Exhibit 10.1

 

 

FIRST AMENDED AND RESTATED SENIOR SECURED SUPER-PRIORITY DEBTOR-IN-POSSESSION
CREDIT AGREEMENT

 

by and among

 

COLT DEFENSE LLC,

 

as a US Borrower,

 

COLT’S MANUFACTURING COMPANY LLC,

 

as a US Borrower,

 

COLT CANADA CORPORATION,

 

as Canadian Borrower,

 

THE SUBSIDIARIES OF COLT DEFENSE LLC

 

NAMED AS GUARANTORS HEREIN,

 

as Guarantors,

 

THE LENDERS THAT ARE SIGNATORIES HERETO,

 

as the Lenders

 

and

 

CORTLAND CAPITAL MARKET SERVICES LLC,

 

as Agent

 

Dated as of June 24, 2015

 

 

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

1.

DEFINITIONS AND CONSTRUCTION

2

 

 

 

 

1.1

Definitions

2

 

 

 

 

 

1.2

Accounting Terms

3

 

 

 

 

 

1.3

Code

3

 

 

 

 

 

1.4

Construction

3

 

 

 

 

 

1.5

Schedules and Exhibits

4

 

 

 

 

2.

LOANS AND TERMS OF PAYMENT

4

 

 

 

 

2.1

[Reserved]

4

 

 

 

 

 

2.2

Loans

4

 

 

 

 

 

2.3

[Reserved]

6

 

 

 

 

 

2.4

Payments; Prepayments

6

 

 

 

 

 

2.5

[Reserved.]

9

 

 

 

 

 

2.6

Interest Rates: Rates, Payments, and Calculations

9

 

 

 

 

 

2.7

Crediting Payments; Clearance Charge

11

 

 

 

 

 

2.8

Designated Account

11

 

 

 

 

 

2.9

Maintenance of Loan Account; Statements of Obligations

11

 

 

 

 

 

2.10

Fees

11

 

 

 

 

 

2.11

[Reserved]

12

 

 

 

 

 

2.12

[Reserved]

12

 

 

 

 

 

2.13

Capital Requirements

12

 

 

 

 

 

2.14

Joint and Several Liability of Borrowers

13

 

 

 

 

3.

CONDITIONS; TERM OF AGREEMENT

16

 

 

 

 

3.1

Conditions Precedent to the Initial Tranche A Loan

16

 

 

 

 

 

3.2

Conditions Precedent to Each Extension of Credit

16

 

 

 

 

 

3.3

[Reserved.]

16

 

 

 

 

 

3.4

Effect of Maturity

16

 

 

 

 

4.

REPRESENTATIONS AND WARRANTIES

16

 

 

 

 

4.1

Due Organization and Qualification; Subsidiaries

17

 

 

 

 

 

4.2

Due Authorization; No Conflict

17

 

i

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4.3

Governmental Consents

18

 

 

 

 

 

4.4

Binding Obligations; Perfected Liens

18

 

 

 

 

 

4.5

Title to Assets; No Encumbrances

19

 

 

 

 

 

4.6

Jurisdiction of Organization; Location of Chief Executive Office and Tangible
Assets; Organizational Identification Number; Commercial Tort Claims

19

 

 

 

 

 

4.7

Litigation

19

 

 

 

 

 

4.8

Compliance with Laws

20

 

 

 

 

 

4.9

No Material Adverse Change

20

 

 

 

 

 

4.10

[Reserved.]

20

 

 

 

 

 

4.11

Employee Benefits

20

 

 

 

 

 

4.12

Environmental Condition

21

 

 

 

 

 

4.13

Intellectual Property

22

 

 

 

 

 

4.14

Leases

22

 

 

 

 

 

4.15

Deposit Accounts and Securities Accounts

22

 

 

 

 

 

4.16

Complete Disclosure

22

 

 

 

 

 

4.17

Material Contracts

23

 

 

 

 

 

4.18

Patriot Act; etc.

23

 

 

 

 

 

4.19

Projections

23

 

 

 

 

 

4.20

Payment of Taxes

23

 

 

 

 

 

4.21

Margin Stock

24

 

 

 

 

 

4.22

Governmental Regulation

24

 

 

 

 

 

4.23

OFAC

24

 

 

 

 

 

4.24

Employee and Labor Matters

24

 

 

 

 

 

4.25

Indebtedness

25

 

 

 

 

 

4.26

Use of Proceeds

25

 

 

 

 

 

4.27

Locations of Inventory and Equipment

25

 

 

 

 

 

4.28

Inventory Records

25

 

 

 

 

 

4.29

Common Enterprise

25

 

 

 

 

 

4.30

Orders

26

 

 

 

 

 

4.31

Budget

26

 

 

 

 

 

4.32

Insurance

26

 

 

 

 

 

4.33

DIP Term Loan Documents

26

 

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4.34

[Reserved]

26

 

 

 

 

 

4.35

Tax Status

26

 

 

 

 

 

4.36

Bankruptcy Matters

27

 

 

 

 

5.

AFFIRMATIVE COVENANTS

27

 

 

 

 

5.1

Financial Statements, Reports, Certificates

27

 

 

 

 

 

5.2

Collateral Reporting

28

 

 

 

 

 

5.3

Existence

28

 

 

 

 

 

5.4

Maintenance of Properties

28

 

 

 

 

 

5.5

Taxes

28

 

 

 

 

 

5.6

Insurance

28

 

 

 

 

 

5.7

Inspection

29

 

 

 

 

 

5.8

Compliance with Laws

29

 

 

 

 

 

5.9

Environmental

30

 

 

 

 

 

5.10

Bank of America Accounts

31

 

 

 

 

 

5.11

[Reserved.]

31

 

 

 

 

 

5.12

Further Assurances

31

 

 

 

 

 

5.13

Lender Meetings

32

 

 

 

 

 

5.14

Material Contracts

32

 

 

 

 

 

5.15

Location of Inventory and Equipment

32

 

 

 

 

 

5.16

Compliance with ERISA and the IRC

32

 

 

 

 

 

5.17

Collateral Access Agreement

33

 

 

 

 

 

5.18

Chief Restructuring Officer

33

 

 

 

 

 

5.19

Information Officer

33

 

 

 

 

 

5.20

Post-Closing Obligations

33

 

 

 

 

 

5.21

Trade Payables/Unrestricted Cash Certificate

33

 

 

 

 

 

5.22

Cash Management Order

33

 

 

 

 

 

5.23

Milestones

33

 

 

 

 

6.

NEGATIVE COVENANTS

33

 

 

 

 

6.1

Indebtedness

33

 

 

 

 

 

6.2

Liens

33

 

 

 

 

 

6.3

Restrictions on Fundamental Changes

33

 

 

 

 

 

6.4

Disposal of Assets

34

 

 

 

 

 

6.5

Change Name

34

 

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6.6

Nature of Business

34

 

 

 

 

 

6.7

Certain Payments of Debt and Amendments

34

 

 

 

 

 

6.8

Change of Control

35

 

 

 

 

 

6.9

Restricted Payments

35

 

 

 

 

 

6.10

Accounting Methods

36

 

 

 

 

 

6.11

Investments; Controlled Investments

36

 

 

 

 

 

6.12

Transactions with Affiliates

36

 

 

 

 

 

6.13

Use of Proceeds

38

 

 

 

 

 

6.14

Limitation on Issuance of Equity Interests; Formation of Subsidiaries

38

 

 

 

 

 

6.15

[Reserved]

38

 

 

 

 

 

6.16

Specified Canadian Pension Plans

38

 

 

 

 

 

6.17

Sale Leaseback Transactions

38

 

 

 

 

 

6.18

Limitations on Dividends and Other Payment Restrictions Affecting Subsidiaries

39

 

 

 

 

 

6.19

Limitations on Negative Pledges

39

 

 

 

 

 

6.20

Employee Benefits

40

 

 

 

 

 

6.21

Collateral Access Agreement

40

 

 

 

 

 

6.22

New Holdco Expenses

40

 

 

 

 

 

6.23

Cash in Deposit Accounts

41

 

 

 

 

 

6.24

[Reserved.]

41

 

 

 

 

 

6.25

Disclosure re Lenders

41

 

 

 

 

7.

FINANCIAL COVENANTS

42

 

 

 

8.

EVENTS OF DEFAULT

43

 

 

 

9.

RIGHTS AND REMEDIES

49

 

 

 

 

9.1

Rights and Remedies

49

 

 

 

 

 

9.2

Remedies Cumulative

50

 

 

 

 

 

9.3

Code and Other Remedies

50

 

 

 

 

 

9.4

Accounts and Payments in Respect of General Intangibles

53

 

 

 

 

 

9.5

Proceeds to be Turned over to and Held by Agent

54

 

 

 

 

 

9.6

Registration Rights

54

 

 

 

 

 

9.7

Deficiency

55

 

 

 

 

10.

WAIVERS; INDEMNIFICATION

55

 

 

 

 

10.1

Demand; Protest; etc.

55

 

iv

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10.2

The Lender Group’s Liability for Collateral

55

 

 

 

 

 

10.3

Indemnification

55

 

 

 

 

11.

NOTICES

56

 

 

 

12.

CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER

58

 

 

 

13.

ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS

59

 

 

 

 

13.1

Assignments and Participations

59

 

 

 

 

 

13.2

Successors

63

 

 

 

 

14.

AMENDMENTS; WAIVERS

63

 

 

 

 

14.1

Amendments and Waivers

63

 

 

 

 

 

14.2

Replacement of Certain Lenders; Lender Purchase Right

65

 

 

 

 

 

14.3

No Waivers; Cumulative Remedies

65

 

 

 

 

15.

AGENT; THE LENDER GROUP

65

 

 

 

 

15.1

Appointment and Authorization of Agent

65

 

 

 

 

 

15.2

Delegation of Duties; Appointment of Subagents

66

 

 

 

 

 

15.3

Liability of Agent

67

 

 

 

 

 

15.4

Reliance by Agent

67

 

 

 

 

 

15.5

Notice of Default or Event of Default

67

 

 

 

 

 

15.6

Credit Decision

68

 

 

 

 

 

15.7

Costs and Expenses; Indemnification

68

 

 

 

 

 

15.8

Agent in Individual Capacity

69

 

 

 

 

 

15.9

Successor Agent

69

 

 

 

 

 

15.10

Lender in Individual Capacity

70

 

 

 

 

 

15.11

Collateral Matters; Credit Bidding

70

 

 

 

 

 

15.12

Restrictions on Actions by Lenders; Sharing of Payments

72

 

 

 

 

 

15.13

Agency for Perfection

72

 

 

 

 

 

15.14

Payments by Agent to the Lenders

72

 

 

 

 

 

15.15

Concerning the Collateral and Related Loan Documents

73

 

 

 

 

 

15.16

Field Examination Reports; Confidentiality; Disclaimers by Lenders; Other
Reports and Information

73

 

 

 

 

 

15.17

[Reserved.]

74

 

 

 

 

 

15.18

Several Obligations; No Liability

74

 

 

 

 

 

15.19

Appointment for the Province of Québec

74

 

 

 

 

 

15.20

Dutch Parallel Debt

75

 

v

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16.

WITHHOLDING TAXES

76

 

 

 

 

16.1

No Setoff; Payments

76

 

 

 

 

 

16.2

Exemptions

77

 

 

 

 

 

16.3

Reductions

78

 

 

 

 

 

16.4

Refunds

79

 

 

 

 

17.

GENERAL PROVISIONS

80

 

 

 

 

17.1

Effectiveness

80

 

 

 

 

 

17.2

Section Headings

80

 

 

 

 

 

17.3

Interpretation

80

 

 

 

 

 

17.4

Severability of Provisions

80

 

 

 

 

 

17.5

[Reserved.]

80

 

 

 

 

 

17.6

Debtor-Creditor Relationship

80

 

 

 

 

 

17.7

Counterparts; Electronic Execution

80

 

 

 

 

 

17.8

[Reserved.]

80

 

 

 

 

 

17.9

Confidentiality

80

 

 

 

 

 

17.10

Lender Group Expenses

82

 

 

 

 

 

17.11

Survival

82

 

 

 

 

 

17.12

Patriot Act

82

 

 

 

 

 

17.13

Integration

82

 

 

 

 

 

17.14

Administrative Borrower as Agent for Borrowers

82

 

 

 

 

 

17.15

Currency Indemnity

83

 

 

 

 

 

17.16

Anti-Money Laundering Legislation

84

 

 

 

 

 

17.17

Quebec Interpretation

84

 

vi

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EXHIBITS AND SCHEDULES

 

Exhibit A-1

 

Form of Assignment and Acceptance

 

 

 

Exhibit B-1

 

Form of Monthly Reporting

 

 

 

Exhibit B-2

 

[Reserved]

 

 

 

Exhibit C-1

 

Form of Compliance Certificate

 

 

 

Exhibit I-1

 

Form of IP Reporting Certificate

 

 

 

Exhibit L-1

 

Exclusive Intellectual Property and other Intangible Licenses

 

 

 

Exhibit L-2

 

[Reserved]

 

 

 

Exhibit M

 

Budget

 

 

 

Exhibit N

 

Form of Committed Loan Notice

 

 

 

Schedule A-1

 

Lender Notice Addresses

 

 

 

Schedule A-2

 

Authorized Persons

 

 

 

Schedule C-1

 

Term Commitments

 

 

 

Schedule D-1

 

Designated Account

 

 

 

Schedule E-1

 

[Reserved]

 

 

 

Schedule E-2

 

[Reserved]

 

 

 

Schedule P-1

 

[Reserved]

 

 

 

Schedule P-2

 

Permitted Liens

 

 

 

Schedule P-3

 

Permitted Holders

 

 

 

Schedule R-1

 

Real Property Collateral

 

 

 

Schedule 1.1

 

Definitions

 

 

 

Schedule 3.1

 

Conditions Precedent to Initial Tranche A Loan

 

 

 

Schedule 3.2

 

Conditions Precedent to Each Extension of Credit

 

 

 

Schedule 4.1(b)

 

Capitalization of Loan Parties

 

 

 

Schedule 4.2

 

Due Authorization; No Conflict

 

vii

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Schedule 4.6(a)

 

Jurisdiction of Organization

 

 

 

Schedule 4.6(b)

 

Chief Executive Offices

 

 

 

Schedule 4.6(c)

 

Organizational Identification Numbers

 

 

 

Schedule 4.6(d)

 

Commercial Tort Claims

 

 

 

Schedule 4.6(e) 

 

Location of Assets

 

 

 

Schedule 4.7

 

Litigation

 

 

 

Schedule 4.9

 

GAAP

 

 

 

Schedule 4.11

 

Pension Plans

 

 

 

Schedule 4.12

 

Environmental Matters

 

 

 

Schedule 4.13

 

Intellectual Property

 

 

 

Schedule 4.15

 

Deposit Accounts and Securities Accounts

 

 

 

Schedule 4.20

 

New Holdco Expenses

 

 

 

Schedule 4.25

 

Permitted Indebtedness

 

 

 

Schedule 4.32

 

Insurance

 

 

 

Schedule 5.1

 

Financial Statements, Reports, Certificates

 

 

 

Schedule 5.2

 

Collateral Reporting

 

 

 

Schedule 5.16

 

Compliance with ERISA and the IRC

 

 

 

Schedule 5.23

 

Milestones

 

 

 

Schedule 6.12(d)

 

Agreements with Affiliates

 

viii

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FIRST AMENDED AND RESTATED SENIOR SECURED SUPER-PRIORITY DEBTOR-IN-POSSESSION
CREDIT AGREEMENT

 

THIS FIRST AMENDED AND RESTATED SENIOR SECURED SUPER-PRIORITY
DEBTOR-IN-POSSESSION CREDIT AGREEMENT (as amended, restated, supplemented or
otherwise modified from time to time, this “Agreement”), is entered into as of
June 24, 2015, by and among the lenders identified on the signature pages hereof
or that becomes a lender hereto from time to time in accordance with this
Agreement (each of such lenders, together with their respective successors and
permitted assigns, are referred to hereinafter as a “Lender”, as that term is
hereinafter further defined), Cortland Capital Market Services LLC, as agent for
the Lenders (in such capacity, together with its successors and assigns in such
capacity, “Agent”), Colt Defense LLC, a Delaware limited liability company, as a
borrower and as a debtor and debtor-in-possession in the Chapter 11 Cases (as
defined below) (“Parent” or “Colt Defense”), Colt Canada Corporation, a Nova
Scotia unlimited company, as a borrower and as a debtor and debtor-in-possession
in the Chapter 11 Cases (“Colt Canada”), Colt’s Manufacturing Company LLC, a
Delaware limited liability company, as a borrower and as a debtor and
debtor-in-possession in the Chapter 11 Cases (“CMC” and together with Colt
Defense and Colt Canada, each individually, a “Borrower” and collectively,
“Borrowers” as hereinafter further defined), CDH II Holdco Inc., a Delaware
corporation, as a guarantor and as a debtor and debtor-in-possession in the
Chapter 11 Cases (“CDH II”), New Colt Holding Corp., a Delaware corporation, as
a guarantor and as a debtor and debtor-in-possession in the Chapter 11 Cases
(“New Colt”), Colt Finance Corp., a Delaware corporation, as a guarantor and as
a debtor and debtor-in-possession in the Chapter 11 Cases (“Colt Finance”), Colt
Defense Technical Services LLC, a Delaware limited liability company, as a
guarantor and as a debtor and debtor-in-possession in the Chapter 11 Cases
(“CDTS”) and Colt International Coöperatief U.A., a cooperative formed under
Dutch law, as a guarantor and as a debtor and debtor-in-possession in the
Chapter 11 Cases (“Dutch Holdings” and, together with CDH II, New Colt, Colt
Finance and CDTS, each individually a “Guarantor” and collectively, “Guarantors”
as hereinafter further defined, and together with the Borrowers, the “Loan
Parties” as hereinafter further defined).

 

WHEREAS, each Loan Party filed a voluntary petition for relief under chapter 11
of the Bankruptcy Code in the United States Bankruptcy Court for the District of
Delaware on the Petition Date;

 

WHEREAS, each of the Loan Parties is continuing in the possession of its assets
and in the management of its business as a debtor-in-possession pursuant to
Section 1107(a) and 1108 of the Bankruptcy Code;

 

WHEREAS, on June 17, 2015, Colt Holding Company LLC, as the foreign
representative on behalf of the Loan Parties (the “Foreign Representative”),
commenced a recognition proceeding under Part IV of the CCAA in the Ontario
Superior Court of Justice (Commercial List) (the “Canadian Court”) to recognize
in Canada, the Chapter 11 Cases as foreign main or non-main proceedings (the
“CCAA Recognition Proceedings”);

 

WHEREAS, prior to the Petition Date, the Initial Prepetition Senior Lenders
provided financing to the Borrowers pursuant to the Prepetition Senior Loan
Agreement, among the Borrowers, the Guarantors, the Agent, and the Initial
Prepetition Senior Lenders;

 

1

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WHEREAS, on June 23, 2015, pursuant to the Prepetition Assignment Agreement, the
Initial Prepetition Senior Lenders assigned all of their respective rights,
interests and obligations, including, without limitations, the liens and
security interests held to secure the obligations under the Prepetition Senior
Loan Agreement to the Lenders party hereto;

 

WHEREAS, after the Petition Date, the Initial DIP Lenders provided $2,000,000 of
financing to the Borrowers pursuant to (i) the Initial DIP Senior Loan Agreement
and (ii) the First Interim DIP Order;

 

WHEREAS, on June 23, 2015 pursuant to the Senior DIP Assignment Agreement, the
Initial DIP Lenders assigned all of their respective rights, interests and
obligations, including, without limitations, the liens and security interests
held to secure the obligations under the Senior Secured Super-Priority
Debtor-In-Possession Credit Agreement, dated as of June 16, 2015, by and among
the Agent, Initial DIP Lenders, Borrowers and the Guarantors (the “Initial DIP
Senior Loan Agreement”) to the Lenders party hereto;

 

WHEREAS, the Loan Parties have, and each Loan Party has, requested the Lenders
to amend and restate the Initial DIP Senior Loan Agreement in its entirety in
order to, among other things, provide additional post-petition loans and
advances and provide other financial accommodations to the Loan Parties, and the
Lenders have agreed, subject to the conditions set forth herein, to extend a
senior secured super-priority debtor-in-possession credit facility (the
“Facility”) to the Borrowers in an aggregate principal amount of $41,666,667 (or
such higher amount permitted by and in accordance with the terms hereunder),
comprised of the Tranche A Loans and the Tranche B Loans, for the purposes
described herein and on the terms and conditions set forth herein;

 

WHEREAS, to provide security for the repayment of the loans made available
pursuant hereto and payment of the other obligations of the Borrowers hereunder,
the Loan Parties have agreed to provide the Agent and the Lenders, in each case,
subject to the Carve-Out (as defined herein), with Liens on the Collateral (as
defined herein);

 

WHEREAS, the Loan Parties, the DIP Term Loan Lenders, the DIP Term Loan Agent,
the Borrowers, and the Guarantors are entering into an amendment to the DIP Term
Loan Agreement contemporaneously herewith; and

 

WHEREAS, the Lenders are willing to make the requested credit facilities
available on the terms and conditions set forth herein;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto covenant and
agree as follows:

 

1.                                      DEFINITIONS AND CONSTRUCTION.

 

1.1                               Definitions.  Capitalized terms used in this
Agreement shall have the meanings specified therefor on Schedule 1.1.

 

2

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1.2                               Accounting Terms.  Any accounting term used in
this Agreement shall have, unless otherwise specifically provided herein, the
meaning customarily given in accordance with GAAP, and all financial
computations hereunder shall be computed unless otherwise specifically provided
herein, in accordance with GAAP as consistently applied and using the same
method for inventory valuation as used in the preparation of the financial
statements of Parent most recently received by Agent prior to the date hereof;
provided, that, upon the adoption by Parent of IFRS as required by Parent’s
independent certified public accountants or in the event of any change in GAAP
after the date hereof that affects the covenants in Section 7 hereof,
Administrative Borrower may by notice to Agent, or Agent may, and at the request
of Required Lenders shall, by notice to Administrative Borrower require that
such covenants be calculated in accordance with GAAP as in effect, and as
applied by Parent and its Subsidiaries, immediately before the adoption by
Parent of IFRS or the applicable change in GAAP became effective, until either
the notice from the applicable party is withdrawn or such covenant is amended in
a manner satisfactory to Parent, Agent and the Required Lenders. 
Notwithstanding anything to the contrary contained herein, all financial
statements delivered hereunder shall be prepared, and all financial covenants
contained herein shall be calculated, without giving effect to any election
under the Statement of Financial Accounting Standards No. 159 (or any similar
accounting principle) permitting a Person to value its financial liabilities or
Indebtedness at the fair value thereof.  When used herein, the term “financial
statements” shall include the notes and schedules thereto.  Whenever the term
“Parent” or “Borrowers” is used in respect of a financial covenant or a related
definition, it shall be understood to mean Parent or Borrowers and their
Subsidiaries on a consolidated basis, unless the context clearly requires
otherwise.  For purposes of calculations pursuant to the terms of this
Agreement, GAAP will be deemed to treat operating leases in a manner consistent
with the current treatment under GAAP as in effect on the Closing Date,
notwithstanding any modification or interpretive changes thereto that may occur
hereafter.

 

1.3                               Code.  Any terms used in this Agreement that
are defined in the Code shall be construed and defined as set forth in the Code
unless otherwise defined herein and any terms used in this Agreement that are
defined in the PPSA and pertaining to Collateral consisting of assets of the
Canadian Loan Parties shall be construed and defined as set forth in the PPSA
unless otherwise defined herein; provided, however, that to the extent that the
Code is used to define any term herein and such term is defined differently in
different Articles of the Code, the definition of such term contained in
Article 9 of the Code shall govern.

 

1.4                               Construction.  Unless the context of this
Agreement or any other Loan Document clearly requires otherwise, references to
the plural include the singular, references to the singular include the plural,
the terms “includes” and “including” are not limiting and shall be deemed to be
followed by the phrase “, without limitation,”, and the term “or” has, except
where otherwise indicated, the inclusive meaning represented by the phrase
“and/or.”  The words “hereof,” “herein,” “hereby,” “hereunder,” and similar
terms in this Agreement or any other Loan Document refer to this Agreement or
such other Loan Document, as the case may be, as a whole and not to any
particular provision of this Agreement or such other Loan Document, as the case
may be.  Section, subsection, clause, schedule, and exhibit references herein
are to this Agreement unless otherwise specified.  Any reference in this
Agreement or in any other Loan Document to any agreement, instrument, or
document shall include all alterations, amendments, changes, extensions,
modifications, renewals, restatements, replacements, substitutions, joinders,
and supplements, thereto and thereof, as applicable (subject to any restrictions
on such

 

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alterations, amendments, changes, extensions, modifications, renewals,
restatements, replacements, substitutions, joinders, and supplements set forth
herein).  The words “asset” and “property” shall be construed to have the same
meaning and effect and to refer to any and all tangible and intangible assets
and properties.  Any reference herein to any Person shall be construed to
include such Person’s successors and assigns.  An Event of Default shall exist
or continue or be continuing until such Event of Default is waived in accordance
with Section 14.1 or is cured if such Event of Default is capable of being cured
as permitted hereunder.  Any reference herein or in any other Loan Document to
the satisfaction, repayment, or payment in full of the Obligations, the Secured
Obligations (as defined in the Security Agreement or the Canadian Security
Agreement, as the case may be) or the Guarantied Obligations (as defined in the
applicable Guaranty) shall mean the repayment in full in cash or immediately
available funds other than unasserted indemnification Obligations.  Unless
otherwise indicated herein, all references to time of day refer to Eastern
Standard Time or Eastern daylight saving time, as in effect in New York City on
such day.  For purposes of the computation of a period of time from a specified
date to a later specified date, the word “from” means “from and including” and
the words “to” and “until” each means “to and including”; provided, that, with
respect to a computation of fees or interest payable to Agent or any Lender,
such period shall in any event consist of at least one full day.  Unless the
context of this Agreement or any other Loan Document clearly requires otherwise
or the Required Lenders otherwise determine, amounts expressed in US Dollars at
any time when used with respect to Foreign Subsidiaries or similar matters shall
be deemed to mean the US Dollar Equivalent of such amounts at such time.

 

1.5                               Schedules and Exhibits.  All of the schedules
and exhibits attached to this Agreement shall be deemed incorporated herein by
reference.

 

2.                                      LOANS AND TERMS OF PAYMENT.

 

2.1                               [Reserved].

 

2.2                               Loans.

 

(a)                                 Subject to the terms and conditions of this
Agreement (including Sections 3.1 and 3.2), the Approved Budget and the Orders,
each Lender with a Term Commitment agrees (severally, not jointly and not
jointly and severally), to make term loans (collectively, the “Tranche A Loans”)
to Borrowers in an aggregate amount up to such Lender’s Pro Rata Share of the
Tranche A Loan Amount as follows:

 

(i)                                     following the entry of the First Interim
DIP Order, the Initial DIP Lenders made an initial Tranche A Loan to the
Borrowers in an amount equal to such Initial DIP Lender’s Pro Rata Share of an
aggregate principal amount equal to $2,000,000, which amount the Initial DIP
Lenders assigned to the Lenders party hereto in Pro Rata Shares of such amount
(the “Initial Tranche A Loan”);

 

(ii)                                  following the entry of the Second Interim
DIP Order, the Lenders party hereto shall make a second Tranche A Loan (the
“Second Tranche A Loan”) to the Borrowers in an amount equal to such Lender’s
Pro Rata Share of an aggregate principal amount equal to $1,333,334; and

 

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(iii)                               on or after the date of entry of the Final
DIP Order, the Lenders shall make one additional Tranche A Loan (the “Third
Tranche A Loan”) to the Borrowers on the date specified in the applicable
Committed Loan Notice of such Lender’s Pro Rata Share of an aggregate principal
amount equal to $3,333,333.

 

(b)                                 Subject to the terms and conditions of this
Agreement (including Section 3.2), the Approved Budget and the Orders, each
Lender with a Term Commitment agrees (severally, not jointly or jointly and
severally), on the next Business Day following the entry of the Final DIP Order
by the Bankruptcy Court, to make one deemed term loan (the “Tranche B Loan”, and
together with the Tranche A Loans, collectively, the “Loans”) to the Borrowers
on the date of the Tranche A Loan made in accordance with the foregoing clause
(iii) of Section 2.2(a) in an amount equal to such Lender’s Pro Rata Share of an
aggregate principal amount equal to $35,000,000, which Tranche B Loan shall be
deemed made by the Lenders to the Borrowers on such date.

 

(c)                                  Each Tranche A Loan shall be made upon the
Administrative Borrower’s delivery to the Agent of a Committed Loan Notice. 
Except with respect to the Initial Tranche A Loan and the Second Tranche A Loan,
each such Committed Loan Notice must be received by the Agent not later than
11:00 a.m. three (3) Business Days prior to the requested date of any Tranche A
Loan.  Each Committed Loan Notice shall specify (i) the requested date of the
Tranche A Loan (which shall be a Business Day), (ii) the principal amount of the
Tranche A Loan to be borrowed and (iii) the Borrower’s wiring instructions to be
used for funding such Tranche A Loan.

 

(d)                                 Following receipt of a Committed Loan
Notice, the Agent shall promptly notify each Lender of the amount of its Pro
Rata Share of the Loan requested.  Each Lender shall make the amount of its
Tranche A Loan available to the Agent in immediately available funds at the
Agent’s office not later than 2:00 p.m. on the Business Day specified in the
applicable Committed Loan Notice.  Upon satisfaction of the applicable
conditions set forth in Section 3.2, the Agent shall use reasonable efforts to
make all funds so received available to the Borrowers in like funds on the day
of receipt by the Agent by wire transfer of such funds into a Designated
Account.

 

(e)                                  Each Loan shall be a US Dollar Denominated
Loan

 

(f)                                   Loans prepaid or repaid (including amounts
substituted and exchanged for Tranche B Loans) hereunder may not be
re-borrowed.  The outstanding principal amount of the Loans, together with
interest accrued thereon, shall be due and payable on the Maturity Date or, if
earlier, on the date on which they are declared due and payable pursuant to the
terms of this Agreement.

 

(g)                                  Term Commitments shall be permanently
reduced by an amount equal to the amount of each Loan extended upon the making
of such Loan.  Notwithstanding the foregoing, all of the Term Commitments shall
automatically terminate at 5:00 p.m., New York time, on June 26, 2015 if the
funding of the Second Tranche A Loan shall have not occurred by such time.

 

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(h)                                 All Loans shall be used for the purposes set
forth in the Orders and in Sections 4.25 and 6.13 hereof.

 

2.3                               [Reserved].

 

2.4                               Payments; Prepayments.

 

(a)                                 Payments by Borrowers.     Except as
otherwise expressly provided herein, all payments by any Borrower may be made to
Agent’s Account for the account of the Lender Group and shall be made in
immediately available funds, no later than 11:00 a.m. (New York time) on the
date specified herein.  Any payment received by Agent later than 11:00 a.m. (New
York time) may be deemed to have been received on the following Business Day and
any applicable interest or fee shall continue to accrue until such following
Business Day.

 

(b)                                 Apportionment and Application.

 

(i)                                     So long as no Application Event has
occurred and is continuing and except as otherwise provided herein, all
principal and interest payments received by Agent shall be apportioned ratably
among the Lenders (according to the unpaid principal balance of the Obligations
to which such payments relate held by each Lender) entitled to such payments and
all payments of fees and expenses received by Agent (other than fees or expenses
that are for Agent’s separate account) shall be apportioned ratably among the
Lenders according to their Pro Rata Share.  All payments to be made hereunder by
Borrowers shall be remitted to Agent and all such payments shall be applied, so
long as no Application Event has occurred and is continuing, to reduce the
balance of any Loans outstanding, and, thereafter, to Borrowers (to be wired to
the Designated Account) or such other Person entitled thereto under applicable
law (subject to Section 2.4(d)(ii) and Section 2.4(e)).

 

(ii)                                  At any time that an Application Event has
occurred and is continuing, at the written direction of Required Lenders to
Agent, all payments remitted to Agent in respect of the Obligations and all
proceeds of Collateral received by Agent shall be applied as follows:

 

(A)                               first, to pay any Lender Group Expenses
(including cost or expense reimbursements) or indemnities then due to Agent
under the Loan Documents, until paid in full,

 

(B)                               second, to pay any fees then due to Agent
under the Loan Documents until paid in full,

 

(C)                               third, ratably, to pay any Lender Group
Expenses (including cost or expense reimbursements) or indemnities then due to
any of the Lenders under the Loan Documents, until paid in full,

 

(D)                               fourth, ratably, to pay any fees then due to
any of the Lenders under the Loan Documents until paid in full,

 

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(E)                                fifth, ratably, to pay interest accrued in
respect of the Loans until paid in full,

 

(F)                                 sixth, ratably, to Agent, for the account of
Lenders, to pay the principal of all Loans until paid in full,

 

(G)                               seventh, to pay any other Obligations until
paid in full; and

 

(H)                              ninth, to Borrowers (to be wired to the
Designated Account) or such other Person entitled thereto under applicable law.

 

(iii)                               [Reserved.]

 

(iv)                              [Reserved.]

 

(v)                                 [Reserved.]

 

(vi)                              For purposes of Section 2.4(b)(ii), “paid in
full” of a type of Obligation means payment in cash or immediately available
funds of all amounts owing on account of such type of Obligation default
interest, interest on interest, and expense reimbursements, whether or not any
of the foregoing would be or is allowed or disallowed in whole or in part in any
Insolvency Proceeding.

 

(vii)                           In the event of a direct conflict between the
priority provisions of this Section 2.4 and any other provision contained in
this Agreement or any other Loan Document, it is the intention of the parties
hereto that such provisions be read together and construed, to the fullest
extent possible, to be in concert with each other.

 

(c)                                  [Reserved].

 

(d)                                 Optional Prepayments.

 

(i)                                     [Reserved].

 

(ii)                                  Loans.  Loans may not be voluntarily
prepaid in whole or in part by the Borrowers without the written consent of the
Required Lenders.

 

(e)                                  Mandatory Prepayments.

 

(i)                                     [Reserved].

 

(ii)                                  Dispositions. Within 3 Business Days of
the date of receipt by Parent or any of its Subsidiaries of the Net Cash
Proceeds of any voluntary or involuntary sale or disposition by Parent or any of
its Subsidiaries of assets (including casualty losses or condemnations but
excluding sales or dispositions which qualify as Permitted Dispositions under
clauses (a), (b), (c), (e), to the extent relating to Restricted Payments made
to Loan Parties, (l), to the extent relating to Permitted Investments of the
type described under clause (a) of the definition thereof, (m) or (n) of the
definition of Permitted Dispositions), Borrowers shall prepay

 

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the outstanding principal amount of the Obligations in accordance with
Section 2.4(f) in an amount equal to 100% of such Net Cash Proceeds (including
condemnation awards and payments in lieu thereof) received by such Person in
connection with such sales or dispositions. Nothing contained in this
Section 2.4(e)(ii) shall permit Parent or any of its Subsidiaries to sell or
otherwise dispose of any assets other than in accordance with Section 6.4.

 

(iii)                               Extraordinary Receipts. Within three
(3) Business Days of the date of receipt by Parent or any of its Subsidiaries of
any Extraordinary Receipts, Borrowers shall prepay the outstanding principal
amount of the Obligations in accordance with Section 2.4(f) in an amount equal
to 100% of such Extraordinary Receipts, net of any reasonable and documented
expenses incurred in collecting such Extraordinary Receipts.

 

(iv)                              Indebtedness and Equity Issuances. Within 3
Business Days of the date of incurrence or issuance by Parent or any of its
Subsidiaries of any Indebtedness (other than Permitted Indebtedness) or issuance
of Equity Interests, Borrowers shall prepay the outstanding principal amount of
the Obligations in accordance with Section 2.4(f) in an amount equal to 100% of
the Net Cash Proceeds received by such Person in connection with such incurrence
or issuance. The provisions of this Section 2.4(e)(iv) shall not be deemed to be
implied consent to any such incurrence or issuance otherwise prohibited by the
terms of this Agreement.

 

(v)                                 [Intentionally omitted.]

 

(vi)                              Waivable Mandatory Prepayments. Anything
contained herein to the contrary notwithstanding, in the event Borrowers are
required to make any mandatory prepayment (a “Waivable Mandatory Prepayment”) of
the Loans pursuant to this Section 2.4(e), not less than two (2) Business Days
prior to the date (the “Required Prepayment Date”) on which Borrowers are
required to make such Waivable Mandatory Prepayment, Administrative Borrower
shall notify Agent in writing of the amount of such prepayment, and Agent will
promptly thereafter notify Lenders of the Administrative Borrower’s request. 
Unless on or before the first Business Day prior to the Required Prepayment Date
(it being understood that any Lender that does not notify Administrative
Borrower and Agent in writing of its election to exercise such option on or
before the first Business Day prior to the Required Prepayment Date shall be
deemed to have elected, as of such date, not to exercise such option) the
Required Lenders have waived in writing such prepayment, then Borrowers shall be
required to make such prepayment.

 

(f)                                   Application of Payments.

 

(i)                                     [Reserved].

 

(ii)                                  Each prepayment pursuant to
Section 2.4(e)(ii) shall, (A) in the case of Net Cash Proceeds of any sale or
disposition of assets consisting of any ABL Priority Collateral, be applied,
first, to the Obligations in the manner provided in Section 2.4(f)(v) and,
second, to the DIP Term Loan Debt to the extent provided in the DIP Term Loan
Documents and (B) in the case of Net Cash Proceeds of any sale or disposition of
assets consisting of any Term Priority Collateral, be applied, first, to the DIP
Term Loan Debt to the extent provided in the DIP

 

8

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Term Loan Documents and, second, to the Obligations in the manner provided in
Section 2.4(f)(v).

 

(iii)                               Each prepayment pursuant to
Section 2.4(e)(iii) shall be applied (A) first, to the Obligations in the manner
provided in Section 2.4(f)(v) and (B) second, to the DIP Term Loan Debt to the
extent provided in the DIP Term Loan Documents, respectively.

 

(iv)                              Each prepayment pursuant to Sections
2.4(e)(iv) shall be applied, (A) first, to the Obligations in the manner
provided in Section 2.4(f)(v) and (B) second, to the DIP Term Loan Debt to the
extent provided in the DIP Term Loan Documents, respectively.

 

(v)                                 Each prepayment of Obligations pursuant to
Section 2.4(e)(ii), (iii) or (iv) shall, (A) so long as no Application Event
shall have occurred and be continuing, be applied ratably to the outstanding
principal amount of the Loans, until paid in full, and (B) if an Application
Event shall have occurred and be continuing, be applied in the manner set forth
in Section 2.4(b)(ii).

 

(g)                                  Application of Optional Prepayments of
Loans.  Each prepayment of Loans permitted pursuant to Section 2.4(d)(ii) shall
be applied to the outstanding principal amount of the Tranche A Loans of the
Lenders in accordance with their Pro Rata Share until paid in full and
thereafter to the outstanding principal amount of the Tranche B Loans of the
Lenders in accordance with their Pro Rata Share until paid in full.  Any such
prepayment pursuant to Section 2.4(d)(ii) shall be accompanied by all accrued
interest on the principal amounts prepaid.

 

2.5                               [Reserved.]

 

2.6                               Interest Rates:  Rates, Payments, and
Calculations.

 

(a)                                 Loan Interest.  The Loans shall bear
interest, at the election of the Borrowers made in accordance with clause (d) of
this Section 2.6, subject to the terms and conditions hereof, as follows:

 

(i)                                     Cash Interest Option.  Except as
provided in Section 2.6(c), all Obligations that have been (or were intended to
be) charged to the Loan Account pursuant to the terms hereof shall bear interest
at a rate per annum equal to 11% (such election, the “Cash Interest Option”); or

 

(ii)                                  Cash/PIK Interest Option.  Except as
provided in Section 2.6(c), all Obligations that have been (or were intended to
be) charged to the Loan Account pursuant to the terms hereof shall bear interest
at a rate per annum equal to 9% on the first Business Day of each month in cash
and 2% on such date in kind (such election, the “Cash/PIK Interest Option”).

 

(b)                                 [Reserved].

 

(c)                                  Default Rate.  Upon the occurrence and
during the continuation of an Event of Default, all Obligations that have been
charged to the Loan Account pursuant to the terms hereof shall, subject to
applicable law, bear interest on the Daily Balance thereof at a per annum rate
equal to two percent (2%) above the per annum rates otherwise applicable
thereto.

 

9

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(d)                                 Payment.  All interest, all fees payable
hereunder or under any of the other Loan Documents, and all costs and expenses
payable hereunder or under any of the other Loan Documents shall be due and
payable, in arrears, on the first Business Day of each month at any time that
Obligations are outstanding, except as otherwise provided herein.  Not later
than one (1) Business Day prior to each date on which interest is due, the
Borrowers shall notify the Agent in writing of its election as to whether the
Cash Interest Option or the Cash/PIK Interest Option shall apply to the
applicable interest payment.  If the Agent does not receive notice of the
Borrowers’ election in accordance with the immediately preceding sentence at
least one (1) Business Day prior to such date on which interest is due, the
Borrowers’ shall be deemed automatically to have elected the Cash/PIK Interest
Option in accordance with Section 2.6(a)(ii).

 

(e)                                  Computation.  Interest shall be calculated
on the basis of a three hundred sixty (360) day year and actual days elapsed. 
Each interest rate which is calculated under this Agreement on any basis other
than the actual number of days in a calendar year (the “deemed interest period”)
is, for the purposes of the Interest Act (Canada), equivalent to a yearly rate
calculated by dividing such interest rate by the number of days in the deemed
interest period, then multiplying such result by the actual number of days in
the calendar year (365 or 366).

 

(f)                                   Intent to Limit Charges to Maximum Lawful
Rate.  In no event shall the interest rate or rates payable under this
Agreement, plus any other amounts paid in connection herewith, exceed the
highest rate permissible under any law that a court of competent jurisdiction
shall, in a final determination, deem applicable.  Each Borrower and the Lender
Group, in executing and delivering this Agreement, intend legally to agree upon
the rate or rates of interest and manner of payment stated within it; provided,
that, anything contained herein to the contrary notwithstanding, if such rate or
rates of interest or manner of payment exceeds the maximum allowable under
applicable law, then, ipso facto, as of the date of this Agreement, Borrowers
are and shall be liable only for the payment of such maximum amount as is
allowed by law, and payment received from Borrowers in excess of such legal
maximum, whenever received, shall be applied to reduce the principal balance of
the Obligations to the extent of such excess.

 

(g)                                  In no event shall the aggregate “interest”
(as defined in Section 347 (the “Criminal Code Section”) of the Criminal Code
(Canada)), payable to any member of the Lender Group under this Agreement or any
other Loan Document exceed the effective annual rate of interest lawfully
permitted under the Criminal Code Section on the “credit advanced” (as defined
in such section) under this Agreement or any other Loan Document.  Further, if
any payment, collection or demand pursuant to this Agreement or any other Loan
Document in respect of such “interest” is determined to be contrary to the
provisions of the Criminal Code Section, such payment, collection, or demand
shall be deemed to have been made by mutual mistake of the affected Borrower and
the affected member of the Lender Group and such “interest” shall be deemed to
have been adjusted with retroactive effect to the maximum amount or rate of
interest, as the case may be, as would not be so prohibited by the Criminal Code
Section to result in a receipt by such member of the Lender Group of interest at
a rate not in contravention of the Criminal Code Section, such adjustment to be
effected, to the extent necessary, as follows:

 

(i)                                     firstly, by reducing the amounts or
rates of interest required to be paid to that member of the Lender Group; and

 

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(ii)                                  then, by reducing any fees, charges,
expenses and other amounts required to be paid to the affected member of the
Lender Group which would constitute “interest”.

 

(h)                                 Notwithstanding the above, and after giving
effect to all such adjustments, if any member of the Lender Group shall have
received an amount in excess of the maximum permitted by the Criminal Code
Section, then the affected Borrower shall be entitled to obtain reimbursement
from that member of the Lender Group in an amount equal to such excess. For
greater certainty, to the extent that any charges, fees or expenses are held to
be within such meaning of “interest”, such amounts shall be pro-rated over the
period of time to which they relate or otherwise over the period from the date
hereof to the date on which all of the Obligations are irrevocably repaid.

 

2.7                               Crediting Payments; Clearance Charge.  The
receipt of any payment item by Agent shall not be considered a payment on
account unless such payment item is a wire transfer of immediately available
federal funds made to Agent’s Account unless and until such payment item is
honored when presented for payment.  Should any payment item not be honored when
presented for payment, then Borrowers shall be deemed not to have made such
payment and interest shall be calculated accordingly.  Anything to the contrary
contained herein notwithstanding, any payment item may be deemed received by
Agent only if it is received into Agent’s Account on a Business Day on or before
11:00 a.m. (New York time).  If any payment item is received into Agent’s
Account on a non-Business Day or after 11:00 a.m. (New York time) on a Business
Day, it may be deemed to have been received by Agent as of the opening of
business on the immediately following Business Day.

 

2.8                               Designated Account.  Borrowers agree to
establish and maintain the Designated Account with the Designated Account Bank
for the purpose of receiving the proceeds of the Tranche A Loans requested by
Borrowers and made by Agent or the Lenders hereunder.  Unless otherwise agreed
by Agent and Borrowers, any Tranche A Loan requested by Borrowers and made by
Agent or the Lenders hereunder shall be made to the Designated Account.

 

2.9                               Maintenance of Loan Account; Statements of
Obligations.  Agent shall maintain an account on its books in the name of US
Borrowers (the “US Loan Account”) on which US Borrowers will be charged with all
Loans made by Agent or the Lenders to US Borrowers or for US Borrowers’ account,
and with all other payment Obligations hereunder or under the other Loan
Documents owing by US Loan Parties, including, accrued interest, fees and
expenses, and Lender Group Expenses.  In accordance with Section 2.7, the US
Loan Account will be credited with all payments received by Agent from US
Borrowers or for any US Borrower’s account.  Agent shall render monthly
statements regarding the US Loan Account to Borrowers, including principal,
interest, fees, and including an itemization of all charges and expenses
constituting Lender Group Expenses owing, and such statements, absent manifest
error, shall be conclusively presumed to be correct and accurate and constitute
an account stated between Borrowers and the Lender Group.

 

2.10                        Fees.  Borrowers shall pay to Agent for the account
of the applicable Person, as and when due and payable under the terms of the Fee
Letter, the fees and amounts set forth in the

 

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Fee Letter.  Such fees and amounts shall be fully earned when paid and shall not
be refundable under any circumstance.

 

2.11                        [Reserved].

 

2.12                        [Reserved].

 

2.13                        Capital Requirements.

 

(a)                                 If, after the date hereof, any Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital or reserve requirements for banks or bank holding
companies, or any change in the interpretation, implementation, or application
thereof by any Governmental Authority charged with the administration thereof,
or (ii) compliance by such Lender or its parent bank holding company with any
guideline, request or directive of any such entity regarding capital adequacy
(whether or not having the force of law), has the effect of reducing the return
on such Lender’s or such holding company’s capital as a consequence of such
Lender’s commitments hereunder to a level below that which such Lender or such
holding company could have achieved but for such adoption, change, or compliance
(taking into consideration such Lender’s or such holding company’s then existing
policies with respect to capital adequacy and assuming the full utilization of
such entity’s capital) by any amount deemed by such Lender to be material, then
such Lender may notify Administrative Borrower and Agent thereof.  Following
receipt of such notice, Borrowers agree to pay such Lender on demand the amount
of such reduction of return of capital as and when such reduction is determined,
payable within 30 days after presentation by such Lender of a statement in the
amount and setting forth in reasonable detail such Lender’s calculation thereof
and the assumptions upon which such calculation was based (which statement shall
be deemed true and correct absent manifest error).  In determining such amount,
such Lender may use any reasonable averaging and attribution methods.  Failure
or delay on the part of any Lender to demand compensation pursuant to this
Section 2.13(a) shall not constitute a waiver of such Lender’s right to demand
such compensation; provided, that, (A) no Borrower shall be required to
compensate a Lender pursuant to this Section for any reductions in return
incurred more than 180 days prior to the date that such Lender notifies
Borrowers of such law, rule, regulation or guidelines giving rise to such
reductions and of such Lender’s intention to claim compensation therefore and
(B) if such claim arises by reason of the adoption of or change in any law,
rule, regulation or guideline that is retroactive, then the 180 day period
referred to above shall be extended to include the period of retroactive effect
thereof.  For purposes of this Section 2.13(a), the Dodd Frank Wall Street
Reform and Consumer Protection Act, the Basel Committee on Banking Supervision
(of any successor or similar authority), the Bank for International Settlements
and (in each case) all rules, regulations, orders, requests, guidelines or
directives in connection therewith are deemed to have been enacted and become
effective after the date of this Agreement.

 

(b)                                 If any Lender requests amounts under
Section 2.13(a) (any such Lender, an “Affected Lender”), then such Affected
Lender shall use reasonable efforts to promptly designate a different one of its
lending offices or to assign its rights and obligations hereunder to another of
its offices or branches, if (i) in the reasonable judgment of such Affected
Lender, such designation or assignment would eliminate or reduce amounts payable
pursuant to Section 2.13(a) and (ii) in the reasonable judgment of such Affected
Lender, such designation or

 

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assignment would not subject it to any material unreimbursed cost or expense and
would not otherwise be materially disadvantageous to it.  Borrowers agree to pay
all reasonable out-of-pocket costs and expenses incurred by such Affected Lender
in connection with any such designation or assignment.  If, after such
reasonable efforts, such Affected Lender does not so designate a different one
of its lending offices or assigns its rights to another of its offices or
branches so as to eliminate Borrower’s obligation to pay any future amounts to
such Affected Lender pursuant to Section 2.13(a) (without prejudice to any
amounts then due to such Affected Lender under Section 2.13(a)) may, unless
prior to the effective date of any such assignment the Affected Lender withdraws
its request for such additional amounts under Section 2.13(a) may seek a
substitute Lender reasonably acceptable to Agent to purchase the Obligations
owed to such Affected Lender hereunder (a “Replacement Lender”), and if such
Replacement Lender agrees to such purchase, such Affected Lender shall assign to
the Replacement Lender its Obligations, pursuant to an Assignment and Acceptance
Agreement, and upon such purchase by the Replacement Lender, such Replacement
Lender shall be deemed to be a “Lender” for purposes of this Agreement and such
Affected Lender shall cease to be a “Lender” for purposes of this Agreement.

 

2.14                        Joint and Several Liability of Borrowers.

 

(a)                                 Each Borrower is accepting joint and several
liability for the Obligations hereunder and under the other Loan Documents in
consideration of the financial accommodations to be provided by the Lender Group
under this Agreement, for the mutual benefit, directly and indirectly, of each
Borrower and in consideration of the undertakings of the other Borrowers to
accept joint and several liability for the Obligations.

 

(b)                                 Each Borrower, jointly and severally, hereby
irrevocably and unconditionally accepts, not merely as a surety but also as a
co-debtor, joint and several liability with the other Borrowers, with respect to
the payment and performance of all of the Obligations (including any Obligations
arising under this Section 2.14), it being the intention of the parties hereto
that all the Obligations shall be the joint and several obligations of each
Borrower without preferences or distinction among them.

 

(c)                                  If and to the extent that any Borrower
shall fail to make any payment with respect to any of the Obligations as and
when due or to perform any of the Obligations in accordance with the terms
thereof, then in each such event the other Borrowers will make such payment with
respect to, or perform, such Obligation until such time as all of the
Obligations are paid in full.

 

(d)                                 Subject to the entry of the Second Interim
DIP Order and, if applicable, the Interim DIP Recognition Order, the Obligations
of each Borrower under the provisions of this Section 2.14 constitute the
absolute and unconditional, full recourse Obligations of each Borrower
enforceable against each Borrower to the full extent of its properties and
assets, irrespective of the validity, regularity or enforceability of the
provisions of this Agreement (other than this Section 2.14(d)) or any other
circumstances whatsoever.  Further, each Borrower waives each of the following,
to the fullest extent permitted by law, (1) any defence based upon (a) the lack
of authority of any Borrower; (b) the unenforceability, invalidity, illegality
or extinguishment of all or any part of the Obligations, or any security or
other guarantee for the

 

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Obligations or any failure of the Agent or any Lender to take proper care or act
in a commercially reasonable manner in respect of any security for the
Obligations or any collateral subject to the security, including in respect of
any disposition of the Collateral or any set-off of any of the Borrowers’ bank
deposits against the Obligations; (c) any act or omission of any of the
Borrowers or any other person, including the Agent, that directly or indirectly
results in the discharge or release of any of the Borrowers or any other Person
or any of the Obligations or any security for the Obligations; or (d) the
Agent’s present or future method of dealing with any of the Borrowers or any
Guarantor or any security (or any collateral subject to the security) or other
guarantee for the Obligations, (2) any right (whether now or hereafter existing)
to require the Agent or a Lender, as a condition to the enforcement of this
Agreement (a) to accelerate the Obligations or proceed and exhaust any recourse
against any of the Borrowers or any other Person; (b) to realize on any security
that it holds; (c) to marshal the assets of any of the Borrowers or any of the
Guarantors; or (d) to pursue any other remedy that each Borrower or Guarantor
may not be able to pursue itself and that might limit or reduce such Borrower or
such Guarantor’s burden, (3) presentment, demand, protest and notice of any kind
including, without limitation, notices of default, (4) any claims, set-off or
other rights that any Borrower or any Guarantor may have against the Agent or
any of the Lenders, whether or not related to the transactions contemplated by
this Agreement or any of the other Loan Documents, (5) all suretyship defences
and rights of every nature otherwise available under any jurisdiction, including
the benefit of discussion and of division, and (6) all other rights and defences
(legal or equitable) the assertion or exercise of which would in any way
diminish the liability of any of the Borrowers under this joint and several
liability obligation or otherwise under this Agreement other than the payment in
full of the Obligations.

 

(e)                                  Except as otherwise expressly provided in
this Agreement, each Borrower hereby waives notice of acceptance of its joint
and several liability, notice of any Loans issued under or pursuant to this
Agreement, notice of the occurrence of any Default, Event of Default, or of any
demand for any payment under this Agreement, notice of any action at any time
taken or omitted by Agent or Lenders under or in respect of any of the
Obligations, any requirement of diligence or to mitigate damages and, generally,
to the extent permitted by applicable law, all demands, notices and other
formalities of every kind in connection with this Agreement (except as otherwise
provided in this Agreement).  Each Borrower hereby assents to, and waives notice
of, any extension or postponement of the time for the payment of any of the
Obligations, the acceptance of any payment of any of the Obligations, the
acceptance of any partial payment thereon, any waiver, consent or other action
or acquiescence by Agent or Lenders at any time or times in respect of any
default by any Borrower in the performance or satisfaction of any term,
covenant, condition or provision of this Agreement, any and all other
indulgences whatsoever by Agent or Lenders in respect of any of the Obligations,
and the taking, addition, substitution or release, in whole or in part, at any
time or times, of any security for any of the Obligations or the addition,
substitution or release, in whole or in part, of any Borrower.  Without limiting
the generality of the foregoing, each Borrower assents to any other action or
delay in acting or failure to act on the part of any Agent or Lender with
respect to the failure by any Borrower to comply with any of its respective
Obligations, including, without limitation, any failure strictly or diligently
to assert any right or to pursue any remedy or to comply fully with applicable
laws or regulations thereunder, which might, but for the provisions of this
Section 2.14 afford grounds for terminating, discharging or relieving any
Borrower, in whole or in part, from any of its Obligations under this
Section 2.14, it being the intention of each Borrower that, so long as any

 

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of the Obligations hereunder remain unsatisfied, the Obligations of each
Borrower under this Section 2.14 shall not be discharged except by performance
and then only to the extent of such performance.  The Obligations of each
Borrower under this Section 2.14 shall not be diminished or rendered
unenforceable by any bankruptcy, insolvency, winding up, reorganization,
arrangement, liquidation, reconstruction or similar proceeding with respect to
any other Borrower or any Agent or Lender.

 

(f)                                   Each Borrower represents and warrants to
Agent and Lenders that such Borrower is currently informed of the financial
condition of Borrowers and of all other circumstances which a diligent inquiry
would reveal and which bear upon the risk of nonpayment of the Obligations. 
Each Borrower further represents and warrants to Agent and Lenders that such
Borrower has read and understands the terms and conditions of the Loan
Documents.  Each Borrower hereby covenants that such Borrower will continue to
keep Agent and the Lenders informed of Borrowers’ financial condition and of all
other circumstances which bear upon the risk of nonpayment or nonperformance of
the Obligations.

 

(g)                                  The provisions of this Section 2.14 are
made for the benefit of Agent, each member of the Lender Group and their
respective successors and assigns, and may be enforced by it or them from time
to time against any or all Borrowers as often as occasion therefor may arise and
without requirement on the part of Agent, any member of the Lender Group, or any
of their successors or assigns first to marshal any of its or their claims or to
exercise any of its or their rights against any Borrower or to exhaust any
remedies available to it or them against any Borrower or to resort to any other
source or means of obtaining payment of any of the Obligations hereunder or to
elect any other remedy.  The provisions of this Section 2.14 shall remain in
effect until all of the Obligations shall have been paid in full or otherwise
fully satisfied.  If at any time, any payment, or any part thereof, made in
respect of any of the Obligations, is rescinded or must otherwise be restored or
returned by Agent or any Lender in connection with the Chapter 11 Cases, the
CCAA Recognition Proceedings, the insolvency, bankruptcy or reorganization of
any Borrower, or otherwise, the provisions of this Section 2.14 will forthwith
be reinstated in effect, as though such payment had not been made.

 

(h)                                 Each Borrower hereby agrees that it will not
enforce any of its rights of contribution or subrogation against any other
Borrower with respect to any liability incurred by it hereunder or under any of
the other Loan Documents, any payments made by it to Agent or Lenders with
respect to any of the Obligations or any collateral security therefor until such
time as all of the Obligations have been paid in full.  Any claim which any
Borrower may have against any other Borrower with respect to any payments to any
Agent or any member of the Lender Group hereunder are hereby expressly made
subordinate and junior in right of payment, without limitation as to any
increases in the Obligations arising hereunder or thereunder, to the prior
payment in full of the Obligations and all such Obligations shall be paid in
full in cash before any payment or distribution of any character, whether in
cash, securities or other property, shall be made to any other Borrower
therefor.

 

(i)                                     Each Borrower hereby agrees that after
the occurrence and during the continuance of any Default or Event of Default,
such Borrower will not demand, sue for or otherwise attempt to collect any
indebtedness of any other Borrower owing to such Borrower until the Obligations
shall have been paid in full.  If, notwithstanding the foregoing sentence,

 

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such Borrower shall collect, enforce or receive any amounts in respect of such
indebtedness, such amounts shall be collected, enforced and received by such
Borrower as trustee for Agent, and such Borrower shall deliver any such amounts
to Agent for application to the Obligations in accordance with Section 2.4(b).

 

3.                                      CONDITIONS; TERM OF AGREEMENT.

 

3.1                               Conditions Precedent to the Initial Tranche A
Loan.  The effectiveness of this Agreement and the obligation of each Lender to
make its Initial Tranche A Loan and Second Tranche A Loan is subject to the
fulfillment, to the satisfaction of each Lender and Agent of the conditions
precedent set forth on Schedule 3.1.

 

3.2                               Conditions Precedent to the Final Advances. 
The obligation of each Lender to make each Loan is subject to the fulfillment,
to the satisfaction of each Lender and Agent of the conditions precedent set
forth on Schedule 3.2.

 

3.3                               [Reserved.]

 

3.4                               Effect of Maturity.  On the Maturity Date, all
of the Obligations immediately shall become due and payable without notice or
demand and Borrowers shall be required to repay all of the Obligations in full. 
No termination of the obligations of the Lender Group (other than payment in
full of the Obligations) shall relieve or discharge any Loan Party of its
duties, obligations, or covenants hereunder or under any other Loan Document and
Agent’s Liens in the Collateral shall continue to secure the Obligations and
shall remain in effect until all Obligations have been paid in full.  When all
of the Obligations have been paid in full and the Lender Group’s obligations to
provide additional credit under the Loan Documents have been terminated
irrevocably, Agent will, at Borrowers’ sole expense, execute and deliver any
termination statements, lien releases, discharges of security interests, and
other similar discharge or release documents (and, if applicable, in recordable
form) as are reasonably necessary to release, as of record, Agent’s Liens and
all notices of security interests and liens previously filed by Agent and Loan
Parties shall execute and deliver to Agent a release of Agent and Lenders in
form and substance reasonably satisfactory to Agent at the direction of the
Required Lenders.

 

4.                                      REPRESENTATIONS AND WARRANTIES.

 

In order to induce the Lender Group to enter into this Agreement, each Loan
Party makes the following representations and warranties to the Lender Group
which shall be true, correct, and complete, in all material respects (except
that such materiality qualifier shall not be applicable to any representations
and warranties that already are qualified or modified by materiality in the text
thereof), as of the Closing Date and the date of each Borrowing and shall be
true, correct, and complete in all material respects (except that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof) as of the date of delivery of each Compliance Certificate (or any other
extension of credit) thereafter, as though made on and as of the date of such
delivery (unless it expressly relates to an earlier date, in which case it shall
have been true and correct in all material respects as of such earlier date
(except to the extent already qualified by materiality,

 

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in which case each shall have been true and correct in all respects)), and such
representations and warranties shall survive the execution and delivery of this
Agreement:

 

4.1                               Due Organization and Qualification;
Subsidiaries.

 

(a)                                 Each Loan Party (i) is duly organized and
existing and in good standing under the laws of the jurisdiction of its
organization, (ii) is qualified to do business in any jurisdiction where the
failure to be so qualified could reasonably be expected to result in a Material
Adverse Change, (iii) upon entry of the Orders, as applicable, has all requisite
power and authority to own and operate its properties, to carry on its business
as now conducted and as proposed to be conducted, except where the failure to
have such power and authority has not had or could not reasonably be expected to
have a Material Adverse Change, (iv) upon entry of the Orders, as applicable,
has all requisite power and authority to enter into the Loan Documents to which
it is a party and to carry out the transactions contemplated thereby and (v) is
a debtor in one of the Chapter 11 Cases.

 

(b)                                 Set forth on Schedule 4.1(b) are the
authorized Equity Interests of each Loan Party and each direct Subsidiary of
such Loan Party, by class, and a description of the number of shares of each
such class that are issued and outstanding, in each case, as of the Closing
Date. Other than as described on Schedule 4.1(b), as of the Closing Date, there
are no subscriptions, options, warrants, or calls relating to any shares of any
Borrower’s or Subsidiary’s Equity Interests, including any right of conversion
or exchange under any outstanding security or other instrument.  None of the
Borrowers or any Subsidiary is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its
capital Equity Interests or any security convertible into or exchangeable for
any of its Equity Interests.

 

(c)                                  All of the outstanding Equity Interests of
each Subsidiary of a Loan Party has been validly issued and is fully paid and,
except with respect to the shares of Colt Canada, non-assessable.

 

(d)                                 None of the Borrowers nor any of their
Subsidiaries are subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of any Loan Party’s Equity
Interests or any security convertible into or exchangeable for any such Equity
Interests.

 

4.2                               Due Authorization; No Conflict.

 

(a)                                 As to each Loan Party, upon entry of the
Orders, as applicable, the execution, delivery, and performance by such Loan
Party of the Loan Documents to which it is a party have been duly authorized by
all necessary action on the part of such Loan Party.

 

(b)                                 Upon entry of the Orders, as applicable, as
to each Loan Party, the execution, delivery, and performance by such Loan Party
of the Loan Documents to which it is a party do not and will not (i) violate any
provision of federal, provincial, state, or local law or regulation applicable
to any Loan Party or its Subsidiaries, or any order, judgment, or decree of any
court or other Governmental Authority binding on any Loan Party or its
Subsidiaries, (ii) violate any provisions of the Governing Documents of any Loan
Party or its Subsidiaries, (iii) conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a

 

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default under any Material Contract of any Loan Party or its Subsidiaries,
(iv) result in or require the creation or imposition of any Lien of any nature
whatsoever upon any assets of any Loan Party, other than Permitted Liens, or
(v) require any approval of any holders of Equity Interests of a Loan Party,
except as set forth on Schedule 4.2, or any approval or consent of any Person
under any Material Contract of any Loan Party, other than consents or approvals
that have been obtained and that are still in force and effect.

 

4.3                               Governmental Consents.  Upon entry of the
Orders, as applicable, the execution, delivery, and performance by each Loan
Party of the Loan Documents to which such Loan Party is a party and the
consummation of the transactions contemplated by the Loan Documents do not and
will not require any registration with, consent, or approval of, or notice to,
or other action with or by, any Governmental Authority, other than
registrations, consents, approvals, notices, or other actions that have been
obtained and that are still in force and effect the entry of the Orders and,
except for filings and recordings with respect to the Collateral to be made, or
otherwise delivered to Agent for filing or recordation, as of the Closing Date
where the failure to obtain the foregoing has or could reasonably be expected to
have a Material Adverse Change.

 

4.4                               Binding Obligations; Perfected Liens.

 

(a)                                 Subject to the entry of the Orders and the
terms thereof, each Loan Document has been duly executed and delivered by each
Loan Party that is a party thereto and is the legally valid and binding
obligation of such Loan Party, enforceable against such Loan Party in accordance
with its respective terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to
or limiting creditors’ rights generally.

 

(b)                                 Agent’s Liens (created pursuant to the Loan
Documents together with the Orders and held for the benefit of the Secured
Parties) are validly created Liens.  Agent’s Liens on the Collateral (created
pursuant to the Loan Documents together with the Orders and held for the benefit
of the Secured Parties) will be legal, valid, enforceable, perfected, first
priority Liens, subject as to priority with respect to the Term Priority
Collateral, the terms of the DIP Intercreditor Agreement, and subject to
Permitted Prior Liens, upon entry of the Second Interim DIP Order or Final DIP
Order, as applicable, and the Canadian Orders. Pursuant to the terms of the
Second Interim DIP Order and/or Final DIP Order, and the Canadian Orders, no
filing or other action will be necessary to perfect or protect such Liens and
security interests on the Collateral. Pursuant to and to the extent provided in
the Second Interim DIP Order, the Final DIP Order and the Canadian Orders, the
Obligations of the Loan Parties under this Agreement will:  (i) constitute
Superpriority Claims and allowed administrative expense claims in the Chapter 11
Cases under section 364(c) of the Bankruptcy Code, having priority over all
administrative expense claims and unsecured claims against such Loan Parties now
existing or hereafter arising, of any kind whatsoever, including, without
limitation, all administrative expense claims of the kind specified in sections
503(b) and 507(b) of the Bankruptcy Code and all super-priority administrative
expense claims granted to any other Person (including avoidance actions and the
proceeds thereof), subject only to the Carve-Out and the terms of the DIP
Intercreditor Agreement; and (ii) constitute a super-priority
debtor-in-possession charge in the CCAA Recognition Proceedings against the
property of Colt Canada in Canada now existing or hereafter arising, of any kind
or nature whatsoever.

 

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4.5                               Title to Assets; No Encumbrances.  Each of the
Loan Parties and its Subsidiaries has (a) good and marketable title to (in the
case of fee interests in Real Property), (b) valid leasehold interests in (in
the case of leasehold interests in real or personal property), and (c) good and
marketable title to (in the case of all other personal property), all of their
respective assets or property necessary to conduct its business or used in the
ordinary course of business.  All of such assets are free and clear of Liens
except for Permitted Liens.

 

4.6                               Jurisdiction of Organization; Location of
Chief Executive Office and Tangible Assets; Organizational Identification
Number; Commercial Tort Claims; Locations of Inventory and Equipment.

 

(a)                                 The name (within the meaning of the Code or
PPSA, as applicable) and jurisdiction of organization of each Loan Party and
each of its Subsidiaries is set forth on Schedule 4.6(a) (as such Schedule may
be updated from time to time to reflect changes resulting from transactions
permitted under this Agreement).

 

(b)                                 The chief executive offices of each Loan
Party and each of its Subsidiaries are located at the addresses indicated on
Schedule 4.6(b) (as such Schedule may be updated from time to time to reflect
changes resulting from transactions permitted under this Agreement).

 

(c)                                  Each Loan Party’s and each of its
Subsidiaries’ tax identification numbers and organizational identification
numbers, if any, are identified on Schedule 4.6(c) (as such Schedule may be
updated from time to time to reflect changes resulting from transactions
permitted under this Agreement).

 

(d)                                 As of the Closing Date, no Loan Party and no
Subsidiary of a Loan Party holds any commercial tort claims that exceed $250,000
or more in any one case or $500,000 or more in the aggregate, except as set
forth on Schedule 4.6(d) (as such schedule may be supplemented from time to
time).

 

(e)                                  Each Loan Party’s Inventory and Equipment
(other than (i) vehicles, (ii) Inventory and Equipment out for repair or
in-transit, (iii) Inventory and Equipment owned by Persons other than Loan
Parties or having an aggregate book value of less than $50,000 and
(iv) Inventory consigned pursuant to the DCAM Consignment described in clause
(b) of the definition of Permitted Dispositions) is located only at the
locations identified on Schedule 4.6(e).

 

4.7                               Litigation.

 

(a)                                 Other than the Chapter 11 Cases and the CCAA
Recognition Proceedings, or as stayed upon commencement of the Chapter 11 Cases
and the CCAA Recognition Proceedings, before and after giving effect to the
Closing Date Transactions, there are no actions, suits, or proceedings pending
or, to the knowledge of any Loan Party, after due inquiry, threatened in writing
against a Loan Party or any of its Subsidiaries that either individually or in
the aggregate could reasonably be expected to result in a Material Adverse
Change.

 

(b)                                 Other than the Chapter 11 Cases and the CCAA
Recognition Proceedings, before and after giving effect to the Closing Date
Transactions, Schedule 4.7 sets forth a

 

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complete and accurate description, with respect to each of the actions, suits,
or proceedings (other than the Chapter 11 Cases and the CCAA Recognition
Proceedings) with asserted liabilities in excess of, or that could reasonably be
expected to result in liabilities in excess of, $50,000 that, as of the Closing
Date, is pending or, to the knowledge of any Loan Party, after due inquiry,
threatened against a Loan Party or any of its Subsidiaries, of (i) the parties
to such actions, suits, or proceedings, (ii) the nature of the dispute that is
the subject of such actions, suits, or proceedings, (iii) the procedural status,
as of the Closing Date, with respect to such actions, suits, or proceedings, and
(iv) whether any liability of the Loan Parties’ and their Subsidiaries in
connection with such actions, suits, or proceedings is covered by insurance.

 

4.8                               Compliance with Laws.  No Loan Party nor any
of its Subsidiaries (a) is in violation of any applicable laws, rules,
regulations, executive orders, or codes (including Environmental Laws) that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Change, or (b) is subject to or in default with respect to any
final judgments, writs, injunctions, decrees, rules or regulations of any court
or any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Change.

 

4.9                               No Material Adverse Change.  All historical
financial statements relating to the Loan Parties and their Subsidiaries that
have been delivered by any Borrower to Agent have been prepared in accordance
with GAAP (except (x) in the case of unaudited financial statements, for the
lack of footnotes and being subject to year-end audit adjustments, (y) as set
forth on Schedule 4.9 and (z) as such statements expressly relate to the
Bargaining Unit Defined Benefit Plan Calculation Error) and present fairly in
all material respects (except as such statements expressly relate to the
Bargaining Unit Defined Benefit Plan Calculation Error), the Loan Parties’ and
their Subsidiaries’ consolidated financial condition as of the date thereof and
results of operations for the period then ended. Since December 31, 2012, except
for the filing of the Chapter 11 Cases and the CCAA Recognition Proceedings,
and, in each case, the imposition of automatic stay therewith, no event,
circumstance, or change has occurred that has or could reasonably be expected to
result in a Material Adverse Change.

 

4.10                        [Reserved].

 

4.11                        Employee Benefits.

 

(a)                                 Except as set forth on Schedule 4.11, no
Loan Party, none of their Subsidiaries, nor any of their ERISA Affiliates
maintains or contributes to any Pension Plan.

 

(b)                                 Except as set forth on Schedule 4.11,
(i) Each Loan Party and each of the ERISA Affiliates has complied in all
material respects with the terms of ERISA, the IRC and all other applicable laws
regarding each Employee Benefit Plan, (ii) no material liability to the PBGC
(other than for the payment of current premiums which are not past due) by any
Loan Party or ERISA Affiliate has been incurred or is reasonably expected by any
Loan Party or ERISA Affiliate to be incurred with respect to any Pension Plan,
(iii) no Loan Party nor any of its Subsidiaries maintains, sponsors,
administers, contributes to, participates in or has any liability in respect of
any Canadian Pension Plan, nor has any such Person ever maintained,

 

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sponsored, administered, contributed or participated in any Canadian Pension
Plan, (iv) the Canadian Pension Plans are duly registered under the Income Tax
Act (Canada) and any other applicable laws which require registration have been
administered in accordance with the Income Tax Act (Canada) and such other
applicable law and no event has occurred which could reasonably be expected to
cause the loss of such registered status, (v) all obligations of the Loan
Parties and their Subsidiaries (including fiduciary, funding, investment and
administration obligations) required to be performed in connection with the
Canadian Pension Plans and the funding agreements therefor have been performed
on a timely basis, and (vi) all contributions or premiums required to be made or
paid by the Loan Parties and their Subsidiaries to the Canadian Pension Plans
have been made on a timely basis in accordance with the terms of such plans and
all applicable laws.

 

(c)                                  Each Employee Benefit Plan that is intended
to qualify under Section 401(a) of the IRC has received a favorable
determination letter from the Internal Revenue Service or an application for
such letter is currently being processed by the Internal Revenue Service.  To
the best knowledge of each Loan Party and the ERISA Affiliates after due
inquiry, except as set forth on Schedule 4.11, nothing has occurred which would
reasonably be expected to prevent, or cause the loss of, such qualification.

 

(d)                                 Except as set forth on Schedule 4.11, no
Notification Event which could reasonably be expected to result in any material
liability to any Loan Party or ERISA Affiliate exists or has occurred in the
past six (6) years.

 

4.12                        Environmental Condition.  Except as set forth on
Schedule 4.12, (a) to Borrowers’ knowledge, no Loan Party’s nor any of its
Subsidiaries’ properties or assets has ever been used by a Loan Party, its
Subsidiaries, or by previous owners or operators in the disposal of, or to
produce, store, handle, treat, release, or transport, any Hazardous Materials,
where such disposal, production, storage, handling, treatment, release or
transport was in violation, in any material respect, of any applicable
Environmental Law, (b) to Borrowers’ knowledge, no Loan Party’s nor any of its
Subsidiaries’ properties or assets has ever been designated pursuant to any
Environmental Law as a Hazardous Materials disposal site, (c) no Loan Party nor
any of its Subsidiaries has received written notice, or has knowledge, that any
Environmental Lien has attached to any revenues or to any Real Property owned or
operated by a Loan Party or its Subsidiaries, (d) no Loan Party nor any of its
Subsidiaries nor any of their respective facilities or operations is subject to
any outstanding written order, consent decree, or settlement agreement with any
Person relating to any Environmental Law or has incurred any Environmental
Liability that, individually or in the aggregate, could reasonably be expected
to result in a Material Adverse Change, (e) no Environmental Law regulates, or
requires notification to a Governmental Authority of the Closing Date
Transactions, (f) no Environmental Action is pending, or to each Loan Party’s
knowledge is threatened, against a Loan Party, any predecessor in interest or
any facilities that may have received Hazardous Materials generated by any Loan
Party or any predecessor in interest, (g) no Environmental Action has been
asserted, or to each Loan Party’s knowledge is threatened, against a Loan Party,
any predecessor in interest or any facilities that may have received Hazardous
Materials generated by any Loan Party or any predecessor in interest; and
(h) there has been no Release of Hazardous Materials and there are no Hazardous
Materials present in violation of Environmental Law at any properties currently,
or to the knowledge of any Loan Party, formerly owned or operated by any Loan
Party or any predecessor

 

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in interest, or at any disposal or treatment facility that received Hazardous
Materials generated by any Loan Party or a predecessor in interest, which
individually or in the aggregate could reasonably be expected to result in a
Material Adverse Change.

 

4.13                        Intellectual Property.  Each Loan Party and its
Subsidiaries own, or hold licenses in, all trademarks, trade names, copyrights,
patents, and licenses that are necessary to the conduct of its business as
currently conducted, and attached hereto as Schedule 4.13 (as updated from time
to time) is a true, correct, and complete listing of all material trademarks,
copyrights and patents as to which any Loan Party is the owner; provided, that,
any Borrower may amend Schedule 4.12 to add additional intellectual property so
long as such amendment occurs by written notice to Agent not less than
forty-five (45) days after the end of the fiscal quarter in which the applicable
Loan Party or its Subsidiary acquires any such property after the Closing Date.

 

4.14                        Leases.  Each Loan Party and its Subsidiaries enjoy
peaceful and undisturbed possession under all leases material to their business
and to which they are parties or under which they are operating, and except, to
the extent constituting a default, as a result of the commencement of the
Chapter 11 Cases and the commencement of the CCAA Recognition Proceedings, all
of such material leases are valid and subsisting and no default beyond any
applicable cure period by the applicable Loan Party or its Subsidiaries exists
under any of them.

 

4.15                        Deposit Accounts and Securities Accounts.  Set forth
on Schedule 4.15 (as updated pursuant to the provisions of the Security
Agreement or the Canadian Security Agreement, as the case may be from time to
time) is a listing of all of the Loan Parties’ and their Subsidiaries’ Deposit
Accounts and Securities Accounts, including, with respect to each bank or
securities intermediary (a) the name and address of such Person, and (b) the
account numbers of the Deposit Accounts or Securities Accounts maintained with
such Person.

 

4.16                        Complete Disclosure.  All factual information taken
as a whole (other than forward-looking information and projections and
information of a general economic nature and general information about
Borrowers’ industry and historical information expressly related to the
Bargaining Unit Defined Benefit Plan Calculation Error provided prior to
February 9, 2015) furnished by or on behalf of a Loan Party or its Subsidiaries
in writing to Agent or any Lender (including all information contained in the
Schedules hereto or in the other Loan Documents) for purposes of or in
connection with this Agreement or the other Loan Documents, and all other such
factual information taken as a whole (other than forward-looking information and
projections and information of a general economic nature and general information
about Borrowers’ industry) hereafter furnished by or on behalf of a Loan Party
or its Subsidiaries in writing to Agent or any Lender will be, true and
accurate, in all material respects, on the date as of which such information is
dated or certified and not incomplete by omitting to state any fact necessary to
make such information (taken as a whole) not misleading in any material respect
at such time in light of the circumstances under which such information was
provided.  The Projections delivered to Lenders on February 2, 2015 represent,
and as of the date on which any other Projections are delivered to Agent, such
additional Projections represent, Borrowers’ good faith estimate, on the date
such Projections are delivered, of the Loan Parties’ and their Subsidiaries’
future performance for the periods covered thereby based upon assumptions
believed by Borrowers to be reasonable at the time of the delivery thereof to
Agent (it being

 

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understood that such Projections are subject to uncertainties and contingencies,
many of which are beyond the control of the Loan Parties and their Subsidiaries,
that no assurances can be given that such Projections will be realized, and that
actual results may differ in a material manner from such Projections).

 

4.17                        Material Contracts.  Except as set forth on Schedule
4.17, each Material Contract is not in default due to the action or inaction of
the applicable Loan Party or any of its Subsidiaries other than as a result of
the commencement of the Chapter 11 Cases.

 

4.18                        Patriot Act; etc.  To the extent applicable, each
Loan Party is in compliance, in all material respects, with the (a) Trading with
the Enemy Act, as amended, and each of the foreign assets control regulations of
the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as
amended) and any other enabling legislation or executive order relating thereto,
(b) Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism (USA Patriot Act of 2001) (the “Patriot Act”),
and (c) the Proceeds of Crime (Money Laundering) and Terrorist Financing Act
(Canada) and the regulations promulgated thereunder.  No part of the proceeds of
the loans made hereunder will be used by any Loan Party or any of their
Affiliates, directly or indirectly, for any payments to any governmental
official or employee, political party, official of a political party, candidate
for political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.

 

4.19                        Projections.  The projections prepared pursuant to
the terms hereof and the Approved Budget are based on good faith estimates and
assumptions believed by management of Borrowers to be reasonable and fair in
light of current conditions and facts known to Borrowers at the time delivered. 
The management of Borrowers believed, as of the date when made, that such
projections and Approved Budget were reasonable and attainable in light of the
current conditions of the Borrowers, it being recognized by Lenders, however,
that Projections as to future events are not to be viewed as facts or guaranties
of future performance, that actual results during the period or periods covered
by such Projections may differ from the projected results and that such
differences may be material and that the Loan Parties make no representations
that such projections will be in fact realized. There is no fact known to
Parent, Borrowers or any of its Subsidiaries which could reasonably be expected
to result in a Material Adverse Change which has not been disclosed herein.

 

4.20                        Payment of Taxes.  All tax returns and reports of
each Loan Party and its Subsidiaries required to be filed by any of them have
been timely filed, and all Taxes shown on such tax returns to be due and payable
and all governmental assessments, fees and other charges upon a Loan Party and
its Subsidiaries and upon their respective assets, income, businesses and
franchises that are due and payable have been paid when due and payable, except
(a) to the extent the validity of such Taxes shall be the subject of a Permitted
Protest or (b) for failures which, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Change.  No Loan Party
knows of any proposed tax assessment against a Loan Party or any of its
Subsidiaries that is not being actively contested by such Loan Party or such
Subsidiary diligently, in good faith, and by appropriate proceedings; provided
such reserves or other appropriate provisions, if any, as shall be required in
conformity with GAAP shall have been

 

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made or provided therefor.  Set forth on Schedule 4.20 is a summary list of
legal, accounting and other out-of-pocket costs and expenses incurred or
reimbursed by the Loan Parties on or prior to February 9, 2015 in connection
with, related to, or arising from any evaluation or analysis related to (i) any
discharge of indebtedness income arising from any exchange offer in respect of
the Senior Notes and (ii) the formation of New Holdco, and the effectuation of
the contemplated structure associated therewith (such type of costs and expenses
referred to herein, the “New Holdco Expenses”).

 

4.21                        Margin Stock.  No Loan Party nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying any
Margin Stock.  No part of the proceeds of the Loans will be used to purchase or
carry any such Margin Stock or to extend credit to others for the purpose of
purchasing or carrying any such Margin Stock or for any purpose that violates
the provisions of Regulation T, U or X of the Board of Governors of the United
States Federal Reserve.

 

4.22                        Governmental Regulation.  No Loan Party nor any of
its Subsidiaries is subject to regulation under the Federal Power Act or the
Investment Company Act of 1940 or under any other federal, state or foreign
statute or regulation which may limit its ability to incur Indebtedness or which
may otherwise render all or any portion of the Obligations unenforceable.  No
Loan Party nor any of its Subsidiaries is a “registered investment company” or a
company “controlled” by a “registered investment company” or a “principal
underwriter” of a “registered investment company” as such terms are defined in
the Investment Company Act of 1940.

 

4.23                        OFAC.  No Loan Party nor any of its Subsidiaries is
in violation of any of the country or list based economic and trade sanctions
administered and enforced by OFAC.  No Loan Party nor any of its Subsidiaries
(a) is a Sanctioned Person or a Sanctioned Entity, (b) has its assets located in
Sanctioned Entities, or (c) derives revenues from investments in, or
transactions with Sanctioned Persons or Sanctioned Entities.  No proceeds of any
loan made hereunder will be used to fund any operations in, finance any
investments or activities in, or make any payments to, a Sanctioned Person or a
Sanctioned Entity.

 

4.24                        Employee and Labor Matters.  Except as, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Change, there is (a) no unfair labor practice complaint pending or, to
the knowledge of Borrowers, threatened against Parent or its Subsidiaries before
any Governmental Authority and no grievance or arbitration proceeding pending or
threatened against Parent or its Subsidiaries which arises out of or under any
collective bargaining agreement, (b) no strike, labor dispute, slowdown,
stoppage or similar action or grievance pending or threatened in writing against
Parent or its Subsidiaries, (c) to the knowledge of Borrowers, after due
inquiry, no union representation question existing with respect to the employees
of Parent or its Subsidiaries and no union organizing activity taking place with
respect to any of the employees of Parent or its Subsidiaries, or (d) any
liability or obligation incurred by Parent or any of its Subsidiaries under the
Worker Adjustment and Retraining Notification Act or similar state law, which
remains unpaid or unsatisfied.  The hours worked and payments made to employees
of Parent or its Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other applicable legal requirements, except to the extent
such violations could not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Change.  All material payments due from
Parent or its Subsidiaries on account

 

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of wages and employee health and welfare insurance and other benefits have been
paid or accrued as a liability on the books of Parent, except where the failure
to do so could not, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Change.

 

4.25                        Indebtedness.  Set forth on Schedule 4.25 is a true
and complete list of all Indebtedness of each Loan Party and each of its
Subsidiaries outstanding immediately prior to the Closing Date that is to remain
outstanding immediately after giving effect to the Closing Date Transactions and
such Schedule accurately sets forth the aggregate principal amount of such
Indebtedness as of the Closing Date.

 

4.26                        Use of Proceeds.  Borrowers will use the proceeds of
the Tranche A Loans (a) to provide working capital and other general corporate
expenses of the Borrowers, (b) for payment of costs and administration
(including, the payment of professional fees and adequate protection
obligations) of the Chapter 11 Cases subject to the Approved Budget, and (c) for
the payment of such other prepetition obligations as the Agent shall reasonably
agree and the Bankruptcy Court shall approve, in each case, (i) in a manner
consistent with the terms and conditions contained herein and (ii) in accordance
with an Approved Budget (hereinafter defined) or otherwise with the consent of
the Required Lenders.  On the next Business Day following the entry of the Final
DIP Order by the Bankruptcy Court, the Tranche B Loans shall be substituted and
exchanged for (and deemed to have prepaid) the Prepetition Senior Loan Debt and
such Tranche B Loans shall be deemed to be Loans made hereunder.

 

4.27                        Locations of Inventory and Equipment.  The Inventory
and Equipment (other than (x) vehicles, Inventory and Equipment out for repair
or in-transit, (y) Inventory and Equipment owned by Persons other than Loan
Parties or having an aggregate book value of less than $25,000 and (z) Inventory
consigned pursuant to the DCAM Consignment described in clause (b) of the
definition of Permitted Disposition) of the Loan Parties and their Subsidiaries
are not stored with a bailee, warehouseman, or similar party and are located
only at, or in-transit between or to, the locations identified on Schedule
4.6(e).

 

4.28                        Inventory Records.  Each Loan Party keeps correct
and accurate records itemizing and describing the type, quality, and quantity of
its and its Subsidiaries’ Inventory and the book value thereof.

 

4.29                        Common Enterprise.  Borrowers and Guarantors make up
a related organization of various entities constituting a single economic and
business enterprise so that Borrowers and Guarantors share an identity of
interests such that any benefit received by any one of them benefits the
others.  Certain Borrowers and Guarantors render services to or for the benefit
of certain of the other Borrowers and/or Guarantors, as the case may be, and
purchase or sell and supply goods to or from or for the benefit of certain of
the others.  Certain of Borrowers and Guarantors have the same chief executive
office, certain common officers and directors and generally do not provide
consolidating financial statements to creditors.  The successful operation and
condition of each of the Loan Parties is dependent on the continued successful
performance of the functions of the group of the Loan Parties as a whole and the
successful operation of each of the Loan Parties is dependent on the successful
performance and operation of each other Loan Party.  Each Loan Party expects to
derive benefit (and its board of directors or other governing body has
determined that it may reasonably be expected to derive benefit),

 

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directly and indirectly, from (i) successful operations of each of the other
Loan Parties and (ii) the credit extended by the Lenders to the Borrowers
hereunder, both in their separate capacities and as members of the group of
companies.  Each Loan Party has determined that execution, delivery, and
performance of this Agreement and any other Loan Documents to be executed by
such Loan Party (and the entering into of joint and several obligations and the
giving of any guarantee or Lien to Agent for the benefit of the Secured Parties
in connection therewith) is within its purpose, in furtherance of its direct
and/or indirect business interests, will be of direct and/or indirect benefit to
such Loan Party, and is in its best interest.

 

4.30                        Orders.  Each of the First Interim DIP Order, Second
Interim DIP Order, and, upon entry of the Initial Recognition Order and the
Interim DIP Recognition Order, the Initial Recognition Order and the Interim DIP
Recognition Order (with respect to the period prior to the entry of the Final
DIP Order and the Final DIP Recognition Order) or the Final DIP Order and the
Final DIP Recognition Order (from after the date the Final DIP Order and the
Final DIP Recognition Order, as applicable, are entered) are in full force and
effect and have not been vacated, reversed or rescinded or, without the prior
written consent of the Agent and Required Lenders, in their sole discretion,
amended or modified and no appeal or leave to appeal of such order has been
timely filed or, if timely filed, no stay pending such appeal or leave to appeal
is currently effective.

 

4.31                        Budget.  A true and complete copy of the Initial
Budget, as approved by the Required Lenders as of the Closing Date, is attached
as Exhibit M hereto.

 

4.32                        Insurance.  The Loan Parties keep their respective
properties adequately insured and maintains (a) insurance to such extent and
against such risks, including fire, as is customary with companies in the same
or similar businesses, (b) workmen’s compensation insurance in the amount
required by applicable law, (c) public liability insurance, which shall include
product liability insurance, in the amount customary with companies in the same
or similar business against claims for personal injury or death on properties
owned, occupied or controlled by it, and (d) such other insurance as may be
required by law (including, without limitation, against larceny, embezzlement or
other criminal misappropriation). Schedule 4.32 sets forth a list of all
insurance maintained by the Loan Parties on the Closing Date.

 

4.33                        DIP Term Loan Documents.  The Loan Parties have
delivered or made available to the Lenders true and correct copies of the DIP
Term Loan Documents. The transactions contemplated by the DIP Term Loan
Documents will be, contemporaneously with the Closing Date, consummated in
accordance with their respective terms and all of the representations and
warranties of Parent or its Subsidiaries in the DIP Term Loan Documents are true
and correct in all respects as of the Closing Date or, to the extent that any
such representation or warranty relates solely to an earlier date, as of such
earlier date.

 

4.34                        [Reserved].

 

4.35                        Tax Status.  No notice under Section 36 of the Tax
Collection Act (Invorderingswet 1990) has been given by any Dutch Loan Party.

 

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4.36                        Bankruptcy Matters.

 

(a)         The Chapter 11 Cases were commenced on the Petition Date and the
CCAA Recognition Proceedings were or will be commenced upon the entry of the
Initial Recognition Order, respectively, in accordance with applicable law and
proper notice thereof under the circumstances, and proper notice of (x) the
motion seeking approval of the Loan Documents and entry of the Orders, as
applicable and (y) the hearings for the approval of the First Interim DIP Order
and Initial Recognition Order have been held by the Bankruptcy Court and the
Canadian Court, respectively.

 

(b)         After the entry of the Orders, as applicable, and pursuant to and to
the extent permitted in the Orders, as applicable, the Obligations will
(i) constitute allowed superpriority administrative expense claims in the
Chapter 11 Cases having priority over all administrative expense claims and
unsecured claims against the Borrowers and other Loan Parties now existing or
hereafter arising, of any kind whatsoever, including, without limitation, all
administrative expense claims of the kind specified in sections 326, 330, 331,
503(b), 506(c), (upon entry of the Final DIP Order), 507(a), 507(b), 726, or any
other provision of the Bankruptcy Code or otherwise, as provided under section
364(c)(l) of the Bankruptcy Code, subject, in all respects, to the Carve-Out
and, to the extent contemplated by the Orders, as applicable, and the DIP
Intercreditor Agreement, the Obligations (as defined in the DIP Term Loan
Agreement) under the DIP Term Loan Agreement; and (ii) constitute a
super-priority debtor-in-possession charge in the CCAA Recognition Proceedings
against all property of Colt Canada in Canada now existing or hereafter arising,
of any kind or nature whatsoever.

 

(c)          After the entry of the Orders, as applicable, and pursuant to and
to the extent provided in the Orders, as applicable, the Obligations will be
secured by a valid and perfected first priority Lien on all of the Loan Parties’
pre-Petition Date and post-Petition Date assets, subject, in all respects, to
the Carve-Out and to Liens in favor of the DIP Term Agent, to the extent
contemplated by the Orders, as applicable, the Permitted Prior Liens and the DIP
Intercreditor Agreement.

 

(d)         After the entry of each Order, such Order is in full force and
effect and has not been reversed, stayed, modified or amended without the
Lenders’ consent.

 

5.                                      AFFIRMATIVE COVENANTS.

 

Each Loan Party covenants and agrees that, until payment in full of the
Obligations, the Loan Parties shall and shall cause each of their Subsidiaries
to comply with each of the following:

 

5.1                               Financial Statements, Reports, Certificates.

 

(a)                                 Loan Parties shall deliver to Agent, with
copies to each Lender, each of the financial statements, reports, and other
items set forth on Schedule 5.1 no later than the times specified therein. 
Parent shall (i) not change its fiscal year and (ii) maintain a system of
accounting that enables Parent to produce financial statements in accordance
with GAAP.

 

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(b)                                 Not later than 1:00 p.m. on the last
Business Day of each calendar week, the Borrowers shall deliver to Agent and
each Lender a report (each, a “Weekly Report”) setting forth the actual cash
flows for the immediately preceding calendar week with respect to each line item
in the Approved Budget; provided that each Weekly Report delivered during the
week after a Test Date shall also set forth such cash flows for the Test Period
most recently ended, together with the percentage, if any, by which such actual
cash flows for each line item exceeded or were less than the cash flows set
forth in the Approved Budget for such Test Period.

 

(c)                                  As soon as available and in any event not
later than the last Business Day of each calendar week, an update to the
Approved Budget then in effect, in form and substance satisfactory to the
Required Lenders, for the subsequent 13-week period following such Business Day
(it being understood that such update to the Approved Budget then in effect
shall contain no differences to the subsequent 12-week period from the Approved
Budget then in effect); provided, however, that commencing with the last
Business Day of the fourth full calendar week after the Closing Date and on
every the last Business Day of the fourth calendar week thereafter, the Borrower
may provide an update to the Approved Budget then in effect which reforecasts
the subsequent 13-week period), which proposed updated reforecasted budget (once
approved by the Required Lenders) shall be deemed the Approved Budget then in
effect; provided that no approval of the Required Lenders shall be required with
respect to any proposed update to the Approved Budget to the extent the
previously approved line items therein remain unchanged for the same period set
forth in the Approved Budget then in effect.

 

5.2                               Collateral Reporting.  Provide Agent, with
copies to each Lender, each of the reports set forth on Schedule 5.2 at the
times specified therein.

 

5.3                               Existence.  Except as otherwise permitted
under Section 6.3 or Section 6.4, at all times maintain and preserve in full
force and effect (a) its existence and (b) all rights and franchises, licenses
and permits material to its business where (in the case of this clause (b) the
failure to do so has or could reasonably be expected to have a Material Adverse
Change; provided, however, that no Loan Party or any of its Subsidiaries shall
be required to preserve any such right or franchise, licenses or permits if the
Required Lenders shall determine that the preservation thereof is no longer
desirable in the conduct of the business of such Person.

 

5.4                               Maintenance of Properties.  Maintain and
preserve all of its assets that are necessary or useful in the proper conduct of
its business in good working order and condition, except for ordinary wear,
tear, and casualty and Permitted Dispositions (and where the failure to do so
has or could reasonably be expected to have a Material Adverse Change).

 

5.5                               Taxes.  Cause all Taxes imposed, levied, or
assessed against any Loan Party or its Subsidiaries, or any of their respective
assets or in respect of any of its income, businesses, or franchises to be paid
in full when due (taking into account any valid and effective extension), except
(a) to the extent that the validity of such Tax shall be the subject of a
Permitted Protest or (b) for failures which, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Change.

 

5.6                               Insurance.  At Borrowers’ expense, maintain
insurance respecting each of the Loan Parties’ and their Subsidiaries’ assets
wherever located, covering liabilities, losses or

 

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damage as customarily are insured against by other Persons engaged in the same
or similar businesses.  All such policies of insurance shall be with financially
sound and reputable insurance companies and in such amounts as is carried
generally in accordance with sound business practice by companies in similar
businesses similarly situated and located.  All property insurance policies
covering the Collateral are to be made payable to Agent for the benefit of Agent
and the Lenders, as their interests may appear, in case of loss, pursuant to a
standard loss payable endorsement with a standard non contributory “lender” or
“secured party” clause and are to contain such other provisions as Agent may
reasonably require to fully protect the Lenders’ interest in the Collateral and
to any payments to be made under such policies.  All certificates of property
and general liability insurance shall, promptly upon the request of Agent, be
delivered to Agent, with the loss payable (but only in respect of Collateral)
and additional insured endorsements in favor of Agent and shall provide for not
less than 30 days (or 10 days in the case of non-payment) prior written notice
to Agent of the exercise of any right of cancellation.  If any Borrower fails to
maintain such insurance while an Event of Default exists, Agent may arrange for
such insurance, but at such Borrower’s expense and without any responsibility on
Agent’s part for obtaining the insurance, the solvency of the insurance
companies, the adequacy of the coverage, or the collection of claims.  Borrowers
shall give Agent prompt notice of any loss exceeding $250,000 covered by its
casualty or business interruption insurance.  Upon the occurrence and during the
continuance of an Event of Default, Agent (upon the direction of the Required
Lenders) shall have the sole right to file claims under any property and general
liability insurance policies (and not under business interruption insurance
policies) in respect of the Collateral (other than with respect to any Term
Priority Collateral), to receive, receipt and give acquittance for any payments
that may be payable thereunder, and to execute any and all endorsements,
receipts, releases, assignments, reassignments or other documents that may be
necessary to effect the collection, compromise or settlement of any claims under
any such insurance policies.  The Loan Parties shall give prior written notice
to the Required Lenders prior to any change (outside of the ordinary course
consistent with past practice) to any insurance policy listed on Schedule 4.32
related to executive risk or directors and officers insurance (including any
change to coverage, amount insured or deductible).

 

5.7                               Inspection.  Permit Agent and the Lenders and
each of their duly authorized representatives or agents to visit any of its
properties and inspect any of its assets or books and records, to conduct
appraisals and valuations, to examine and make copies of its books and records,
and to discuss its affairs, finances, and accounts with, and to be advised as to
the same by, its officers and employees at such reasonable times (during normal
business hours) and intervals as Agent (upon the direction of the Required
Lenders) shall designate and, so long as no Default or Event of Default exists
and is continuing, with at least two (2) Business Days’ prior notice to
Administrative Borrower all at such times and intervals as Agent (upon the
direction of the Required Lenders) shall request, all at Borrower’s expense;
provided, that, as to such examinations of Intellectual Property and appraisals
of Intellectual Property of the Loan Parties, unless an Event of Default exists
or has occurred and is continuing, no more than one (1) examination of
Intellectual Property and one (1) appraisal of Intellectual Property in any 12
month period (commencing as of the Closing Date) shall be at the expense of
Borrowers.

 

5.8                               Compliance with Laws.  Except as set forth on
Schedule 4.11, comply with the requirements of all applicable material laws,
rules, regulations, and orders of any Governmental Authority in all material
respects.

 

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5.9                               Environmental.

 

(a)                                 Keep any property either owned or operated
by Parent or its Subsidiaries free of any Environmental Liens or post bonds or
other financial assurances sufficient to satisfy the obligations or liability
evidenced by such Environmental Liens,

 

(b)                                 Comply, in all material respects, with
Environmental Laws,

 

(c)                                  Promptly notify Agent in writing (with a
copy to the Lenders) of any release of which any Borrower has knowledge of a
Hazardous Material in any reportable quantity from or onto property owned or
operated by Parent or its Subsidiaries and take any Remedial Actions required to
abate said release or otherwise to come into compliance, with applicable
Environmental Law, except where the failure to do so has not had an could not
reasonably be expected to result in a Material Adverse Change,

 

(d)                                 Promptly, but in any event within three
(3) Business Days of its receipt thereof, provide Agent with written notice of
any of the following:  (i) notice that an Environmental Lien has been filed
against any of the real or personal property of Parent or its Subsidiaries,
(ii) commencement of any Environmental Action or written notice that an
Environmental Action will be filed against Parent or its Subsidiaries, and
(iii) written notice of a violation, citation, or other administrative order
from a Governmental Authority pursuant to any Environmental Law;

 

(e)                                  To the extent applicable, comply with all
requirements pursuant to and within the timeframes set forth in Connecticut’s
Transfer Act (Conn. Gen. Stat. §22a-134, et seq.) as a result of any prior
transactions and the Closing Date Transactions, including but not limited to
retaining a licensed environmental professional and completing all required
filings, authorizations, approvals, notifications, site investigations, and
remediation.  The Loan Parties shall provide Agent with copies of all material
documents filed with, and material responses from, the Connecticut Department of
Environmental Protection, with respect to Connecticut’s Transfer Act;

 

(f)                                   Promptly, but in any event within five
(5) Business Days of its receipt thereof, provide Agent with written notice of
discovery of any occurrence or condition on any real property adjoining or in
the vicinity of any Real Property that could reasonably be expected to cause
such Real Property or any part thereof to be subject to any material
restrictions on the ownership, occupancy, transferability or use thereof under
any Environmental Laws; and

 

(g)                                  At the request of the Required Lenders or
Agent (at the direction of the Required Lenders) upon the Required Lenders’ sole
determination that a Release of Hazardous Materials in excess of a reportable
quantity or a violation of Environmental Law may have occurred at, onto or from
the Real Property, or upon an Event of Default, the Loan Parties shall provide
to Agent and the Lenders, within thirty (30) calendar days after such request,
at the sole expense of the Loan Parties, a Phase I Report for any of the Real
Property prepared by an environmental consulting firm acceptable to the Required
Lenders and, if recommended by the Phase I Report, a Phase II environmental site
assessment report .  Without limiting the generality of the foregoing, if the
Required Lenders determine at any time that a risk exists that any

 

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requested Phase I Report and Phase II report will not be provided within the
time referred to above, Agent and/or the Required Lenders may retain an
environmental consulting firm to prepare such reports at the sole expense of the
Loan Parties, and the Loan Parties shall provide reasonable access to Agent
and/or the Required Lenders, such firm and any agents or representatives to
their respective properties to undertake such Phase I or Phase II environmental
site assessment.

 

5.10                        Bank of America Accounts. With respect to any and
all deposit or other accounts maintained with Bank of America, N.A. (the “Bank
of America Accounts”), cause there to be at all times a standing instruction and
direction requiring Bank of America, N.A. to transfer all amounts and funds
deposited in the Bank of America Accounts on a daily basis to a deposit account
subject to a Control Agreement, in each case, in a manner reasonably
satisfactory to the Required Lenders.

 

5.11                        [Reserved.].

 

5.12                        Further Assurances.  At any time upon the reasonable
request of the Required Lenders execute and/or deliver to Agent and the Required
Lenders any and all financing statements, fixture filings, security agreements,
pledges, assignments, endorsements of certificates of title, mortgages, title
insurance, deeds of trust, opinions of counsel and all other documents (the
“Additional Documents”) that the Required Lenders may request in form and
substance reasonably satisfactory to the Required Lenders, (i) to create,
perfect, and maintain Agent’s Liens in all of the assets of Parent and its
Subsidiaries (whether now owned or hereafter arising or acquired, tangible or
intangible, real or personal), (ii) to create and perfect Liens in favor of
Agent in any Real Property acquired by Parent or its Subsidiaries after the
Closing Date, (iii) in order to fully consummate all of the transactions
contemplated hereby and under the other Loan Documents and (iv) to create and
perfect Liens in favor of Agent in the Equity Interests of Parent owned by CDH
II; provided, that, no other pledge shall be required if the costs to the Loan
Parties of providing such documents are unreasonably excessive (as determined by
Agent in consultation with Borrowers) in relation to the benefits of Agent and
the Lenders of the benefits afforded thereby. In furtherance and not in
limitation of the foregoing, each Loan Party shall within sixty days of the date
of request by the Required Lenders (or such later date as agreed to in writing
by the Required Lenders), deliver any and all executed filings and other
documents required under the Federal Assignment of Claims Act of 1940 so
requested and cause the filing thereof.  To the maximum extent permitted by
applicable law, if any Loan Party refuses or fails to execute or deliver any
reasonably requested Additional Documents within a reasonable period of time
following the request to do so, such Loan Party hereby authorizes Agent to
execute any such Additional Documents in the applicable Loan Party’s name, as
applicable, and authorizes Agent to file such executed Additional Documents in
any appropriate filing office. In furtherance and not in limitation of the
foregoing, each Loan Party shall take such actions as the Required Lenders may
reasonably request from time to time (a) in connection with any merger,
amalgamation, consolidation, or reorganization permitted under Section 6.3,
delivery to Agent of the agreements and documentation related thereto, or (b) to
ensure that the Obligations are guaranteed by the Guarantors and are secured by
substantially all of the assets of the Loan Parties (subject to exceptions and
limitations contained in the Loan Documents).

 

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5.13                        Lender Meetings.  On a weekly basis (or less
frequently as the Required Lenders shall agree), hold a meeting (by conference
call or, at the request of Required Lenders, in person) with all Lenders (and
any financial advisor retained by the Agent or any Lender) who choose to attend
such meeting at which meeting shall be reviewed, among other things, the
financial results of Parent and the financial condition of Parent and its
Subsidiaries and the actual results versus projections in the Approved Budget
then in effect, operations of the Borrowers, matters pertaining to the Chapter
11 Cases, and/or any other developments; provided, however, that following the
occurrence of a Default or an Event of Default, such meetings shall be held as
often as the Required Lenders shall request.  For the avoidance of doubt, any of
the foregoing meetings with Lenders may be held concurrently with any lender
meetings required pursuant to Section 5.13 of the DIP Term Loan Agreement
(unless otherwise requested by the Required Lenders).

 

5.14                        Material Contracts.  Provide Agent (for further
delivery to the Lenders) with copies of (a) each Material Contract entered into
since February 9, 2015, and (b) each material amendment or modification of any
Material Contract entered into since February 9, 2015.

 

5.15                        Location of Inventory and Equipment.  Keep each Loan
Party’s Inventory and Equipment (other than (x) vehicles, Inventory and
Equipment out for repair or in-transit, (y) Inventory and Equipment owned by
Persons other than Loan Parties or having an aggregate book value of less than
$10,000 and (z) Inventory consigned pursuant to the DCAM Consignment described
in clause (b) of the definition of Permitted Disposition) only at the locations
identified on Schedule 4.6(b) or Schedule 4.6(e); provided, that, any Borrower
may amend Schedule 4.6(e) or Schedule 4.6(b) so long as such amendment occurs by
written notice to Agent not less than 10 days after the date on which such
Inventory or Equipment is moved to such new location

 

5.16                        Compliance with ERISA and the IRC.  In addition to
and without limiting the generality of Section 5.8, (a) comply in all material
respects with applicable provisions of ERISA and the IRC with respect to all
Employee Benefit Plans, (b) except in connection with a Bargaining Unit Defined
Benefit Plan Calculation Error to the extent it does not result in a Bargaining
Unit Defined Benefit Plan Calculation Error Event, without the prior written
consent of the Required Lenders, not take any action or fail to take action the
result of which could reasonably be expected to result in a Loan Party or ERISA
Affiliate incurring a material liability to the PBGC or to a Multiemployer Plan
(other than to pay contributions or premiums payable in the ordinary course),
(c) not participate in any prohibited transaction that could reasonably be
expected to result in a material civil penalty, excise tax, fiduciary liability
or correction obligation under ERISA or the IRC, and (d) furnish to Agent upon
the Required Lenders’ written request such additional information about any
Employee Benefit Plan for which any Loan Party or ERISA Affiliate could
reasonably expect to incur any material liability.  With respect to each Pension
Plan (other than a Multiemployer Plan) except as could not reasonably be
expected to result in material liability to the Loan Parties and except in
connection with a Bargaining Unit Defined Benefit Plan Calculation Error to the
extent it does not result in a Bargaining Unit Defined Benefit Plan Calculation
Error Event, the Loan Parties and the ERISA Affiliates shall (i) satisfy in full
and in a timely manner, without incurring any late payment or underpayment
charge or penalty and without giving rise to any Lien, all of the contribution
and funding requirements of the IRC and of ERISA, and (ii) pay, or cause to be
paid, to the PBGC in a timely manner, without incurring any late payment or
underpayment charge or penalty, all premiums

 

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required pursuant to ERISA.  In addition to and without limiting the foregoing
take all actions required under Schedule 5.16 in the manner and on the time
frames set forth therein.

 

5.17                        [Reserved].

 

5.18                        Chief Restructuring Officer. Maintain at all times
(other than as a result of not being approved by the Bankruptcy Court), a chief
restructuring officer acceptable to the Required Lenders (it being understood
that Keith Maib is acceptable) with responsibilities reasonably satisfactory to
the Required Lenders.

 

5.19                        [Reserved.]

 

5.20                        Post-Closing Obligations.  On or before the date
that is thirty (30) days after the Closing Date (or such later date as permitted
by the Required Lenders), the Loan Parties shall satisfy each of the following
post-closing covenants to the satisfaction of the Required Lenders, subject to
waiver in accordance with Section 10.5:

 

(a)                                 Control Agreements.  The Borrowers and the
other Loan Parties shall cause to be executed and delivered to the Agent and the
Lenders executed copy of the Control Agreements, in form and substance
satisfactory to the Required Lenders, with respect to such accounts as
reasonably determined by the Required Lenders.

 

5.21                        Trade Payables/Unrestricted Cash Certificate. 
Intentionally omitted.

 

5.22                        Cash Management Order.  Keep the Cash Management
Order in effect at all times on and after the Closing Date and such orders of
the Canadian Court recognizing the Cash Management Order, in effect at all times
following their entry.

 

5.23                        Milestones.  The Borrowers shall comply with
milestones set forth in Schedule 5.23.

 

6.                                      NEGATIVE COVENANTS.

 

Each Loan Party covenants and agrees that, until payment in full of the
Obligations, the Loan Parties will not and will not permit any of their
Subsidiaries to do any of the following:

 

6.1                               Indebtedness.  Create, incur, assume, suffer
to exist, guarantee, or otherwise become or remain, directly or indirectly,
liable with respect to any Indebtedness, except for Permitted Indebtedness.

 

6.2                               Liens.  Create, incur, assume, or suffer to
exist, directly or indirectly, any Lien on or with respect to any of its assets,
of any kind, whether now owned or hereafter acquired, or any income or profits
therefrom, except for Permitted Liens.

 

6.3                               Restrictions on Fundamental Changes.

 

(a)                                 Enter into any merger, amalgamation,
consolidation, reorganization, or recapitalization, or reclassify its Equity
Interests except for mergers, consolidations,

 

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amalgamations and reorganizations (i) between US Loan Parties, (ii) between
Canadian Loan Parties, (iii) between any Borrower and any of its Subsidiaries,
provided that, in the case of this clause (iii), such Borrower is the surviving
entity of such merger, amalgamation or consolidation, and (iv) between
Subsidiaries of Parent which are not Loan Parties.

 

(b)                                 Liquidate, wind up, or dissolve itself (or
suffer any liquidation or dissolution).

 

(c)                                  Suspend or terminate all or a substantial
portion of its or their business.

 

(d)                                 [reserved].

 

(e)                                  Notwithstanding the foregoing, Section 6.5
or any other provision of the Loan Documents to the contrary, Parent shall not
change its legal form to a C corporation or otherwise change its classification
to that of a corporation for federal income tax purposes (such changes, a
“Conversion”).

 

6.4                               Disposal of Assets.  Convey, sell, lease,
license, assign, transfer, or otherwise dispose of (or enter into an agreement
to convey, sell, lease, license, assign, transfer, or otherwise dispose of) any
assets or Equity Interests of Parent or its Subsidiaries, except for Permitted
Dispositions.

 

6.5                               Change Name.  Change the name, organizational
identification number, jurisdiction of organization or organizational identity
of any Loan Party; provided, that, any Loan Party may change its name so long as
such Loan Party gives 30 days prior written notice to Agent of such change.

 

6.6                               Nature of Business.  Make any change in the
nature of its or their business as presently conducted or acquire any properties
or assets that are not reasonably related to the conduct on the Closing Date of
such business activities.

 

6.7                               Certain Payments of Debt and Amendments.

 

(a)                                 Except as permitted hereunder, make any
payment, prepayment, redemption, retirement, defeasance, purchase or sinking
fund payment or other acquisition for value of any of its Indebtedness other
than the Indebtedness hereunder or under the other Loan Documents or under the
DIP Term Loan Documents and the Prepetition Term Loan Documents (solely to the
extent of the Permitted Term Roll-Up) (including, without limitation, by way of
depositing money or securities with the trustee therefor before the date
required for the purpose of paying any portion of such Indebtedness when due),
or otherwise set aside or deposit or invest any sums for such purpose, except
that:

 

(i)                                     Loan Parties may make regularly
scheduled payments of interest in respect of Indebtedness permitted under
clauses (w), (x) and (y) of the definition of Permitted Indebtedness as and when
due in respect of such Indebtedness in accordance with the terms of the
Prepetition Term Loan Documents, the DIP Term Loan Documents and the Prepetition
Senior Loan Documents in effect as of the Closing Date;

 

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(ii)                                  Loan Parties may make payments expressly
set forth in the Approved Budget;

 

(iii)                               [reserved];

 

(iv)                              [reserved];

 

(v)                                 [reserved]; and

 

(vi)                              as to payments in respect of any other
Permitted Indebtedness not subject to the provisions above in this Section 6.7,
Borrowers and Guarantors may make payments of regularly scheduled principal on
the scheduled maturity thereof (and in the case of Indebtedness that has been
contractually subordinated in right of payment to the Obligations or subject to
an intercreditor agreement with Agent solely to the extent such payment is
permitted at such time under the subordination and/or intercreditor terms and
conditions set forth therein or applicable thereto).

 

(b)                                 Borrowers shall not, and shall not permit
any of their Subsidiaries, directly or indirectly, to amend, modify, or change
(or permit the amendment, modification or other change in any manner of) any of
the terms or provisions of:

 

(i)                                     any agreements, documents or instruments
in respect of any agreements related to the Indebtedness permitted under clause
(p) of the definition of Permitted Indebtedness;

 

(ii)                                  the certificate of incorporation,
memorandum and articles of association, certificate of formation, limited
liability agreement, limited partnership agreement or other organizational
documents of any Loan Party;

 

(iii)                               any of the Specified Equipment Lease
Documents;

 

(iv)                              the Prepetition Term Loan Documents, the DIP
Term Loan Documents and the Prepetition Senior Loan Documents, except in
accordance with the terms of the DIP Intercreditor Agreement;

 

(v)                                 [reserved]; and

 

(vi)                              the Management Agreement, the Consulting
Agreement or any other agreement listed on Schedule 6.12(d) except with the
prior written consent of the Required Lenders.

 

6.8                               Change of Control.  Intentionally omitted.

 

6.9                               Restricted Payments.  Declare or make, or
agree to pay or make, directly or indirectly, any Restricted Payment, except:

 

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(a)                                 Parent and each Subsidiary may declare and
make dividend payments or other distributions payable in the Equity Interests of
such Person (other than Disqualified Equity Interests);

 

(b)                                 [reserved];

 

(c)                                  [reserved];

 

(d)                                 [reserved];

 

(e)                                  [reserved];

 

(f)                                   [reserved];

 

(g)                                  to the extent New Holdco, directly or
indirectly through its ownership of CDH II, owns a majority of the Equity
Interests in Parent, Parent may make distributions to New Holdco and/or CDH II,
as applicable, to fund any accounting or tax-related expenses and corporate
maintenance expenses (such as filing fees) incurred in the ordinary course of
business; provided, that, (x) it is understood and agreed by the Loan Parties
that such distributions shall in no event be permitted hereunder or made if such
expenses are with respect to tax planning, New Holdco Expenses, sales taxes or
income taxes and (y) the aggregate amount of any such expenses shall not exceed
$25,000 for the period commencing on the Closing Date through the Maturity Date;

 

(h)                                 Parent may make distributions to fund
(i) ordinary course reimbursement of reasonable and customary out of pocket
expenses paid to non-insider directors and (ii) indemnities provided on behalf
of the directors of New Holdco and CDH II in an amount not to exceed $50,000;
and

 

(i)                                     any Subsidiary of Parent may pay
dividends or other distributions to a Loan Party (including, without limitation,
distributions to a Loan Party upon the reduction of capital (by whatsoever name
called, including paid in capital, paid up capital or stated capital) of such
Subsidiary).

 

6.10                        Accounting Methods.  Modify or change its fiscal
year of Parent or its method of accounting (other than as may be required to
conform to GAAP or as permitted under Section 1.2).

 

6.11                        Investments; Controlled Investments.  Directly or
indirectly, make or acquire any Investment or incur any liabilities (including
contingent obligations) for or in connection with any Investment, except for
Permitted Investments.

 

6.12                        Transactions with Affiliates.  Directly or
indirectly, enter into or permit to exist any transaction or agreement with any
Affiliate (including without limitation; any transaction to purchase, acquire or
lease any property from, or sell, transfer or lease any property to, any
officer, director or other Affiliates of Parent or any of its Subsidiaries),
except for:

 

36

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(a)                                 any employment or compensation arrangement
or agreement, employee benefit plan or arrangement, officer or director
indemnification agreement or any similar arrangement or other compensation
arrangement entered into by Parent or any of its Subsidiaries in the ordinary
course of business and payments, issuance of securities or awards pursuant
thereto, and including the grant of stock options, restricted stock, stock
appreciation rights, phantom stock awards or similar rights to employees and
directors in each case approved by the Board of Directors of such Parent or such
Subsidiary; provided, that, such transactions are not otherwise prohibited by
this Agreement;

 

(b)                                 transactions exclusively between the Loan
Parties; provided, that, such transactions are not otherwise prohibited by this
Agreement;

 

(c)                                  transactions permitted under Section 6.3,
or 6.9 hereof;

 

(d)                                 any agreement as in effect as of the Closing
Date and listed on Schedule 6.12(d), as each such agreement may be amended,
modified, supplemented, extended or renewed from time to time with the prior
written consent of the Required Lenders;

 

(e)                                  the reimbursement by Parent of Sciens
Management LLC and Sciens Institutional Services LLC of reasonable and customary
out-of-pocket expenses of Sciens Management LLC and Sciens Institutional
Services LLC incurred in the ordinary course of business in connection with the
businesses of Parent and its Subsidiaries, solely to the extent required by
terms of the Management Agreement and the Consulting Agreement, in an aggregate
amount not to exceed $75,000 in the aggregate in any fiscal year of Parent;
provided, that, as of the date of any such payment and after giving effect
thereto, no Default or Event of Default, in each case, pursuant to Section 8.1,
shall exist or have occurred and be continuing; provided, further, that for the
fiscal year 2015 of Parent, any such payments under this clause (e) shall have
been for expenses incurred following the Closing Date and shall not exceed
$30,000 in the aggregate;

 

(f)                                   the payment of reasonable and customary
(i) fees and reasonable out of pocket expenses paid to non-insider directors and
(ii) indemnities provided on behalf of, the directors of Parent or any
Subsidiary; provided that no more than $50,000 of the proceeds of the Loans may
be used for such indemnities; and

 

(g)                                  transactions with customers, clients,
suppliers, joint venture partners (other than joint ventures with Sponsor or any
of its Affiliates), or purchasers of, or sellers of goods or services to, a Loan
Party, in each case, that are Affiliates of the Loan Parties; provided, that
(i) any such transaction is made in the ordinary course of business of the Loan
Parties and is in compliance with the terms of this Agreement and (ii) any such
transaction is on terms that are no less favorable to Parent or the relevant
Subsidiary than those that could have been obtained at the time of such
transactions in a comparable transaction by Parent or such Subsidiary with an
unrelated person.

 

Notwithstanding anything to the contrary in this Agreement, other than as
expressly permitted under Section 6.22, no payments may be made (or deemed to be
made) by the Loan Parties to

 

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Sponsor or its Affiliates (other than Parent and its Subsidiaries) except in the
Loan Parties’ ordinary course of business consistent with past practice.

 

6.13                        Use of Proceeds.  Except as otherwise provided
herein or approved by the Agent (at the direction of the Required Lenders), use
any cash or the proceeds of any Loans in a manner or for a purpose inconsistent
with this Agreement, the Orders and the Approved Budget (subject to the
Permitted Variances); provided, that no cash or the proceeds of any Loans may be
used by the Loan Parties in connection with: (i) the payment of any principal of
the Prepetition Term Loan Debt (other than the Permitted Term Roll-Up), and
(ii) investigating (including by way of examination and/or discovery
proceedings), initiating, asserting, joining, commencing, supporting or
prosecuting any claims, causes of action, adversary proceedings or other
litigation against the Lenders, the Agent, the Prepetition Senior Loan Agent and
the Prepetition Senior Loan Lenders, and each of their respective officers,
directors, employees, agents, attorneys, affiliates, assigns, or successors,
with respect to any transaction, occurrence, omission, action or other matter
(including formal discovery proceedings in anticipation thereof), including,
without limitation, (1) any claims or causes of action arising under chapter 5
of the Bankruptcy Code or under Canadian Insolvency Law; (2) any so-called
“lender liability” claims and causes of action; (3) any action with respect to
the validity, enforceability, priority and extent of the Prepetition Senior Loan
Debt, the Prepetition Senior Loan Debt or the Loans; (4) any action seeking to
invalidate, set aside, avoid or subordinate, in whole or in part, the
Prepetition Senior Loan Debt, the Prepetition Senior Loan Debt or the Loans; or
(5) any action seeking to modify any of the rights, remedies, priorities,
privileges, protections and benefits granted to any or all of the Secured
Parties hereunder or under the Loan Documents, or for any purpose that is
prohibited under the Bankruptcy Code, in each case, other than an aggregate
amount not to exceed $10,000 that may be used by, or to reimburse, the fees,
costs or expenses of, the Committee solely in connection with the investigation
of the prepetition claims of the holders of the Prepetition Senior Loan Debt,
the Prepetition Senior Loan Debt or their affiliates; provided, that, during the
Remedies Notice Period, nothing herein or in the Orders, as applicable, shall
limit the ability of the Loan Parties to seek to challenge an Event of Default.

 

6.14                        Limitation on Issuance of Equity Interests;
Formation of Subsidiaries.  Except for the issuances or sales of Equity
Interests by a Loan Party to another Loan Party, issue or sell or enter into any
agreement or arrangement for the issuance or sale of any of its Equity
Interests.  No Loan Party shall form any new direct or indirect Subsidiary.

 

6.15                        [Reserved].

 

6.16                        Specified Canadian Pension Plans.  (i) Maintain,
sponsor, administer, contribute to, participate in or assume or incur any
liability in respect of any Specified Canadian Pension Plan, or (ii) acquire an
interest in any Person if such Person sponsors, administers, contributes to,
participates in or has any liability in respect of, any Specified Canadian
Pension Plan.

 

6.17                        Sale Leaseback Transactions.  Create, incur or
suffer to exist, or permit any of its Subsidiaries to create, incur or suffer to
exist, any obligations as lessee for the payment of rent for any real or
personal property in connection with any sale and leaseback transaction.

 

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6.18                        Limitations on Dividends and Other Payment
Restrictions Affecting Subsidiaries.  Create or otherwise cause, incur, assume,
suffer or permit to exist or become effective any consensual encumbrance or
restriction of any kind on the ability of any Subsidiary of any Loan Party
(a) to pay dividends or to make any other distribution on any shares of Equity
Interests of such Subsidiary owned by any Loan Party or any of its Subsidiaries,
(b) to pay or prepay or to subordinate any Indebtedness owed to any Loan Party
or any of its Subsidiaries, (c) to make loans or advances to any Loan Party or
any of its Subsidiaries or (d) to transfer any of its property or assets to any
Loan Party or any of its Subsidiaries, or permit any of its Subsidiaries to do
any of the foregoing; provided, however, that nothing in any of clauses
(a) through (d) of this Section 6.18 shall prohibit or restrict compliance with:

 

(i)                                     this Agreement and the other Loan
Documents;

 

(ii)                                  the Prepetition Term Loan Agreement and
the other Prepetition Term Loan Documents;

 

(iii)                               the DIP Term Loan Agreement and the other
DIP Term Loan Documents;

 

(iv)                              the Prepetition Senior Loan Agreement and the
other Prepetition Senior Loan Documents;

 

(v)                                 the Senior Note Indenture;

 

(vi)                              any applicable law, rule or regulation
(including, without limitation, applicable currency control laws and applicable
state corporate statutes restricting the payment of dividends in certain
circumstances);

 

(vii)                           in the case of clause (d), customary
restrictions on the subletting, assignment or transfer of any specified property
or asset set forth in a lease, license, asset sale agreement or similar contract
for the conveyance of such property or asset; or

 

(viii)                        in the case of clause (d), any agreement,
instrument or other document evidencing a Permitted Lien (or the Indebtedness
secured thereby) from restricting on customary terms the transfer of any
property or assets subject thereto.

 

6.19                        Limitations on Negative Pledges.  Enter into, incur
or permit to exist, or permit any Subsidiary to enter into, incur or permit to
exist, directly or indirectly, any agreement, instrument, deed, lease or other
arrangement that prohibits, restricts or imposes any condition upon the ability
of any Loan Party or any Subsidiary of any Loan Party to create, incur or permit
to exist any Lien upon any of its property or revenues, whether now owned or
hereafter acquired, or that requires the grant of any security for an obligation
if security is granted for another obligation, except the following:  (a) this
Agreement and the other Loan Documents, (b) the Prepetition Term Loan Agreement
and the other Prepetition Term Loan Documents, (c) the DIP Term Loan Agreement
and the other DIP Term Loan Documents, (d) the Prepetition Senior Loan Agreement
and the other Prepetition Senior Loan Documents, (e) the Senior Note Indenture
and any related security documents, (f) restrictions or conditions imposed by
any agreement relating to secured Indebtedness permitted by Section 6.1 of this
Agreement if such restrictions or

 

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conditions apply only to the property or assets securing such Indebtedness,
(g) any customary restrictions and conditions contained in agreements relating
to the sale or other disposition of assets or of a Subsidiary pending such sale
or other disposition; provided that such restrictions and conditions apply only
to the assets or Subsidiary to be sold or disposed of and such sale or
disposition is permitted hereunder and (h) customary provisions in leases
restricting the assignment or sublet thereof.  Notwithstanding the foregoing,
the limitations set forth in this Section 6.19 shall not be any more restrictive
than permitted pursuant to Section 6.19 of the DIP Term Loan Agreement.

 

6.20                        Employee Benefits.

 

(a)                                 Terminate, or permit any ERISA Affiliate to
terminate, any Pension Plan in a manner, or take any other action with respect
to any Pension Plan, which could reasonably be expected to result in any
material liability of any Loan Party or ERISA Affiliate to the PBGC.

 

(b)                                 Fail to make, or permit any ERISA Affiliate
to fail to make, full payment when due of all amounts which, under the
provisions of any Pension Plan, agreement relating thereto or applicable law,
any Loan Party or ERISA Affiliate is required to pay if such failure could
reasonably be expected to result in a Material Adverse Change.

 

(c)                                  Permit to occur, or allow any ERISA
Affiliate to permit to occur, any failure to satisfy the minimum funding
standards under section 302 of ERISA or section 412 of the Code, whether or not
waived, with respect to any Plan which exceeds $1,000,000 with respect to all
Pension Plans in the aggregate.

 

(d)                                 Except as could not reasonably be expected
to have a material liability, acquire, or permit any ERISA Affiliate to acquire,
an interest in any Person that causes such Person to become an ERISA Affiliate
with respect to a Loan Party or with respect to any ERISA Affiliate if such
Person sponsors, maintains or contributes to, or at any time in the six-year
period preceding such acquisition has sponsored, maintained, or contributed to,
(i) any Pension Plan or (ii) any Multiemployer Plan.

 

(e)                                  Contribute to or assume an obligation to
contribute to, or permit any ERISA Affiliate to contribute to or assume an
obligation to contribute to, any Multiemployer Plan not set forth on Schedule
4.11.

 

(f)                                   Amend, or permit any ERISA Affiliate to
amend, a Pension Plan resulting in a material increase in current liability such
that a Loan Party or ERISA Affiliate is required to provide security to such
Pension Plan under the IRC.

 

6.21                        [Reserved].

 

6.22                        New Holdco Expenses.  After the Closing Date, incur
or pay any New Holdco Expenses.  At the request of the Required Lenders from
time to time, the Loan Parties shall provide a summary list of New Holdco
Expenses incurred by the Loan Parties after February 9, 2015.

 

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6.23                        Cash in Deposit Accounts.  Subject to satisfaction
of the obligations set forth in Section 5.20(a), permit any cash to be held in
any account other than a Deposit Account (or, to the extent permitted under the
Security Agreement, the Excluded Accounts (as defined in the Security
Agreement)) subject to a Control Agreement in favor of the Agent.

 

6.24                        [Reserved.]

 

6.25                        Disclosure re Lenders.  At any time during the
period from and including the Closing Date to and including the Maturity Date,
issue or make any press release or other publication, make any disclosure in any
public filing, or disclose to any Person (other than any other Loan Party or
their Affiliates) any document, terms or agreement, in each case, relating in
any way to this Agreement or any other Loan Document, any amendment, waiver or
modification thereof, any Lender, any other actual or potential transaction or
agreement (relating to a restructuring of the Loan Parties or otherwise) with
any Lender (or any proposal thereof), or any discussions with respect to any of
the foregoing, in each case, except (x) with the prior written consent of
Required Lenders or (y) as required by applicable law.

 

6.26                        Chapter 11 Cases and CCAA Recognition Proceedings.

 

(a)                                 Other than the claims and Liens of the DIP
Term Loan Agent arising under the DIP Term Loan Credit Agreement or any of the
Loan Documents and subject to the DIP Intercreditor Agreement, and other than
the adequate protection claims of the Prepetition Term Agent arising from the
Prepetition Term Loan Agreement and the adequate protection claims of the
Prepetition Senior Loan Agent arising from the Prepetition Senior Loan
Agreement, in each case, to the extent set forth in the Orders, as applicable,
and except for the Carve-Out and in respect of Permitted Prior Liens, incur,
create, assume, suffer to exist or permit, or file any motion seeking, any other
Superpriority Claim which is pari passu with, or senior to the claims and Liens
of, the Agent and Lenders.

 

(b)                                 Make or permit to be made any change to the
Orders, as applicable, without the consent of the Required Lenders.

 

(c)                                  Commence any adversary proceeding,
contested matter or other action asserting any claims or defenses or otherwise
against Agent, any Lender, the Prepetition Senior Loan Agent or the Prepetition
Senior Loan Lenders with respect to this Agreement, the other Loan Documents,
the transactions contemplated hereby or thereby, the Prepetition Senior Loan
Agreement, the other documents or agreements executed or delivered in connection
therewith or the transactions contemplated thereby; provided, that during the
Remedies Notice Period, nothing herein or in the Orders, as applicable, shall
limit the ability of the Loan Parties to seek to challenge an Event of Default.

 

(d)                                 Make (i) any prepetition “critical vendor”
payments or other payments on account of any creditor’s prepetition unsecured
claim, (ii) payments on account of claims or expenses arising under section
503(b)(9) of the Bankruptcy Code or (iii) payments under any management
incentive plan or on account of claims or expenses arising under section
503(c) of the Bankruptcy Code, except in amounts and on terms and conditions
that (a) are approved by order of the Bankruptcy Court after notice and a
hearing and (b) are expressly permitted by the

 

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terms of the Loan Documents and within the limits, including any allowed
variance, of the Approved Budget or otherwise with the consent of the Required
Lenders.

 

7.                                      FINANCIAL COVENANTS.

 

Each Loan Party covenants and agrees that, until payment in full of the
Obligations:

 

(a)                                 Intentionally omitted.

 

(b)                                 Intentionally omitted.

 

(c)                                  Intentionally omitted.

 

(d)                                 Total Expenditures; Total Receipts.  With
respect to the Test Period ending on each Test Date, the Loan Parties shall not,
and shall cause each other Loan Party to not, (i) make disbursements that would
be included in the line-item “WH Total Cash Outflows” (the “Total Operating
Disbursement Line”) in the Approved Budget during such Test Period in an
aggregate amount which would exceed by more than ten percent (10.0%) the
aggregate amount of disbursements budgeted in the Total Operating Disbursements
Line in the Approved Budget for such Test Period, but without regard to such
expenditures for the payment or reimbursement of Lender Group Expenses (and such
similar expenses paid pursuant to the DIP Term Loan Agreement) (the “Total
Operating Disbursement Variance”); provided, that to the extent actual
disbursements are less than the budgeted WH Total Cash Outflows during such Test
Period, such difference shall be carried forward to succeeding Test Periods
until such difference is reduced to zero dollars ($0); (ii) make disbursements
that would be included in the line-item “Non Operating Cash Outflows” in the
Approved Budget (the “Total Non-Operating Disbursement Line”) during such Test
Period in an aggregate amount which would exceed by more than ten percent
(10.0%) the aggregate amount of disbursements budgeted in the Total
Non-Operating Disbursement Line in the Approved Budget for such Test Period (the
“Total Non-Operating Disbursement Variance”); provided, that to the extent
actual disbursements are less than the budgeted Non Operating Cash Outflows
during such Test Period, such difference shall be carried forward to succeeding
Test Periods until such difference is reduced to zero dollars ($0); and
(iii) permit receipts that would be included in the line-item “Total Cash
Inflows” in the Approved Budget (the “Total Receipts Line”) during such Test
Period to be in an aggregate amount less than ninety percent (90.0%) of receipts
budgeted in the Total Receipts Line in the Approved Budget for such Test Period
(the “Total Receipts Variance” and together with the Total Operating
Disbursement Variance and the Total Non-Operating Disbursement Variance, the
“Permitted Variances”); provided that (A) to the extent actual receipts are
greater than the budgeted Total Cash Inflows during such Test Period, such
excess shall be carried forward to succeeding Test Periods until such excess is
reduced to zero dollars ($0), and (B) if actual receipts are less than ninety
percent (90.0%) of receipts budgeted in the Total Receipts Line for such Test
Period solely as a result of a delay in receipt of one or more foreign
government receivables(s) backed by a letter-of-credit (which are identified in
writing to the Required Lenders) that were projected to be received during such
Test Period in the Approved Budget, so long as such receivable(s) are received
not more than five (5) calendar days after the end of such Test Period, such
receivable(s) shall be treated as having being received during such Test Period
(and not the Test Period when actually received).

 

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(e)                                  Capital Expenditures.  Make or commit to
make Capital Expenditures during the term of this Agreement in an aggregate
amount in excess of $1,000,000.

 

8.                                      EVENTS OF DEFAULT.

 

Any one or more of the following events shall constitute an event of default
(each, an “Event of Default”) under this Agreement:

 

8.1                               If Borrowers fail to pay when due and payable,
or when declared due and payable, (a) all or any portion of the Obligations
consisting of interest, fees, or charges due the Lender Group, reimbursement of
Lender Group Expenses, or other amounts (other than any portion thereof
constituting principal) constituting Obligations (including any portion thereof
accrues after the commencement of an Insolvency Proceeding, regardless of
whether allowed or allowable in whole or in part as a claim in any such
Insolvency Proceeding), and such failure continues for a period of 3 Business
Days, or (b) all or any portion of the principal of the Obligations;

 

8.2                               If any Loan Party or any of its Subsidiaries:

 

(a)                                 fails to perform or observe any covenant or
other agreement contained in any of (i) Sections 5.1, 5.2, 5.3 (solely if any
Borrower or other Loan Party is not in good standing in its jurisdiction of
organization), 5.7, 5.10, 5.16, 5.18, 5.20 or 5.21 (solely if any Borrower or
other Loan Party refuses to allow Agent, the Required Lenders or their
respective representatives or agents to visit such Loan Party’s properties,
inspect its assets or books or records, examine and make copies of its books and
records, or discuss such Loan Party’s affairs, finances, and accounts with
officers and employees of such Borrower) of this Agreement, (ii) Section 6 of
this Agreement, (iii) Section 7 of this Agreement, (iv) Section 6 of the
Security Agreement, or (v) Section 6 of the Canadian Security Agreement; or

 

(b)                                 fails to perform or observe any covenant or
other agreement contained in Section 5.6, 5.13, 5.15 or 5.16 of this Agreement,
and such failure continues for a period of 3 Business Days (in each case of
Sections 5.6, 5.13 and 5.16) or 10 Business Days (in the case of Section 5.15)
after the earlier of (i) the date on which such failure shall first become known
to a Responsible Officer of any Loan Party or (ii) the date on which written
notice thereof is given to Administrative Borrower by Agent; and

 

(c)                                  fails to perform or observe any covenant or
other agreement contained in this Agreement, or in any of the other Loan
Documents, in each case, other than any such covenant or agreement that is the
subject of another provision of this Section 8 (in which event such other
provision of this Section 8 shall govern), and such failure continues for a
period of 20 days after the earlier of (i) the date on which such failure shall
first become known to a Responsible Officer of any Borrower or (ii) the date on
which written notice thereof is given to Administrative Borrower by Agent;

 

8.3                               If one or more judgments, orders, or awards
for the payment of money involving an aggregate amount of $500,000, or more
(except to the extent fully covered (other than to the extent of customary
deductibles) by insurance pursuant to which the insurer has not denied coverage)
is entered or filed against a Loan Party or any of its Subsidiaries, or with
respect to

 

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any of their respective assets, and either (a) there is a period of 30
consecutive days at any time after the entry of any such judgment, order, or
award during which (1) the same is not discharged, satisfied, vacated, or bonded
pending appeal, or (2) a stay of enforcement thereof is not in effect, or
(b) enforcement proceedings are commenced upon such judgment, order, or award;

 

8.4                               [RESERVED].

 

8.5                               [RESERVED].

 

8.6                               If a Loan Party or any of its Subsidiaries is
enjoined, restrained, or in any way prevented by court order from continuing to
conduct all or any material part of the business affairs of Parent Borrowers and
its Subsidiaries, taken as a whole;

 

8.7                               If there is (a) a default in respect of the
DIP Term Loan Agreement or one or more agreements to which a Loan Party or any
of its Subsidiaries is a party with one or more third Persons relative to a Loan
Party’s or any of its Subsidiaries’ Indebtedness involving an aggregate amount
of $1,000,000 or more, and such default (i) occurs at the final maturity of the
obligations thereunder, or (ii) results in a right by such third Person,
irrespective of whether exercised, to accelerate the maturity of such Loan
Party’s or its Subsidiary’s obligations thereunder, or (b) a default in respect
of one or more Material Contracts, or (c) a default in respect of or an
involuntary early termination of one or more Hedge Agreements to which a Loan
Party or any of its Subsidiaries is a party involving an aggregate amount of
$1,000,000 or more;

 

8.8                               If any warranty, representation, certificate,
statement, or Record made herein or in any other Loan Document or delivered in
writing to Agent or any Lender in connection with this Agreement or any other
Loan Document proves to be untrue in any material respect (except that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof) as of the date of issuance or making or deemed making thereof (unless
it expressly relates to an earlier date, in which case it shall have been true
and correct in all material respects as of such earlier date (except to the
extent already qualified by materiality, in which case each shall have been true
and correct in all respects);

 

8.9                               If (i) the obligation of any Guarantor under
the Guaranty ceases to be in full force and effect or (ii) the Obligations cease
to be Superpriority Claims;

 

8.10                        If the Security Agreement or any other Loan Document
that purports to create a Lien, shall, for any reason, fail or cease to create a
valid and perfected Lien on Collateral with the priority set forth in the
Orders, except as a result of a disposition of the applicable Collateral in a
transaction permitted under this Agreement;

 

8.11                        The validity or enforceability of any Loan Document
or the Obligations shall at any time for any reason (other than solely as the
result of an action or failure to act on the part of Agent) be declared to be
null and void, or a proceeding shall be commenced by a Loan Party or its
Subsidiaries, or a Committee or by any Governmental Authority having
jurisdiction over a Loan Party or its Subsidiaries, seeking to establish the
invalidity or unenforceability thereof, or a

 

44

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Loan Party or its Subsidiaries shall deny that such Loan Party or its
Subsidiaries has any liability or obligation purported to be created under any
Loan Document;

 

8.12                        If any Loan Party ceases to have the right to use,
or the Loan Parties are not in possession and control of, a material amount of
the Specified Government Property;

 

8.13                        [Reserved.];

 

8.14                        (a) The occurrence of any damage to, or loss, theft
or destruction of, any Collateral having an aggregate book value in excess of
$175,000 (exclusive of any damage to Collateral covered by insurance pursuant to
which the insurer has not denied coverage) if (i) the proceeds of such insurance
are not received by the Loan Parties within 10 days of such occurrence and
(ii) such Collateral is not repaired and/or replaced within 10 days of such
occurrence or (b) any strike, lockout, labor dispute, embargo, condemnation, act
of God or public enemy, or other casualty which causes, for more than 15
consecutive days, the cessation or substantial curtailment of material revenue
producing activities of the Loan Parties, taken as a whole;

 

8.15                        The loss, suspension or revocation of, or failure to
renew, any material license or permit now held or hereafter acquired by any Loan
Parties;

 

8.16                        (a) The indictment (or an indictment threatened in
writing) of any Loan Party (or any executive officer thereof acting in such
capacity as an executive officer and not in his or her personal capacity) under
any criminal statute, or (b) commencement of, or commencement threatened in
writing of, criminal or civil proceedings against any Loan Party (or any
executive officer thereof acting in such capacity as an executive officer and
not in his or her personal capacity), solely to the extent that pursuant to such
indictment, statute or proceedings, the penalties or remedies sought or
available in connection therewith include forfeiture to any Governmental
Authority of any material portion of the property of the Loan Parties, taken as
a whole;

 

8.17                        An event, circumstance, or change has occurred that
has or could reasonably be expected to result in a Material Adverse Change with
respect to the Loan Parties and their Subsidiaries;

 

8.18                        A Dutch Loan Party gives notice under
Section 36(2) of the 1990 Tax Collection Act (Invorderingswet 1990); or

 

8.19                        (a) The occurrence of an event or condition which
could reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan, which could reasonably be expected to result in liability in
excess of $500,000; (b) the imposition of any liability in excess of $500,000
under Title I or Title IV of ERISA, other than PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon any Loan Party or any of its ERISA
Affiliates, (c) the occurrence of a nonexempt prohibited transaction under
Section 406 or 407 of ERISA for which any Loan Party may be directly or
indirectly liable and which is reasonably expected to result in a liability to
any Loan Party in excess of $500,000, (d)  receipt from the Internal Revenue
Service of notice of the failure of any Employee Benefit Plan to qualify under
Section 401(a) of the IRC, or the failure of

 

45

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any trust forming part of any Employee Plan to fail to qualify for exemption
from taxation under Section 501(a) of the IRC, (e) the imposition of any lien on
any of the rights, properties or assets of any Loan Party or any of its ERISA
Affiliates, in either case pursuant to Title IV of ERISA, and which lien secures
a liability in excess of $1,000,000 or (f) the occurrence of a Bargaining Unit
Defined Benefit Plan Calculation Error; provided that any of the foregoing
(other than with respect to clauses (a) and (c)) that occurs in connection with
a Bargaining Unit Defined Benefit Plan Calculation Error shall not constitute a
Default or Event of Default hereunder or under any of the other Loan Documents
unless it is a Bargaining Unit Defined Benefit Plan Calculation Error Event.

 

8.20                        If the audited financial statements of Parent and
its Subsidiaries for the fiscal year ended December 31, 2014 or restated audited
financial statements (if any) of Parent and its Subsidiaries for the fiscal
years ended December 31, 2013 or December 31, 2012 reflect (x) any new material
weakness in financial reporting or internal controls other than that which
relates to, and is consistent with, the matters and circumstances disclosed on
the Parent’s Form 8-K filed with the SEC on February 9, 2015 or (y) any
information (other than that which expressly relates to, and is consistent in
all respects with, the matters and circumstances disclosed on such Form 8-K or
on the Parent’s Form 12b-25 filed with the SEC on April 1, 2015) which (A) would
reasonably be expected to be, or result in, a Material Adverse Change or
(B) would constitute, or would have constituted, an Event of Default.

 

8.21                        There shall have occurred any of the following in
the Chapter 11 Cases or the CCAA Recognition Proceedings:

 

(a)                                 the bringing of a motion by any Loan Party
in the Chapter 11 Cases or the CCAA Recognition Proceedings, as applicable, or
the entry of any order by the Bankruptcy Court in the Chapter 11 Cases or the
Canadian Court in the CCAA Recognition Proceedings, as applicable: (i) to obtain
additional financing under section 364(c) or (d) of the Bankruptcy Code not
otherwise permitted pursuant to this Agreement or that does not provide for the
repayment of all Obligations under this Agreement in full in cash; (ii) to grant
any Lien other than Liens expressly permitted under this Agreement upon or
affecting any Collateral; (iii) except as provided in this Agreement, the
Orders, as the case may be, to use cash collateral of the Agent under
section 363(c) of the Bankruptcy Code without the prior written consent of the
Agent and the Required Lenders; or (iv) that (in the case of any Loan Party)
requests or seeks authority for or that (in the case of an order entered by the
Bankruptcy Court on account of a request by any Loan Party) approves or provides
authority to take any other action or actions adverse to the rights and remedies
of the Agent and the Lenders hereunder or their interest in the Collateral;

 

(b)                                 the filing of any plan of reorganization or
disclosure statement attendant thereto, or any direct or indirect amendment to
such plan or disclosure statement, by any Loan Party which does not provide for
either (x) the repayment of all Obligations under this Agreement in full in cash
on the “Effective Date” of such plan or (y) such other treatment of the
Obligations in a manner acceptable to the Required Lenders;

 

(c)                                  the entry of an order in any of the Chapter
11 Cases or the CCAA Recognition Proceedings confirming a plan or plans of
reorganization that does not (i)(a) contain a provision for repayment in full in
cash of all of the Obligations under this Agreement on or

 

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before the effective date of such plan or plans and (b) provide for the
continuation of the Liens and security interests granted to the Agent for the
benefit of the Lenders and priority until the Obligations have been paid in full
or (ii) provide for such other treatment of the Obligations in a manner
acceptable to the Required Lenders;

 

(d)                                 the entry of an order in the Chapter 11
Cases or the CCAA Recognition Proceedings amending, supplementing, staying,
vacating or otherwise modifying any Loan Document or any of the Orders in any
case without the prior written consent of the Required Lenders;

 

(e)                                  the Final DIP Order is not entered within
twenty-five (25) days (or such other period as the Required Lenders may agree to
in writing) following the date of the Interim Hearing or the Final DIP Order
does not permit the Borrowers to incur the Tranche B Loan;

 

(f)                                   the Final DIP Recognition Order is not
granted by the Canadian Court on or prior to the date that is five (5) days (or
such other period as the Required Lenders may agree to in writing) after the
date of entry of the Final DIP Order;

 

(g)                                  the payment of, or application by any Loan
Party for authority to pay, any prepetition claim without the Required Lenders’
prior written consent other than (i) as provided in any “first day order” in
form and substance reasonably acceptable to the Required Lenders or on account
of the Permitted Term Roll-Up, (ii) as set forth in the Approved Budget (subject
to the Permitted Variances) or (iii) unless otherwise expressly permitted under
this Agreement;

 

(h)                                 the entry of an order by the Bankruptcy
Court or the Canadian Court for the sale without the Agent’s and the Required
Lenders’ consent, of all or substantially all of any Borrower’s assets either
through a sale under section 363 of the Bankruptcy Code, through a confirmed
plan of reorganization in the Chapter 11 Cases or the CCAA Recognition
Proceedings, or otherwise that does not provide for payment in full in cash of
the Obligations;

 

(i)                                     the dismissal of the Chapter 11 Cases or
the CCAA Recognition Proceedings which does not contain a provision for payment
in full in cash of all noncontingent monetary Obligations of the Borrowers
hereunder, or if any Loan Party shall file a motion or other pleading seeking
the dismissal of the Chapter 11 Cases or the CCAA Recognition Proceedings which
does not contain a provision for payment in full in cash of all noncontingent
monetary Obligations of the Borrowers hereunder;

 

(j)                                    the conversion of the Chapter 11 Cases or
the CCAA Recognition Proceedings from one under chapter 11 to one under chapter
7 of the Bankruptcy Code or a bankruptcy under Debtor Relief Laws, as
applicable, or any Loan Party shall file a motion or other pleading seeking the
conversion of the Chapter 11 Cases or the CCAA Recognition Proceedings under
section 1112 of the Bankruptcy Code or otherwise;

 

(k)                                 the entry of an order by the Bankruptcy
Court or the Canadian Court, as applicable, granting relief from or modifying
the automatic stay of section 362 of the Bankruptcy Code or any stay operating
under Canadian Insolvency Law (x) to allow any creditor to execute upon or
enforce a Lien on any Collateral, or (y) with respect to any Lien of or the
granting of any

 

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Lien on any Collateral to any state or local environmental or regulatory agency
or authority having priority over the Liens in favor of the Agent and the
Prepetition Senior Loan Agent;

 

(l)                                     the entry of an order in the Chapter 11
Cases or the CCAA Recognition Proceedings, as applicable, avoiding or requiring
repayment of any portion of the payments made on account of the Obligations
owing under this Agreement or the other Loan Documents;

 

(m)                             the failure of any Loan Party to perform any of
its obligations under any of the Orders or any violation of any of the terms of
the Orders, subject to any applicable grace or cure periods;

 

(n)                                 the challenge by any Loan Party to the
validity, extent, perfection or priority of any liens granted under the
Prepetition Senior Loan Documents;

 

(o)                                 the remittance, use or application of cash
collateral of the Loan Parties other than in accordance with any cash management
procedures and agreements approved by the Bankruptcy Court and the Orders;

 

(p)                                 the entry of an order in any of the Chapter
11 Cases or the CCAA Recognition Proceedings granting any other super priority
administrative claim or Lien equal or superior to that granted to the Agent, on
behalf of itself and the Lenders without the consent in writing of the Required
Lenders or as otherwise expressly permitted in this Agreement;

 

(q)                                 the filing of a motion by any Loan Party
requesting, or the entry of any order granting, any super-priority claim which
is senior or pari passu with the Lenders’ claims or with the claims of the
Prepetition Senior Loan Lenders under the Prepetition Senior Loan Documents, the
Prepetition Term Loan Lenders under the Prepetition Term Loan Documents, or the
DIP Term Loan Lenders under the DIP Term Loan Documents, except (i) in
connection with Permitted Prior Liens, (ii) in respect of the Carve-Out,
(iii) under the Adequate Protection Provisions, (iv) to the extent the claim
relates to new financing that provides for the repayment of all Obligations
under this Agreement irrevocably in full in cash on the closing of such new
financing, or (v) as provided in the DIP Intercreditor Agreement.;

 

(r)                                    the entry of an order precluding the
Agent or the Prepetition Senior Loan Agent from having the right to or being
permitted to “credit bid” with respect to the assets of the Loan Parties;

 

(s)                                   any attempt by any Loan Party to reduce
(other than a reduction in accordance with the terms of this Agreement), avoid,
set off or subordinate the Obligations or the Liens securing such Obligations to
any other debt;

 

(t)                                    the reversal, vacation or stay of the
effectiveness of any of the Orders or any provision thereof without the consent
of the Required Lenders;

 

(u)                                 the payment of or granting adequate
protection (except pursuant to the Adequate Protection Provisions) with respect
to any Prepetition Term Loan Debt and Prepetition Senior Loan Debt (other than
the Permitted Term Roll-Up or with respect to payment permitted

 

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under any “first day order” in form and substance satisfactory to the Lenders or
as set forth in the Orders);

 

(v)                                 an application for any of the orders
described in this Section 8.21 including, without limitation, clauses (a), (c),
(d), (h), (i), (j), (k) or (o) shall be made by a Person other than the Agent or
the Lenders and such application is not, to the extent requested by Agent or the
Lenders, contested by any Borrower in good faith and the relief requested is
granted in an order that is not stayed pending appeal;

 

(w)                               the cessation of Liens or super-priority
claims granted with respect to this Agreement to be valid, perfected and
enforceable in all respects

 

(x)                                 the entry of any order of the Canadian Court
that is not in recognition of an existing order of the Bankruptcy Court that is
in form and substance reasonably acceptable to the Lenders, without the consent
of the Lenders;

 

(y)                                 the Bankruptcy Court or the Canadian Court
shall cease to have exclusive jurisdiction with respect to all matters relating
to the exercise of rights and remedies under the Loan Documents, the Orders, the
DIP Liens and the Collateral;

 

(z)                                  the CCAA Recognition Proceedings are
dismissed or converted to full plenary proceedings under the CCAA or any Loan
Party shall file an application motion or other pleading or shall consent to an
application, motion or other pleading filed by any person seeking any of the
foregoing with consent of the Lenders thereof; or

 

(aa)                          the filing of any application, motion, pleading or
report in the CCAA Recognition Proceeding by the Foreign Representative that is
not in form and substance acceptable to the Lenders other than with respect to
the report of an independent information officer, if appointed, and provided to
the Lenders at least two (2) Business Days prior to the filing.

 

9.                                      RIGHTS AND REMEDIES.

 

9.1                               Rights and Remedies.  Upon the occurrence and
during the continuation of an Event of Default, Agent may, and, at the written
instruction of the Required Lenders, shall (in each case under clauses (a) or
(b) by written notice to Administrative Borrower), in addition to any other
rights or remedies provided for hereunder or under any other Loan Document or by
applicable law, do any one or more of the following:

 

(a)                                 subject to the Remedies Notice Period,
declare the Obligations, whether evidenced by this Agreement or by any of the
other Loan Documents immediately due and payable, whereupon the same shall
become and be immediately due and payable and Borrowers shall be obligated to
repay all of such Obligations in full, without presentment, demand, protest, or
further notice or other requirements of any kind, all of which are hereby
expressly waived by each Borrower;

 

(b)                                 deliver written notice to the Bankruptcy
Court or the Canadian Court, as applicable, that pursuant to the Orders, the
automatic stay provisions of section 362 of the

 

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Bankruptcy Code or any stay operating under Canadian Insolvency Law have been
vacated and modified to the extent necessary to permit the Agent and the Lenders
to exercise all rights and remedies provided for in the Loan Documents upon the
expiration of the Remedies Notice Period; and

 

(c)                                  subject to the Remedies Notice Period,
exercise all other rights and remedies available to Agent or the Lenders under
the Loan Documents (including, without limitation, Section 9.3 hereof), the
Orders or applicable law.

 

The Loan Parties shall cooperate fully with the Agent and the Lenders in their
exercise of rights and remedies, whether against the Collateral or otherwise.

 

9.2                               Remedies Cumulative.  The rights and remedies
of the Lender Group under this Agreement, the other Loan Documents, and all
other agreements shall be cumulative.  The Lender Group shall have all other
rights and remedies not inconsistent herewith as provided under the Code, the
PPSA, by law, or in equity.  No exercise by the Lender Group of one right or
remedy shall be deemed an election, and no waiver by the Lender Group of any
Event of Default shall be deemed a continuing waiver.  No delay by the Lender
Group shall constitute a waiver, election, or acquiescence by it.

 

9.3                               Code and Other Remedies.

 

(a)                                 Code Remedies. During the continuance of an
Event of Default, subject to the Remedies Notice Period, the Agent may exercise,
in addition to all other rights and remedies granted to it in this Agreement
(including, without limitation, Section 9.1) and in any other instrument or
agreement securing, evidencing or relating to any Obligation, all rights and
remedies of a secured party under the Code or any other applicable law.

 

(b)                                 Disposition of Collateral. Without limiting
the generality of the foregoing, the Agent may, without demand of performance or
other demand, presentment, protest, advertisement or notice of any kind (except
any notice required by any of the Orders and any notice required by law referred
to below, including compliance with the Remedies Notice Period) to or upon any
Loan Party or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived (except as required by any of the
Orders)), during the continuance of any Event of Default (personally or through
its agents or attorneys), (i) enter upon the premises where any Collateral is
located, without any obligation to pay rent, through self- help, without
judicial process, without first obtaining a final judgment or giving any Loan
Party or any other Person notice or opportunity for a hearing on the Agent’s
claim or action, (ii) collect, receive, appropriate and realize upon any
Collateral, (iii) Sell, grant option or options to purchase and deliver any
Collateral (enter into contractual obligations to do any of the foregoing), in
one or more parcels at public or private sale or sales, at any exchange,
broker’s board or office of any Secured Party or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk,
(iv) withdraw all cash and Cash Equivalents in any Deposit Account or Securities
Account of a Loan Party and apply such cash and Cash Equivalents and other cash,
if any, then held by it as Collateral in satisfaction of the Obligations, and
(v) give notice and take sole possession and control of all amounts on deposit
in or credited

 

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to any Deposit Account or Securities Account pursuant to the related Control
Agreement.  The Agent shall have the right, upon any such public sale or sales
and, to the extent permitted by the Code and other applicable Requirements of
Law, upon any such private sale, to purchase the whole or any part of the
Collateral so sold (and, in lieu of actual payment of the purchase price, may
“credit bid” or otherwise set off the amount of such price against the
Obligations), free of any right or equity of redemption of any Loan Party, which
right or equity is hereby waived and released.

 

(c)                                  Management of the Collateral. Each Loan
Party further agrees, that, during the continuance of any Event of Default,
subject to the Remedies Notice Period, (i) at the Agent’s request, it shall
assemble the Collateral and make it available to the Agent at places that the
Agent shall reasonably select, whether at such Loan Party’s premises or
elsewhere, (ii) without limiting the foregoing, the Agent also has the right to
require that each Loan Party store and keep any Collateral pending further
action by the Agent and, while any such Collateral is so stored or kept, provide
such guards and maintenance services as shall be necessary to protect the same
and to preserve and maintain such Collateral in good condition, (iii) until the
Agent is able to Sell any Collateral, the Agent shall have the right to hold or
use such Collateral to the extent that it deems appropriate for the purpose of
preserving the Collateral or its value or for any other purpose deemed
appropriate by the Agent and (iv) the Agent may, if it so elects, seek the
appointment of a receiver or keeper to take possession of any Collateral and to
enforce any of the Agent’s remedies (for the benefit of the Secured Parties),
with respect to such appointment without prior notice or hearing as to such
appointment. The Agent shall not have any obligation to any Loan Party to
maintain or preserve the rights of any Loan Party as against third parties with
respect to any Collateral while such Collateral is in the possession of the
Agent.

 

(d)                                 Direct Obligation. Neither the Agent nor any
other Secured Party shall be required to make any demand upon, or pursue or
exhaust any right or remedy against, any Loan Party, any other Loan Party or any
other Person with respect to the payment of the Obligations or to pursue or
exhaust any right or remedy with respect to any Collateral therefor or any
direct or indirect guaranty thereof. All of the rights and remedies of the Agent
and any other Secured Party under any Loan Document shall be cumulative, may be
exercised individually or concurrently and not exclusive of any other rights or
remedies provided by any Requirement of Law. To the extent it may lawfully do
so, each Loan Party absolutely and irrevocably waives and relinquishes the
benefit and advantage of, and covenants not to assert against the Agent or any
Lender, any valuation, stay, appraisement, extension, redemption or similar laws
and any and all rights or defenses it may have as a surety, now or hereafter
existing, arising out of the exercise by them of any rights hereunder. If any
notice of a proposed sale or other disposition of any Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least 10 days before such sale or other disposition.

 

(e)                                  Commercially Reasonable. To the extent that
applicable Requirements of Law impose duties on the Agent to exercise remedies
in a commercially reasonable manner, each Loan Party acknowledges and agrees
that it is not commercially unreasonable for the Agent to do any of the
following:

 

(i)                                     fail to incur significant costs,
expenses or other Liabilities reasonably deemed as such by the Agent to prepare
any Collateral for disposition or otherwise to

 

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complete raw material or work in process into finished goods or other finished
products for disposition;

 

(ii)                                  fail to obtain Permits, or other consents,
for access to any Collateral to Sell or for the collection or Sale of any
Collateral, or, if not required by other Requirements of Law, fail to obtain
Permits or other consents for the collection or disposition of any Collateral;

 

(iii)                               fail to exercise remedies against account
debtors or other Persons obligated on any Collateral or to remove Liens on any
Collateral or to remove any adverse claims against any Collateral;

 

(iv)                              advertise dispositions of any Collateral
through publications or media of general circulation, whether or not such
Collateral is of a specialized nature or to contact other Persons, whether or
not in the same business as any Loan Party, for expressions of interest in
acquiring any such Collateral;

 

(v)                                 exercise collection remedies against account
debtors and other Persons obligated on any Collateral, directly or through the
use of collection agencies or other collection specialists, hire one or more
professional auctioneers to assist in the disposition of any Collateral, whether
or not such Collateral is of a specialized nature or, to the extent deemed
appropriate by the Agent, obtain the services of other brokers, investment
bankers, consultants and other professionals to assist the Agent in the
collection or disposition of any Collateral, or utilize Internet sites that
provide for the auction of assets of the types included in the Collateral or
that have the reasonable capacity of doing so, or that match buyers and sellers
of assets to dispose of any Collateral;

 

(vi)                              dispose of assets in wholesale rather than
retail markets;

 

(vii)                           disclaim disposition warranties, such as title,
possession or quiet enjoyment; or

 

(viii)                        purchase insurance or credit enhancements to
insure the Agent against risks of loss, collection or disposition of any
Collateral or to provide to the Agent a guaranteed return from the collection or
disposition of any Collateral.

 

(f)                                   Each Loan Party acknowledges that the
purpose of this Section 9.3 is to provide a non- exhaustive list of actions or
omissions that are commercially reasonable when exercising remedies against any
Collateral and that other actions or omissions by the Secured Parties shall not
be deemed commercially unreasonable solely on account of not being indicated in
this Section 9.3. Without limitation upon the foregoing, nothing contained in
this Section 9.3 shall be construed to grant any rights to any Loan Party or to
impose any duties on the Agent that would not have been granted or imposed by
this Agreement or by applicable Requirements of Law in the absence of this
Section 9.3.

 

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9.4                               Accounts and Payments in Respect of General
Intangibles.

 

(a)                                 In addition to, and not in substitution for,
any other provision in this Agreement, if required by the Agent at any time
during the continuance of an Event of Default, subject to the Remedies Notice
Period, on and after the date on which at least one Deposit Account or
Securities Account has been established, any payment of accounts or payment in
respect of general intangibles, when collected by any Loan Party, shall be
promptly (and, in any event, within 2 Business Days) deposited by such Loan
Party in the exact form received, duly indorsed by such Loan Party to the Agent,
in such account, subject to withdrawal by the Agent as provided in Section 9.5.
Until so turned over, such payment shall be held by such Loan Party in trust for
the Agent, segregated from other funds of such Loan Party. Each such deposit of
proceeds of accounts and payments in respect of general intangibles shall be
accompanied by a report identifying in reasonable detail the nature and source
of the payments included in the deposit.

 

(b)                                 At any time during the continuance of an
Event of Default, subject to the Remedies Notice Period:

 

(i)                                     each Loan Party shall, upon the Agent’s
request, deliver to the Agent all original and other documents evidencing, and
relating to, the contractual obligations and transactions that gave rise to any
account or any payment in respect of general intangibles, including all original
orders, invokes and shipping receipts and notify account debtors that the
accounts or general intangibles have been collaterally assigned to the Agent and
that payments in respect thereof shall be made directly to the Agent;

 

(ii)                                  the Agent may, without notice, at any time
during the continuance of an Event of Default, limit or terminate the authority
of a Loan Party to collect its accounts or amounts due under general intangibles
or any thereof and, in its own name or in the name of others, communicate with
account debtors to verify with them to the Agent’s reasonable satisfaction the
existence, amount and terms of any account or amounts due under any general
intangible. In addition, the Agent may at any lime enforce such Loan Party’s
rights against such account debtors and obligors of general intangibles; and

 

(iii)                               each Loan Party shall take all actions,
deliver all documents and provide all information necessary or reasonably
requested by the Agent to ensure any Internet domain name is registered.

 

(c)                                  Anything herein to the contrary
notwithstanding, each Loan Party shall remain liable under each account and each
payment in respect of general intangibles to observe and perform all the
conditions and obligations to be observed and performed by it thereunder, all in
accordance with the terms of any agreement giving rise thereto. No Secured Party
shall have any obligation or liability under any agreement giving rise to an
account or a payment in respect of a general intangible by reason of or arising
out of any Loan Document or the receipt by any Secured Party of any payment
relating thereto, nor shall any Secured Party be obligated in any manner to
perform any obligation of any Loan Party under or pursuant to any agreement
giving rise to an account or a payment in respect of a general intangible, to
make any payment, to make any inquiry as to the nature or the sufficiency of any
payment received by it or as to the

 

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sufficiency of any performance by any party thereunder, to present or file any
claim, to take any action to enforce any performance or to collect the payment
of any amounts that may have been assigned to it or to which it may be entitled
at any time or times.

 

9.5                               Proceeds to be Turned over to and Held by
Agent.  Unless otherwise expressly provided in this Agreement, upon the
occurrence and during the continuance of an Event of Default, subject to the
Remedies Notice Period, all proceeds of any Collateral received by any Loan
Party hereunder in cash or Cash Equivalents shall be held by such Loan Party in
trust for the Agent and the other Secured Parties, segregated from other funds
of such Loan Party, and shall, promptly upon receipt by any Loan Party, be
turned over to the Agent in the exact form received (with any necessary
endorsement). All such proceeds of Collateral and any other proceeds of any
Collateral received by the Agent in cash or Cash Equivalents shall be held by
the Agent in a Deposit Account or Securities Account. All proceeds being held by
the Agent in a Deposit Account or Securities Account (or by such Loan Party in
trust for the Agent) shall continue to be held as collateral security for the
Obligations and shall not constitute payment thereof until applied as provided
in this Agreement.

 

9.6                               Registration Rights.

 

(a)                                 Each Loan Party recognizes that the Agent
may be unable to effect a public sale of any pledged Collateral by reason of
certain prohibitions contained in the Securities Act, and applicable state or
foreign securities laws or otherwise or may determine that a public sale is
impracticable, not desirable or not commercially reasonable and, accordingly,
may resort to one or more private sales thereof to a restricted group of
purchasers that shall be obliged to agree, among other things, to acquire such
securities for their own account for investment and not with a view to the
distribution or resale thereof. Each Loan Party acknowledges and agrees that any
such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have been made in a commercially
reasonable manner. The Agent shall be under no obligation to delay a sale of any
pledged Collateral for the period of time necessary to permit the issuer thereof
to register such securities for public sale under the Securities Act, or under
applicable state or foreign securities laws even if such issuer would agree to
do so.

 

(b)                                 Upon the occurrence and during the
continuance of an Event of Default, each Loan Party agrees to use its
commercially reasonable efforts to do or cause to be done all such other acts as
may be necessary to make such sale or sales of any portion of the pledged
Collateral pursuant to this Section 9.6, valid and binding and in compliance
with all applicable Requirements of Law provided that no Loan Party shall have
any obligation to publicly register any securities. Each Loan Party further
agrees that a breach of any covenant contained in this Section 9.6 will cause
irreparable injury to the Agent and other Secured Parties, that the Agent and
the other Secured Parties have no adequate remedy at law in respect of such
breach and, as a consequence, that each and every covenant contained in this
Section 9.6 shall be specifically enforceable against such Loan Party, and such
Loan Party hereby waives and agrees not to assert any defense against an action
for specific performance of such covenants except for a defense that no Event of
Default has occurred under this Agreement.

 

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9.7                               Deficiency.  Each Loan Party shall remain
liable for any deficiency if the proceeds of any sale or other disposition of
any Collateral are insufficient to pay the Obligations and the fees and
disbursements of any attorney employed by the Agent or any other Secured Party
to collect such deficiency.

 

10.                               WAIVERS; INDEMNIFICATION.

 

10.1                        Demand; Protest; etc.  Each Borrower waives demand,
protest, notice of protest, notice of default or dishonor, notice of payment and
nonpayment, nonpayment at maturity, release, compromise, settlement, extension,
or renewal of documents, instruments, chattel paper, and guarantees at any time
held by the Lender Group on which such Borrower may in any way be liable.

 

10.2                        The Lender Group’s Liability for Collateral.  Each
Borrower hereby agrees that:  (a) the Lender Group shall not in any way or
manner be liable or responsible for:  (i) the safekeeping of the Collateral,
(ii) any loss or damage thereto occurring or arising in any manner or fashion
from any cause, (iii) any diminution in the value thereof, or (iv) any act or
default of any carrier, warehouseman, bailee, forwarding agency, or other
Person, and (b) all risk of loss, damage, or destruction of the Collateral shall
be borne by Borrowers, other than any such loss or damage resulting from the
gross negligence, willful misconduct or bad faith of the Agent or any member of
the Lender Group, as determined by final non-appealable order of a court of
competent jurisdiction.

 

10.3                        Indemnification.  Borrowers and other Loan Parties
shall pay, indemnify, defend, and hold the Agent-Related Persons, the
Lender-Related Persons (each, an “Indemnified Person”) harmless (to the fullest
extent permitted by law) from and against any and all claims, demands, suits,
actions, investigations, proceedings, liabilities, fines, costs, penalties, and
damages, and all reasonable fees and disbursements of attorneys (limited to one
US counsel to Agent-Related Persons and one US counsel and one local US counsel
to Lender-Related Persons, one Canadian counsel to Agent-Related Persons and one
Canadian counsel to Lender-Related Persons, one Dutch counsel to Agent-Related
Persons and one Dutch counsel to Lender-Related Persons and any local or
regulatory counsel to Agent-Related Persons and Lender-Related Persons
reasonably selected by Agent, one additional counsel for the Lenders (taken as a
whole) if an Event of Default has occurred and is continuing and, if the
interests of any Agent-Related Person or Lender-Related Person are distinctly
and disproportionately affected, one additional counsel for such affected
Person), experts, or consultants and all other costs and expenses actually
incurred in connection therewith or in connection with the enforcement of this
indemnification (promptly upon demand of Agent but in any event not later than 2
days of demand therefor by Agent irrespective of (1) the provisions of
Section 17.10 hereof and (2) whether suit is brought), at any time asserted
against, imposed upon, or incurred by any of them (a) in connection with or as a
result of or related to the execution and delivery of this Agreement, any of the
other Loan Documents, or the transactions contemplated hereby or thereby or the
monitoring of Parent’s and its Subsidiaries’ compliance with the terms of the
Loan Documents (provided, however, that the indemnification in this clause
(a) shall not extend to (i) disputes solely between or among the Lenders or
(ii) disputes solely between or among the Lenders and their respective
Affiliates; it being understood and agreed that the indemnification in this
clause (a) shall extend to Agent (but not the Lenders) relative to disputes
between or among Agent (in

 

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its capacity as such) on the one hand, and one or more Lenders, or one or more
of their Affiliates, on the other hand), (b) with respect to any investigation,
litigation, or proceeding related to this Agreement, any other Loan Document, or
the use of the proceeds of the credit provided hereunder (irrespective of
whether any Indemnified Person is a party thereto), or any act, omission, event,
or circumstance in any manner related thereto, and (c) in connection with or
arising out of any Environmental Liabilities, Environmental Action or Remedial
Action, including any presence or release of Hazardous Materials at, on, under,
to or from any assets or properties owned, leased or operated by Parent or any
of its Subsidiaries (each and all of the foregoing, the “Indemnified
Liabilities”); provided, that, the Indemnified Liabilities shall not include any
Taxes or any costs attributable to Taxes, which shall be governed by
Section 16.  The foregoing to the contrary notwithstanding, no Borrower shall
have any obligation to any Indemnified Person under this Section 10.3 with
respect to any Indemnified Liability that a court of competent jurisdiction
determines by a final non-appealable order to have resulted from the bad faith,
gross negligence or willful misconduct of such Indemnified Person or its
officers, directors, employees, attorneys, or agents.  This provision shall
survive the termination of this Agreement and the repayment of the Obligations. 
If any Indemnified Person makes any payment to any other Indemnified Person with
respect to an Indemnified Liability as to which any Loan Party was required to
indemnify the Indemnified Person receiving such payment, the Indemnified Person
making such payment is entitled to be indemnified and reimbursed by Loan Parties
with respect thereto.  To the fullest extent permitted by Requirements of Law,
the Loan Parties shall not assert, and hereby waive, any claim against any
Indemnified Person, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any other
Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or the use of the proceeds
thereof.

 

11.                               NOTICES.

 

Unless otherwise provided in this Agreement, all notices or demands relating to
this Agreement or any other Loan Document shall be in writing and (except for
financial statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be personally delivered or sent by
registered or certified mail (postage prepaid, return receipt requested),
overnight courier, electronic mail (at such email addresses as a party may
designate in accordance herewith), or telefacsimile.  In the case of notices or
demands to Loan Parties or Agent, as the case may be, they shall be sent to the
respective address set forth below:

 

If to Loan Parties:

Colt Defense LLC

 

547 New Park Avenue

 

West Hartford, CT 06110

 

Attn: John Coghlin

 

Fax No. (860) 244-1442

 

 

with copies to:

O’Melveny & Myers LLP

 

7 Times Square

 

New York, New York 10036

 

Attn: Sung Pak, Esq.

 

Fax No.: (212) 326-2061

 

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If to Agent:

Cortland Capital Market Services LLC

 

225 W. Washington Street, Suite 2100

 

Chicago, Illinois 60606

 

Attn: Ryan Morick and Legal Department

 

Fax No. (312) 376-0751

 

Email: ryan.morick@cortlandglobal.com;

legal@cortlandglobal.com

 

 

with copies to:

Holland & Knight LLP

 

131 S. Dearborn Street, 30th Floor

 

Chicago, Illinois 60603

 

Attn: Joshua M. Spencer

 

Fax No. (312) 578-6666

 

Email: Joshua.spencer@hklaw.com

 

 

If to a Lender:

to the address of such Lender specified on Schedule A-1

 

 

with copies to:

Brown Rudnick LLP

One Financial Center

Boston, Massachusetts 02111

Attn: Steven B. Levine, Esq.

Fax No.  (617) 856-8201

Phone: (617) 856-8587

Email: slevine@brownrudnick.com

 

Brown Rudnick LLP

Seven Times Square

New York, New York 10036

Attn: Robert J. Stark, Esq.

Fax No.  (212) 209-4801

Phone: (212) 2094862

Email: rstark@brownrudnick.com

 

Any party hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other
party.  All notices or demands sent in accordance with this Section 11, shall be
deemed received on the earlier of the date of actual receipt or 3 Business Days
after the deposit thereof in the mail; provided, that (a) notices sent by
overnight courier service shall be deemed to have been given when received,
(b) notices by facsimile shall be deemed to have been given when sent (except
that, if not given during normal business hours for the recipient, shall be
deemed to have been given at the opening of business on the next Business Day
for the recipient) and (c) notices by electronic mail shall be deemed received
upon the sender’s receipt of an acknowledgment from the intended recipient (such
as by the “return receipt requested” function, as available, return email or
other written acknowledgment).

 

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12.                               CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

 

(a)                                 THE VALIDITY OF THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN
DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS
OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER
OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

(b)                                 THE PARTIES AGREE THAT ALL ACTIONS OR
PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE OF NEW YORK AND, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF NEW
YORK, STATE OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN
THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE
SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.  EACH LOAN PARTY AND EACH MEMBER
OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY
RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT
TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
SECTION 12(b).

 

(c)                                  TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, EACH LOAN PARTY AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.  EACH LOAN PARTY AND EACH
MEMBER OF THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.  IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

(d)                                 SUBJECT TO THE LAST SENTENCE OF THIS
SECTION 12(d) EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS
TO THE EXCLUSIVE JURISDICTION OF THE BANKRUPTCY COURT, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS, OR FOR RECOGNITION
OR ENFORCEMENT OF ANY JUDGMENT.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL
JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE

 

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ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL
AFFECT ANY RIGHT THAT AGENT MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY LOAN PARTY OR
ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

(e)                                  NOTWITHSTANDING ANY OTHER PROVISION OF THIS
SECTION 12, (I) THE BANKRUPTCY COURT SHALL HAVE EXCLUSIVE JURISDICTION OVER ANY
ACTION OR DISPUTE INVOLVING, RELATING TO OR ARISING OUT OF THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS AND (II) THE BANKRUPTCY COURT SHALL HAVE EXCLUSIVE
JURISDICTION OVER ANY ACTION OR DISPUTE INVOLVING, RELATING TO OR ARISING OUT OF
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS; PROVIDED, THAT NOTHING IN THIS
SECTION 12 SHALL AFFECT THE RIGHT OF THE AGENT OR ANY LENDER TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY APPLICABLE REQUIREMENTS OF LAW OR COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY LOAN PARTY OR ANY COLLATERAL IN ANY
OTHER JURISDICTION.

 

13.                               ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

 

13.1                        Assignments and Participations.

 

(a)                                 Any Lender may at any time assign to one or
more Eligible Transferees (each, an “Assignee”) all or a portion of its rights
and obligations under this Agreement (including all or a portion of the
Obligations at the time owing to it); provided, that, any such assignment shall
be subject to the following conditions:

 

(i)                                     The principal outstanding balance of the
Obligations of the assigning Lender subject to such assignment shall be not less
than $1,000,000, unless the Agent otherwise consents, except that such minimum
amount shall not apply to (A) an assignment or delegation by any Lender to any
other Lender, an Affiliate of any Lender or an Related Fund or (B) a group of
new Lenders, each of which is an Affiliate of each other or a Related Fund of
such new Lender to the extent that the aggregate amount to be assigned to all
such new Lenders is at least $1,000,000 or (C) in the case of an assignment of
the entire remaining amount of the Obligations at the time owing to it.

 

(ii)                                  Each partial assignment shall be made as
an assignment of a proportionate part of all the assigning Lender’s rights and
obligations (including Term Commitments) under this Agreement.

 

(iii)                               No consent shall be required for any
assignment.

 

(iv)                              The parties to each assignment shall execute
and deliver to the Agent an Assignment and Acceptance, together with a
processing fee of $3,500; provided, that Agent may, in its discretion, elect to
reduce or waive such processing fee in the case of any assignment (and shall
waive such fee if the assignment is from a Lender to an Affiliate of such

 

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Lender), and the assignee, if it is not a Lender, shall deliver to the Agent an
administrative questionnaire in a form reasonably satisfactory to Agent.

 

(v)                                 No such assignment shall be made to (A) a
Loan Party or an Affiliate of a Loan Party, (B) any Defaulting Lender or any of
its Subsidiaries or any Person who, upon becoming a Lender hereunder, would
constitute a Defaulting Lender or one of its Subsidiaries, (C) a natural Person
or (D) any Disqualified Lender.

 

(vi)                              Borrowers and Agent may continue to deal
solely and directly with a Lender in connection with the interest so assigned to
an Assignee until (A) written notice of such assignment, together with payment
instructions, addresses, and related information with respect to the Assignee,
have been given to Administrative Borrower and Agent by such Lender and the
Assignee, (B) such Lender and its Assignee have delivered to Administrative
Borrower and Agent an Assignment and Acceptance and Agent has notified the
assigning Lender of its receipt thereof in accordance with this
Section 13.1(a) and the satisfaction of the other conditions herein.

 

(b)                                 The parties to each assignment shall execute
and deliver to the Agent an Assignment and Acceptance, together with a
processing and recordation fee of $3,500, provided, however, that the Agent may,
in its sole discretion, elect to waive such processing and recordation fee in
the case of any assignment. The assignee, if it shall not be a Lender, shall
deliver to the Agent a written notice specifying such Lender’s lending office
and notice information.

 

(c)                                  From and after the date that Agent has
recorded the assignment in the Register and Agent notifies the assigning Lender
(with a copy to Borrowers) that it has received an executed Assignment and
Acceptance and, if applicable, payment of the required processing fee, (i) the
Assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall be a “Lender” and shall have the rights and obligations of a
Lender under the Loan Documents, and (ii) the assigning Lender shall, to the
extent that rights and obligations hereunder and under the other Loan Documents
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights (except with respect to Section 10.3) and be released from any future
obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender’s rights
and obligations under this Agreement and the other Loan Documents, such Lender
shall cease to be a party hereto and thereto); provided, however, that nothing
contained herein shall release any assigning Lender from obligations that
survive the termination of this Agreement, including such assigning Lender’s
obligations under Section 15 and Section 17.9(a).

 

(d)                                 By executing and delivering an Assignment
and Acceptance, the assigning Lender thereunder and the Assignee thereunder
confirm to and agree with each other and the other parties hereto as follows: 
(i) other than as provided in such Assignment and Acceptance, such assigning
Lender makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
Loan Document furnished pursuant hereto, (ii) such assigning

 

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Lender makes no representation or warranty and assumes no responsibility with
respect to the financial condition of any Borrower or the performance or
observance by any Borrower of any of its obligations under this Agreement or any
other Loan Document furnished pursuant hereto, (iii) such Assignee confirms that
it has received such documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into such Assignment and
Acceptance, (iv) such Assignee will, independently and without reliance upon
Agent, such assigning Lender or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement,
(v) such Assignee appoints and authorizes Agent to take such actions and to
exercise such powers under this Agreement and the other Loan Documents as are
delegated to Agent, by the terms hereof and thereof, together with such powers
as are reasonably incidental thereto, and (vi) such Assignee agrees that it will
perform all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.

 

(e)                                  Immediately upon Agent’s receipt of the
required processing fee, if applicable, and delivery of notice to the assigning
Lender pursuant to Section 13.1(a), this Agreement shall be deemed to be amended
to the extent, but only to the extent, necessary to reflect the addition of the
Assignee.

 

(f)                                   Any Lender may at any time sell to one or
more commercial banks, financial institutions, or other Persons (a
“Participant”) participating interests in all or any portion of its Obligations
and the other rights and interests of that Lender (the “Originating Lender”)
hereunder and under the other Loan Documents; provided, however, that (i) the
Originating Lender shall remain a “Lender” for all purposes of this Agreement
and the other Loan Documents and the Participant receiving the participating
interest in the Obligations and the other rights and interests of the
Originating Lender hereunder shall not constitute a “Lender” hereunder or under
the other Loan Documents and the Originating Lender’s obligations under this
Agreement shall remain unchanged, (ii) the Originating Lender shall remain
solely responsible for the performance of such obligations, (iii) Borrowers,
Agent, and the Lenders shall continue to deal solely and directly with the
Originating Lender in connection with the Originating Lender’s rights and
obligations under this Agreement and the other Loan Documents, (iv) no Lender
shall transfer or grant any participating interest under which the Participant
has the right to approve any amendment to, or any consent or waiver with respect
to, this Agreement or any other Loan Document, except to the extent such
amendment to, or consent or waiver with respect to this Agreement or of any
other Loan Document would (A) extend the final maturity date of the Obligations
hereunder in which such Participant is participating, (B) reduce the interest
rate applicable to the Obligations hereunder in which such Participant is
participating, (C) release all or substantially all of the Collateral or
guaranties (except to the extent expressly provided herein or in any of the Loan
Documents) supporting the Obligations hereunder in which such Participant is
participating, (D) postpone the payment of, or reduce the amount of, the
interest or fees payable to such Participant through such Lender (other than a
waiver of default interest), or (E) decreases the amount or postpones the due
dates of scheduled principal repayments or prepayments or premiums payable to
such Participant through such Lender, and (v) all amounts payable by Borrowers
hereunder shall be determined as if such Lender had not sold such participation,
except that, if amounts outstanding under this Agreement are due and unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of set off in

 

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respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement.  The rights of any Participant
only shall be derivative through the Originating Lender with whom such
Participant participates and no Participant shall have any rights under this
Agreement or the other Loan Documents or any direct rights as to the other
Lenders, Agent, Loan Parties, the Collections of Loan Parties, the Collateral,
or otherwise in respect of the Obligations.  No Participant shall have the right
to participate directly in the making of decisions by the Lenders among
themselves.

 

(g)                                  In connection with any such assignment or
participation or proposed assignment or participation or any grant of a security
interest in, or pledge of, its rights under and interest in this Agreement, a
Lender may, subject to the provisions of Section 17.9, disclose all documents
and information which it now or hereafter may have relating to Parent and its
Subsidiaries and their respective businesses.

 

(h)                                 Any other provision in this Agreement
notwithstanding, any Lender may at any time create a security interest in, or
pledge, all or any portion of its rights under and interest in this Agreement in
favor of any Federal Reserve Bank in accordance with Regulation A of the Federal
Reserve Bank or U.S. Treasury Regulation 31 CFR §203.24, and such Federal
Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law.

 

(i)                                     Agent (as a non-fiduciary agent on
behalf of Borrowers) shall maintain, or cause to be maintained, a register (the
“Register”) on which it enters the name and address of each Lender as the
registered owner of the Loans (and the principal amount thereof and stated
interest thereon) held by such Lender (each, a “Registered Loan”).  A Registered
Loan (and the registered note, if any, evidencing the same) may be assigned or
sold in whole or in part only by registration of such assignment or sale on the
Register (and each registered note shall expressly so provide) and any
assignment or sale of all or part of such Registered Loan (and the registered
note, if any, evidencing the same) may be effected only by registration of such
assignment or sale on the Register, together with the surrender of the
registered note, if any, evidencing the same duly endorsed by (or accompanied by
a written instrument of assignment or sale duly executed by) the holder of such
registered note, whereupon, at the request of the designated assignee(s) or
transferee(s), one or more new registered notes in the same aggregate principal
amount shall be issued to the designated assignee(s) or transferee(s).  Prior to
the registration of assignment or sale of any Registered Loan (and the
registered note, if any evidencing the same), Borrowers shall treat the Person
in whose name such Registered Loan (and the registered note, if any, evidencing
the same) is registered as the owner thereof for the purpose of receiving all
payments thereon and for all other purposes, notwithstanding notice to the
contrary.

 

(j)                                    In the event that a Lender sells
participations in the Registered Loan, such Lender, as a non-fiduciary agent on
behalf of Borrowers, shall maintain (or cause to be maintained) a register on
which it enters the name of all participants in the Registered Loans held by it
(and the principal amount (and stated interest thereon) of the portion of such
Registered Loans that is subject to such participations) (the “Participant
Register”).  A Registered Loan (and the Registered Note, if any, evidencing the
same) may be participated in whole or in part only by registration of such
participation on the Participant Register (and each registered note shall

 

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expressly so provide).  Any participation of such Registered Loan (and the
registered note, if any, evidencing the same) may be effected only by the
registration of such participation on the Participant Register.

 

(k)                                 Agent shall make a copy of the Register (and
each Lender shall make a copy of its Participant Register in the extent it has
one) available for review by Borrowers from time to time as Borrowers may
reasonably request.

 

13.2                        Successors.  This Agreement shall bind and inure to
the benefit of the respective successors and assigns of each of the parties
hereto; provided, however, that no Borrower may assign this Agreement or any
rights or duties hereunder without the Lenders’ prior written consent and any
prohibited assignment shall be absolutely void ab initio.  No consent to
assignment by the Lenders shall release any Borrower from its Obligations.  A
Lender may assign this Agreement and the other Loan Documents and its rights and
duties hereunder and thereunder pursuant to Section 13.1 and, except as
expressly required pursuant to Section 13.1, no consent or approval by any
Borrower is required in connection with any such assignment.

 

14.                               AMENDMENTS; WAIVERS.

 

14.1                        Amendments and Waivers.

 

(a)                                 No amendment, waiver or other modification
of any provision of this Agreement or any other Loan Document (other than the
Fee Letter), and no consent with respect to any departure by any Loan Party
therefrom, shall be effective unless the same shall be in writing and signed by
the Required Lenders (or by Agent at the written request of the Required
Lenders) and the Loan Parties that are party thereto and then any such waiver or
consent shall be effective, but only in the specific instance and for the
specific purpose for which given; provided, however, that no such waiver,
amendment, or consent shall, unless in writing and signed by all of the Lenders
directly affected thereby and all of the Loan Parties that are party thereto, do
any of the following:

 

(i)                                     [reserved],

 

(ii)                                  postpone or delay any date fixed by this
Agreement or any other Loan Document for any payment of principal, interest,
fees, or other amounts due hereunder or under any other Loan Document,

 

(iii)                               reduce the principal of, or the rate of
interest on, any loan or other extension of credit hereunder, or reduce any fees
or other amounts payable hereunder or under any other Loan Document (except
(y) in connection with the waiver of applicability of Section 2.6(c) (which
waiver shall be effective with the written consent of the Required Lenders), and
(z) that any amendment or modification of defined terms used in the financial
covenants in this Agreement shall not constitute a reduction in the rate of
interest or a reduction of fees for purposes of this clause (iii)),

 

(iv)                              amend, modify, or eliminate this Section or
any provision of this Agreement providing for consent or other action by all
Lenders,

 

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(v)                                 [reserved],

 

(vi)                              release Agent’s Lien in and to any of the
Collateral, except as permitted by Section 15.11,

 

(vii)                           amend, modify, or eliminate the definition of
“Required Lenders” or “Pro Rata Share”,

 

(viii)                        contractually subordinate any of Agent’s Liens,
except as permitted by Section 15.11,

 

(ix)                              release any Borrower or any Guarantor from any
obligation for the payment of money or consent to the assignment or transfer by
any Borrower or any Guarantor of any of its rights or duties under this
Agreement or the other Loan Documents, except in connection with a merger,
liquidation, dissolution or sale of such Person expressly permitted by the terms
hereof or the other Loan Documents,

 

(x)                                 amend, modify, or eliminate any of the
provisions of Section 2.4(b)(i) or (ii) or Section 2.4(f), or

 

(xi)                              amend, modify, or eliminate any of the
provisions of Section 13.1(a) to permit a Loan Party or an Affiliate of a Loan
Party to be permitted to become an Assignee.

 

(b)                                 No amendment, waiver, modification,
elimination, or consent shall amend, modify, or waive (i) the definition of, or
any of the terms or provisions of, the Fee Letter, without the written consent
of Agent and Borrowers (and shall not require the written consent of any of the
Lenders), and (ii) any provision of Section 15 pertaining to Agent, or any other
rights or duties of Agent under this Agreement or the other Loan Documents,
without the written consent of Agent, Borrowers, and the Required Lenders.

 

(c)                                  [reserved].

 

(d)                                 [reserved].

 

(e)                                  Anything in this Section 14.1 to the
contrary notwithstanding, (i) any amendment, modification, elimination, waiver,
consent, termination, or release of, or with respect to, any provision of this
Agreement or any other Loan Document that relates only to the relationship of
the Lender Group among themselves, and that does not affect the rights or
obligations of any Loan Party, shall not require consent by or the agreement of
any Loan Party, and (ii) any amendment, waiver, modification, elimination, or
consent of or with respect to any provision of this Agreement or any other Loan
Document may be entered into without the consent of, or over the objection of,
any Defaulting Lender other than any of the matters governed by
Section 14.1(a)(i) through (iii).

 

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14.2                        Replacement of Certain Lenders; Lender Purchase
Right.

 

(a)                                 If (i) any action to be taken by the Lender
Group or Agent hereunder requires the consent, authorization, or agreement of
all Lenders or all Lenders affected thereby and if such action has received the
consent, authorization, or agreement of the Required Lenders but not of all
Lenders or all Lenders affected thereby, or (ii) any Lender makes a claim for
compensation under Section 16, then Borrowers or Agent, upon at least 5 Business
Days prior irrevocable notice, may permanently replace any Lender that failed to
give its consent, authorization, or agreement (a “Holdout Lender”) or any Lender
that made a claim for compensation (a “Tax Lender”) with one or more Replacement
Lenders, and the Holdout Lender or Tax Lender, as applicable, shall have no
right to refuse to be replaced hereunder.  Such notice to replace the Holdout
Lender or Tax Lender, as applicable, shall specify an effective date for such
replacement, which date shall not be later than 15 Business Days after the date
such notice is given.

 

(b)                                 Prior to the effective date of such
replacement, the Holdout Lender or Tax Lender, as applicable, and each
Replacement Lender shall execute and deliver an Assignment and Acceptance,
subject only to the Holdout Lender or Tax Lender, as applicable, being repaid in
full its share of the outstanding Obligations (without any premium or penalty of
any kind whatsoever, but including all interest, fees and other amounts that may
be due in payable in respect thereof).  If the Holdout Lender or Tax Lender, as
applicable, shall refuse or fail to execute and deliver any such Assignment and
Acceptance prior to the effective date of such replacement, Agent may, but shall
not be required to, execute and deliver such Assignment and Acceptance in the
name or and on behalf of the Holdout Lender or Tax Lender, as applicable, and
irrespective of whether Agent executes and delivers such Assignment and
Acceptance, the Holdout Lender or Tax Lender, as applicable, shall be deemed to
have executed and delivered such Assignment and Acceptance.  The replacement of
any Holdout Lender or Tax Lender, as applicable, shall be made in accordance
with the terms of Section 13.1.  Until such time as one or more Replacement
Lenders shall have acquired all of the Obligations, and the other rights and
obligations of the Holdout Lender or Tax Lender, as applicable, hereunder and
under the other Loan Documents, the Holdout Lender or Tax Lender, as applicable,
shall remain obligated to make the Holdout Lender’s or Tax Lender’s, as
applicable, Pro Rata Share of Loans.

 

14.3                        No Waivers; Cumulative Remedies.  No failure by
Agent or any Lender to exercise any right, remedy, or option under this
Agreement or any other Loan Document, or delay by Agent or any Lender in
exercising the same, will operate as a waiver thereof.  No waiver by Agent or
any Lender will be effective unless it is in writing, and then only to the
extent specifically stated.  No waiver by Agent or any Lender on any occasion
shall affect or diminish Agent’s and each Lender’s rights thereafter to require
strict performance by each Loan Party of any provision of this Agreement. 
Agent’s and each Lender’s rights under this Agreement and the other Loan
Documents will be cumulative and not exclusive of any other right or remedy that
Agent or any Lender may have.

 

15.                               AGENT; THE LENDER GROUP.

 

15.1                        Appointment and Authorization of Agent.  Each Lender
hereby designates and appoints Cortland Capital Market Services LLC as its agent
under this Agreement and the other

 

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Loan Documents and each Lender hereby irrevocably authorizes Agent to execute
and deliver each of the other Loan Documents on its behalf and to take such
other action on its behalf under the provisions of this Agreement and each other
Loan Document and to exercise such powers and perform such duties as are
expressly delegated to Agent by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto.  Agent
agrees to act as agent for and on behalf of the Lenders on the conditions
contained in this Section 15.  Any provision to the contrary contained elsewhere
in this Agreement or in any other Loan Document notwithstanding, Agent shall not
have any duties or responsibilities, except those expressly set forth herein or
in the other Loan Documents, nor shall Agent have or be deemed to have any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against Agent.  Without
limiting the generality of the foregoing, the use of the term “agent” in this
Agreement or the other Loan Documents with reference to Agent is not intended to
connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable law.  Instead, such term is used merely as a
matter of market custom, and is intended to create or reflect only a
representative relationship between independent contracting parties.  Each
Lender hereby further authorizes Agent to act as the secured party under each of
the Loan Documents that create a Lien on any item of Collateral.  Except as
expressly otherwise provided in this Agreement, Agent shall have and may use its
sole discretion with respect to exercising or refraining from exercising any
discretionary rights or taking or refraining from taking any actions that Agent
expressly is entitled to take or assert under or pursuant to this Agreement and
the other Loan Documents.  Without limiting the generality of the foregoing, or
of any other provision of the Loan Documents that provides rights or powers to
Agent, Lenders agree that Agent shall have the right to exercise the following
powers as long as this Agreement remains in effect:  (a) maintain, in accordance
with its customary business practices, ledgers and records reflecting the status
of the Obligations, the Collateral, the Collections of Parent and its
Subsidiaries, and related matters, (b) execute or file any and all financing or
similar statements or notices, amendments, renewals, supplements, documents,
instruments, notices and other written agreements with respect to the Loan
Documents, (c) make Loans, for itself or on behalf of Lenders, as provided in
the Loan Documents, (d) exclusively receive, apply, and distribute the
Collections of Parent and its Subsidiaries as provided in the Loan Documents,
(e) open and maintain such bank accounts and cash management arrangements as
Agent deems necessary and appropriate in accordance with the Loan Documents for
the foregoing purposes with respect to the Collateral and the Collections of
Parent and its Subsidiaries, (f) perform, exercise, and enforce any and all
other rights and remedies of the Lender Group with respect to Parent or its
Subsidiaries, the Obligations, the Collateral, the Collections of Parent and its
Subsidiaries, or otherwise related to any of same as provided in the Loan
Documents, and (g) incur and pay such Lender Group Expenses, at the expense of
the Loan Parties, as Agent may deem necessary or appropriate for the performance
and fulfillment of its functions and powers pursuant to the Loan Documents.

 

15.2                        Delegation of Duties; Appointment of Subagents. 
(a) Agent may execute any of its duties under this Agreement or any other Loan
Document by or through agents, employees or attorneys in fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties. 
Agent shall not be responsible for the negligence or misconduct of any agent or
attorney in fact that it selects as long as such selection was made without
gross negligence or willful misconduct.  Agent shall not be responsible for the
negligence or misconduct of any agent

 

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or attorney in fact that it selects as long as such selection was made without
gross negligence or willful misconduct. Agent and any such sub-agent may perform
any and all of its duties and exercise its rights and powers by or through their
respective Affiliates.  All of the rights, benefits, and privileges (including
the exculpatory and indemnification provisions) of this Section 15 shall apply
to any such sub-agent and to any of the Affiliates of Agent and any such
sub-agents, and shall apply to their respective activities as if such sub-agent
and Affiliates were named herein in connection with the transactions
contemplated hereby and by the Loan Documents.

 

15.3                        Liability of Agent.  None of the Agent-Related
Persons shall (a) be liable for any action taken or omitted to be taken by any
of them under or in connection with this Agreement or any other Loan Document or
the transactions contemplated hereby (except for its own bad faith, gross
negligence or willful misconduct), or (b) be responsible in any manner to any of
the Lenders for any recital, statement, representation or warranty made by
Parent or any of its Subsidiaries or Affiliates, or any officer or director
thereof, contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure of
Parent or its Subsidiaries or any other party to any Loan Document to perform
its obligations hereunder or thereunder.  No Agent-Related Person shall be under
any obligation to any Lenders to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the books and records or
properties of Parent or its Subsidiaries.

 

15.4                        Reliance by Agent.  Agent shall be entitled to rely,
and shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, telefacsimile or other
electronic method of transmission, telex or telephone message, statement or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent, or made by the proper Person or Persons, and upon advice
and statements of legal counsel (including counsel to Borrowers or counsel to
any Lender), independent accountants and other experts selected by Agent.  Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless Agent shall first receive such
advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable.  If Agent so requests, it shall first be indemnified to its
reasonable satisfaction by the Lenders against any and all liability and expense
that may be incurred by it by reason of taking or continuing to take any such
action.  Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement or any other Loan Document in accordance with
a request or consent of the Required Lenders and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.

 

15.5                        Notice of Default or Event of Default.  Agent shall
not be deemed to have knowledge or notice of the occurrence of any Default or
Event of Default, except with respect to defaults in the payment of principal,
interest, fees, and expenses required to be paid to Agent for the account of the
Lenders and, except with respect to Events of Default of which Agent has actual
knowledge, unless Agent shall have received written notice from a Lender or any
Borrower referring to this Agreement, describing such Default or Event of
Default, and stating

 

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that such notice is a “notice of default.”  Agent promptly will notify the
Lenders of its receipt of any such notice or of any Event of Default of which
Agent has actual knowledge.  If any Lender obtains actual knowledge of any Event
of Default, such Lender promptly shall notify the other Lenders and Agent of
such Event of Default.  Each Lender shall be solely responsible for giving any
notices to its Participants, if any.  Subject to Section 15.4, Agent shall take
such action with respect to such Default or Event of Default as may be requested
by the Required Lenders in accordance with Section 9; provided, however, that
unless and until Agent has received any such request, Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable.

 

15.6                        Credit Decision.  Each Lender acknowledges that none
of the Agent-Related Persons has made any representation or warranty to it, and
that no act by Agent hereinafter taken, including any review of the affairs of
Parent and its Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender.  Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such due diligence, documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of any Borrower or any other Person party
to a Loan Document, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to Borrowers.  Each Lender also represents that
it will, independently and without reliance upon any Agent-Related Person and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of any Borrower or any other Person party to a Loan Document. 
Except for notices, reports, and other documents expressly herein required to be
furnished to the Lenders by Agent, Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of any Borrower or any other Person party to a
Loan Document that may come into the possession of any of the Agent-Related
Persons.  Each Lender acknowledges that Agent does not have any duty or
responsibility, either initially or on a continuing basis (except to the extent,
if any, that is expressly specified herein) to provide such Lender with any
credit or other information with respect to any Borrower, its Affiliates or any
of their respective business, legal, financial or other affairs, and
irrespective of whether such information came into Agent’s or its Affiliates’ or
representatives’ possession before or after the date on which such Lender became
a party to this Agreement.

 

15.7                        Costs and Expenses; Indemnification.  Agent may
incur and pay Lender Group Expenses, at the expense of the Lender Group, to the
extent Agent reasonably deems necessary or appropriate for the performance and
fulfillment of its functions, powers, and obligations pursuant to the Loan
Documents, including court costs, attorneys fees and expenses, fees and expenses
of financial accountants, advisors, consultants, and appraisers, costs of
collection by outside collection agencies, auctioneer fees and expenses, and
costs of security guards or insurance premiums paid to maintain the Collateral,
whether or not Borrowers are obligated to reimburse Agent or Lenders for such
expenses pursuant to this Agreement or otherwise.  Agent

 

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is authorized and directed to deduct and retain sufficient amounts from the
Collections of Parent and its Subsidiaries received by Agent to reimburse Agent
for such out-of-pocket costs and expenses prior to the distribution of any
amounts to Lenders.  In the event Agent is not reimbursed for such costs and
expenses by Parent or its Subsidiaries, each Lender hereby agrees that it is and
shall be obligated to pay to Agent such Lender’s ratable thereof.  Whether or
not the transactions contemplated hereby are consummated, each of the Lenders,
on a ratable basis, shall indemnify and defend the Agent-Related Persons (to the
extent not reimbursed by or on behalf of Borrowers and without limiting the
obligation of Borrowers to do so) from and against any and all Indemnified
Liabilities; provided, that, no Lender shall be liable for the payment to any
Agent-Related Person of any portion of such Indemnified Liabilities resulting
solely from such Person’s bad faith, gross negligence or willful misconduct nor
shall any Lender be liable for the obligations of any Defaulting Lender in
failing to make any Loan or other extension of credit hereunder.  Without
limitation of the foregoing, each Lender shall reimburse Agent upon demand for
such Lender’s ratable share of any costs or out of pocket expenses (including
attorneys, accountants, advisors, and consultants fees and expenses) incurred by
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment, or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement or any other Loan Document to the extent
that Agent is not reimbursed for such expenses by or on behalf of Borrowers. 
The undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of Agent.

 

15.8                        Agent in Individual Capacity.  Cortland Capital
Market Services LLC (“Cortland”) and its Affiliates may make loans to, issue
letters of credit for the account of, accept deposits from, acquire equity
interests in, and generally engage in any kind of banking, trust, financial
advisory, underwriting, or other business with Parent and its Subsidiaries and
Affiliates and any other Person party to any Loan Document as though Cortland
were not Agent hereunder, and, in each case, without notice to or consent of the
other members of the Lender Group.  The other members of the Lender Group
acknowledge that, pursuant to such activities, Cortland or its Affiliates may
receive information regarding Borrowers or their Affiliates or any other Person
party to any Loan Documents that is subject to confidentiality obligations in
favor of Borrowers or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them.

 

15.9                        Successor Agent.  Agent may resign as Agent upon 30
days prior written notice to the Lenders (unless such notice is waived by the
Required Lenders) and Administrative Borrower (unless such notice is waived by
Borrowers).  If Agent resigns under this Agreement, the Required Lenders shall
be entitled, with (so long as no Event of Default has occurred and is
continuing) the consent of Administrative Borrower (such consent not to be
unreasonably withheld, delayed, or conditioned), appoint a successor Agent for
the Lenders.  If no successor Agent is appointed prior to the effective date of
the resignation of Agent, Agent may appoint, after consulting with the Lenders
and Administrative Borrower, a successor Agent.  If Agent has materially
breached or failed to perform any material provision of this Agreement or of
applicable law, the Required Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders with (so long as no Event of
Default has occurred and

 

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is continuing) the consent of Borrowers (such consent not to be unreasonably
withheld, delayed, or conditioned).  In any such event, upon the acceptance of
its appointment as successor Agent hereunder, such successor Agent shall succeed
to all the rights, powers, and duties of the retiring Agent and the term “Agent”
shall mean such successor Agent and the retiring Agent’s appointment, powers,
and duties as Agent shall be terminated.  After any retiring Agent’s resignation
hereunder as Agent, the provisions of this Section 15 shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Agent under
this Agreement.  If no successor Agent has accepted appointment as Agent by the
date which is 30 days following a retiring Agent’s notice of resignation, the
retiring Agent’s resignation shall nevertheless thereupon become effective and
the Lenders shall perform all of the duties of Agent hereunder until such time,
if any, as the Lenders appoint a successor Agent as provided for above.

 

15.10                 Lender in Individual Capacity.  Any Lender and its
respective Affiliates may make loans to, issue letters of credit for the account
of, accept deposits from, equity interests in and generally engage in any kind
of banking, trust, financial advisory, underwriting, or other business with
Parent and its Subsidiaries and Affiliates and any other Person party to any
Loan Documents as though such Lender were not a Lender hereunder without notice
to or consent of the other members of the Lender Group.  The other members of
the Lender Group acknowledge that, pursuant to such activities, such Lender and
its respective Affiliates may receive information regarding Parent or their
Affiliates or any other Person party to any Loan Documents that is subject to
confidentiality obligations in favor of Parent or such other Person and that
prohibit the disclosure of such information to the Lenders, and the Lenders
acknowledge that, in such circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver such Lender will use its reasonable
best efforts to obtain), such Lender shall not be under any obligation to
provide such information to them.

 

15.11                 Collateral Matters; Credit Bidding.

 

(a)                                 Subject to Section 15.11(b), Lenders hereby
irrevocably authorize Agent, at its option and in its discretion, to release, or
subordinate, any Lien on any of the Collateral (i) upon satisfaction of all of
the Obligations, or (ii) constituting property being sold or disposed of if
Administrative Borrower or any Loan Party certifies to Agent that the sale or
disposition is made in compliance with Section 6.4 (and Agent may rely
conclusively on any such certificate, without further inquiry), or
(iii) constituting property in which any Loan Party did not own an interest at
the time the security interest, mortgage or lien was granted or at any time
thereafter, or (iv) having a value in the aggregate in any twelve (12) month
period of less than $2,500,000, and to the extent Agent may release its Lien on
any such Collateral pursuant to the sale or other disposition thereof, such sale
or other disposition shall be deemed consented to by Lenders, or (v) if required
or permitted under the terms of any of the other Loan Documents, including any
intercreditor agreement, or (vi) constituting property leased to a Loan Party
under a lease that has expired or is terminated, or (vii) subject to
Section 14.1, the Canadian Security Documents and the Security Documents, if the
release is approved, authorized or ratified in writing by the Required Lenders. 
Upon request by Agent or any Borrower at any time, the Lenders will confirm in
writing Agent’s authority to release or subordinate any such Liens on particular
types or items of Collateral pursuant to this Section 15.11; provided, that,
(1) Agent shall not be required to execute any document necessary to evidence
such release or subordination on terms that, in Agent’s opinion, would expose
Agent to liability or create any obligation or entail any

 

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consequence other than the release of such Lien without recourse,
representation, or warranty, and (2) such release or subordination shall not in
any manner discharge, affect, or impair the Obligations or any Liens (other than
those expressly being released or subordinated) upon (or obligations of any
Borrower in respect of) all interests retained by any Loan Party, including, the
proceeds of any sale, all of which shall continue to constitute part of the
Collateral.  The Lenders further hereby irrevocably authorize Agent, at its
option and in its sole discretion, to subordinate any Lien granted to or held by
Agent under any Loan Document to the holder of any Permitted Lien on such
property if such Permitted Lien secures Permitted Purchase Money Indebtedness.

 

(b)                                 The Loan Parties and the Lenders hereby
irrevocably authorize Agent, based upon the instruction of the Required Lenders,
to (A) consent to, credit bid or purchase (either directly or through one or
more acquisition vehicles) all or any portion of the Collateral at any sale
thereof conducted under the provisions of the Bankruptcy Code or other
bankruptcy laws, including under Section 363 of the Bankruptcy Code, (B) credit
bid or purchase (either directly or through one or more acquisition vehicles)
all or any portion of the Collateral at any sale or other disposition thereof
conducted under the provisions of the Code or the PPSA, including pursuant to
Sections 9-610 or 9-620 of the Code, or (C) credit bid or purchase (either
directly or through one or more acquisition vehicles) all or any portion of the
Collateral at any other sale or foreclosure conducted by Agent (whether by
judicial action or otherwise) in accordance with applicable law.  In connection
with any such credit bid or purchase, (i) the Obligations owed to the Lenders
shall be entitled to be, and shall be, credit bid on a ratable basis (with
Obligations with respect to contingent or unliquidated claims being estimated
for such purpose if the fixing or liquidation thereof would not unduly delay the
ability of Agent to credit bid or purchase at such sale or other disposition of
the Collateral and, if such claims cannot be estimated without unduly delaying
the ability of Agent to credit bid, then such claims shall be disregarded, not
credit bid, and not entitled to any interest in the asset or assets purchased by
means of such credit bid) and the Lenders whose Obligations are credit bid shall
be entitled to receive interests (ratably based upon the proportion of their
Obligations credit bid in relation to the aggregate amount of Obligations so
credit bid) in the asset or assets so purchased (or in the Equity Interests of
the acquisition vehicle or vehicles that are used to consummate such purchase),
and (ii) the Agent, based upon the instruction of the Required Lenders, may
accept non-cash consideration, including debt and equity securities issued by
such acquisition vehicle or vehicles and in connection therewith the Agent may
reduce the Obligations owed to the Lenders (ratably based upon the proportion of
their Obligations credit bid in relation to the aggregate amount of Obligations
so credit bid) based upon the value of such non-cash consideration.

 

(c)                                  Agent shall have no obligation whatsoever
to any of the Lenders to assure that the Collateral exists or is owned by a Loan
Party or is cared for, protected, or insured or has been encumbered, or that
Agent’s Liens have been properly or sufficiently or lawfully created, perfected,
protected, or enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission, or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, in its
sole discretion given Agent’s own interest in the Collateral in its capacity as
one of the Lenders and that Agent shall have no other

 

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duty or liability whatsoever to any Lender as to any of the foregoing, except as
otherwise provided herein.

 

15.12                 Restrictions on Actions by Lenders; Sharing of Payments.

 

(a)                                 Each of the Lenders agrees that it shall
not, without the express written consent of Agent, and that it shall, to the
extent it is lawfully entitled to do so, upon the written request of Agent, set
off against the Obligations, any amounts owing by such Lender to Parent or its
Subsidiaries or any deposit accounts of Parent or its Subsidiaries now or
hereafter maintained with such Lender.  Each of the Lenders further agrees that
it shall not, unless specifically requested to do so in writing by Agent, take
or cause to be taken any action, including, the commencement of any legal or
equitable proceedings to enforce any Loan Document against any Borrower or any
Guarantor or to foreclose any Lien on, or otherwise enforce any security
interest in, any of the Collateral.

 

(b)                                 If, at any time or times any Lender shall
receive (i) by payment, foreclosure, setoff, or otherwise, any proceeds of
Collateral or any payments with respect to the Obligations, except for any such
proceeds or payments received by such Lender from Agent pursuant to the terms of
this Agreement, or (ii) payments from Agent in excess of such Lender’s Pro Rata
Share of all such distributions by Agent, such Lender promptly shall (A) turn
the same over to Agent, in kind, and with such endorsements as may be required
to negotiate the same to Agent, or in immediately available funds, as
applicable, for the account of all of the Lenders and for application to the
Obligations in accordance with the applicable provisions of this Agreement, or
(B) purchase, without recourse or warranty, an undivided interest and
participation in the Obligations owed to the other Lenders so that such excess
payment received shall be applied ratably as among the Lenders in accordance
with their Pro Rata Shares; provided, however, that to the extent that such
excess payment received by the purchasing party is thereafter recovered from it,
those purchases of participations shall be rescinded in whole or in part, as
applicable, and the applicable portion of the purchase price paid therefor shall
be returned to such purchasing party, but without interest except to the extent
that such purchasing party is required to pay interest in connection with the
recovery of the excess payment.

 

15.13                 Agency for Perfection.  Agent hereby appoints each other
Lender as its agent (and each Lender hereby accepts such appointment) for the
purpose of perfecting Agent’s Liens in assets which, in accordance with
Article 8 or Article 9, as applicable, of the Code or in accordance with the
PPSA or the Securities Transfer Act of any applicable jurisdictions in Canada
can be perfected by possession or control.  Should any Lender obtain possession
or control of any such Collateral, such Lender shall notify Agent thereof, and,
promptly upon Agent’s request therefor shall deliver possession or control of
such Collateral to Agent or in accordance with Agent’s instructions.

 

15.14                 Payments by Agent to the Lenders.  All payments to be made
by Agent to the Lenders shall be made by bank wire transfer of immediately
available funds pursuant to such wire transfer instructions as each party may
designate for itself by written notice to Agent.  Concurrently with each such
payment, Agent shall identify whether such payment (or any portion thereof)
represents principal, premium, fees, or interest of the Obligations.

 

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15.15                 Concerning the Collateral and Related Loan Documents. 
Each member of the Lender Group authorizes and directs Agent to enter into this
Agreement, the DIP Intercreditor Agreement and the other Loan Documents.  Each
member of the Lender Group agrees that any action taken by Agent in accordance
with the terms of this Agreement or the other Loan Documents relating to the
Collateral and the exercise by Agent of its powers set forth therein or herein,
together with such other powers that are reasonably incidental thereto, shall be
binding upon all of the Lenders.

 

15.16                 Field Examination Reports; Confidentiality; Disclaimers by
Lenders; Other Reports and Information.

 

(a)                                 By becoming a party to this Agreement, each
Lender:

 

(i)                                     is deemed to have requested that Agent
furnish such Lender, promptly after it becomes available, a copy of each field
examination report respecting Parent or its Subsidiaries (each, a “Report”)
prepared by or at the request of Required Lenders, and Agent shall so furnish
each Lender with such Reports,

 

(ii)                                  expressly agrees and acknowledges that
Agent does not (i) make any representation or warranty as to the accuracy of any
Report, and (ii) shall not be liable for any information contained in any
Report,

 

(iii)                               expressly agrees and acknowledges that the
Reports are not comprehensive audits or examinations, that Agent or other party
performing any audit or examination will inspect only specific information
regarding Parent and its Subsidiaries and will rely significantly upon Parent’s
and its Subsidiaries’ books and records, as well as on representations of each
Borrower’s personnel,

 

(iv)                              agrees to keep all Reports and other material,
non-public information regarding Parent and its Subsidiaries and their
operations, assets, and existing and contemplated business plans in a
confidential manner in accordance with Section 17.9, and

 

(v)                                 without limiting the generality of any other
indemnification provision contained in this Agreement, agrees:  (i) to hold
Agent and any other Lender preparing a Report harmless from any action the
indemnifying Lender may take or fail to take or any conclusion the indemnifying
Lender may reach or draw from any Report in connection with any loans or other
credit accommodations that the indemnifying Lender has made or may make to
Borrowers, or the indemnifying Lender’s participation in, or the indemnifying
Lender’s purchase of, a loan or loans of Borrowers, and (ii) to pay and protect,
and indemnify, defend and hold Agent, and any such other Lender preparing a
Report harmless from and against, the claims, actions, proceedings, damages,
costs, expenses, and other amounts (including, attorneys fees and costs)
incurred by Agent and any such other Lender preparing a Report as the direct or
indirect result of any third parties who might obtain all or part of any Report
through the indemnifying Lender.

 

(b)                                 In addition to the foregoing: (i) any Lender
may from time to time request of Agent in writing that Agent provide to such
Lender a copy of any report or document provided by Parent or any Subsidiary of
Parent to Agent that has not been contemporaneously

 

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provided by Parent or its Subsidiaries to such Lender, and, upon receipt of such
request, Agent promptly shall provide a copy of same to such Lender, (y) to the
extent that Agent is entitled, under any provision of the Loan Documents, to
request additional reports or information from Parent or its Subsidiaries, any
Lender may, from time to time, reasonably request Agent to exercise such right
as specified in such Lender’s notice to Agent, whereupon Agent promptly shall
request of such Borrower the additional reports or information reasonably
specified by such Lender, and, upon receipt thereof from Parent or its
Subsidiaries, Agent promptly shall provide a copy of same to such Lender, and
(z) any time that Agent renders to any Borrower a statement regarding the Loan
Account, Agent shall send a copy of such statement to each Lender.

 

15.17                 [Reserved.]

 

15.18                 Several Obligations; No Liability.  Nothing contained
herein shall confer upon any Lender any interest in, or subject any Lender to
any liability for, or in respect of, the business, assets, profits, losses, or
liabilities of any other Lender.  Each Lender shall be solely responsible for
notifying its Participants of any matters relating to the Loan Documents to the
extent any such notice may be required, and no Lender shall have any obligation,
duty, or liability to any Participant of any other Lender.  Except as provided
in Section 15.7, no member of the Lender Group shall have any liability for the
acts of any other member of the Lender Group.  No Lender shall be responsible to
any Borrower or any other Person for any failure by any other Lender to fulfill
its obligations to make credit available hereunder, nor to advance for such
Lender or on its behalf, nor to take any other action on behalf of such Lender
hereunder or in connection with the financing contemplated herein.

 

15.19                 Appointment for the Province of Québec.  Without prejudice
to Section 15.1 above, each member of the Lender Group hereby appoints Agent as
the person holding the power of attorney (fondé pouvoir) of the Lender Group as
contemplated under Article 2692 of the Civil Code of Québec, to enter into, to
take and to hold on their behalf, and for their benefit, any deed of hypothec
(“Deed of Hypothec”) to be executed by any of the Borrowers or Guarantors
granting a hypothec pursuant to the laws of the Province of Québec (Canada) and
to exercise such powers and duties which are conferred thereupon under such
deed.  All of the Lender Group hereby additionally appoints Agent as agent,
mandatary, custodian and depositary for and on behalf of the Lender Group (a) to
hold and to be the sole registered holder of any bond (“Bond”) issued under the
Deed of Hypothec, the whole notwithstanding any other applicable law, and (b) to
enter into, to take and to hold on their behalf, and for their benefit, a bond
pledge agreement (“Pledge”) to be executed by such Borrower or Guarantor
pursuant to the laws of the Province of Québec and creating a pledge of the Bond
as security for the payment and performance of, inter alia, the Obligations.  In
this respect, (i) Agent as agent, mandatary, custodian and depositary for and on
behalf of the Lender Group, shall keep a record indicating the names and
addresses of, and the pro rata portion of the obligations and indebtedness
secured by the Pledge, owing to each of the members of the Lender Group for and
on behalf of whom the Bond is so held from time to time, and (ii) each of the
members of the Lender Group will be entitled to the benefits of any property or
assets charged under the Deed of Hypothec and the Pledge and will participate in
the proceeds of realization of any such property or assets. Agent, in such
aforesaid capacities shall (A) have the sole and exclusive right and authority
to exercise, except as may be otherwise specifically restricted by the terms
hereof, all rights and remedies given to Agent with respect to the property or
assets charged under the Deed of Hypothec and

 

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Pledge, any other applicable law or otherwise, and (B) benefit from and be
subject to all provisions hereof with respect to the Agent mutatis mutandis,
including, without limitation, all such provisions with respect to the liability
or responsibility to and indemnification by the Lender Group, the Borrowers or
the Guarantors.  The execution prior to the date hereof by Agent of any Deed of
Hypothec, Pledge or other security documents made pursuant to the laws of the
Province of Québec (Canada) is hereby ratified and confirmed.  The constitution
of Agent as the Person holding the power of attorney (fondé de pouvoir), and of
Agent, as agent, mandatary, custodian and depositary with respect to any bond
that may be issued and pledged from time to time to Agent for the benefit of the
Lender Group, shall be deemed to have been ratified and confirmed by each Person
accepting an assignment of, a participation in or an arrangement in respect of,
all or any portion of any of the Lender Group’s rights and obligations under
this Agreement by the execution of an assignment, including an Assignment and
Acceptance Agreement or other agreement pursuant to which it becomes such
assignee or participant, and by each successor Agent by the execution of an
assignment agreement or other agreement, or by the compliance with other
formalities, as the case may be, pursuant to which it becomes a successor Agent
hereunder.

 

15.20                 Dutch Parallel Debt.

 

In this Section:

 

Corresponding Debt means any amount which each of Dutch Holdings, Colt Defense
Technical Services LLC and each Borrower owes to the Lenders and the Agent (or
any of them) under or in connection with each or any of the Loan Documents due
and payable but unpaid.

 

Parallel Debt means any amount which each of Dutch Holdings, Colt Defense
Technical Services LLC and each Borrower owes to the Agent under this
Section 15.20.

 

(a)                                 Each of Dutch Holdings, Colt Defense
Technical Services LLC and each Borrower irrevocably and unconditionally
undertakes to pay to the Agent amounts equal to, and in the currency or
currencies of, its Corresponding Debt.

 

(b)                                 The Parallel Debt of each of Dutch Holdings,
Colt Defense Technical Services LLC and each Borrower:

 

(i)                                     shall become due and payable at the same
time as its Corresponding Debt;

 

(ii)                                  is independent and separate from, and
without prejudice to, its Corresponding Debt.

 

(c)                                  For purposes of this Clause, the Agent:

 

(i)                                     is the independent and separate creditor
of each Parallel Debt;

 

(ii)                                  acts in its own name and not as agent,
representative or trustee of the Finance Parties and its claims in respect of
each Parallel Debt shall not be held on trust; and

 

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(iii)                               shall have the independent and separate
right to demand payment of each Parallel Debt in its own name (including,
without limitation, through any suit, execution, enforcement of security,
recovery of guarantees and applications for and voting in any kind of insolvency
proceeding).

 

(d)                                 The Parallel Debt of each of Dutch Holdings,
Colt Defense Technical Services LLC and each Borrower shall be (a) decreased to
the extent that its Corresponding Debt has been irrevocably and unconditionally
paid or discharged, and (b) increased to the extent to that its Corresponding
Debt has increased, and the Corresponding Debt of each of Dutch Holdings, Colt
Defense Technical Services LLC and each Borrower shall be (x) decreased to the
extent that its Parallel Debt has been irrevocably and unconditionally paid or
discharged, and (y) increased to the extent that its Parallel Debt has
increased, in each case provided that the Parallel Debt of each of Dutch
Holdings, Colt Defense Technical Services LLC and each Borrower shall never
exceed its Corresponding Debt.

 

(e)                                  All amounts received or recovered by the
Agent in connection with this Section 15.20, to the extent permitted by
applicable law, shall be applied in accordance with Section 5 (Application of
proceeds).

 

(f)                                   This Section 15.20 applies for the purpose
of determining the secured obligations in the Security Documents governed by
Dutch law.

 

16.                               WITHHOLDING TAXES.

 

16.1                        No Setoff; Payments.  All payments made by any Loan
Party under any Loan Document will be made without setoff, counterclaim or other
defense.  In addition, all such payments will be made free and clear of, and
without deduction or withholding for, any present or future Taxes unless
deduction or withholding of any Taxes is required under applicable law.  If any
deduction or withholding of any Indemnified Tax is required by law, the
applicable Loan Party shall pay such additional amounts as may be necessary so
that, after such required deduction or withholding of Indemnified Tax (including
any Indemnified Tax on the additional amounts payable under this Section 16.1),
the amount payable to the affected Agent or Lender (as applicable) is equal to
same amount that would have been so payable had no such deduction or withholding
of Indemnified Tax been required; provided, however, that Loan Parties shall not
be required to pay any additional amounts under this Section 16.1 to the extent
that the obligation to pay such additional amounts results from Agent’s or such
Lender’s own bad faith, willful misconduct or gross negligence (as finally
determined by a court of competent jurisdiction).  Loan Parties will furnish to
Agent as promptly as possible after the date the payment by Loan Parties of any
Tax in respect of any payment made by any Loan Party under any Loan Document is
due pursuant to applicable law, certified copies of tax receipts evidencing such
payment by Loan Parties or other evidence reasonably satisfactory to Agent. 
Loan Parties agree to pay any present or future stamp, value added or
documentary taxes or any other similar excise or property taxes, charges, or
levies that arise from any payment made hereunder or from the execution,
delivery, performance, recordation, or filing of, or otherwise with respect to
this Agreement or any other Loan Document (collectively, “Other Taxes”). The
Loan Parties shall jointly and severally indemnify each recipient of amounts
payable under this Section 16.1, within 10 Business Days after demand therefor,
for the full amount of any Indemnified Taxes and Other

 

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Taxes (including Indemnified Taxes and Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) payable or paid by such
recipient or required to be withheld or deducted from a payment to such
recipient and any reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A certificate as to
the amount of such payment or liability, which also describes in reasonable
detail the basis for such payment or liability, delivered to a Loan Party by a
Lender (with a copy to the Agent), or by the Agent on its own behalf or on
behalf of a Lender, shall be conclusive absent manifest error.

 

16.2                        Exemptions.

 

(a)                                 If a Lender or Participant is entitled to
claim an exemption or reduction from United States withholding tax, such Lender
or Participant agrees with and in favor of Agent, to deliver to Administrative
Borrower and Agent (or, in the case of a Participant, to the Lender granting the
participation only) one of the following before receiving its first payment
under the Loan Documents:

 

(i)                                     if such Lender or Participant is
entitled to claim an exemption from United States withholding tax pursuant to
the portfolio interest exception, (A) a statement of the Lender or Participant,
signed under penalty of perjury, that it is not a (I) a “bank” as described in
Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder of any Borrower (within
the meaning of Section 871(h)(3)(B) of the IRC), or (III) a controlled foreign
corporation related to any Borrower within the meaning of Section 864(d)(4) of
the IRC, and (B) a properly completed and executed IRS Form W-8BEN,
Form W-8BEN-E or Form W-8IMY (with proper attachments);

 

(ii)                                  if such Lender or Participant is entitled
to claim an exemption from, or a reduction of, withholding tax under a United
States tax treaty, a properly completed and executed copy of IRS Form W-8BEN or
Form W-8BEN-E;

 

(iii)                               if such Lender or Participant is entitled to
claim that interest paid under this Agreement is exempt from United States
withholding tax because it is effectively connected with a United States trade
or business of such Lender, a properly completed and executed copy of IRS
Form W-8ECI;

 

(iv)                              if such Lender or Participant is entitled to
claim that interest paid under this Agreement is exempt from United States
withholding tax because such Lender or Participant serves as an intermediary, a
properly completed and executed copy of IRS Form W-8IMY (with proper
attachments); or

 

(v)                                 a properly completed and executed copy of
any other form or forms, including IRS Form W-9, as may be required under the
IRC or other laws of the United States as a condition to exemption from, or
reduction of, United States withholding or backup withholding tax.

 

(b)                                 Each Lender or Participant shall provide new
forms (or successor forms) upon the expiration, invalidity or obsolescence of
any previously delivered forms and shall promptly notify Administrative Borrower
and Agent (or, in the case of a Participant, the Lender

 

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granting the participation only) in writing of any change in circumstances which
would modify or render invalid any claimed exemption or reduction.

 

(c)                                  If a Lender or Participant claims an
exemption from, or reduction of, withholding or backup withholding tax in a
jurisdiction other than the United States, such Lender or such Participant
agrees with and in favor of Agent and the Administrative Borrower to deliver to
Administrative Borrower and Agent in writing (or, in the case of a Participant,
to the Lender granting the participation only), before receiving its first
payment under the Loan Documents (and/or thereafter from time to time if
reasonably requested by the Agent or Administrative Borrower), any such form or
other information as may be required under the laws of such jurisdiction
(including any administrative policy or practice of such jurisdiction) as a
condition to exemption from, or reduction of, withholding or backup withholding
tax, but only if such Lender or such Participant is legally able to deliver such
forms and if in such Lender’s or Participant’s judgment the completion,
execution or submission of such forms would not subject such Lender or
Participant to any material unreimbursed cost or expense and would not
materially prejudice the legal or commercial position of such Lender.  Each
Lender and each Participant shall provide new forms (or successor forms) or
information upon the expiration, invalidity or obsolescence of any previously
delivered forms or information and promptly notify Administrative Borrower and
Agent (or, in the case of a Participant, the Lender granting the participation
only) in writing of any change in circumstances which would modify or render
invalid any claimed exemption or reduction.

 

(d)                                 If a Lender or Participant claims exemption
from, or reduction of, withholding tax and such Lender or Participant sells,
assigns, grants a participation in, or otherwise transfers all or part of the
Obligations of Borrowers, such Lender or Participant agrees to notify
Administrative Borrower and Agent (or, in the case of a sale of a participation
interest, the Lender granting the participation only) of the percentage amount
in which it is no longer the beneficial owner of Obligations of Borrowers.  To
the extent of such percentage amount, Agent will treat such Lender’s or such
Participant’s documentation or information provided pursuant to Section 16.2(a),
16.2(b) or 16.2(c) as no longer valid.  With respect to such percentage amount,
such Participant or Assignee shall provide new documentation or information,
pursuant to Section 16.2(a), 16.2(b) or 16.2(c), if applicable.  Each Loan Party
agrees that each Participant shall be entitled to the benefits of this
Section 16 (subject to the limitations set forth in Section 13.1(e) and
Section 14.2 as if the Participant were a Lender) with respect to its
participation in any portion of the Obligations so long as such Participant
complies with the obligations set forth in this Section 16 with respect thereto.

 

16.3                        Reductions.

 

(a)                                 If a Lender or a Participant is entitled to
a reduction in the applicable withholding tax, Agent (or, in the case of a
Participant, the Lender granting the participation) may deduct or withhold from
any interest payment to such Lender or such Participant an amount equivalent to
the applicable withholding tax after taking into account such reduction.  If the
forms or other documentation or information required by Section 16.2(a),
16.2(b) or 16.2(c) are not delivered by a Lender or Participant to the
applicable Loan Party or Agent (or, in the case of a Participant, to the Lender
granting the participation), then the applicable Loan Party or Agent (or, in the
case of a Participant, the Lender granting the participation), as applicable,
shall deduct

 

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or withhold amounts required to be withheld by applicable laws from any payment
to such Lender or such Participant not providing such forms or other
documentation or information at the applicable statutory rate.

 

(b)                                 If the IRS or any other Governmental
Authority of the United States or other jurisdiction asserts a claim that Agent
(or, in the case of a Participant, the Lender granting the participation) did
not properly deduct or withhold tax from amounts paid to or for the account of
any Lender or any Participant due to a failure on the part of the Lender or any
Participant (because the appropriate form or information was not delivered, was
not properly executed, or because such Lender failed to notify Agent (or such
Participant failed to notify the Lender granting the participation) of a change
in circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason) such Lender shall indemnify and hold
Agent harmless (or, in the case of a Participant, such Participant shall
indemnify and hold the Lender granting the participation harmless) for all
amounts paid, directly or indirectly, by Agent (or, in the case of a
Participant, the Lender granting the participation), as tax or otherwise,
including penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to Agent (or, in the case of a Participant,
to the Lender granting the participation only) under this Section 16, together
with all costs and expenses (including attorneys fees and expenses).  The
obligation of the Lenders and the Participants under this subsection shall
survive the payment of all Obligations and the resignation or replacement of
Agent.

 

16.4                        Refunds.  If Agent or a Lender determines, in its
sole discretion, that it has received a refund of any Taxes as to which it has
been indemnified by Borrowers or with respect to which Borrowers have paid
additional amounts pursuant to this Section 16, so long as no Default or Event
of Default has occurred and is continuing, it shall pay over such refund to
Borrowers (but only to the extent of payments made, or additional amounts paid,
by Borrowers under this Section 16 with respect to Taxes giving rise to such a
refund), net of all out-of-pocket expenses of Agent or such Lender and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to such a refund); provided, that Borrowers, upon the request of
Agent or such Lender, agree to repay the amount paid over to Borrowers (plus any
penalties, interest or other charges, imposed by the relevant Governmental
Authority, other than such penalties, interest or other charges imposed as a
result of the bad faith, willful misconduct or gross negligence of Agent or such
Lender hereunder) to Agent or such Lender in the event Agent or such Lender is
required to repay such refund to such Governmental Authority.  Notwithstanding
anything to the contrary in this Section 16.4, in no event will an Agent or
Lender, as the case may be, be required to pay any amount to Borrowers pursuant
to this Section 16.4 the payment of which would place Agent or Lender in a less
favorable net after-tax position than the Agent or Lender would have been in if
the tax subject to indemnification and giving rise to such refund had not been
deducted, withheld or otherwise imposed and the indemnification payments or
additional amounts with respect to such tax had never been paid. 
Notwithstanding anything in this Agreement to the contrary, this Section 16.4
shall not be construed to require Agent or any Lender to make available its tax
returns (or any other confidential information which it in good faith deems
confidential) to any Borrower or any other Person.

 

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17.                               GENERAL PROVISIONS.

 

17.1                        Effectiveness.  This Agreement shall be binding and
deemed effective when executed by each Loan Party, Agent, and each Lender whose
signature is provided for on the signature pages hereof upon satisfaction of all
the conditions precedent pursuant to Section 3.1.

 

17.2                        Section Headings.  Headings and numbers have been
set forth herein for convenience only.  Unless the contrary is compelled by the
context, everything contained in each Section applies equally to this entire
Agreement.

 

17.3                        Interpretation.  Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed against the Lender Group or
any Loan Party, whether under any rule of construction or otherwise.  On the
contrary, this Agreement has been reviewed by all parties and shall be construed
and interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.

 

17.4                        Severability of Provisions.  Each provision of this
Agreement shall be severable from every other provision of this Agreement for
the purpose of determining the legal enforceability of any specific provision.

 

17.5                        [Reserved.].

 

17.6                        Debtor-Creditor Relationship.  The relationship
between the Lenders and Agent, on the one hand, and the Loan Parties, on the
other hand, is solely that of creditor and debtor.  No member of the Lender
Group has (or shall be deemed to have) any fiduciary relationship or duty to any
Loan Party arising out of or in connection with the Loan Documents or the
transactions contemplated thereby, and there is no agency or joint venture
relationship between the members of the Lender Group, on the one hand, and the
Loan Parties, on the other hand, by virtue of any Loan Document or any
transaction contemplated therein.

 

17.7                        Counterparts; Electronic Execution.  This Agreement
may be executed in any number of counterparts and by different parties on
separate counterparts, each of which, when executed and delivered, shall be
deemed to be an original, and all of which, when taken together, shall
constitute but one and the same Agreement.  Delivery of an executed counterpart
of this Agreement by telefacsimile or other electronic method of transmission
shall be equally as effective as delivery of an original executed counterpart of
this Agreement.  Any party delivering an executed counterpart of this Agreement
by telefacsimile or other electronic method of transmission also shall deliver
an original executed counterpart of this Agreement but the failure to deliver an
original executed counterpart shall not affect the validity, enforceability, and
binding effect of this Agreement.  The foregoing shall apply to each other Loan
Document mutatis mutandis.

 

17.8                        [Reserved.].

 

17.9                        Confidentiality.

 

(a)                                 Agent and Lenders each individually (and not
jointly or jointly and severally) agree that non-public information regarding
Parent and its Subsidiaries, their

 

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operations, assets, and existing and contemplated business plans (“Confidential
Information”) shall be treated by Agent and the Lenders in a confidential
manner, and shall not be disclosed by Agent and the Lenders to Persons who are
not parties to this Agreement, except:  (i) to attorneys for and other advisors,
accountants, auditors, and consultants to any member of the Lender Group and to
employees, directors and officers of any member of the Lender Group (the Persons
in this clause (i), “Lender Group Representatives”) on a “need to know” basis in
connection with this Agreement and the transactions contemplated hereby and on a
confidential basis, (ii) to Subsidiaries and Affiliates of any member of the
Lender Group; provided that any such Subsidiary or Affiliate shall have agreed
to receive such information hereunder subject to the terms of this Section 17.9,
(iii) as may be required by regulatory authorities so long as such authorities
are informed of the confidential nature of such information, (iv) as may be
required by statute, decision, or judicial or administrative order, rule, or
regulation; provided that (x) prior to any disclosure under clause (iii) or
(iv), the disclosing party agrees to provide Administrative Borrower with prior
notice thereof, to the extent that it is practicable to do so and to the extent
that the disclosing party is permitted to provide such prior notice to Borrowers
pursuant to the terms of the applicable statute, decision, or judicial or
administrative order, rule, or regulation and (y) any disclosure under clause
(iii) or (iv) shall be limited to the portion of the Confidential Information as
may be required by such regulatory authority, statute, decision, or judicial or
administrative order, rule, or regulation, (v) as may be agreed to in advance in
writing by Borrowers, (vi) as requested or required by any Governmental
Authority pursuant to any subpoena or other legal process; provided, that,
(x) prior to any disclosure under this clause (vi) the disclosing party agrees
to provide Borrowers with prior written notice thereof, to the extent that it is
practicable to do so and to the extent that the disclosing party is permitted to
provide such prior written notice to Borrowers pursuant to the terms of the
subpoena or other legal process and (y) any disclosure under this clause
(vi) shall be limited to the portion of the Confidential Information as may be
required by such Governmental Authority pursuant to such subpoena or other legal
process, (vii) as to any such information that is or becomes generally available
to the public (other than as a result of prohibited disclosure by Agent or the
Lenders or the Lender Group Representatives), (viii) in connection with any
assignment, participation or pledge of any Lender’s interest under this
Agreement; provided that prior to receipt of Confidential Information any such
assignee, participant, or pledgee shall have agreed in writing to receive such
Confidential Information hereunder subject to the terms of this Section, (ix) in
connection with any litigation or other adversary proceeding involving parties
hereto which such litigation or adversary proceeding involves claims related to
the rights or duties of such parties under this Agreement or the other Loan
Documents; provided, that, prior to any disclosure to any Person (other than any
Loan Party, Agent, any Lender, any of their respective Affiliates, or their
respective counsel) under this clause (ix) with respect to litigation involving
any Person (other than any Borrower, Agent, any Lender, any of their respective
Affiliates, or their respective counsel), the disclosing party agrees to provide
Borrowers with prior written notice thereof, and (x) in connection with, and to
the extent reasonably necessary for, the exercise of any secured creditor remedy
under this Agreement or under any other Loan Document.

 

(b)                                 Anything in this Agreement to the contrary
notwithstanding, Agent (upon the direction of the Required Lenders) may disclose
information concerning the terms and conditions of this Agreement and the other
Loan Documents to loan syndication and pricing reporting services or for its
marketing materials, with such information to consist of deal terms and other
information customarily found in such publications or marketing materials and
may

 

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otherwise use the name, logos, and other insignia of Borrowers and Loan Parties
in any “tombstone” or other advertisements, on its website or in other marketing
materials of the Agent.

 

17.10                 Lender Group Expenses.  Borrowers agree to pay any and all
Lender Group Expenses promptly upon demand therefor by Agent.  Borrowers agree
that their respective obligations contained in this Section 17.10 shall survive
payment or satisfaction in full of all other Obligations and the termination of
this Agreement.

 

17.11                 Survival.  All representations and warranties made by the
Loan Parties in the Loan Documents and in the certificates or other instruments
delivered in connection with or pursuant to this Agreement or any other Loan
Document shall be considered to have been relied upon by the other parties
hereto and shall survive the execution and delivery of the Loan Documents and
the making of any loans, regardless of any investigation made by any such other
party or on its behalf and notwithstanding that Agent or any Lender may have had
notice or knowledge of any Default or Event of Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any loan or any fee or any other amount payable under this
Agreement is outstanding.

 

17.12                 Patriot Act.  Each Lender that is subject to the
requirements of the Patriot Act hereby notifies Borrowers that pursuant to the
requirements of the Act, it is required to obtain, verify and record information
that identifies each Borrower, which information includes the name and address
of each Borrower and other information that will allow such Lender to identify
each Borrower in accordance with the Patriot Act.  In addition, if Agent is
required by law or regulation or internal policies to do so, it shall have the
right to periodically conduct (a) Patriot Act searches, OFAC/PEP searches, and
customary individual background checks for the Loan Parties and (b) OFAC/PEP
searches and customary individual background checks for the Loan Parties’ senior
management and key principals, and each Borrower agrees to cooperate in respect
of the conduct of such searches and further agrees that the reasonable costs and
charges for such searches shall constitute Lender Group Expenses hereunder and
be for the account of such Borrower.

 

17.13                 Integration.  This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.

 

17.14                 Administrative Borrower as Agent for Borrowers.  Each
Borrower hereby irrevocably appoints and constitutes Parent (“Administrative
Borrower”) as its agent and attorney-in-fact to request and receive Loans
pursuant to this Agreement and the other Loan Documents from Agent or any Lender
in the name or on behalf of such Borrower.  Agent and Lenders may disburse the
Loans to such bank account of Administrative Borrower or a Borrower or otherwise
make such Loans to a Borrower as Administrative Borrower may designate or
direct, without notice to any other Borrower or Guarantor.  Notwithstanding
anything to the contrary contained herein, Agent may at any time and from time
to time require that Loans to or for the account of any Borrower be disbursed
directly to an operating account of such Borrower.

 

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(a)                                 Administrative Borrower hereby accepts the
appointment by Borrowers to act as the agent and attorney-in-fact of Borrowers
pursuant to this Section 17.14.  Administrative Borrower shall ensure that the
disbursement of any Loans to each Borrower requested by or paid to or for the
account of Parent shall be paid to or for the account of such Borrower.

 

(b)                                 Each Borrower and Guarantor hereby
irrevocably appoints and constitutes Administrative Borrower as its agent to
receive statements on account and all other notices from Agent, and Lenders with
respect to the Obligations or otherwise under or in connection with this
Agreement and the other Loan Documents.

 

(c)                                  Any notice, election, representation,
warranty, agreement or undertaking by or on behalf of any other Borrower or any
Guarantor by Administrative Borrower shall be deemed for all purposes to have
been made by such Borrower or Guarantor, as the case may be, and shall be
binding upon and enforceable against such Borrower or Guarantor to the same
extent as if made directly by such Borrower or Guarantor.

 

(d)                                 No resignation or termination of the
appointment of Administrative Borrower as agent as aforesaid shall be effective,
except after ten (10) Business Days’ prior written notice to Agent. If the
Administrative Borrower resigns under this Agreement, Borrowers shall be
entitled to appoint a successor Administrative Borrower (which shall be a
Borrower).  Upon the acceptance of its appointment as successor Administrative
Borrower hereunder, such successor Administrative Borrower shall succeed to all
the rights, powers and duties of the retiring Administrative Borrower and the
term “Administrative Borrower” shall mean such successor Administrative Borrower
and the retiring or terminated Administrative Borrower’s appointment, powers and
duties as Administrative Borrower shall be terminated.

 

17.15                 Currency Indemnity.  If, for the purposes of obtaining
judgment in any court in any jurisdiction with respect to this Agreement or any
of the other Loan Documents, it becomes necessary to convert into the currency
of such jurisdiction (the “Judgment Currency”) any amount due under this
Agreement or under any of the other Loan Documents in any currency other than
the Judgment Currency (the “Currency Due”), then conversion shall be made at the
exchange rate at which Agent is able, on the relevant date, to purchase the
Currency Due with the Judgment Currency prevailing on the Business Day before
the day on which judgment is given.  In the event that there is a change in the
rate of exchange rate prevailing between the Business Day before the day on
which the judgment is given and the date of receipt by Agent of the amount due,
Borrowers will, on the date of receipt by Agent, pay such additional amounts, if
any, as may be necessary to ensure that the amount received by Agent on such
date is the amount in the Judgment Currency which when converted at the rate of
exchange prevailing on the date of receipt by Agent is the amount then due under
this Agreement or such other of the Loan Documents in the Currency Due.  If the
amount of the Currency Due which Agent is able to purchase is less than the
amount of the Currency Due originally due to it, Borrowers and Guarantors shall
indemnify and save Agent harmless from and against loss or damage arising as a
result of such deficiency.  If the amount of the Judgment Currency which Agent
is able to purchase is greater than the amount of the Judgment Currency original
due it, Agent agrees, so long as no Event of Default has occurred and is
continuing, to return the amount of any excess to Borrowers (or to any other
Person who may be entitled thereto under applicable law).  The indemnity
contained herein shall constitute an obligation separate and independent from
the

 

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other obligations contained in this Agreement and the other Loan Documents,
shall give rise to a separate and independent cause of action, shall apply
irrespective of any indulgence granted by any Agent from time to time and shall
continue in full force and effect notwithstanding any judgment or order for a
liquidated sum in respect of an amount due under this Agreement or any of the
other Loan Documents or under any judgment or order.

 

17.16                 Anti-Money Laundering Legislation.

 

(a)                                 Each Loan Party acknowledges that, pursuant
to the Proceeds of Crime Money Laundering) and Terrorist Financing Act (Canada)
and other applicable anti-money laundering, anti-terrorist financing, government
sanction and “know your client” laws, under the laws of Canada (collectively,
including any guidelines or orders thereunder, “AML Legislation”), Agent and
Lenders may be required to obtain, verify and record information regarding each
Loan Party, its respective directors, authorized signing officers, direct or
indirect shareholders or other Persons in control of such Loan Party, and the
transactions contemplated hereby.  Administrative Borrower shall promptly
provide all such information, including supporting documentation and other
evidence, as may be reasonably requested by any Lender or Agent, or any
prospective assign or participant of a Lender or Agent, necessary in order to
comply with any applicable AML Legislation, whether now or hereafter in
existence.

 

(b)                                 If Agent has ascertained the identity of any
Loan Party or any authorized signatories of any Loan Party for the purposes of
applicable AML Legislation, then the Agent:

 

(i)                                     shall be deemed to have done so as an
agent for each Lender, and this Agreement shall constitute a “written agreement”
in such regard between each Lender and the Agent within the meaning of
applicable AML Legislation; and

 

(ii)                                  shall provide to each Lender copies of all
information obtained in such regard without any representation or warranty as to
its accuracy or completeness.

 

(c)                                  Notwithstanding the provisions of this
Section and except as may otherwise be agreed in writing, each Lender agrees
that Agent has no obligation to ascertain the identity of the Loan Parties or
any authorized signatories of the Loan Parties on behalf of any Lender, or to
confirm the completeness or accuracy of any information it obtains from the Loan
Parties or any such authorized signatory in doing so.

 

17.17                 Quebec Interpretation.  For all purposes pursuant to which
the interpretation or construction of this Agreement may be subject to the laws
of the Province of Quebec or a court or tribunal exercising jurisdiction in the
Province of Quebec, (a) “personal property” shall include “movable property”,
(b) “real property” shall include “immovable property”, (c) “tangible property”
shall include “corporeal property”, (d) “intangible property” shall include
“incorporeal property”, (e) “security interest”, “mortgage” and “lien” shall
include a “hypothec”, “prior claim” and a “resolutory clause”, (f) all
references to filing, registering or recording under the Code or PPSA shall
include publication under the Civil Code of Quebec, (g) all references to
“perfection” of or “perfected” liens or security interest shall include a
reference to an “opposable” or “set up” lien or security interest as against
third parties, (h) any “right of offset”, “right of setoff” or similar
expression shall include a “right of compensation”, (i) “goods” shall

 

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include corporeal movable property” other than chattel paper, documents of
title, instruments, money and securities, (j) an “agent” shall include a
“mandatary”, (k) “construction liens” shall include “legal hypothecs”,
(l) “joint and several” shall include solidary, (m) “gross negligence or willful
misconduct” shall be deemed to be “intentional or gross fault”, (n) “beneficial
ownership” shall include “ownership on behalf of another as mandatary”,
(o) “easement” shall include “servitude”, (p) “priority” shall include “prior
claim”, (q) “survey” shall include “certificate of location and plan”, and
(r) “fee simple title” shall include “absolute ownership”.

 

17.18                 Amendment and Restatement.  Upon the execution and
delivery of this Agreement, the “Obligations” (including, without limitation,
interest and fees accrued to the date hereof) as defined in and governed by the
Initial DIP Senior Loan Agreement (collectively, the “Original Obligations”)
shall continue to be in full force and effect, but shall be governed by the
terms and conditions set forth in this Agreement.  The Original Obligations,
together with any and all additional Obligations incurred by the Loan Parties
hereunder or under any of the other Loan Documents, shall continue to be secured
by all of the pledges and grants of security interests provided in connection
with the Initial DIP Senior Loan Agreement (and, from and after the date hereof,
shall be secured by all of the pledges and grants of security interests provided
in connection with this Agreement), all as more specifically set forth in the
Security Documents and the Orders.  The Loan Parties hereby reaffirm their
respective obligations under each Loan Document to which it is party, as
amended, restated, amended and restated, supplemented or otherwise modified by
this Agreement and by the other Loan Documents.  The Loan Parties further agree
that each Loan Document shall remain in full force and effect following the
execution and delivery of this Agreement (except to the extent modified or
replaced by any Loan Document delivered in connection herewith) and that all
references to the “Agreement” or “Credit Agreement” in such Loan Documents shall
be deemed to refer to this Agreement.  The execution and delivery of this
Agreement shall constitute an amendment and restatement, but not a novation or
repayment, of the Original Obligations.

 

[Signature pages to follow.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered as of the date first above written.

 

 

COLT DEFENSE LLC

 

 

 

 

By:

/s/ Dennis Veilleux

 

 

Name: Dennis Veilleux

 

 

Title: President and

 

 

Chief Executive Officer

 

 

 

 

 

 

 

CDH II HOLDCO INC.

 

 

 

 

By:

/s/ Dennis Veilleux

 

 

Name: Dennis Veilleux

 

 

Title: President and

 

 

Chief Executive Officer

 

 

 

 

 

 

 

COLT FINANCE CORP.

 

 

 

 

By:

/s/ Dennis Veilleux

 

 

Name: Dennis Veilleux

 

 

Title: President and

 

 

Chief Executive Officer

 

 

 

 

 

 

 

NEW COLT HOLDING CORP.

 

 

 

 

By:

/s/ Dennis Veilleux

 

 

Name: Dennis Veilleux

 

 

Title: President and

 

 

Chief Executive Officer

 

 

 

 

 

 

 

COLT’S MANUFACTURING COMPANY LLC

 

 

 

 

By:

/s/ Dennis Veilleux

 

 

Name: Dennis Veilleux

 

 

Title: President and

 

 

Chief Executive Officer

 

--------------------------------------------------------------------------------

 

 

COLT DEFENSE TECHNICAL SERVICES LLC

 

 

 

 

By:

/s/ Dennis Veilleux

 

 

Name: Dennis Veilleux

 

 

Title: President and

 

 

Chief Executive Officer

 

 

 

 

 

 

 

COLT CANADA CORPORATION

 

 

 

 

By:

/s/ Dennis Veilleux

 

 

Name: Dennis Veilleux

 

 

Title: President and

 

 

Chief Executive Officer

 

 

 

 

 

 

 

COLT INTERNATIONAL COÖPERATIEF U.A.

 

 

 

 

By:

/s/ Dennis Veilleux

 

 

Name: Dennis Veilleux

 

 

Title: President and

 

 

Chief Executive Officer

 

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CORTLAND CAPITAL MARKET SERVICES LLC, as Agent

 

 

 

 

 

 

 

By:

/s/ Emily Ergang Pappas

 

 

Name:

Emily Ergang Pappas

 

 

Title:

Associate Counsel

 

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Schedule 1.1

 

As used in the Agreement, the following terms shall have the following
definitions:

 

“ABL Priority Collateral” shall have the meaning set forth in the DIP
Intercreditor Agreement.

 

“Account” means an account (as that term is defined in the Code).

 

“Account Debtor” means any Person who is obligated on an Account, chattel paper,
or a general intangible.

 

“Acquisition” means (a) the purchase or other acquisition by a Person or its
Subsidiaries of all or substantially all of the assets of (or any division or
business line of) any other Person, or (b) the purchase or other acquisition
(whether by means of a merger, consolidation, amalgamation or otherwise) by a
Person or its Subsidiaries of at least a majority of the Equity Interests of any
other Person having ordinary voting power for the election of directors or other
members of the governing body of such other Person.

 

“Adequate Protection Provisions” means the provisions in the First Interim DIP
Order, Second Interim DIP Order or the Final DIP Order, as applicable, providing
for adequate protection to the Prepetition Senior Loan Debt and Prepetition Term
Loan Debt.

 

“Additional Documents” has the meaning specified therefor in Section 5.12 of the
Agreement.

 

“Administrative Borrower” has the meaning specified therefor in Section 17.14 of
the Agreement.

 

“Affiliate” means, as applied to any Person, any other Person who controls, is
controlled by, or is under common control with, such Person.  For purposes of
this definition, “control” means the possession, directly or indirectly through
one or more intermediaries, of the power to direct the management and policies
of a Person, whether through the ownership of Equity Interests of such Person,
by contract, or otherwise; provided, however, that, for purposes of Section 6.12
of the Agreement: (a) any Person which owns directly or indirectly 10% or more
of the Equity Interests of such Person having ordinary voting power for the
election of directors or other members of the governing body of a Person or 10%
or more of the partnership or other ownership interests of a Person (other than
as a limited partner of such Person) shall be deemed an Affiliate of such
Person, (b) each current and former (within the five-year period prior to the
Prepetition Term Loan Closing Date) officer and/or director (or comparable
manager) of a Loan Party or Sponsor shall be deemed to be an Affiliate of such a
Loan Party, (c) each partnership in which a Person is a general partner shall be
deemed an Affiliate of such Person and (d) any Person that is a current or
former (within the five-year period prior to the Prepetition Term Loan Closing
Date) partner, member or principal (or any employee acting in any such capacity)
of any Loan Party or a consultant (other than any consultants, financial
advisors and/or other third party service providers of nationally recognized
standing) of Sponsor shall be deemed to be an Affiliate of a Loan Party.

 

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“Agent” has the meaning specified therefor in the preamble to the Agreement.

 

“Agent Fee Letter” means the fee letter, dated as of June 16, 2015, among
Borrowers and Agent, in form and substance reasonably satisfactory to Agent.

 

“Agent-Related Persons” means Agent, together with its Affiliates, officers,
directors, employees, attorneys, and agents.

 

“Agent’s Account” means the Deposit Account of Agent designated in writing by
Agent from time to time.

 

“Agent’s Liens” means the Liens granted by Parent or its Subsidiaries to Agent
under the Loan Documents.

 

“Agreement” means the Amended and Restated Senior Secured Super-Priority
Debtor-in-Possession Credit Agreement to which this Schedule 1.1 is attached, as
may be amended, restated, supplemented or otherwise modified from time to time.

 

“AML Legislation” has the meaning specified in Section 17.16 of the Agreement.

 

“Application Event” means the occurrence of (a) a failure by Borrowers to repay
all of the Obligations in full on the Maturity Date, or (b) an Event of Default
and the election by the Required Lenders to require that payments and proceeds
of Collateral be applied pursuant to Section 2.4(b)(ii) of the Agreement.

 

“Approved Budget” means the Initial Budget, as updated pursuant to
Section 5.1(c) during the continuance of the Chapter 11 Cases and CCAA
Recognition Proceedings to the extent such update is in form and substance
satisfactory to the Required Lenders, and (ii) a monthly budget for the four
months following the Petition Date, provided, however, that neither the Agent
nor the Required Lenders may require the removal of line items contained in a
prior Approved Budget.

 

“Assignee” has the meaning specified therefor in Section 13.1(a) of the
Agreement.

 

“Assignment and Acceptance” means an Assignment and Acceptance Agreement
substantially in the form of Exhibit A-1.

 

“Authorized Person” means any one of the individuals identified on Schedule A-2,
as such schedule is updated from time to time by written notice from
Administrative Borrower to Agent.

 

“Bankruptcy Code” means title 11 of the United States Code, as in effect from
time to time.

 

“Bankruptcy Court” means the United States Bankruptcy Court for the District of
Delaware, or any other court having jurisdiction over the Chapter 11 Cases.

 

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“Bargaining Unit Defined Benefit Plan Calculation Error” has the meaning
specified therefor in Schedule 4.11 to the Agreement.

 

“Bargaining Unit Defined Benefit Plan Calculation Error Event” means any event
or series of events related to or arising from the Bargaining Unit Defined
Benefit Plan Calculation Error which individually or in the aggregate for all
such events results or may reasonably be expected to result in liabilities of
any Pension Plan or of Parent, its Subsidiaries or ERISA Affiliates of more than
$5,000,000 as determined prior to taking into account any assets or other
liabilities of such Pension Plan.

 

“BIA” means the Bankruptcy and Insolvency Act (Canada), R.S.C. 1985, c. B-3, as
the same now exists or may from time to time hereafter be amended, modified,
recodified or supplemented, together with all official rules, regulations and
interpretations thereunder or related thereto.

 

“Board of Directors” means, as to any Person, the board of directors (or
comparable managers) of such Person or any committee thereof duly authorized to
act on behalf of the board of directors (or comparable managers).

 

“Borrowers” means, collectively, US Borrowers and Canadian Borrowers.

 

“Borrowing” means a borrowing consisting of Loans made on the same day by the
Lenders (or Agent on behalf thereof).

 

“Business Day” means any day that is not a Saturday, Sunday, or other day on
which banks are authorized or required to close in the state of New York, or the
Province of Ontario.

 

“Canadian Borrowers” means (a) Colt Canada Corporation, a Nova Scotia unlimited
company and (b) any other person that after the Closing Date becomes a Canadian
borrower under the Agreement, and “Canadian Borrower” means any one of them.

 

“Canadian Collateral” means Collateral consisting of assets or interests in
assets of Canadian Loan Parties, and the proceeds thereof.

 

“Canadian Court” means the Ontario Superior Court of Justice (Commercial List).

 

“Canadian Insolvency Law” shall mean any of the BIA, the CCAA, and the WURA,
each as now and hereafter in effect, and any successors to such statutes and any
proceeding under applicable federal or provincial corporate law seeking an
arrangement or compromise of some or all of the debts of a Person or a stay of
proceedings to enforce some or all claims of creditors against a Person.

 

“Canadian Loan Parties” means, individually and collectively, Colt Canada and
any other Loan Party organized under the laws of Canada or any province or
territory thereof.

 

“Canadian Mortgage” means any Mortgage taken in respect of real property located
in Canada.

 

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“Canadian Orders” means, collectively, the Initial Recognition Order, the
Interim DIP Recognition Order and, the Final DIP Recognition Order, and
separately, the Initial Recognition Order, the Interim DIP Recognition Order or,
the Final DIP Recognition Order, as the context requires.

 

“Canadian Pension Plan” means any plan, program or arrangement that is a pension
plan for the purposes of any applicable pension benefits legislation or any tax
laws of Canada or a Province thereof, whether or not registered under any such
laws, which is maintained or contributed to by, or to which there is or may be
an obligation to contribute by, any Borrower or any Guarantor in respect of any
Person’s employment in Canada with such Borrower or such Guarantor.

 

“Canadian Security Agreement” means the security agreement, dated as of the date
hereof, in form and substance reasonably satisfactory to Required Lenders,
executed and delivered by Canadian Loan Parties to Agent.

 

“Canadian Security Documents” means the Canadian Security Agreement, the
Canadian Guarantee, each Canadian Mortgage and any other Loan Document that
grants, or purports to grant, a Lien on any Canadian Collateral.

 

“Capital Expenditures” means, with respect to any Person for any period, the
aggregate of all expenditures by such Person and its Subsidiaries during such
period that are capital expenditures as determined in accordance with GAAP,
whether such expenditures are paid in cash or financed.

 

“Capitalized Lease Obligation” means that portion of the obligations under a
Capital Lease that is required to be capitalized in accordance with GAAP.

 

“Capital Lease” means a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.

 

“Carve-Out” has the meaning set forth in the First Interim DIP Order and the
Second Interim DIP Order (with respect to the period prior to the entry of the
Final DIP Order) or the Final DIP Order (from and after the date the Final DIP
Order is entered).

 

“Cash Equivalents” means (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued or fully guaranteed by any state of the United States
or any political subdivision of any such state or any public instrumentality
thereof maturing within 1 year from the date of acquisition thereof and, at the
time of acquisition, having one of the two highest ratings obtainable from
either Standard & Poor’s Rating Group (“S&P”) or Moody’s Investors Service, Inc.
(“Moody’s”), (c) commercial paper maturing no more than 270 days from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-1 from S&P or at least P-1 from Moody’s, (d) certificates of deposit, time
deposits, overnight bank deposits or bankers’ acceptances maturing within 1 year
from the date of acquisition thereof issued by any bank organized under the laws
of the United States or any state thereof or the District of Columbia or any
United States branch of a foreign bank having at the

 

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date of acquisition thereof combined capital and surplus of not less than
$250,000,000, (e) Deposit Accounts maintained with (i) any bank that satisfies
the criteria described in clause (d) above, or (ii) any other bank organized
under the laws of the United States or any state thereof so long as the full
amount maintained with any such other bank is insured by the Federal Deposit
Insurance Corporation, (f) repurchase obligations of any commercial bank
satisfying the requirements of clause (d) of this definition or recognized
securities dealer having combined capital and surplus of not less than
$250,000,000, having a term of not more than seven days, with respect to
securities satisfying the criteria in clauses (a) or (d) above, (g) debt
securities with maturities of six months or less from the date of acquisition
backed by standby letters of credit issued by any commercial bank satisfying the
criteria described in clause (d) above, and (h) Investments in money market
funds substantially all of whose assets are invested in the types of assets
described in clauses (a) through (g) above; provided, that, in the case of any
Foreign Subsidiary, “Cash Equivalents” of such Foreign Subsidiary shall also
include direct obligations of the sovereign country (or any agency thereof which
is backed by the full faith and credit of such sovereign country) in which such
Foreign Subsidiary is organized and is conducting business or in obligations
fully and unconditionally guaranteed by such foreign country (or any agency
thereof); provided, further, in the case of any Foreign Subsidiary that is not a
Loan Party, “Cash Equivalents” of such Foreign Subsidiary shall also include
securities and other investments held by such Foreign Subsidiary in the ordinary
course of business which are substantially similar to the assets described in
clauses (a) through (g) above.

 

“Cash Management Order” means, as the context requires, that certain (i) Interim
Order (I) Authorizing Continued Use of Existing Cash Management System and Bank
Accounts; (II) Waiving Certain United States Trustee Requirements;
(III) Authorizing Continued Performance of Intercompany Transactions; and
(IV) Granting Related Relief or (ii) Final Order (I) Authorizing Continued Use
of Existing Cash Management System and Bank Accounts; (II) Waiving Certain
United States Trustee Requirements; (III) Authorizing Continued Performance of
Intercompany Transactions; and (IV) Granting Related Relief order, in each case,
entered by the Bankruptcy Court, which shall be in form and substance reasonably
satisfactory to the Lenders.

 

“Cash Management Services” means any cash management or related services
including treasury, depository, return items, overdraft, controlled
disbursement,  merchant store value cards, e-payables services, electronic funds
transfer, interstate depository network, automatic clearing house transfer
(including the Automated Clearing House processing of electronic funds transfers
through the direct Federal Reserve Fedline system) and other cash management
arrangements.

 

“CCAA” means the Companies’ Creditors Arrangement Act, R.S.C. 1985, c.C-36, as
the same now exists or may from time to time hereafter be amended, modified,
recodified or supplemented, together with all official rules, regulations and
interpretations thereunder or related thereto.

 

“CCAA Recognition Proceedings” has the meaning specified therefor in the
recitals of this Agreement.

 

“CDH II” has the meaning specified therefor in the preamble to the Agreement.

 

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“CDTS” has the meaning specified therefor in the preamble to the Agreement.

 

“CFC” means a controlled foreign corporation within the meaning of Section 956
of the IRC; provided, that, for the avoidance of doubt neither Dutch Holdings
nor Colt Canada is a CFC.

 

“Chapter 11 Cases” means the voluntary cases under chapter 11 of the Bankruptcy
Code of the Loan Parties and their affiliated debtors and debtors-in-possession
in the Bankruptcy Court.

 

“Closing Date” means the date of the making of the Initial Tranche A Loans under
the Agreement which occurred on June 16, 2015.

 

“Closing Date LCs” has the meaning specified in clause (d) of the definition of
Permitted Liens.

 

“Closing Date Transactions” shall mean, collectively, the transactions
contemplated by the Loan Documents to be consummated on the Closing Date, as
amended, in connection with each of the foregoing.

 

“CMC” shall have the meaning specified therefor in the preamble to the
Agreement.

 

“Code” means the New York Uniform Commercial Code, as in effect from time to
time.

 

“Collateral” means all assets and interests in assets and proceeds thereof now
owned or hereafter acquired by Parent or its Subsidiaries and all assets upon
which a Lien is granted or purported to be granted by a Loan Party in favor of
Agent or the Lenders under any of the Loan Documents.

 

“Collateral Access Agreement” means a landlord waiver, bailee letter, or
acknowledgement agreement of any lessor, warehouseman, processor, consignee,
freight forwarder, or other Person in possession of, having a Lien upon, or
having rights or interests in Parent’s or its Subsidiaries’ books and records,
Equipment, or Inventory, in each case, in form and substance satisfactory to the
Required Lenders.

 

“Collections” means all cash, checks, notes, instruments, and other items of
payment (including insurance proceeds, cash proceeds of asset sales, rental
proceeds, and tax refunds).

 

“Colt Canada” shall have the meaning specified therefor in the preamble to the
Agreement.

 

“Colt Defense” shall have the meaning specified therefor in the preamble to the
Agreement.

 

“Colt Finance” shall have the meaning specified therefor in the preamble to the
Agreement.

 

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“Committed Loan Notice” means an irrevocable written notice of a Tranche A Loan,
substantially in the form of Exhibit N, appropriately completed and signed by a
Responsible Officer of the Borrowers.

 

“Committee” means the official committee of unsecured creditors appointed in the
Chapter 11 Cases, pursuant to Section 1102 of the Bankruptcy Code.

 

“Compliance Certificate” means a certificate substantially in the form of
Exhibit C-1 delivered by the chief financial officer of Administrative Borrower
to Agent.

 

“Confidential Information” has the meaning specified therefor in
Section 17.9(a) of the Agreement.

 

“Consulting Agreement” means the Consulting Services Agreement, dated as of
July 12, 2013, by and between Parent and Sciens Institutional Services LLC, as
amended, restated, modified or supplemented from time to time in accordance with
the terms hereof, pursuant to which Parent engaged Sciens Institutional Services
LLC to provide certain consulting services.

 

“Control Agreement” means a control agreement, in form and substance reasonably
satisfactory to Agent, executed and delivered by Parent or one of its
Subsidiaries, Agent, and the applicable securities intermediary (with respect to
a Securities Account) or bank (with respect to a Deposit Account).

 

“Controlled Account Agreement” has the meaning specified therefor in the
Security Agreement or the Canadian Security Agreement, as the case may be.

 

“Copyright Security Agreement” has the meaning specified therefor in the
Security Agreement or the Canadian Security Agreement, as the case may be.

 

“Cortland” shall mean Cortland Capital Market Services LLC.

 

“Covered Claims” shall have the meaning given to such term in the Litigation
Management Agreement, dated as of July 12, 2013, by and among, Parent, New Colt,
CMC, and each of the Stockholder Representatives (as defined therein) signatory
thereto, as in effect on the Closing Date.

 

“Currency Due” has the meaning specified in Section 17.15 of this Agreement.

 

“Daily Balance” means, as of any date of determination and with respect to any
Obligation, the amount of such Obligation owed at the end of such day.

 

“Debtor Relief Laws” means the Bankruptcy Code of the United States, Canadian
Insolvency Laws, and all other liquidation, conservatorship, bankruptcy,
assignment for the benefit of creditors, moratorium, rearrangement,
receivership, insolvency, reorganization, or similar debtor relief laws of the
United States, Canada or other applicable jurisdictions from time to time in
effect.

 

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“Default” means an event, condition, or default that, with the giving of notice,
the passage of time, or both, would be an Event of Default.

 

“Defaulting Lender” means any Lender that (a) has failed to fund any amounts
required to be funded by it under the Agreement on the date that it is required
to do so under the Agreement, (b) notified Administrative Borrower, Agent, or
any Lender in writing that it does not intend to comply with all or any portion
of its funding obligations under the Agreement, (c) has made a public statement
to the effect that it does not intend to comply with its funding obligations
under the Agreement or under other agreements generally (as reasonably
determined by Agent) under which it has committed to extend credit, (d) failed,
within 1 Business Day after written request by Agent, to confirm that it will
comply with the terms of the Agreement relating to its obligations to fund any
amounts required to be funded by it under the Agreement, (e) otherwise failed to
pay over to Agent or any other Lender any other amount required to be paid by it
under the Agreement on the date that it is required to do so under the
Agreement, or (f) (i) becomes or is insolvent or has a parent company that has
become or is insolvent or (ii) becomes the subject of a bankruptcy or Insolvency
Proceeding, or has had a Receiver, conservator, trustee, or custodian or
appointed for it, or has taken any action in furtherance of, or indicating its
consent to, approval of or acquiescence in any such proceeding or appointment or
has a parent company that has become the subject of a bankruptcy or Insolvency
Proceeding, or has had a Receiver, conservator, trustee, or custodian appointed
for it, or has taken any action in furtherance of, or indicating its consent to,
approval of or acquiescence in any such proceeding or appointment.  If at any
time there is only one Lender, then no Lender shall be deemed a “Defaulting
Lender” (irrespective of otherwise qualifying as a “Defaulting Lender” pursuant
to the immediately preceding sentence).

 

“Deposit Account” means any deposit account (as that term is defined in the
Code).

 

“Designated Account” means the Deposit Account of Administrative Borrower
identified on Schedule D-1.

 

“Designated Account Bank” means the bank specified in Schedule D-1.

 

“DIP Intercreditor Agreement” means the Amended and Restated DIP Intercreditor
Agreement, dated as of the Closing Date, by and between Agent and DIP Term Loan
Agent, Prepetition Term Loan Agent and Prepetition Senior Loan Agent, as
acknowledged and agreed to by the Borrowers and Guarantors and the other
respective borrowers and guarantors, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.

 

“DIP Liens” means the Liens and security interests granted to Agent, for the
benefit of the Secured Parties, pursuant to the Security Documents and the
Orders, which such Liens and security interests shall have the priorities set
forth in the Orders.

 

“DIP Term Loan Agent” shall mean Wilmington Savings Fund Society, FSB and its
successors and assigns, including any successor or replacement agent under the
DIP Term Loan Agreement.

 

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“DIP Term Loan Agreement” shall mean the DIP Term Loan Agreement, dated as of
June 16, 2015, by and among DIP Term Loan Agent, DIP Term Loan Lenders, Parent
and certain of its affiliates, as amended pursuant to that certain Amendment
No. 1 on June 24, 2015, as the same now exists or may hereafter be further
amended, modified, supplemented, extended, renewed, restated or replaced in
accordance with the terms of the DIP Intercreditor Agreement.

 

“DIP Term Loan Debt” shall mean all obligations, liabilities and indebtedness of
every kind, nature and description owing by Borrowers and Guarantors to DIP Term
Loan Agent and DIP Term Loan Lenders, including principal, interest, charges,
fees, premiums, indemnities, costs and expenses, however evidenced, whether as
principal, surety, endorser, guarantor or otherwise, arising under the DIP Term
Loan Documents.

 

“DIP Term Loan Debt Amount” shall mean $33,333,333.

 

“DIP Term Loan Documents” shall mean, collectively, the following (as the same
now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced, in each case in accordance with the terms of the
DIP Intercreditor Agreement): (a) the DIP Term Loan Agreement; and (b) all other
agreements, documents and instruments at any time executed and/or delivered by
any Borrower or Guarantor with, to or in favor of DIP Term Loan Agent or any DIP
Term Loan Lender in connection therewith or related thereto; sometimes being
referred to herein individually as a “DIP Term Loan Document”.

 

“DIP Term Loan Lenders” shall mean the lenders under the DIP Term Loan Agreement
and their respective successors and assigns.

 

“Disclosure Statement” has the meaning specified on Schedule 5.23 attached to
the Agreement.

 

“Disqualified Equity Interest” means, with respect to any Person, any Equity
Interest in such Person that, by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable, either mandatorily or
at the option of the holder thereof) or upon the happening of any event or
condition:

 

(a)                                 matures or is mandatorily redeemable (other
than solely for Equity Interests in such Person that do not constitute
Disqualified Equity Interests and cash in lieu of fractional shares of such
Equity Interests), whether pursuant to a sinking fund obligation or otherwise;

 

(b)                                 is convertible or exchangeable at the option
of the holder thereof for Indebtedness or Equity Interests (other than solely
for Equity Interests in such Person that do not constitute Disqualified Equity
Interest and cash in lieu of fractional shares of such Equity Interests); or

 

(c)                                  is redeemable (other than solely for Equity
Interests in such Person that do not constitute Disqualified Equity Interest and
cash in lieu of fractional shares of such Equity Interests) or is required to be
repurchased by such Person or any of its Affiliates, in whole or in part, at the
option of the holder thereof;

 

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in each case, on or prior to the date that is 91 days after the Maturity Date;
provided, that, an Equity Interest that would not constitute a Disqualified
Equity Interest but for terms thereof giving holders thereof the right to
require such Person to redeem or purchase such Equity Interest upon the
occurrence of an “asset sale” or a “change of control” shall not constitute a
Disqualified Equity Interest if any such requirement becomes operative only
after repayment in full in cash of all of the Obligations.

 

“Dollars” or “$” means lawful currency of United States of America.

 

“Dutch Collateral” means Collateral consisting of assets or interests in assets
of Dutch Holdings, and the proceeds thereof.

 

“Dutch Holdings” means Colt International Coöperatief U.A., a cooperative
(coöperatie) incorporated under Dutch law, registered with the trade register of
the Chambers of Commerce in the Netherlands under number 56651317.

 

“Dutch Loan Party” and “Dutch Loan Parties” means, individually and
collectively, Dutch Holdings and any other Loan Party organized under the laws
of the Netherlands.

 

“Dutch Pledge of Bank Accounts” means that certain deed of pledge of accounts
(third ranking), dated as of the date hereof, in form and substance reasonably
satisfactory to Required Lenders, executed and delivered by Dutch Holdings and
Agent.

 

“Dutch Pledge of Membership Interests” means that certain deed of pledge of
membership interests (third ranking), dated as of the date hereof, in form and
substance reasonably satisfactory to Required Lenders, executed and delivered by
Dutch Holdings, the other Loan Parties party thereto and Agent.

 

“Dutch Security Documents” means the Dutch Pledge of Membership Interests and
Dutch Pledge of Bank Accounts and any other Loan Document that grants, or
purports to grant, a Lien on any Dutch Collateral.

 

“Eligible Transferee” means (a) a commercial bank organized under the laws of
the United States, or Canada or any state or province thereof, (b) a commercial
bank organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development or a political subdivision
of any such country; provided, that such bank is acting through a branch or
agency located in the United States or Canada, (c) a finance company, insurance
company, or other financial institution or fund that is engaged in making,
purchasing, or otherwise investing in commercial loans in the ordinary course of
its business, (d) any Affiliate (other than individuals) of a pre-existing
Lender, (e) so long as no Event of Default has occurred and is continuing, any
other Person approved by Agent, and (f) during the continuation of an Event of
Default, any other Person.

 

“Employee Benefit Plan” means any employee benefit plan within the meaning of
Section 3(3) of ERISA, whether or not subject to ERISA, (a) that is or within
the preceding six (6) years has been sponsored, maintained or contributed to by
any Loan Party or ERISA Affiliate or (b) to which any Loan Party or ERISA
Affiliate has, or has had at any time within the preceding six (6) years, any
liability, contingent or otherwise.

 

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“Employee Litigation Escrow Fund” shall have the meaning given to such term in
the Escrow Agreement, dated as of July 12, 2013, by and among Parent, the
Stockholder Representatives (as defined therein) signatory thereto and Bank of
America, as escrow agent, as in effect on the Closing Date.

 

“Environmental Action” means any written complaint, summons, citation, notice,
directive, order, claim, investigation, judicial or administrative proceeding,
judgment, or other written communication from any Governmental Authority, or any
third party alleging violations by Parent or its Subsidiaries of, or liabilities
of Parent or its Subsidiaries under, Environmental Laws, including those
relating to releases of Hazardous Materials (a) from any assets, properties, or
businesses of Parent, any Subsidiary of Parent or any of their predecessors in
interest, (b) from adjoining properties or businesses, or (c) from or onto any
facilities which received Hazardous Materials generated by Parent, any
Subsidiary of Parent or any of their predecessors in interest.

 

“Environmental Law” means any applicable federal, state, provincial, foreign or
local statute, law, rule, regulation, ordinance, code, binding and enforceable
guideline, binding and enforceable written policy, or rule of common law now or
hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, in each case, to the extent binding on Parent
or its Subsidiaries, relating to protection of the environment, or human health
or safety (to the extent relating to exposure to Hazardous Materials), including
without limitation, those relating to the generation, storage, treatment or
disposal of Hazardous Materials, in each case as amended from time to time.

 

“Environmental Liabilities” means all liabilities, monetary obligations, losses,
damages, costs and expenses (including all reasonable fees, disbursements and
expenses of counsel, experts, or consultants, and costs of investigation and
feasibility studies), fines, penalties, sanctions, and interest incurred as a
result of any claim or demand, or Remedial Action required, by any Governmental
Authority or any third party, and which relate to any Environmental Action.

 

“Environmental Lien” means any Lien in favor of any Governmental Authority for
Environmental Liabilities.

 

“Equipment” means equipment (as that term is defined in the Code).

 

“Equity Interests” shall mean, with respect to any Person, all of the shares,
interests, participations or other equivalents (however designated) of such
Person’s capital stock or general partnership, limited partnership, limited
liability company or other equity, ownership or profit interests at any time
outstanding, all of the warrants, options or other rights for the purchase or
acquisition from such Person of shares of capital stock of (or other interests
in) such Person, all of the securities convertible into or exchangeable for
shares of capital stock of (or other interests in) such Person or warrants,
rights or options for the purchase or acquisition from such Person of such
shares (or such other interests), but excluding any interests in phantom equity
plans and any debt security that is convertible into or exchangeable for such
shares, and all of the other ownership or profit interests in such Person
(including partnership, member or trust interests

 

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therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are outstanding on any date of determination.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statutes, and all regulations and guidance promulgated
thereunder.  Any reference to a specific section of ERISA shall be deemed to be
a reference to such section of ERISA and any successor statutes, and all
regulations and guidance promulgated thereunder.

 

“ERISA Affiliate” means each entity, trade or business (whether or not
incorporated) that together with a Loan Party or a Subsidiary would be (or has
been) treated as a “single employer” within the meaning of section 4001(b)(1) of
ERISA or subsections (b), (c), (m) or (o) of section 414 of the IRC.  ERISA
Affiliate shall include any Subsidiary of any Loan Party.

 

“Event of Default” has the meaning specified therefor in Section 8 of the
Agreement.

 

“Exchange Act” means the Securities Exchange Act of 1934, as in effect from time
to time.

 

“Excluded Property” has the meaning specified in the Security Agreement or the
Canadian Security Agreement, as the case may be.

 

“Extraordinary Receipts” means any payments in cash received by Parent or any of
its Subsidiaries not in the ordinary course of business (and not consisting of
proceeds described in Section 2.4(e)(ii) of the Agreement) consisting of
(a) proceeds of judgments, proceeds of settlements, or other consideration of
any kind received in connection with any cause of action or claim, (b) indemnity
payments (other than to the extent such indemnity payments are immediately
payable to a Person that is not an Affiliate of Parent or any of its
Subsidiaries, (c) foreign, federal, state or local tax refunds, (d) pension plan
reversions, and (e) any purchase price adjustment received in connection with
any purchase agreement, after deducting therefrom, to the extent applicable,
taxes paid or payable to any taxing authorities (or tax distributions made to
members or shareholders) by Parent or such Subsidiary in connection with such
event, in each case (other than with respect to tax distributions), to the
extent, but only to the extent, that the amounts so deducted are, at the time of
receipt of such cash, actually paid or payable to a Person that is not an
Affiliate of Parent or any of its Subsidiaries, and are properly attributable to
such transaction.

 

“Facility” has the meaning specified in the recitals of this Agreement.

 

“Fee Letter” means the Agent Fee Letter.

 

“Filing Date” means the date on which the CCAA Recognition Proceedings will be
commenced, which shall be no later than three (3) Business Days following the
date of entry of the First Interim DIP Order.

 

“Final DIP Order” means the final order entered by the Bankruptcy Court,
approving the Loans and including provisions authorizing the Tranche B Loan and
refinancing of certain obligations under the Prepetition Senior Loan Debt, and
otherwise in form and substance acceptable to the Lenders in their sole
discretion, which Final DIP Order shall be in full force

 

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and effect and shall not have been reversed, vacated, stayed or subject to the
possibility of appeal, and shall not have been amended, supplemented or
otherwise modified without the prior written consent of the Required Lenders.

 

“Final DIP Recognition Order” means the order of the Canadian Court, in form and
substance acceptable to the Required Lenders in their sole discretion,
recognizing and enforcing in Canada the Final DIP Order, and based on a motion
record that is in form and substance acceptable to the Required Lenders in their
sole discretion.

 

“First Interim DIP Order” means the interim order entered by the Bankruptcy
Court on June 16, 2015, at Docket No. 78.

 

“Foreign Lender” means any Lender or Participant that is not a United States
person within the meaning of IRC Section 7701(a)(30).

 

“Foreign Representative” has the meaning specified in the recitals of this
Agreement.

 

“Foreign Subsidiary” means a direct or indirect Subsidiary of a Loan Party
organized or incorporated under the laws of a jurisdiction other than a State of
the United States of America, the United States of America or the District of
Columbia.

 

“GAAP” means generally accepted accounting principles as in effect from time to
time in the United States, consistently applied; provided, that, all
calculations relative to liabilities shall be made without giving effect to
Statement of Financial Accounting Standards No. 159.

 

“Governing Documents” means, with respect to any Person, the certificate or
articles of incorporation, by-laws, or other organizational documents of such
Person.

 

“Governmental Authority” means any federal, state, provincial, territorial,
local, or other governmental or administrative body, instrumentality, board,
department, or agency or any court, tribunal, administrative hearing body,
arbitration panel, commission, or other similar dispute-resolving panel or body.

 

“Guarantors” means (a) Colt Finance, (b) CDTS, (c) New Colt, (d) CDH II,
(e) Dutch Holdings, and (f) any other Person that becomes a guarantor under the
Agreement after the Closing Date; and “Guarantor” means any one of them.

 

“Guaranty” means each guaranty executed by any Guarantor in favor of Agent, for
the benefit of the Secured Parties, in form and substance reasonably
satisfactory to the Required Lenders.

 

“Hazardous Materials” means (a) substances that are defined or listed in, or
otherwise classified pursuant to, any Environmental Laws as “hazardous
substances,” “hazardous materials,” “hazardous wastes,” “toxic substances,” or
any other formulation intended to define, list, or classify substances by reason
of deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, reproductive toxicity, or “EP toxicity”, (b) oil, petroleum, or
petroleum derived substances, natural gas, natural gas liquids, synthetic gas,
drilling fluids, produced waters, and other wastes associated with the
exploration, development, or production

 

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of crude oil, natural gas, or geothermal resources, (c) any flammable substances
or explosives or any radioactive materials, and (d) asbestos in any form or
electrical equipment that contains any oil or dielectric fluid containing levels
of polychlorinated biphenyls in excess of 50 parts per million.

 

“Hedge Agreement” means (a) any commodities futures contract, commodity swap,
commodity option or similar agreement or arrangement entered into by any Loan
Party designed to protect such Loan Party against fluctuations in the price of
commodities actually used in the ordinary course of business of such Loan Party,
(b) any interest rate protection agreement, interest rate future agreement,
interest rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement designed to protect a Loan Party against
fluctuations in interest rates, and (c) any foreign currency exchange contract,
currency swap agreement, currency futures contract, currency option contract or
other similar agreement or arrangement designed to protect a Loan Party against
fluctuations in currency exchange rates.

 

“Holdout Lender” has the meaning specified therefor in Section 14.2(a) of the
Agreement.

 

“IFRS” means the International Financial Reporting Standards.

 

“Indebtedness” as to any Person means (a) all obligations of such Person for
borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes, or other similar instruments and all reimbursement or other
obligations in respect of letters of credit, bankers acceptances, or other
financial products, (c) all obligations of such Person as a lessee under Capital
Leases, (d) all obligations or liabilities of others secured by a Lien on any
asset of such Person, irrespective of whether such obligation or liability is
assumed, (e) all obligations of such Person to pay the deferred purchase price
of assets (other than trade payables incurred in the ordinary course of business
and repayable in accordance with customary trade practices), (f) all obligations
of such Person owing under Hedge Agreements (which amount shall be calculated
based on the amount that would be payable by such Person if the Hedge Agreement
were terminated on the date of determination), (g) any Disqualified Equity
Interests of such Person, and (h) any obligation of such Person guaranteeing or
intended to guarantee (whether directly or indirectly guaranteed, endorsed,
co-made, discounted, or sold with recourse) any obligation of any other Person
that constitutes Indebtedness under any of clauses (a) through (g) above;
provided, that, any earn-out obligation of a Person shall not constitute
Indebtedness until such obligation constitutes a liability on the balance sheet
of such Person.  For purposes of this definition, (i) the amount of any
Indebtedness represented by a guaranty or other similar instrument shall be the
lesser of the principal amount of the obligations guaranteed and still
outstanding and the maximum amount for which the guaranteeing Person may be
liable pursuant to the terms of the instrument embodying such Indebtedness, and
(ii) the amount of any Indebtedness described in clause (d) above shall be the
lower of the amount of the obligation and the fair market value of the assets of
such Person securing such obligation.

 

“Indemnified Liabilities” has the meaning specified therefor in Section 10.3 of
the Agreement.

 

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“Indemnified Person” has the meaning specified therefor in Section 10.3 of the
Agreement.

 

“Indemnified Taxes” means any Taxes now or hereafter imposed by any Governmental
Authority with respect to any payments by any Loan Party under any Loan
Document; provided, however, that Indemnified Taxes shall exclude (i) any Tax
imposed on the net income of Agent, any Lender or any Participant (including any
branch profits Taxes) and any franchise or similar Taxes in lieu thereof, in
each case imposed by the jurisdiction (or by any political subdivision or taxing
authority thereof) in which Agent, such Lender or such Participant is organized
or in which Agent’s, such Lender’s or such Participant’s principal office or
applicable lending office is located or as a result of any other present or
former connection between Agent, such Lender or such Participant and the
jurisdiction (or political subdivision or taxing authority thereof) imposing the
Tax (other than any such connection arising solely from Agent, such Lender or
such Participant having executed, delivered or performed its obligations or
received payment under, or enforced its rights or remedies under the Agreement
or any other Loan Document); (ii) Taxes resulting from a Lender’s or a
Participant’s failure to comply with the requirements of Section 16.2(a), (b),
(c) or (d) of the Agreement, (iii) any United States federal withholding Taxes
that would be imposed on amounts payable to a Foreign Lender based upon the
applicable withholding rate in effect at the time such Foreign Lender becomes a
party to the Agreement (or designates a new lending office), except that
Indemnified Taxes shall include any such amount that such Foreign Lender (or its
assignor, if any) was previously entitled to receive pursuant to Section 16.1 of
the Agreement, if any, with respect to such withholding Tax at the time such
Foreign Lender becomes a party to the Agreement (or designates a new lending
office), (iv) provided that neither the Agent nor any Lender or any Participant
would be considered to be dealing, at non-arm’s length within the meaning of the
Income Tax Act (Canada) solely as a result of enforcement of security, any
Canadian federal withholding Taxes imposed on amounts payable to Agent, any
Lender or any Participant under the Income Tax Act (Canada), as amended, because
the Agent, such Lender or such Participant is not dealing at arm’s length with
the applicable Loan Party for purposes of the Income Tax Act (Canada), as
amended, (v) provided that neither the Agent nor any Lender or any Participant
would be considered to be dealing, at non-arm’s length within the meaning of the
Income Tax Act (Canada) solely as a result of enforcement of security, any
Canadian federal withholding taxes imposed on amounts payable to any Agent,
Lender or Participant under the Income Tax Act (Canada), as amended, as a result
of any Agent, Lender or Participant being or not dealing at arm’s length with a
“specified shareholder” of the applicable Loan Party within the meaning of
subsection 18(5) of the Income Tax Act (Canada) as amended, and (vi) any United
States federal withholding Taxes imposed as a result of Agent’s, any Lender’s or
any Participant’s failure or inability to comply with the requirements of
Sections 1471 through 1474 of the IRC or any regulations promulgated thereunder
to establish an exemption from withholding Tax thereunder, any intergovernmental
agreement entered into in connection with the implementation of such sections of
the IRC and any U.S. or non-U.S. regulations or other governmental rules adopted
to implement such intergovernmental agreement.

 

“Information Officer” has the meaning specified therefor in Section 5.19 of this
Agreement.

 

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“Initial Budget” means a cash flow forecast setting forth all line-item and
cumulative cash receipts and expenditures on a weekly basis for the period
beginning as of the week of the Closing Date through and including the 13th week
after the Closing Date, broken down by week, including the anticipated weekly
uses of the proceeds of the Loans for such period, which shall include, among
other things, available cash, cash flow, payment of trade payables and ordinary
course expenses, total cash expenditures and Capital Expenditures, fees and
expenses relating to the Facility, and working capital and other general
corporate needs, which forecast shall be in form and substance reasonably
satisfactory to the Agent at the direction of the Required Lenders.

 

“Initial DIP Lenders” shall mean collectively, Marblegate Special Opportunities
Master Fund, L.P. and P Marblegate Ltd.

 

“Initial DIP Senior Loan Agreement” shall have the meaning specified therefor in
the recitals.

 

“Initial Prepetition Senior Lenders” shall mean, collectively, Marblegate
Special Opportunities Master Fund, L.P. and P Marblegate Ltd.

 

“Initial Recognition Order” means the order of the Canadian Court in form and
substance acceptable to the Required Lenders in their sole discretion,
commencing the CCAA Recognition Proceedings, and based on an application record
that is in form and substance acceptable to the Required Lenders in their sole
discretion.

 

“Initial Tranche A Loan” has the meaning specified therefor in Section 2.2(a) of
the Agreement.

 

“Insolvency Proceeding” means any proceeding commenced by or against any Person
under any provision of the Bankruptcy Code, the CCAA, the WURA, or the BIA, or
under any other provincial, territorial state or federal bankruptcy or
insolvency law or any bankruptcy or insolvency law of any other applicable
jurisdiction, assignments for the benefit of creditors, formal or informal
moratoria, compositions, extensions generally with creditors, or proceedings
seeking reorganization, arrangement, or other similar relief, including any
proceeding under applicable Canadian federal or provincial corporate law seeking
an arrangement or compromise of some or all of the debts of a Person or a stay
of proceedings to enforce some or all claims of creditors against a Person.

 

“Intellectual Property” means all domestic and foreign rights, title and
interest in the following:  (i) inventions, discoveries and ideas, whether
patentable or not, and all patents, registrations and applications therefor,
including without limitation divisions, continuations, continuations-in-part,
reexaminations, reissues and renewal applications; (ii) published and
unpublished works of authorship, whether copyrightable or not, copyrights
therein and thereto and registrations and applications therefor, and all
renewals, extensions, restorations and reversions thereof; (iii) trademarks,
service marks, trade names, trade dress, brand names, Internet domain names,
logos, symbols, and other indicia of origin, all applications and registrations
for all of the foregoing, and all goodwill associated therewith and symbolized
thereby, including without limitation all extensions, modifications and renewal
of the same; (iv) confidential and proprietary information, trade secrets and
know-how, including, without

 

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limitation, TDPs, formulae, processes, compounds, drawings, designs, industrial
designs, blueprints, surveys, reports, manuals, operating standards and customer
lists; (v) software and contract rights relating to computer software programs,
in whatever form created or maintained; and (vi) all other intellectual property
rights or proprietary rights and claims or causes of action arising out of or
related to any infringement, misappropriation or other violation of any of the
foregoing throughout the world, including, without limitation, rights to recover
for past, present and future violations thereof and any and all products and
proceeds of the foregoing.

 

“Intercompany Subordination Agreement” means an amended and restated
intercompany subordinated note executed and delivered by the Loan Parties and
the other parties thereto, the form and substance of which is reasonably
satisfactory to Agent.

 

“Interim DIP Recognition Order” means, as the context requires, the order of the
Canadian Court, in form and substance acceptable to the Required Lenders in
their sole discretion, recognizing and enforcing in Canada the First Interim DIP
Order, and based on an application record that is in form and substance
acceptable to the Required Lenders in their sole discretion or any further
recognition order of the Canadian Court recognizing further interim DIP orders
entered by the Bankruptcy Court from time to time, including the Second Interim
Order, which further recognition orders shall be in form and substance
satisfactory to the Required Lenders in their sole discretion.

 

“Interim Hearing” has the meaning specified therefor in the First Interim DIP
Order.

 

“Inventory” means inventory (as such term is defined in the Code).

 

“Investment” means, with respect to any Person, any investment by such Person in
any other Person (including Affiliates) in the form of loans, guarantees,
advances, capital contributions (excluding (a) commission, travel, and similar
advances to officers and employees of such Person made in the ordinary course of
business, and (b) bona fide Accounts arising in the ordinary course of
business), or acquisitions of Indebtedness, Equity Interests, or all or
substantially all of the assets of such other Person (or of any division or
business line of such other Person), and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.

 

“IP Reporting Certificate” means an IP reporting certificate substantially in
the form of Exhibit I-1 executed and delivered by the Loan Parties to Agent.

 

“IRC” means the Internal Revenue Code of 1986, as in effect from time to time.

 

“Judgment Currency” has the meaning specified in Section 17.15 of the Agreement.

 

“Lender” has the meaning set forth in the preamble to the Agreement, and shall
also include any other Person made a party to the Agreement pursuant to the
provisions of Section 13.1 of the Agreement or pursuant to an amendment thereto
and “Lenders” means each of the Lenders or any one or more of them.

 

“Lender Group” means each of the Lenders and Agent, or any one or more of them.

 

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“Lender Group Expenses” means all (a) costs or expenses (including taxes, and
insurance premiums) required to be paid by Parent or its Subsidiaries under any
of the Loan Documents that are paid, advanced, or incurred by the Lender Group,
(b) reasonable and documented out-of-pocket fees or charges paid or incurred by
Agent and each Lender in connection with the Lender Group’s transactions with
Parent or its Subsidiaries under any of the Loan Documents, including, fees or
charges for photocopying, notarization, couriers and messengers,
telecommunication, public record searches (including tax lien, litigation, and
PPSA and UCC searches and including searches with the patent and trademark
office, or the copyright office, or similar searches with respect to the
Canadian Loan Parties and Dutch Holdings), filing, recording, publication,
appraisal (including periodic collateral appraisals to the extent of the fees
and charges (and up to the amount of any limitation) contained in the Agreement
or the Fee Letter), real estate surveys, real estate title policies and
endorsements, and environmental audits, (c) Agent’s customary fees and charges
(as adjusted from time to time) with respect to the disbursement of funds (or
the receipt of funds) to or for the account of any Borrower (whether by wire
transfer or otherwise) or with respect to the establishment of electronic
collateral reporting systems, together with any reasonable and documented
out-of-pocket costs and expenses incurred in connection therewith,
(d) reasonable and documented out-of-pocket charges paid or incurred by Agent
resulting from the dishonor of checks payable by or to any Loan Party,
(e) reasonable out-of-pocket costs and expenses paid or incurred by the Lender
Group to correct any default or enforce any provision of the Loan Documents, or
during the continuance of an Event of Default, in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated, (f) subject to the terms of
Section 5.7 of the Agreement, all reasonable and documented out-of-pocket
expenses and costs heretofore and from time to time hereafter incurred by Agent
during the course of periodic field examinations of the Collateral and
Borrowers’ operations, plus a per diem charge at Agent’s then standard rate for
Agent’s examiners in the field and office (which rate as of the date hereof is
$1,000 per person per day), (g) reasonable and documented out-of-pocket costs
and expenses of third party claims or any other suit paid or incurred by the
Lender Group in enforcing or defending the Loan Documents or in connection with
the transactions contemplated by the Loan Documents or the Lender Group’s
relationship with Parent or any of its Subsidiaries, (h) Agent’s and each
Lender’s reasonable and documented costs and expenses (including reasonable
attorneys and financial advisor fees) incurred in advising, structuring,
drafting, reviewing, administering (including travel, meals, and lodging),
syndicating, or amending the Loan Documents, and (i) Agent’s and, each Lender’s
reasonable and documented costs and expenses (including reasonable attorneys,
accountants, consultants, and financial and other advisors fees and expenses)
incurred in terminating, enforcing (including attorneys, accountants,
consultants, and other advisors fees and expenses incurred in connection with
the Chapter 11 Cases, the CCAA Recognition Proceedings, a “workout,” a
“restructuring,” or an Insolvency Proceeding concerning Parent or any of its
Subsidiaries or in exercising rights or remedies under the Loan Documents), or
defending the Loan Documents, irrespective of whether suit is brought, or in
taking any Remedial Action concerning the Collateral.  Without limiting the
generality of the foregoing, Lender Group Expenses shall include all prepetition
and postpetition fees and expenses of (x) one lead counsel (which shall be Brown
Rudnick LLP) for the Lenders and Ad Hoc Consortium of Holders of the Loan
Parties’ 8.75% Senior Notes, one Delaware counsel (which shall be Ashby &
Geddes, PA), for such parties, one Canadian counsel (if designated) and any
other necessary local or regulatory counsel, and (y) one lead counsel for the

 

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Agent (which shall be Holland & Knight LLP) and one Delaware counsel for the
Agent (which shall be Sullivan Hazeltine Allinson LLC) related to the Loans and
all other aspects of the Loan Parties’ restructuring and these Chapter 11 Cases
incurred through the date hereof and as may be subsequently incurred during the
remainder of these Chapter 11 Cases (“DIP Fee Obligations”); provided, however,
that the portion of DIP Fee Obligations related to the negotiation,
documentation, execution, filing, administration, and enforcement of the Loans
and Loan Documents, shall be due and payable on the Closing Date and thereafter,
any further such portion of DIP Fee Obligations shall be paid currently during
the Chapter 11 Cases, and provided, further, however, that Loan Parties’ may
defer payment of the remainder of the DIP Fee Obligations until the Maturity
Date.

 

“Lender Group Representatives” has the meaning specified therefor in
Section 17.9 of the Agreement.

 

“Lender-Related Person” means, with respect to any Lender, such Lender, together
with such Lender’s Affiliates, officers, directors, employees, attorneys, and
agents.

 

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment,
hypothec, charge, deposit arrangement, encumbrance, easement, lien (statutory or
other), security interest, or other security arrangement and any other
preference, priority, or preferential arrangement of any kind or nature
whatsoever, including any conditional sale contract or other title retention
agreement, the interest of a lessor under a Capital Lease and any synthetic or
other financing lease having substantially the same economic effect as any of
the foregoing.

 

“Loan Account” means the US Loan Account.

 

“Loan Documents” means this Agreement, the Controlled Account Agreements, the
Control Agreements, any Copyright Security Agreement, the Fee Letter, any
Guaranty, any Intercompany Subordination Agreement, the Mortgages, any Patent
Security Agreement, the Security Agreement, the Canadian Security Agreement, any
Trademark Security Agreement, any other Security Document, the DIP Intercreditor
Agreement, the Collateral Assignment, the Orders, any note or notes executed by
any Borrower in connection with the Agreement and payable to any member of the
Lender Group, any Canadian Security Document, any letter of credit application
entered into by any Borrower in connection with the Agreement, any amendments or
modifications to any of the foregoing and any other agreement entered into or
certificate issued, now or in the future, by Parent or any of its Subsidiaries
in connection with the Agreement.

 

“Loan Party” means any Borrower or any Guarantor.

 

“Loans” has the meaning specified therefor in Section 2.2(b) of the Agreement.

 

“Local Governmental Authority” means any state, province, municipality or other
political subdivision of the United States or any foreign country, or any
department, agency or instrumentality thereof.

 

“Management Agreement” means the letter agreement, dated as of July 9, 2007, by
and between Parent and Sciens Management, LLC, as amended, restated, modified or
supplemented

 

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from time to time in accordance with the terms hereof, pursuant to which Parent
engaged Sciens Management, LLC to provide certain investment banking, corporate
and strategic advisory services.

 

“Margin Stock” as defined in Regulation U of the Board of Governors of the
Federal Reserve System as in effect from time to time.

 

“Material Adverse Change” means (a) a material adverse change in the business,
operations, assets or condition (financial or otherwise) of Parent and its
Subsidiaries, taken as a whole, (b) a material impairment of Parent’s and its
Subsidiaries ability to perform their obligations under the Loan Documents to
which they are parties or of the Lender Group’s ability to enforce the
Obligations or realize upon the Collateral, or (c) a material impairment of the
enforceability or priority of Agent’s Liens with respect to the Collateral as a
result of an action or failure to act on the part of Parent or its Subsidiaries,
in each case, other than the commencement of the Chapter 11 Cases or the
continuation of the Chapter 11 Cases.

 

“Material Contract” means (i) the Senior Note Indenture, (ii) each Prepetition
Term Loan Document, (iii) each Prepetition Senior Loan Document, (iv) any
contract or agreement (other than a Loan Document or DIP Term Loan Document) of
any Loan Party involving monetary liability of or to Parent or its Subsidiaries
in excess of $2,000,000 in any fiscal year of Parent and (v) each other contract
or agreement, the loss of which could reasonably be expected to result in a
Material Adverse Change.

 

“Maturity Date” shall mean the earliest to occur of (a) the Stated Maturity
Date, (b) the closing date of the Section 363 Sale, (c) the substantial
consummation (as defined in Section 1101 of the Bankruptcy Code), of a plan of
reorganization or liquidation filed in the Chapter 11 Cases that is confirmed
pursuant to an order entered by the Bankruptcy Court, and recognized by the
Canadian Court in the CCAA Recognition Proceedings, and (d) the date of
acceleration of the Obligations in accordance with the terms herein.

 

“Moody’s” has the meaning specified therefor in the definition of Cash
Equivalents.

 

“Mortgages” means, individually and collectively, one or more mortgages, deeds
of trust, deeds to secure debt, charges or debentures executed and delivered by
Parent or its Subsidiaries in favor of Agent, in form and substance reasonably
satisfactory to Agent, that encumber the Real Property Collateral.

 

“Multiemployer Plan” means any multiemployer plan within the meaning of
Section 3(37) or 4001(a)(3) of ERISA with respect to which any Loan Party or
ERISA Affiliate has an obligation to contribute or has any liability, contingent
or otherwise or could be assessed withdrawal liability assuming a complete
withdrawal from any such multiemployer plan.

 

“Net Cash Proceeds” means (a) with respect to any sale or disposition by Parent
or any of its Subsidiaries of assets (including pursuant to casualty losses or
condemnation), the amount of cash proceeds received (directly or indirectly)
from time to time (whether as initial consideration and including condemnation
awards and payments in lieu thereof) or through the payment of deferred
consideration) by or on behalf of Parent or its Subsidiaries, in connection
therewith after deducting therefrom only (i) reasonable fees, commissions, and
expenses related thereto and

 

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required to be paid by Parent or such Subsidiary in connection with such sale or
disposition, (ii) Taxes paid or payable to any taxing authorities (or tax
distributions made to members or shareholders) by Parent or such Subsidiary in
connection with such sale or disposition, in each case (other than with respect
to tax distributions), to the extent, but only to the extent, that the amounts
so deducted are, at the time of receipt of such cash, actually paid or payable
to a Person that is not an Affiliate of Parent or any of its Subsidiaries, and
are properly attributable to such transaction; and (iii) all amounts that are
set aside as a reserve (A) for adjustments in respect of the purchase price of
such assets, and (B) for any liabilities associated with such sale or casualty,
to the extent such reserve is required by GAAP, to the extent that in each case
the funds described above in this clause (iii) are (x) deposited into escrow
with a third party escrow agent or set aside in a separate Deposit Account that
is subject to a Controlled Account Agreement in favor of Agent and (y) paid to
Agent as a prepayment of the applicable Obligations in accordance with
Section 2.4(e) of the Agreement at such time when such amounts are no longer
required to be set aside as such a reserve; and (b) with respect to the issuance
or incurrence of any Indebtedness by Parent or any of its Subsidiaries, or the
issuance by Parent or any of its Subsidiaries of any Equity Interests, the
aggregate amount of cash received (directly or indirectly) from time to time
(whether as initial consideration or through the payment or disposition of
deferred consideration) by or on behalf of Parent or such Subsidiary in
connection with such issuance or incurrence, after deducting therefrom only
(i) reasonable fees, commissions, and expenses related thereto and required to
be paid by Parent or such Subsidiary in connection with such issuance or
incurrence, and (ii) taxes paid or payable to any taxing authorities by Parent
or such Subsidiary in connection with such issuance or incurrence, in each case
to the extent, but only to the extent, that the amounts so deducted are, at the
time of receipt of such cash, actually paid or payable to a Person that is not
an Affiliate of Parent or any of its Subsidiaries, and are properly attributable
to such transaction.

 

“New Colt” means New Colt Holding Corp., a Delaware corporation.

 

“New Holdco” means Colt Holding Company LLC, a Delaware limited liability
company.

 

“New Holdco Expenses” has the meaning specified therefor in Section 4.20 of the
Agreement.

 

“Notification Event” means (a) the occurrence of a “reportable event” described
in Section 4043 of ERISA for which the 30-day notice requirement has not been
waived by applicable regulations issued by the PBGC, (b) the withdrawal of any
Loan Party or ERISA Affiliate from a Pension Plan during a plan year in which it
was a “substantial employer” as defined in Section 4001(a)(2) of ERISA, (c) the
termination of a Pension Plan, the filing of a notice of intent to terminate a
Pension Plan or the treatment of a Pension Plan amendment as a termination,
under Section 4041 of ERISA, if the plan assets are not sufficient to pay all
plan liabilities, (d) the institution of proceedings to terminate, or the
appointment of a trustee with respect to, any Pension Plan by the PBGC or any
Pension Plan or Multiemployer Plan administrator, (e) any other event or
condition that would constitute grounds under Section 4042(a) of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan,
(f) the imposition of a Lien pursuant to the IRC or ERISA in connection with any
Employee Benefit Plan, (g) the partial or complete withdrawal of any Loan Party
or ERISA

 

24

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Affiliate from a Multiemployer Plan (other than any withdrawal that would not
constitute an Event of Default under Section 8.16 of the Agreement), (h) any
event or condition that results in the termination of a Multiemployer Plan under
Section 4041A of ERISA or the institution by the PBGC of proceedings to
terminate or to appoint a trustee to administer a Multiemployer Plan under
ERISA, (i) any Pension Plan being in “at risk status” within the meaning of IRC
Section 430(i), (j) any Multiemployer Plan being in “endangered status” or
“critical status” within the meaning of IRC Section 432(b) or the determination
that any Multiemployer Plan is or is expected to be insolvent or in
reorganization within the meaning of Title IV of ERISA, (k) with respect to any
Pension Plan, any Loan Party or ERISA Affiliate incurring a substantial
cessation of operations within the meaning of ERISA Section 4062(e), (l) the
failure of any Pension Plan to meet the minimum funding standards within the
meaning of the IRC or ERISA (including Section 412 of the IRC or Section 302 of
ERISA), in each case, whether or not waived, (m) the filing of an application
for a waiver of the minimum funding standards within the meaning of the IRC or
ERISA (including Section 412 of the IRC or Section 302 of ERISA) with respect to
any Pension Plan, (n) the failure to make by its due date a required payment or
contribution with respect to any Pension Plan or Multiemployer Plan, or (o) any
event that results in or could reasonably be expected to result in a liability
by a Loan Party or ERISA Affiliate pursuant to Title IV of ERISA.

 

“Obligations” means all loans (including the Tranche A Loans and the Tranche B
Loans), debts, principal, interest (including any interest accruing at the
Default Rate), premiums, liabilities (including all amounts charged to the Loan
Account pursuant to the Agreement), obligations (including indemnification
obligations), fees (including the fees provided for in the Fee Letter), Lender
Group Expenses, guaranties, covenants, and duties of any kind and description
owing by any Loan Party pursuant to or evidenced by the Agreement or any of the
other Loan Documents and irrespective of whether for the payment of money,
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, and including all interest not paid when due and
all other expenses or other amounts that any Borrower is required to pay or
reimburse by the Loan Documents or by law or otherwise in connection with the
Loan Documents.  Any reference in the Agreement or in the Loan Documents to the
Obligations shall include all or any portion thereof and any extensions,
modifications, renewals, or alterations thereof, both prior and subsequent to
any Insolvency Proceeding.

 

“OFAC” means The Office of Foreign Assets Control of the U.S. Department of the
Treasury.

 

“Orders” means, collectively, the First Interim DIP Order, the Second Interim
DIP Order, the Final DIP Order and the Canadian Orders and separately, the First
Interim DIP Order, the Second Interim DIP Order, the Final DIP Order or the
Canadian Orders, as the context requires.

 

“Originating Lender” has the meaning specified therefor in Section 13.1(f) of
the Agreement.

 

“Other Taxes” has the meaning specified therefor in Section 16.1 of the
Agreement.

 

“Parent” has the meaning specified therefor in the preamble to the Agreement.

 

25

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“Participant” has the meaning specified therefor in Section 13.1(f) of the
Agreement.

 

“Participant Register” has the meaning set forth in Section 13.1(j) of the
Agreement.

 

“Patent Security Agreement” has the meaning specified therefor in the Security
Agreement or the Canadian Security Agreement, as the case may be.

 

“Patriot Act” has the meaning specified therefor in Section 4.17 of the
Agreement.

 

“Payoff Date” means the first date on which all of the Obligations (other than
unasserted contingent obligations) are paid in full.

 

“PBGC” means the Pension Benefit Guaranty Corporation or any successor agency.

 

“Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan,
which is subject to the provisions of Title IV or Section 302 of ERISA or
Sections 412 or 430 of the Code and which is sponsored, maintained, or
contributed to by any Loan Party or ERISA Affiliate or with respect to which any
Loan Party or ERISA Affiliate has any liability, contingent or otherwise.

 

“Permit” means, with respect to any Person, any permit, approval, authorization,
license, registration, certificate, concession, grant, franchise, variance or
permission from, and any other contractual obligations with, any Governmental
Authority, in each case whether or not having the force of law and applicable to
or binding upon such Person or any of its property or to which such Person or
any of its property is subject.

 

“Permitted Dispositions” means:

 

(a)                                 sales, abandonment, or other dispositions of
Equipment that is substantially worn, damaged, or obsolete in the ordinary
course of business consistent with past practice,

 

(b)                                 sales of Inventory to buyers in the ordinary
course of business and the consignment of Inventory to the Government of the
United Mexican States in the ordinary course of business consistent with past
practice pursuant to a written agreement (the “DCAM Consignment”); provided,
that, the maximum value of Inventory consigned to the Government of the United
Mexican States at any one time shall not exceed $1,000,000,

 

(c)                                  the use or transfer of money or Cash
Equivalents in a manner that is not prohibited by the terms of the Agreement or
the other Loan Documents,

 

(d)                                 the non-exclusive licensing or sublicensing
of Intellectual Property or other general intangibles (other than the exclusive
licenses in effect on the Closing Date as set forth on Schedule L-1) and
licenses, leases or subleases of other property, in each case, in the ordinary
course of business consistent with past practice and so long as any such
transaction shall not: (i) materially interfere with the business of Parent and
its Subsidiaries, (ii) adversely affect, limit or restrict the rights of Agent
to use any Intellectual Property of Loan Parties to sell or otherwise dispose of
any Inventory or other Collateral, (iii) have a material and adverse effect on
the value of such Intellectual Property, or (iv) otherwise adversely limit or
interfere in any respect with the

 

26

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use of any such Intellectual Property by Agent in connection with the exercise
of its rights or remedies hereunder or under any of the other Loan Documents;

 

(e)                                  the granting of Permitted Liens,

 

(f)                                   the sale or discount, in each case without
recourse, of Accounts arising in the ordinary course of business consistent with
past practice, but only in connection with the compromise or collection thereof,

 

(g)                                  any involuntary loss, damage or destruction
of property,

 

(h)                                 any involuntary condemnation, seizure or
taking, by exercise of the power of eminent domain or otherwise, or confiscation
or requisition of use of property;

 

(i)                                     the leasing or subleasing of assets of
Parent or its Subsidiaries (other than Accounts and Inventory) in the ordinary
course of business consistent with past practice,

 

(j)                                    the sale or issuance of Equity Interests
by any Subsidiary of Parent to a Loan Party,

 

(k)                                 the non-exclusive licensing or sublicensing
of Intellectual Property pursuant to manufacturing license agreements or
technical assistance agreements with certain foreign governments, or otherwise
in accordance with the International Traffic in Arms Regulations, in each case,
so long as any such transaction does not: (i) adversely affect, limit or
restrict the rights of Agent to use any Intellectual Property of Loan Parties to
sell or otherwise dispose of any Inventory or other Collateral, (ii) have a
material and adverse effect on the value of such Intellectual Property, or
(iii) otherwise adversely limit or interfere with the use of such Intellectual
Property by Agent in connection with the exercise of its rights or remedies
hereunder or under any of the other Loan Documents;

 

(l)                                     the making of a Restricted Payment that
is expressly permitted to be made pursuant to Section 6.9 of the Agreement,

 

(m)                             the making of a Permitted Investment, and

 

(n)                                 the sale or other disposition of property by
a Loan Party to another Loan Party.

 

“Permitted Holder” means the Persons listed on Schedule P-3 to the Agreement.

 

“Permitted Indebtedness” means:

 

(a)                                 Indebtedness evidenced by the Agreement or
the other Loan Documents,

 

(b)                                 Indebtedness set forth on Schedule 4.25 and,
in the case of letters of credit listed on such schedule, extensions of maturity
or replacements of such Indebtedness in the same principal amount,

 

27

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(c)                                  Permitted Purchase Money Indebtedness;
provided that the aggregate amount of all such Indebtedness does not exceed
$500,000 at any time outstanding unless otherwise agreed to in writing by the
Agent at the direction of the Required Lenders,

 

(d)                                 endorsement of instruments or other payment
items for deposit,

 

(e)                                  Indebtedness consisting of (i) unsecured
guarantees incurred in the ordinary course of business with respect to surety
and appeal bonds, performance bonds, bid bonds, appeal bonds, completion
guarantee and similar obligations; (ii) unsecured guarantees arising with
respect to customary indemnification obligations to purchasers in connection
with Permitted Dispositions; and (iii) unsecured guarantees with respect to
Indebtedness of Parent or one of its Subsidiaries, to the extent that the Person
that is obligated under such guaranty would have been permitted to incur such
underlying Indebtedness; provided that the aggregate amount of all such
Indebtedness does not exceed $500,000 at any time outstanding unless otherwise
agreed to in writing by the Agent at the direction of the Required Lenders,

 

(f)                                   [reserved],

 

(g)                                  [reserved],

 

(h)                                 Indebtedness incurred in the ordinary course
of business consistent with past practice under performance, surety, statutory
and appeal bonds,

 

(i)                                     Indebtedness to finance premiums for
property, casualty, liability or other insurance to Parent or any of its
Subsidiaries, so long as the amount of such Indebtedness is not in excess of the
amount of the unpaid cost of, and shall be incurred only to defer the cost of,
such insurance,

 

(j)                                    [reserved],

 

(k)                                 Indebtedness incurred in respect of credit
cards, credit card processing services, debit cards, stored value cards,
purchase cards (including so-called “procurement cards” or “P-cards”), or Cash
Management Services, in each case, incurred in the ordinary course of business
consistent with past practice,

 

(l)                                     [reserved],

 

(m)                             Indebtedness of Parent or its Subsidiaries
arising pursuant to Permitted Intercompany Advances,

 

(n)                                 [reserved],

 

(o)                                 Indebtedness consisting of Permitted
Investments,

 

(p)                                 Indebtedness evidenced by the Senior Note
Indenture in an aggregate outstanding principal amount not to exceed
$250,000,000,

 

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(q)                                 Indebtedness with respect to letters of
credit issued by, or a letter of credit facility with, a letter of credit issuer
reasonably acceptable to Required Lenders, in an aggregate face amount not to
exceed $2,000,000,

 

(r)                                    Indebtedness incurred by Parent or its
Subsidiaries in respect of workers’ compensation claims, health, disability or
other employee benefits or property, casualty or liability insurance,
self-insurance obligations, performance, bid surety and similar bonds and
completion guarantees (not for borrowed money), in each case in the ordinary
course of business consistent with past practice,

 

(s)                                   Indebtedness arising from the honoring by
a bank or other financial institution of a check, draft or similar instrument
(except in the case of daylight overdrafts) drawn against insufficient funds in
the ordinary course of business consistent with past practice; provided, that
such Indebtedness is extinguished with ten Business Days of incurrence,

 

(t)                                    Indebtedness of Parent or any Subsidiary
consisting of take-or-pay obligations contained in supply arrangements in the
ordinary course of business consistent with past practice,

 

(u)                                 [reserved],

 

(v)                                 other unsecured Indebtedness in an aggregate
principal amount not to exceed $100,000 at any time outstanding;

 

(w)                               Indebtedness evidenced by the Prepetition Term
Loan Documents in an aggregate outstanding principal amount not to exceed the
Prepetition Term Loan Debt Amount plus any paid-in-kind interest accrued thereon
(including pursuant to any Adequate Protection Provisions of the Orders);

 

(x)                                 Indebtedness evidenced by the DIP Term Loan
Documents in an aggregate outstanding principal amount not to exceed the DIP
Term Loan Debt Amount;

 

(y)                                 Indebtedness evidenced by the Prepetition
Senior Loan Documents.

 

“Permitted Intercompany Advances” means loans (a) made by a Loan Party that is
not a Specified Loan Party to another Loan Party that is not a Specified Loan
Party and (b) made by a Loan Party that is not a Specified Loan Party to a
Specified Loan Party; provided, that, (i) in the case of clauses (a) and (b),
Agent shall have received an Intercompany Subordination Agreement as duly
authorized, executed and delivered by the parties to any such loans and (ii) in
the case of clause (b) only, the aggregate amount of all such loans does not
exceed $100,000 at any time outstanding unless otherwise agreed to in writing by
the Agent at the direction of the Required Lenders.

 

“Permitted Investments” means:

 

(a)                                 Investments in cash and Cash Equivalents of
any Loan Party or other Investments by a Loan Party or a non-Loan Party in any
Loan Party,

 

29

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(b)                                 Investments in negotiable instruments
deposited or to be deposited for collection in the ordinary course of business
consistent with past practice,

 

(c)                                  advances made in connection with purchases
of goods or services in the ordinary course of business consistent with past
practice,

 

(d)                                 Investments received in settlement of
amounts due to any Loan Party or any of its Subsidiaries effected in the
ordinary course of business consistent with past practice or owing to any Loan
Party or any of its Subsidiaries as a result of Insolvency Proceedings involving
an Account Debtor or upon the foreclosure or enforcement of any Lien in favor of
any Loan Party or any of its Subsidiaries,

 

(e)                                  [reserved],

 

(f)                                   guarantees permitted under the definition
of Permitted Indebtedness,

 

(g)                                  Permitted Intercompany Advances,

 

(h)                                 Equity Interests or other securities
acquired in connection with the satisfaction or enforcement of Indebtedness or
claims due or owing to any Loan Party or any of its Subsidiaries (in bankruptcy
of customers or suppliers or otherwise outside the ordinary course of business
consistent with past practice) or as security for any such Indebtedness or
claims,

 

(i)                                     deposits of cash made in the ordinary
course of business consistent with past practice to secure performance of
operating leases,

 

(j)                                    [reserved],

 

(k)                                 [reserved],

 

(l)                                     [reserved],

 

(m)                             [reserved],

 

(n)                                 the endorsement of instruments for
collection or deposit in the ordinary course of business consistent with past
practice,

 

(o)                                 deposits of cash for leases, utilities,
worker’s compensation and similar matters in the ordinary course of business
consistent with past practice,

 

(p)                                 receivables owing to Parent or any of its
Subsidiaries if created or acquired in the ordinary course of business
consistent with past practices as of the date hereof,

 

(q)                                 [reserved],

 

(r)                                    stock or obligations issued to Parent and
its Subsidiaries by any Person (or the representative of such Person) in respect
of Indebtedness of such Person owing to Parent and its Subsidiaries in
connection with the insolvency, bankruptcy, receivership or reorganization of
such Person or a composition or readjustment of the debts of such Person,
provided, that, the

 

30

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original of any such stock or instrument evidencing such obligations shall be
promptly delivered to Agent, upon Required Lenders’ request, together with such
stock power, assignment or endorsement by Parent and its Subsidiaries as
Required Lenders’ may request,

 

(s)                                   Investments constituting Restricted
Payments permitted by Section 6.9 of the Agreement,

 

(t)                                    Investments made as a result of the
receipt of non-cash consideration from a Permitted Disposition,

 

(u)                                 Investments made in connection with the
funding of contributions under any non-qualified retirement plan or similar
employee compensation plan in an amount not to exceed the amount of compensation
expense recognized by Parent and its Subsidiaries in connection with such plans,

 

(v)                                 Solely to the extent constituting
Investments, purchases and acquisitions of inventory, supplies, materials and
equipment or purchases of contract rights or licenses or leases of intellectual
property, in each case in the ordinary course of business consistent with past
practice.

 

“Permitted Liens” means:

 

(a)                                 Liens granted to, or for the benefit of,
Agent to secure the Obligations,

 

(b)                                 Liens for unpaid Taxes that either (i) are
not yet delinquent, or (ii) for which the underlying Taxes are the subject of
Permitted Protests,

 

(c)                                  judgment Liens arising solely as a result
of the existence of judgments, orders, or awards that do not constitute an Event
of Default and solely to the extent the rights and remedies of the holder of
such judgment Lien is stayed or enjoined by the Bankruptcy Court pursuant to the
Chapter 11 Cases or the Canadian Court, as applicable,

 

(d)                                 Liens set forth on Schedule P-2; provided,
however, that to qualify as a Permitted Lien, any such Lien described on
Schedule P-2 shall only secure the Indebtedness that it secures on the Closing
Date in respect thereof or in the case of Liens on cash deposits securing
letters of credit issued and outstanding on the Closing Date (“Closing Date
LCs”), Liens on cash deposits of an equivalent amount securing replacements or
extensions of such letters of credit; provided, that the cash deposits securing
the Closing Date LCs have been returned to the applicable Loan Party (or
arrangements for the substantially concurrent return of such cash deposits to
the applicable Loan Party have been made),

 

(e)                                  any interest or title of a lessor,
sublessor or licensor in or to any asset (other than Accounts or Inventory)
under any lease, sublease or license entered into by Parent or its Subsidiaries
in the ordinary course of business consistent with past practice and covering
only such asset,

 

(f)                                   purchase money Liens or the interests of
lessors under Capital Leases, in each case, as to assets or property, other than
Accounts or Inventory, to the extent that such Liens or

 

31

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interests secure Permitted Purchase Money Indebtedness and so long as (i) such
Lien attaches only to the asset or property purchased or acquired (substantially
contemporaneous with such purchase or acquisition) and the proceeds thereof, and
(ii) such Lien only secures the Indebtedness that was incurred to acquire the
asset or property purchased or acquired,

 

(g)                                  Liens arising by operation of law in favor
of warehousemen, landlords, carriers, mechanics, materialmen, laborers, or
suppliers, incurred in the ordinary course of business consistent with past
practice and not in connection with the borrowing of money, and which Liens
either (i) are for sums not yet delinquent, or (ii) are the subject of Permitted
Protests,

 

(h)                                 Liens on cash deposited to secure Parent’s
and its Subsidiaries’ obligations in connection with worker’s compensation or
other unemployment insurance,

 

(i)                                     Liens on cash deposited to secure
Parent’s and its Subsidiaries’ obligations in connection with the making or
entering into of bids, tenders, or leases in the ordinary course of business
consistent with past practice and not in connection with the borrowing of money,

 

(j)                                    Liens on cash deposited to secure
Parent’s and its Subsidiaries’ reimbursement obligations with respect to surety
or appeal bonds obtained in the ordinary course of business consistent with past
practice,

 

(k)                                 with respect to any Real Property,
encumbrances, ground leases, easements or reservations of, or rights of others
(including any reservations, limitations, provisos and conditions expressed in
any original grant from the Crown with respect of any Real Property owned by
Colt Canada) for, licensees, rights of way, sewers, electric lines, telegraph
and telephone lines and other similar purposes, or zoning, building codes or
other restrictions (including, without limitation, minor defects or
irregularities in title and similar encumbrances) in each case as to the use of
Real Property or Liens on Real Property incidental to the conduct of the
business of Parent or its Subsidiaries or to the ownership of its Real Property
that (in each case) do not individually or in the aggregate materially adversely
affect the value of any such Real Property or materially impair, or interfere
with, the use or operation of such Real Property,

 

(l)                                     licenses of intellectual property to the
extent constituting a Permitted Disposition, in the ordinary course of business
consistent with past practice,

 

(m)                             [reserved],

 

(n)                                 rights of setoff or bankers’ liens upon
deposits of cash in favor of banks or other depository institutions, solely to
the extent incurred in connection with the maintenance of such deposit accounts
in the ordinary course of business,

 

(o)                                 [reserved],

 

(p)                                 Liens in favor of customs, revenue and other
tax authorities arising as a matter of law to secure payment of customs duties
in connection with the importation of goods,

 

(q)                                 Liens on cash deposits to secure
Indebtedness permitted by clause (q) of the definition of “Permitted
Indebtedness”,

 

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(r)                                    additional Liens granted by the
Bankruptcy Court or the Canadian Court pursuant to the Adequate Protection
Provisions of the Orders,

 

(s)                                   [reserved],

 

(t)                                    Liens arising from precautionary Code
financing statement filings regarding operating leases entered into by Parent
and its Subsidiaries in the ordinary course of business,

 

(u)                                 Liens arising out of conditional sale, title
retention, consignment or similar arrangements for the sale of goods entered
into in the ordinary course of business including Inventory consigned pursuant
to the DCAM Consignment described in clause (b) of the definition of Permitted
Dispositions,

 

(v)                                 [reserved],

 

(w)                               [reserved],

 

(x)                                 with respect to any Real Property, minor
survey exceptions, minor encumbrances, ground leases, easements or reservations
or, or rights of others for, licenses, rights-of-way servitudes, sewers,
restrictive consents, electric lines, drains, telegraph and telephone and cable
television lines, gas and oil pipelines and other similar purposes, or zoning,
building codes or other restrictions (including, without limitation, minor
defects or irregularities in title and similar encumbrances) which (in each
case) were not incurred in connection with Indebtedness and which do not
individually or in the aggregate materially adversely affect the value of such
Real Property or materially impair, interfere with, the use or operation of such
Real Property,

 

(y)                                 leases, subleases, licenses or sublicenses
to the extent permitted by clause (d) of the definition of Permitted
Dispositions, and

 

(z)                                  Liens of Prepetition Term Loan Agent, DIP
Term Loan Agent and Prepetition Senior Loan Agent to secure the Indebtedness
permitted under clauses (w), (x) and (y), respectively, of the definition of
Permitted Indebtedness, provided, that, such liens shall at all times be subject
to the terms of the DIP Intercreditor Agreement.

 

Notwithstanding anything to the contrary contained in any of the Loan Documents,
Permitted Liens shall not include any Liens on assets of any Loan Party which
secure any Indebtedness or other obligations of any Foreign Subsidiary, except
(x) as permitted by clause (a) of the definition of Permitted Liens and liens
arising in respect of Indebtedness permitted under clauses (w), (x) and (y) of
the definition of Permitted Indebtedness, (y) as consented to in writing by the
Required Lenders or (z) Liens on assets of Canadian Loan Parties may secure
Indebtedness and other obligations of Canadian Loan Parties to the extent
permitted by Section 6.1 or 6.2 of the Agreement.

 

“Permitted Prior Liens” means Liens of the type described in clauses (b), (g),
(h), (n) and (p) of the definition of “Permitted Liens” under the Prepetition
Senior Loan Agreement and permitted by Section 6.2 thereof (solely to the extent
any such permitted Liens were incurred and valid, binding, enforceable, properly
perfected, and nonavoidable as of the Petition Date).

 

33

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“Permitted Protest” means the right of Parent or any of its Subsidiaries to
protest any Lien (other than any Lien that secures the Obligations), Taxes
(other than payroll Taxes or Taxes that are the subject of a United States
federal tax lien), or rental payment, provided that (a) a reserve or provision
with respect to such obligation is established on Parent’s or its Subsidiaries’
books and records in such amount as is required under GAAP and (b) such Lien or
other obligations are being contested in good faith by appropriate proceedings
diligently conducted and such proceedings operate to stay the enforcement of
such Lien or any Lien securing any such obligations.

 

“Permitted Term Roll-Up” means the refinancing of the obligations under the
Prepetition Term Loan Documents subject to the terms of the Final DIP Order and
after giving effect to the holders (or their agent) of such refinanced
obligations having entered into the DIP Intercreditor Agreement pursuant to a
joinder in form and substance acceptable to the Lenders.

 

“Permitted Variances” has the meaning specified in Section 7(d) of this
Agreement.

 

“Permitted Purchase Money Indebtedness” means, as of any date of determination,
Purchase Money Indebtedness incurred after the Closing Date in an aggregate
principal amount outstanding at any one time not in excess of $500,000.

 

“Person” means natural persons, corporations, limited liability companies,
limited partnerships, general partnerships, limited liability partnerships,
joint ventures, trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, Governmental Authorities or
otherwise.

 

“Petition Date” means June 14, 2015.

 

“PPSA” means the Personal Property Security Act (Ontario), the Civil Code of
Québec or any other applicable Canadian Federal or Provincial statute pertaining
to the granting, perfecting, priority or ranking of security interests, liens,
hypothecs on personal property, and any successor statutes, together with any
regulations thereunder, in each case as in effect from time to time.  References
to sections of the PPSA shall be construed to also refer to any successor
sections.

 

“Prepetition Assignment Agreement” shall mean those certain Assignment and
Acceptance Agreements dated as of June 23, 2015, by and among Cortland, the
Initial Prepetition Senior Lenders and the Lenders.

 

“Prepetition Senior Loan Agent” shall mean Cortland and its successors and
assigns, including any successor or replacement agent under the Prepetition
Senior Loan Agreement.

 

“Prepetition Senior Loan Agreement” shall mean the Credit Agreement, dated as of
February 9, 2015, by and among Prepetition Senior Loan Agent, Prepetition Senior
Loan Lenders, Parent and certain of its affiliates, as the same now exists or
may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced in accordance with the terms of the DIP Intercreditor Agreement.

 

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“Prepetition Senior Loan Debt” shall mean all obligations, liabilities and
indebtedness of every kind, nature and description owing by Borrowers and
Guarantors to Prepetition Senior Loan Agent and Prepetition Senior Loan Lenders,
including principal, interest, charges, fees, premiums, indemnities, costs and
expenses, however evidenced, whether as principal, surety, endorser, guarantor
or otherwise, arising under the Prepetition Term Loan Documents.

 

“Prepetition Senior Loan Documents” shall mean, collectively, the following (as
the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced, in each case in accordance with the
terms of the DIP Intercreditor Agreement): (a) the Prepetition Senior Loan
Agreement; and (b) all other agreements, documents and instruments at any time
executed and/or delivered by any Borrower or Guarantor with, to or in favor of
Prepetition Senior Loan Agent or any Prepetition Senior Loan Lender in
connection therewith or related thereto; sometimes being referred to herein
individually as a “Prepetition Senior Loan Document”.

 

“Prepetition Senior Loan Lenders” shall mean the lenders under the Prepetition
Senior Loan Agreement and their respective successors and assigns.

 

“Prepetition Term Loan Agent” shall mean Wilmington Savings Fund Society, FSB
and its successors and assigns, including any successor or replacement agent
under the Prepetition Term Loan Agreement.

 

“Prepetition Term Loan Agreement” shall mean the Term Loan Agreement, dated as
of November 17, 2014, by and among Prepetition Term Loan Agent, Prepetition Term
Loan Lenders, Parent and certain of its affiliates, as the same now exists or
may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced in accordance with the terms of the DIP Intercreditor Agreement.

 

“Prepetition Term Loan Closing Date” shall mean November 17, 2014.

 

“Prepetition Term Loan Debt” shall mean all obligations, liabilities and
indebtedness of every kind, nature and description owing by Borrowers and
Guarantors to Prepetition Term Loan Agent and Prepetition Term Loan Lenders,
including principal, interest, charges, fees, premiums, indemnities, costs and
expenses, however evidenced, whether as principal, surety, endorser, guarantor
or otherwise, arising under the Prepetition Term Loan Documents.

 

“Prepetition Term Loan Debt Amount” shall mean $72,988,102.39.

 

“Prepetition Term Loan Documents” shall mean, collectively, the following (as
the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced, in each case in accordance with the
terms of the DIP Intercreditor Agreement): (a) the Prepetition Term Loan
Agreement; and (b) all other agreements, documents and instruments at any time
executed and/or delivered by any Borrower or Guarantor with, to or in favor of
Prepetition Term Loan Agent or any Prepetition Term Loan Lender in connection
therewith or related thereto; sometimes being referred to herein individually as
a “Prepetition Term Loan Document”.

 

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“Prepetition Term Loan Lenders” shall mean the lenders under the Prepetition
Term Loan Agreement and their respective successors and assigns.

 

“Pro Rata Share” means, as of any date of determination, with respect to all
matters as to a particular Lender (including the indemnification obligations
arising under Section 15.7 of the Agreement), the percentage obtained by
dividing (y) the outstanding principal amount of such Lender’s Loans, by (z) the
outstanding principal amount of all Loans.

 

“Projections” means Parent’s forecasted (a) balance sheets, (b) profit and loss
statements, and (c) cash flow statements, all prepared on a basis consistent
with Parent’s historical financial statements, together with appropriate
supporting details and a statement of underlying assumptions.

 

“Purchase Money Indebtedness” means Indebtedness (other than the Obligations,
but including Capitalized Lease Obligations), incurred at the time of, or within
20 days after, the acquisition of any fixed assets for the purpose of financing
all or any part of the acquisition cost thereof.

 

“Real Property” means any estates or interests in real property now owned or
hereafter acquired by Parent or its their Subsidiaries and the improvements
thereto.

 

“Real Property Collateral” means the Real Property identified on Schedule R-1
and any Real Property hereafter acquired by Parent or its their Subsidiaries
which is subject to a Lien in favor of Agent.

 

“Receiver” means a receiver, interim receiver, manager, receiver and manager,
liquidator, trustee in bankruptcy or similar Person.

 

“Record” means information that is inscribed on a tangible medium or that is
stored in an electronic or other medium and is retrievable in perceivable form.

 

“Register” has the meaning set forth in Section 13.1(i) of the Agreement.

 

“Registered Loan” has the meaning set forth in Section 13.1(i) of the Agreement.

 

“Related Fund” means, with respect to any Lender that is an investment fund, any
other investment fund that invests in commercial loans and that is managed or
advised by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.

 

“Release” means any release, spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of any Hazardous Material into the indoor or outdoor environment
(including the abandonment or disposal of any barrels, containers or other
closed receptacles containing any Hazardous Material), including the movement of
any Hazardous Material through the air, soil, surface water or groundwater.

 

“Remedial Action” means all actions taken to (a) clean up, remove, remediate,
contain, treat, monitor, assess, evaluate, or in any way address Hazardous
Materials in the indoor or

 

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outdoor environment, (b) prevent or minimize a release or threatened release of
Hazardous Materials so they do not migrate or endanger or threaten to endanger
public health or welfare or the indoor or outdoor environment, (c) restore or
reclaim natural resources or the environment, (d) perform any pre-remedial
studies, investigations, or post-remedial operation and maintenance activities,
or (e) conduct any other actions with respect to Hazardous Materials, in each
case pursuant to Environmental Laws.

 

“Remedies Notice Period” has the meaning ascribed to such term in the Orders, as
applicable.

 

“Plan” has the meaning specified therefor on Schedule 5.23 attached to the
Agreement.

 

“Report” has the meaning specified therefor in Section 15.16 of the Agreement.

 

“Required Lenders” means, at any time, Lenders whose aggregate Pro Rata Shares
(calculated under clause (b) of the definition of Pro Rata Shares) exceed 50%.

 

“Requirements of Law” means, with respect to any Person, collectively, the
common law and all federal, state, local, foreign, multinational or
international laws, statutes, codes, treaties, standards, rules and regulations,
guidelines, ordinances, orders, judgments, writs, injunctions, decrees
(including administrative or judicial precedents or authorities) and the
interpretation or administration thereof by, and other determinations,
directives, requirements or requests of, any Governmental Authority, in each
case whether or not having the force of law and that are applicable to or
binding upon such Person or any of its property or to which such Person or any
of its property is subject.

 

“Responsible Officer” means any chief executive officer, president, senior vice
president, executive vice president, chief operating officer, chief financial
officer, chief accounting officer, general counsel, treasurer or other similar
officer of any Borrower.

 

“Restricted Payment” means to the declaration or payment of any dividend or
other distribution (whether in cash, securities or other property) with respect
to any Equity Interests of Parent or any of its Subsidiaries, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such Equity Interests or on
account of any return of capital to Parent or such Subsidiary’s stockholders,
partners or members (or the equivalent Person thereof), or payment made to
redeem, purchase, repurchase or retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire any Equity Interests of
Parent or any of its Subsidiaries, or any setting apart of funds or property for
any of the foregoing.

 

“Sanctioned Entity” means (a) a country or a government of a country, (b) an
agency of the government of a country, (c) an organization directly or
indirectly controlled by a country or its government, (d) a Person resident in
or determined to be resident in a country, in each case, that is subject to a
country sanctions program administered and enforced by OFAC.

 

“Sanctioned Person” means a person named on the list of Specially Designated
Nationals maintained by OFAC.

 

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“S&P” has the meaning specified therefor in the definition of Cash Equivalents.

 

“SEC” means the United States Securities and Exchange Commission and any
successor thereto.

 

“Second Interim DIP Order” means the interim order entered by the Bankruptcy
Court on June 24, 2015, in the form of Exhibit E-1 and otherwise in form and
substance satisfactory to the Lenders in their sole discretion, entered upon a
motion filed by Loan Parties that is in form and substance reasonably acceptable
to the Lenders in their sole discretion.

 

“Second Tranche A Loan” has the meaning specified therefor in Section 2.2(a) of
the Agreement.

 

“Section 363 Sale” means a sale of substantially all of the Loan Parties’ assets
pursuant to Bankruptcy Code section 363 and the 363 Order.

 

“Secured Parties” means the Lenders and the Agent.

 

“Securities Account” means a securities account (as that term is defined in the
Code).

 

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and any successor statute.

 

“Security Agreement” means a security agreement, dated as of even date with the
Agreement, in form and substance reasonably satisfactory to Agent, executed and
delivered by US Loan Parties to Agent.

 

“Security Documents” means the Security Agreement, the Canadian Guarantee, the
Canadian Security Agreement, the Dutch Security Documents, any Copyright
Security Agreement, any Patent Security Agreement, any Trademark Security
Agreements, any Mortgage, and such other mortgages, debentures, charges,
pledges, security agreements, joinder agreements, documents and instruments as
may be required by the Required Lenders and/or are entered into in connection
with the Agreement.

 

“Sell” means, with respect to any property, to sell, convey, transfer, assign,
license, lease or otherwise dispose of, any interest therein or to permit any
Person to acquire any such interest, including, in each case, through a sale and
leaseback transaction or through a sale, factoring at maturity, collection of or
other disposal, with or without recourse, of any notes or accounts receivable. 
Conjugated forms thereof and the noun “Sale” have correlative meanings.

 

“Senior DIP Assignment Agreement” shall mean those certain Assignment and
Acceptance Agreements dated as of June 23, 2015, by and among the Initial DIP
Lenders and the Lenders.

 

“Senior Notes” means the 8.75% Senior Notes due 2017 issued under the Senior
Note Indenture.

 

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“Senior Note Indenture” means the Indenture, dated as of November 10, 2009, by
and among Parent, Colt Finance Corp. and Wilmington Trust FSB, as trustee with
respect to the Senior Notes, as may be amended from time to time in accordance
with the terms thereof.

 

“Specified Canadian Pension Plan” means any Canadian Pension Plan which contains
a “defined benefit provision”, as defined in subsection 147.1(1) of the Income
Tax Act (Canada).

 

“Specified Equipment Lease Documents” means, collectively, the Master Lease
Agreement Number 16293-90000, dated January 16, 2007, between Banc of America
Leasing & Capital, LLC or its successors and assigns and Parent, together with
all schedules thereto, and all agreements, documents and instruments evidencing
or otherwise related thereto, as the same now exist or may hereafter be amended,
supplemented or otherwise modified.

 

“Specified Government Property” means any and all property loaned, leased or
otherwise provided to a Loan Party pursuant to or in connection with a Specified
Government Property Loan Agreement.

 

“Specified Government Property Loan Agreement” means, individually and
collectively, (a) the Loan Agreement, executed on or about May 27, 2009, between
Colt Canada and Department of National Defence (Canada), and (b) any other
agreement between any Loan Party and the national government of Canada or any of
its agencies or instrumentalities pursuant to which the national government of
Canada or any of its agencies or instrumentalities lends, leases or otherwise
provides goods to a Loan Party to be used by a Loan Party for purposes of
performing work pursuant to a supply or similar agreement between a Loan Party
and the national government of Canada or any of its agencies or
instrumentalities.

 

“Specified Loan Party” means any Loan Party (a) that is not formed, organized
and/or incorporated under the laws of the United States of America, any state
thereof, the District of Columbia, Canada (or any province or territory thereof)
or the Netherlands and (b) for which Agent has provided notice to Administrative
Borrower that such Loan Party is a Specified Loan Party.

 

“Sponsor” means Sciens Management LLC.

 

“Stated Maturity Date” means December 15, 2015.

 

“Subsidiary” of a Person means a corporation, partnership, limited liability
company, or other entity in which that Person directly or indirectly owns or
controls the Equity Interests having ordinary voting power to elect a majority
of the board of directors (or appoint other comparable managers) of such
corporation, partnership, limited liability company, or other entity.  Unless
otherwise specified, all references herein to a “Subsidiary” or “Subsidiaries”
shall refer to a Subsidiary or Subsidiaries of the Loan Parties.

 

“Superpriority Claims” means all of the claims of the Agent and the Lenders on
account of the Obligations, which claims shall be entitled to the benefits of
section 364(c)(1) of the Bankruptcy Code, having a superpriority over any and
all administrative expenses of the kind that are specified in sections 105, 326,
328, 330, 331, 503(b), 506(c) (subject to entry of the Final

 

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DIP Order), 507(a), 507(b), 546(c), 726, 1114 or any other provisions of the
Bankruptcy Code, subject only to the Carve-Out.

 

“Taxes” means any taxes, levies, imposts, duties, assessments or other similar
charges now or hereafter imposed by any Governmental Authority, and all
interest, penalties or similar liabilities with respect thereto.

 

“Tax Lender” has the meaning specified therefor in Section 14.2(a) of the
Agreement.

 

“Term Commitment” means, for any Lender, its obligation to make a portion of the
Loans in the principal amount shown on Schedule C-1 of the Agreement.  The
original aggregate Term Commitment on the Closing Date is $41,666,667.

 

“Term Priority Collateral” shall have the meaning set forth in the DIP
Intercreditor Agreement.

 

“Test Date” means for all purposes hereunder each Friday occurring after the
first full week after the Closing Date.

 

“Test Period” means, with respect to each Test Date, the consecutive one-week
period ending on such Test Date.

 

“Third Tranche A Loan” has the meaning specified therefor in Section 2.2(a) of
the Agreement.

 

“Total Non-Operating Disbursement Line” has the meaning specified therefor in
Section 7(d) of the Agreement.

 

“Total Operating Disbursement Line” has the meaning specified therefor in
Section 7(d) of the Agreement.

 

“Total Non-Operating Disbursement Variance” has the meaning specified therefor
in Section 7(d) of the Agreement.

 

“Total Operating Disbursement Variance” has the meaning specified therefor in
Section 7(d) of the Agreement.

 

“Total Receipts Line” has the meaning specified therefor in Section 7(d) of the
Agreement.

 

“Total Receipts Variance” has the meaning specified therefor in Section 7(d) of
the Agreement.

 

“Trademark Security Agreement” has the meaning specified therefor in the
Security Agreement or the Canadian Security Agreement, as the case may be.

 

“Tranche A Loans” has the meaning specified therefor in Section 2.2(a).

 

“Tranche B Loan” has the meaning specified therefor in Section 2.2(b).

 

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“United States” means the United States of America.

 

“Unrestricted Cash” means cash or Cash Equivalents of any Loan Party organized
under the laws United States or Canada that are not subject to any express
contractual restrictions on the application thereof (it being expressly
understood and agreed that, for the avoidance of doubt, affirmative and negative
covenants and events of default that do not expressly restrict the application
of such cash or Cash Equivalents shall not constitute express contractual
restrictions for purposes of this definition) and not subject to any Lien (other
than Liens created by the Loan Documents, non-consensual Liens permitted by
Section 6.3 and (whether or not consensual) Liens permitted by clauses (w), (z),
(aa) and (cc) of the definition of Permitted Liens); provided; however; that for
the purposes of this definition the cash or Cash Equivalents of any Loan Party
organized under the laws of Canada shall be net of out of pocket costs or fees
and applicable taxes, necessary to repatriate such cash determined by Parent in
good faith.

 

“US Borrowers” means, collectively, (a) Colt Defense LLC, a Delaware limited
liability company, (b) Colt’s Manufacturing Company LLC, a Delaware limited
liability company and (c) any other person that after the Closing Date becomes a
US Borrower under the Agreement; and “Borrower” means any one of them.

 

“US Collateral” means Collateral consisting of assets or interests in assets of
US Loan Parties, and the proceeds thereof.

 

“US Dollar Denominated Loan” means a Loan denominated in US Dollars.

 

“US Dollar Equivalent” means at any time (a) as to any amount denominated in US
Dollars, the amount thereof at such time, and (b) as to any amount denominated
in any other currency, the equivalent amount in US Dollars calculated by Agent
in good faith at such time using the exchange rate in effect on the Business Day
of determination.

 

“US Dollars”, “US$” and “$” shall each mean lawful currency of the United States
of America.

 

“US Lender” means the Lenders.

 

“US Loan Account” has the meaning specified therefor in Section 2.9 of the
Agreement.

 

“US Loan Parties” means US Borrowers and Guarantors; each sometimes being
referred to individually as a “US Loan Party.”

 

“Weekly Report” has the meaning specified in Section 5.1(b) of this Agreement.

 

“WURA” means the Winding Up and Restructuring Act (Canada), R.S.C. 1985, c.
W-11, as the same now exists or may from time to time hereafter be amended,
modified, recodified or supplemented, together with all official rules,
regulations and interpretations thereunder or related thereto.

 

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