Exhibit 10.1

 

Execution Version

 

 

TERM LOAN AGREEMENT

 

by and among

 

COLT DEFENSE LLC,

COLT FINANCE CORP.,

NEW COLT HOLDING CORP.,

COLT’S MANUFACTURING COMPANY, LLC AND

COLT CANADA CORPORATION,

 

as Borrowers,

 

THE SUBSIDIARIES OF COLT DEFENSE LLC

NAMED AS GUARANTORS HEREIN,

 

as Guarantors,

 

THE LENDERS THAT ARE PARTIES HERETO,

 

as the Lenders,

 

and

 

WILMINGTON SAVINGS FUND SOCIETY, FSB,

 

as Agent

 

Dated as of November 17, 2014

 

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

1.

DEFINITIONS AND CONSTRUCTION

1

 

1.1

Definitions

1

 

1.2

Accounting Terms

1

 

1.3

Code

2

 

1.4

Construction

2

 

1.5

Schedules and Exhibits

3

 

1.6

Pro Forma and Other Calculations

3

 

 

 

2.

TERM LOAN AND TERMS OF PAYMENT

4

 

2.1

[Reserved]

4

 

2.2

Term Loan

4

 

2.3

[Reserved]

5

 

2.4

Payments; Reductions of Commitments; Prepayments

5

 

2.5

[Reserved]

9

 

2.6

Interest Rate: Rate, Payments, and Calculations

9

 

2.7

Crediting Payments; Clearance Charge

10

 

2.8

Designated Account

10

 

2.9

Maintenance of Loan Account; Statements of Obligations

10

 

2.10

Fees

11

 

2.11

[Reserved

11

 

2.12

[Reserved]

11

 

2.13

Capital Requirements

11

 

2.14

Joint and Several Liability of Borrowers

12

 

 

 

3.

CONDITIONS; TERM OF AGREEMENT

14

 

3.1

Conditions Precedent to the Initial Extension of Credit

14

 

3.2

[Reserved]

14

 

3.3

Maturity

14

 

3.4

Effect of Maturity

14

 

3.5

Early Termination by Borrowers

15

 

3.6

Conditions Subsequent

15

 

 

 

4.

REPRESENTATIONS AND WARRANTIES

15

 

4.1

Due Organization and Qualification; Subsidiaries

15

 

4.2

Due Authorization; No Conflict

16

 

4.3

Governmental Consents

16

 

4.4

Binding Obligations; Perfected Liens

16

 

4.5

Title to Assets; No Encumbrances

17

 

4.6

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

17

 

4.7

Litigation

17

 

4.8

Compliance with Laws

18

 

4.9

No Material Adverse Change

18

 

4.10

Solvency; Fraudulent Transfer

18

 

4.11

Employee Benefits

18

 

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4.12

Environmental Matters

19

 

4.13

Intellectual Property

20

 

4.14

Leases

20

 

4.15

Deposit Accounts and Securities Accounts

21

 

4.16

Complete Disclosure

21

 

4.17

Material Contracts

21

 

4.18

Patriot Act; etc.

21

 

4.19

Indebtedness

21

 

4.20

Payment of Taxes

22

 

4.21

Margin Stock

22

 

4.22

Governmental Regulation

22

 

4.23

OFAC

22

 

4.24

Employee and Labor Matters

22

 

4.25

Amended ABL Loan Documents

23

 

4.26

[Reserved]

23

 

4.27

[Reserved]

23

 

4.28

Use of Proceeds

23

 

4.29

Common Enterprise

23

 

4.30

[Reserved]

23

 

4.31

Senior Note Indenture

23

 

4.32

Insurance

23

 

4.33

Centre of Main Interests and Establishments

24

 

4.34

Tax Status

24

 

 

 

5.

AFFIRMATIVE COVENANTS

24

 

5.1

Financial Statements, Reports, Certificates

24

 

5.2

Collateral Reporting

24

 

5.3

Existence

24

 

5.4

Maintenance of Properties

24

 

5.5

Taxes

24

 

5.6

Insurance

24

 

5.7

Inspection

25

 

5.8

Compliance with Laws

25

 

5.9

Environmental

25

 

5.10

Intercompany Trademark Agreement

27

 

5.11

Formation of Subsidiaries

27

 

5.12

Further Assurances

27

 

5.13

Lender Meetings

28

 

5.14

Material Contracts

28

 

5.15

Locations of Inventory and Equipment

28

 

5.16

Compliance with ERISA and the IRC

28

 

5.17

Canadian Employee Benefits

29

 

 

 

6.

NEGATIVE COVENANTS

29

 

6.1

Indebtedness

29

 

6.2

Liens

29

 

6.3

Restrictions on Fundamental Changes

29

 

6.4

Disposal of Assets

30

 

6.5

Change Name

30

 

6.6

Nature of Business

30

 

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6.7

Certain Payments of Debt and Amendments

30

 

6.8

Senior Note Indenture; Secured Debt Cap

32

 

6.9

Restricted Payments

32

 

6.10

Accounting Methods

33

 

6.11

Investments

33

 

6.12

Transactions with Affiliates

33

 

6.13

Use of Proceeds

34

 

6.14

Limitation on Issuance of Equity Interests

35

 

6.15

[Reserved]

35

 

6.16

Specified Canadian Pension Plans

35

 

6.17

Sale Leaseback Transactions

35

 

6.18

Limitations on Dividends and Other Payment Restrictions Affecting Subsidiaries

35

 

6.19

Limitations on Negative Pledges

35

 

6.20

Employee Benefits

36

 

 

 

7.

[RESERVED]

36

 

 

 

8.

EVENTS OF DEFAULT

36

 

 

 

9.

RIGHTS AND REMEDIES

39

 

9.1

Rights and Remedies

39

 

9.2

Remedies Cumulative

40

 

9.3

Appointment of a Receiver

41

 

 

 

10.

WAIVERS; INDEMNIFICATION

41

 

10.1

Demand; Protest; etc.

41

 

10.2

The Lender Group’s Liability for Collateral

41

 

10.3

Indemnification

41

 

 

 

11.

NOTICES

42

 

 

 

12.

CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER

44

 

 

 

13.

ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS

45

 

13.1

Assignments and Participations

45

 

13.2

Successors

48

 

 

 

14.

AMENDMENTS; WAIVERS

49

 

14.1

Amendments and Waivers

49

 

14.2

Replacement of Certain Lenders

50

 

14.3

No Waivers; Cumulative Remedies

51

 

 

 

15.

AGENT; THE LENDER GROUP

51

 

15.1

Appointment and Authorization of Agent

51

 

15.2

Delegation of Duties

52

 

15.3

Liability of Agent

52

 

15.4

Reliance by Agent

52

 

15.5

Notice of Default or Event of Default

53

 

15.6

Credit Decision

53

 

15.7

Costs and Expenses; Indemnification

53

 

15.8

Agent in Individual Capacity

54

 

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15.9

Successor Agent

54

 

15.10

Lender in Individual Capacity

55

 

15.11

Collateral Matters

55

 

15.12

Restrictions on Actions by Lenders; Sharing of Payments

57

 

15.13

Agency for Perfection

57

 

15.14

Payments by Agent to the Lenders

57

 

15.15

Concerning the Collateral and Related Loan Documents

57

 

15.16

Collateral Reports; Confidentiality; Disclaimers by Lenders; Other Reports and
Information

58

 

15.17

Agent May File Proofs of Claim

59

 

15.18

Several Obligations; No Liability

59

 

15.19

Appointment for the Province of Québec

59

 

15.20

Dutch Parallel Debts

60

 

 

 

16.

WITHHOLDING TAXES

61

 

16.1

No Setoff; Payments

61

 

16.2

Exemptions

61

 

16.3

Lender Indemnification

63

 

16.4

Refunds

63

 

 

 

17.

GENERAL PROVISIONS

64

 

17.1

Effectiveness

64

 

17.2

Section Headings

64

 

17.3

Interpretation

64

 

17.4

Severability of Provisions

64

 

17.5

Right of Setoff

64

 

17.6

Debtor-Creditor Relationship

64

 

17.7

Counterparts; Electronic Execution

64

 

17.8

Revival and Reinstatement of Obligations

65

 

17.9

Confidentiality

65

 

17.10

Lender Group Expenses

66

 

17.11

Survival

66

 

17.12

Patriot Act

66

 

17.13

Integration

66

 

17.14

Administrative Borrower as Agent for Borrowers

67

 

17.15

Currency Indemnity

67

 

17.16

Anti-Money Laundering Legislation

68

 

17.17

Quebec Interpretation

68

 

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TERM LOAN AGREEMENT

 

THIS TERM LOAN AGREEMENT (this “Agreement”), is entered into as of November 17,
2014, by and among:

 

(i)      the lenders identified on the signature pages hereof (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);

 

(ii)  WILMINGTON SAVINGS FUND SOCIETY, FSB, as agent for the Lenders (in such
capacity, together with its successors and assigns in such capacity, “Agent”);

 

(iii)    COLT DEFENSE LLC, a Delaware limited liability company (“Parent”), COLT
FINANCE CORP., a Delaware corporation (“Colt Finance”), NEW COLT HOLDING CORP.,
a Delaware corporation (“New Colt”), COLT’S MANUFACTURING COMPANY, LLC, a
Delaware limited liability company (“Colt’s Manufacturing”), and COLT CANADA
CORPORATION, a Nova Scotia unlimited company (“Colt Canada”, and together with
Parent, Colt Finance, New Colt and Colt’s Manufacturing, each individually, a
“Borrower” and, collectively, “Borrowers”); and

 

(v)    COLT DEFENSE TECHNICAL SERVICES LLC, a Delaware limited liability company
(“CDTS”), and COLT INTERNATIONAL COOPERATIEF U.A., a cooperative organized under
the laws of the Netherlands registered with the trade register of the Chamber of
Commerce in the Netherlands under number 56651317 (“Colt Netherlands” and,
together with CDTS and any other Guarantor party hereto from time to time, each
individually a “Guarantor” and, collectively, “Guarantors”).

 

WITNESSETH:

 

WHEREAS, Borrowers have requested that the Lenders provide a term loan facility
to Borrowers to, among other things, refinance the Existing Credit Agreement (as
hereinafter defined) and to pay transactional fees, costs, and expenses incurred
in connection with this Agreement, the other Loan Documents, and the
transactions contemplated hereby and thereby;

 

WHEREAS, the Borrowers and Guarantors shall enter into an amendment or
amendments to the ABL Loan Documents (as hereinafter defined) to, among other
things, permit the Closing Date Transactions, including the execution of this
Agreement and the transactions contemplated hereby; and

 

WHEREAS, the Lenders have indicated their willingness to provide such financing
on the terms and conditions set forth herein.

 

The parties 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.

 

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

 

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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 the Lenders prior to the date hereof; provided,
however, that (a) upon the adoption by Parent of IFRS as required by Parent’s
independent certified public accountants and notification by Administrative
Borrower to Agent of such adoption (the “IFRS Adoption”) or (b) if
Administrative Borrower notifies Agent that Borrowers request an amendment to
any provision hereof to eliminate the effect of any Accounting Change occurring
after the Closing Date or in the application thereof on the operation of such
provision (or if Agent notifies Administrative Borrower that the Required
Lenders request an amendment to any provision hereof for such purpose),
regardless of whether any such notice is given before or after such the IFRS
Adoption or Accounting Change or in the application thereof, then Agent, at the
direction of the Required Lenders, and Borrowers agree that they will negotiate
in good faith amendments to the provisions of this Agreement that are directly
affected by such IFRS Adoption or Accounting Change with the intent of having
the respective positions of the Lenders and Borrowers after such IFRS Adoption
or Accounting Change conform as nearly as possible to their respective positions
as of the date of this Agreement and, until any such amendments have been agreed
upon and agreed to by the Required Lenders, the provisions in this Agreement,
including the covenants, shall be calculated in accordance with GAAP as in
effect, and as applied by Parent and its Subsidiaries as if no such IFRS
Adoption or Accounting Change had occurred.  In the case of the IFRS Adoption or
the Accounting Change until such covenants are amended in a manner satisfactory
to Parent, Agent and the Required Lenders (i) all calculations made for the
purpose of determining compliance with the financial ratios and financial
covenants contained herein shall be made on a basis consistent with GAAP in
existence immediately prior to such adoption and (ii) financial statements
delivered pursuant to Section 5.1 shall be accompanied by a reconciliation
showing the adjustments made to calculate such financial ratios and financial
covenants.  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.  Notwithstanding anything
to the contrary contained in GAAP or any interpretations or other pronouncements
by the Financial Accounting Standards Board or otherwise, the term “unqualified
opinion” as used herein to refer to opinions or reports provided by accountants
shall mean an opinion or report that does not include any qualification,
explanation, supplemental comment or other comment concerning the ability of the
applicable person to continue as a going concern or the scope of the audit. 
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 any
Canadian Loan Party 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

 

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plural, the terms “includes” and “including” are not limiting, 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, replacements, substitutions, joinders, and supplements,
thereto and thereof, as applicable (subject to any restrictions on such
alterations, amendments, changes, extensions, modifications, renewals,
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.  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 Documents) or the Guarantied Obligations (as defined in
the applicable Guaranty) shall mean the repayment in full in cash or immediately
available funds of all of the Obligations 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.

 

1.6                               Pro Forma and Other Calculations.

 

(a)                                 Notwithstanding anything to the contrary
herein, financial ratios and tests, including Consolidated EBITDA and the
Secured Leverage Ratio and any other requirement herein to determine pro forma
compliance, shall be determined based on the most recently ended 12 fiscal month
period.

 

(b)                                 For purposes of calculating any financial
ratio or test, Specified Transactions (including, with any incurrence or
repayment of any Indebtedness in connection therewith to be subject to clause
(d) of this Section 1.6) that have been made (i) during the applicable period or
(ii) if applicable as described in clause (a) above, subsequent to such period
and prior to or simultaneously with the event for which the calculation of any
such ratio is made shall be calculated on a pro forma basis assuming that all
such Specified Transactions (and any increase or decrease in Consolidated EBITDA
and the component financial definitions used therein attributable to any
Specified Transaction) had occurred on the first day of the applicable period. 
If, since the beginning of any applicable period, any Person that subsequently
became a Subsidiary or was merged, amalgamated or consolidated with or into
Parent or any of its Subsidiaries since the beginning of such period as a result
of a Specified Transaction that would have required adjustment pursuant to this
Section 1.6, then such financial ratio or test shall be calculated to give pro
forma effect thereto in accordance with this Section 1.6.

 

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(c)                                  Whenever pro forma effect is to be given to
any Specified Transaction, the pro forma calculations shall be made in good
faith by a responsible financial or accounting officer of Parent, which shall
include any adjustments that would be required to be included in a Registration
Statement on Form S-1 in accordance with Article 11 of Regulation S-X
promulgated under the Securities Act; provided, however, that, without the prior
written consent of the Required Lenders, no such pro forma calculations shall
include any cost savings, operating expense reductions, synergies or other
similar items.

 

(d)                                 In the event that (x) Parent or any
Subsidiary of Parent incurs (including by assumption or guarantees) or repays
(including by redemption, repayment, retirement or extinguishment) any
Indebtedness (other than Indebtedness incurred or repaid under any revolving
credit facility unless such Indebtedness has been permanently repaid and not
replaced), or (y) Parent or any Subsidiary of Parent issues, repurchases or
redeems Disqualified Equity Interests, in each case, included in the
calculations of any financial ratio or test, (i) during the applicable period or
(ii) subsequent to the end of the applicable period and prior to or
simultaneously with the event for which the calculation of any such ratio is
made, then such financial ratio or test shall be calculated giving pro forma
effect to such incurrence or repayment of Indebtedness, or such issuance or
redemption of Disqualified Equity Interests, in each case to the extent
required, as if the same had occurred on the last day of the applicable period
(except in the case of Consolidated EBITDA and the Secured Leverage Ratio (or
similar ratio), in which case such incurrence, assumption, guarantee,
redemption, repayment, retirement or extinguishment of Indebtedness or such
issuance, repurchase or redemption of Disqualified Equity Interests will be
given effect, as if the same had occurred on the first day of the applicable
period).  Notwithstanding the foregoing or any other provision contained in the
Loan Documents, with respect to the repayment or redemption of Indebtedness with
the proceeds of an Excluded Issuance, such repayment or redemption shall be
disregarded for all purposes under this Agreement, including the calculation of
any financial covenants or ratios and, for the avoidance of doubt, Sections
7(a), (b) and (c), until Parent has delivered the financial information required
under Section 5.1 for the first full fiscal quarter of Parent ending after the
fiscal quarter in which such repayment or redemption was made.

 

(e)                                  If any Indebtedness bears a floating rate
of interest and is being given pro forma effect, the interest on such
Indebtedness shall be calculated as if the rate in effect on the date of the
event for which the calculation of Consolidated EBITDA or the Secured Leverage
Ratio is made had been the applicable rate for the entire period (taking into
account any interest hedging arrangements applicable to such Indebtedness
permitted by this Agreement).  Interest on a Capitalized Lease Obligation shall
be deemed to accrue at an interest rate reasonably determined by a Responsible
Officer of Parent to be the rate of interest implicit in such Capitalized Lease
Obligation in accordance with GAAP.  Interest on Indebtedness that may
optionally be determined at an interest rate based upon a factor of a prime or
similar rate, a Eurocurrency interbank offered rate, or other rate, shall be
determined to have been based upon the rate actually chosen, or if none, then
based upon such optional rate chosen as Parent or Subsidiary may designate.

 

2.                                      TERM LOAN AND TERMS OF PAYMENT.

 

2.1                               [Reserved].

 

2.2                               Term Loan.

 

(a)                                 Subject to the terms and conditions of this
Agreement, on the Closing Date each Lender with a Term Loan Commitment agrees
(severally, not jointly or jointly and severally) to make a

 

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term loan (collectively, the “Term Loan”) to Borrowers in an amount equal to
such Lender’s Pro Rata Share of the Term Loan Amount.

 

(b)                                 Each Term Loan made by each Lender shall be
evidenced by this Agreement and, if requested by a Lender, a Term Note payable
to such Lender or its registered assigns in the original principal amount of
such Term Loan.

 

(c)                                  The outstanding unpaid principal balance
of, and all accrued and unpaid interest on, the Term Loan shall be due and
payable on the earlier of (i) the Maturity Date and (ii) the date of the
acceleration of the Term Loan in accordance with the terms hereof.  Any
principal amount of the Term Loan that is repaid or prepaid may not be
reborrowed.  All principal of, interest on, and other amounts payable in respect
of the Term Loan, including any premiums, fees, expenses or other additional
amounts owed and all PIK Interest, shall constitute Obligations hereunder.

 

2.3                               [Reserved].

 

2.4                               Payments; Reductions of Commitments;
Prepayments.

 

(a)                                 Payments by Borrowers.

 

(i)                                     Except as otherwise expressly provided
herein, all payments by any Borrower shall 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) shall 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.

 

(ii)                                  Unless Agent receives notice from
Administrative Borrower prior to the date on which any payment is due to the
Lenders that Borrowers will not make such payment in full as and when required,
Agent may assume that Borrowers have made (or will make) such payment in full to
Agent on such date in immediately available funds and Agent may (but shall not
be so required), in reliance upon such assumption, distribute to each Lender on
such due date an amount equal to the amount then due such Lender.  If and to the
extent Borrowers do not make such payment in full to Agent on the date when due,
each Lender severally shall repay to Agent on demand such amount distributed to
such Lender, together with interest thereon at the interest rate then applicable
to the Term Loan for each day from the date such amount is distributed to such
Lender until the date repaid.

 

(b)                                 Apportionment and Application.

 

(i)                                     So long as no Application Event has
occurred and is continuing and except as otherwise provided herein, including
with respect to Defaulting Lenders, 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 having a Pro Rata Share of the
type of Obligation to which a particular fee or expense relates.  All payments
to be made hereunder by Borrowers shall be remitted to Agent and all such
payments, and all proceeds of Collateral received by Agent, shall be applied, so
long as no Application Event has occurred and is continuing, to repay the
remaining Term Loan (which payments shall be applied against the Term Loan in
the inverse order of maturity), 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(b)(v), Section 2.4(d)(ii) and Section 2.4(e)).

 

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(ii)                                  At any time that an Application Event has
occurred and is continuing and except as otherwise provided herein with respect
to Defaulting Lenders, 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 (including
any fees, premiums and penalties specified in Section 2.10) then due to any of
the Lenders under the Loan Documents until paid in full,

 

(E)                                fifth, to pay interest due in respect of the
Term Loan until paid in full,

 

(F)                                 sixth, to pay the principal of the Term Loan
until paid in full,

 

(G)                               seventh, to pay any other Obligations other
than Obligations owed to Defaulting Lenders to pay any other Obligations,

 

(H)                              eighth, ratably to pay any Obligations owed to
Defaulting Lenders, and

 

(I)                                   ninth, to Borrowers or such other Person
entitled thereto under applicable law.

 

(iii)                               In each instance, so long as no Application
Event has occurred and is continuing, Section 2.4(b)(i) shall not apply to any
payment made by any Borrower to Agent and specified by such Borrower to be for
the payment of specific Obligations then due and payable (or prepayable) under
any provision of this Agreement or any other Loan Document.

 

(iv)                              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, including
interest accrued after the commencement of any Insolvency Proceeding, 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.

 

(v)                                 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.  In the event of any actual,
irreconcilable conflict that cannot be resolved as aforesaid, then the terms and
provisions of this Section 2.4 shall control and govern.

 

(c)                                  Reduction of Commitments.

 

(i)                                     [Reserved].

 

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(ii)                                  Termination of the Term Loan Commitments. 
The Term Loan Commitments shall terminate upon the making of the Term Loan on
the Closing Date.  Notwithstanding the foregoing, all of the Term Loan
Commitments shall automatically terminate at 5:00 p.m., New York time, on
December 31, 2014 if the Closing Date shall have not occurred by such time.

 

(d)                                 Optional Prepayments.

 

(i)                                     [Reserved].

 

(ii)                                  Term Loan.  The Borrowers may, at any time
and from time to time, upon at least 5 Business Days’ prior written notice to
Agent (or such shorter period as the Required Lenders may agree to in their sole
discretion), prepay the principal of the Term Loan, in whole or in part.  Each
prepayment made pursuant to this Section 2.4(d)(ii) shall be (1) accompanied by
the payment of accrued interest to the date of such payment on the amount
prepaid and the payment of any premiums or penalties required by Section 2.10,
(2) in a minimum amount of $500,000, or the remaining balance of the Term Loan,
if less, and (3) accompanied by the Applicable Prepayment Premium and the
Repayment Fee, as applicable.

 

(e)                                  Mandatory Prepayments.

 

(i)                                     [Reserved].

 

(ii)                                  Dispositions.  Within 5 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 (x) sales or dispositions which qualify as Permitted Dispositions
under clauses (a),(b), (c), (e), (i), (j), (l), (m) or (n) of the definition of
Permitted Dispositions and (y) any single sale or disposition (including any
casualty losses or condemnations) or series of related sales or dispositions for
which the aggregate amount of Net Cash Proceeds received from such sales or
dispositions or series of related sales or dispositions does not exceed
$50,000), Borrowers shall prepay the outstanding principal amount of the
Obligations in accordance with Section 2.4(f)(ii) 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
to the extent that the aggregate amount of Net Cash Proceeds received exceeds
$2,500,000 in the aggregate during the term of this Agreement.  Notwithstanding
the foregoing payment requirement, so long as (A) no Default or Event of Default
shall have occurred and be continuing or would result therefrom,
(B) Administrative Borrower shall have given Agent prior written notice of
Borrowers’ intention to use such Net Cash Proceeds to pay for the costs of
replacement of the properties or assets that are the subject of such sale or
disposition or the cost of purchase or construction of other assets (other than
Current Assets) that are useful in the business of Parent or its Subsidiaries,
and (C) Parent or its Subsidiaries, as applicable, complete such replacement,
purchase, or construction within 180 days after the initial receipt of such Net
Cash Proceeds, the Borrower may retain (in a Deposit Account over which the
Agent has a perfected first priority Lien) such proceeds for reinvestment as
permitted hereunder; provided, however, that Net Cash Proceeds in excess of
(x) up to $4,000,000 of Net Cash Proceeds of Term Priority Collateral for
licensing transactions permitted hereunder agreed to in writing by the Loan
Parties prior to the Closing Date and (y) up to $5,000,000 of Net Cash Proceeds
of Term Priority Collateral for licensing transactions permitted hereunder
entered into from and after the Closing Date, shall be remitted to the Agent to
be held by it in an account in its own name and shall be either deemed applied
to the payment of the Obligations (including any accrued interest and premiums
and fees required to be paid at the time of any repayment in accordance with the
terms hereof) automatically and without notice it further action on the Agent’s
part upon the occurrence of any Event of Default under Section 8.4 or
Section 8.5, or, if sooner, returned to the Borrowers if the chief financial

 

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officer of Parent has certified to the Agent that (x) such Net Cash Proceeds
will be reinvested in assets that will be Term Priority Collateral and (y) on a
pro forma basis after giving effect to the applicable reinvestment, the Secured
Leverage Ratio of Parent and its Subsidiaries as of the end of the fiscal month
most recently ended as to which financial statements are available (which shall
be dated no more than three weeks prior to the proposed date of increase) is no
more than 4.5 to 1.00.  To the extent the disposition is of ABL Priority
Collateral, the Net Cash Proceeds (as defined in the ABL Agreement) therefrom
shall be used to repay outstanding loans under the ABL Credit Agreement. 
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 5 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)(ii) in an amount equal to
100% of such Extraordinary Receipts, net of any reasonable expenses incurred in
collecting such Extraordinary Receipts.

 

(iv)                              Indebtedness Issuances .  Within 5 Business
Days of the date of incurrence or issuance by Parent or any of its Subsidiaries
of any Indebtedness (other than Permitted Indebtedness), Borrowers shall prepay
the outstanding principal amount of the Obligations in accordance with
Section 2.4(f)(ii) 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)                                 Change of Control.  Borrowers shall
immediately prepay the outstanding Obligations in the event that a Change of
Control shall have occurred.

 

(vii)                           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 Term Loan pursuant to this Section 2.4(e), not less than 5 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 of the amount of such prepayment, and Agent will promptly
thereafter notify each Lender of the amount of such Lender’s Pro Rata Share of
such Waivable Mandatory Prepayment and such Lender’s option to refuse such
amount.  Each such Lender may exercise such option by giving written notice to
Administrative Borrower and Agent of its election to do so 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 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).  On the Required Prepayment Date, Borrowers shall
pay to Agent the amount of the Waivable Mandatory Prepayment, which amount shall
be applied (A) in an amount equal to that portion of the Waivable Mandatory
Prepayment payable to those Lenders that have elected not to exercise such
option, to prepay the Term Loans of such Lenders (which prepayment shall be
applied to prepay the outstanding principal amount of the Obligations in
accordance with Section 2.4(f)(ii)) and (B) to the extent of any excess, to
Borrowers for working capital and general corporate purposes.

 

(f)                                   Application of Payments.

 

(i)                                     Any prepayments required pursuant to
Section 2.4(e) shall be preceded by irrevocable written notice delivered to
Agent by 11:00 A.M., New York City time, not less than three (3) Business

 

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Days prior to the date of such prepayment, specifying the underlying reason for
the mandatory prepayment and the amount of the same.

 

(ii)                                  Subject to Section 2.4(f)(iii), each
prepayment pursuant to Section 2.4(d) or Section 2.4(e) shall (A) so long as no
Application Event shall have occurred and be continuing, be applied, to the
outstanding principal amount of the remaining Term Loan 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).

 

(iii)                               With respect to any mandatory prepayment
required by Section 2.4(e)(ii): (A) if the proceeds are from any sale or
disposition of, or insurance or any condemnation, taking or other casualty with
respect to, any ABL Priority Collateral, such proceeds shall be applied
(x) first, to the ABL Obligations, to the extent required by the ABL Credit
Agreement (as in effect on the date hereof) until paid in full (but, for the
avoidance of doubt, without a permanent reduction in commitments, unless
required by the terms of the ABL Credit Agreement), and (y) second, to the
principal of the Term Loan , until paid in full; and (B) if the proceeds are
from the sale or disposition of, or insurance or any condemnation, taking or
other casualty with respect to, any other assets of the Loan Parties not
described in subclause (A), such proceeds shall be applied to the principal of
the Term Loan, until paid in full.

 

2.5                               [Reserved].

 

2.6                               Interest Rate:  Rate, Payments, and
Calculations.

 

(a)                                 Cash Interest.  Except as provided in
Section 2.6(b) and 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 8.00% (“Cash Interest”).

 

(b)                                 PIK Interest.  All Obligations that have
been (or were intended to be) charged to the Loan Account pursuant to the terms
hereof shall bear in-kind interest at a rate per annum equal to 2.00%, which
interest shall be paid by adding an amount equal to such unpaid interest to the
then outstanding principal amount of the Term Loans (interest so paid, “PIK
Interest”).

 

(c)                                  Default Rate.  Upon the occurrence and
during the continuation of an Event of Default, all Obligations shall bear
interest at a per annum rate equal to two (2) percentage points above the per
annum rates otherwise applicable thereunder.

 

(d)                                 Payment.  All interest, and 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 day of each month (“Interest Payment Date”) at
any time that Obligations are outstanding, except as otherwise provided herein. 
The Borrowers shall deliver written notice to the Agent at least 5 Business Days
prior to each Interest Payment Date setting forth a calculation of the Cash
Interest and PIK Interest to be paid on such Interest Payment Date.  The Agent
shall have the right to review and adjust any such calculations.  Each Borrower
hereby authorizes Agent, from time to time without prior notice to such
Borrower, to charge all interest, fees, costs, expenses and other amounts
payable hereunder or under any of the other Loan Documents when due and payable
to the Loan Account.

 

(e)                                  Computation.  All interest shall be
calculated on the basis of a three hundred sixty (360) day year and actual days
elapsed.  For the purposes of the Interest Act (Canada), the yearly rate of
interest to which any rate calculated on the basis of a period of time different
from the actual number of days in the year (360 days, for example) is equivalent
is the stated rate multiplied by the actual number

 

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of days in the year (365 or 366 days) and divided by the number of days in the
shorter period (360 days, in the example).

 

(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.

 

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 or 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 shall 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 shall be deemed to have been received by Agent as of the opening of
business on the immediately following Business Day.

 

2.8                               Designated Account.  Agent is authorized to
make any advance of the Term Loan in accordance with this Agreement based upon
telephonic or other instructions received from anyone purporting to be an
Authorized Person or, without instructions, if pursuant to Section 2.6(d). 
Borrowers agree to establish and maintain the Designated Account for the purpose
of receiving the proceeds of the Term Loan requested by Borrowers and made by
the Lenders hereunder.  Unless otherwise agreed by Agent and Borrowers, any Term
Loan requested by Borrowers and made by 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
Borrowers (the “Loan Account”) on which Borrowers will be charged with the Term
Loan made by the Lenders to Borrowers or for Borrowers’ account and with all
other payment Obligations hereunder or under the other Loan Documents,
including, accrued interest, fees and expenses, and Lender Group Expenses.  In
accordance with Section 2.7, the Loan Account will be credited with all payments
received by Agent from Borrowers or for Borrowers’ account.  Agent shall make
available to Borrowers quarterly statements regarding the Loan Account,
including the principal amount of the Term Loan interest accrued hereunder, fees
accrued or charged hereunder or under the other Loan Documents, and a summary
itemization of all charges and expenses constituting Lender Group Expenses
accrued hereunder or under the other Loan Documents, and each such statement,
absent manifest error, shall be conclusively presumed to be correct and accurate
and constitute an account stated between Borrowers and the Lender Group unless,
within 30 days after Agent first makes such a statement available to Borrowers,
Borrowers shall deliver to Agent written objection thereto describing the error
or errors contained in such statement.  The Borrower shall continue to have such
obligations notwithstanding any failure by the Agent to maintain the Loan
Account.

 

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2.10                        Fees.

 

(a)                                 Closing Fee.  Borrowers shall pay to Agent
(or to the Lenders, as may be directed at the Closing Date) for the account of
the Lenders a closing fee in an amount equal to $1,050,000, which fee shall be
due and payable in full on the Closing Date.

 

(b)                                 Agent Fees.  Borrowers shall timely pay to
Agent such fees and expenses as are required under the Agent Fee Letter.

 

(c)                                  Prepayment Premium.  If Borrowers have
(i) sent a notice of voluntary prepayment of the Term Loan pursuant to
Section 2.4(d)(ii) or shall otherwise make any voluntary prepayment of the Term
Loan, (ii) terminated this Agreement pursuant to Section 3.5 of this Agreement,
or (iii) sent a notice of mandatory repayment of the Term Loan pursuant to
Section 2.4(e) or shall otherwise make mandatory prepayment, then on the date of
repayment, prepayment or termination, Borrowers shall pay to Agent, in cash, in
the case of clauses (i), (ii) or (iii) (in the case of clause (iii) only for
such mandatory prepayments pursuant to Section 2.4(e)(iii), (iv) or (v)), the
Applicable Prepayment Premium and the Repayment Fee.  Calculations of the
Applicable Prepayment Premium and the Repayment Fee shall be made by the
Borrowers; provided that the Agent shall have the right to review and adjust
such calculations.

 

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 obligations 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 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 Administrative Borrower of
such law, rule, regulation or guideline giving rise to such reductions and of
such Lender’s intention to claim compensation therefor 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

 

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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 additional or
increased costs referred to in Section 2.12 or amounts under Section 2.13(a) or
sends a notice under Section 2.12(i) relative to changed circumstances (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 2.12 or Section 2.13(a), as applicable, and (ii) in the reasonable
judgment of such Affected Lender, such designation or 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 assign its rights to another of its offices or branches so as to
eliminate Borrowers’ obligation to pay any future amounts to such Affected
Lender pursuant to Section 2.12 or Section 2.13(a), as applicable, then
Borrowers (without prejudice to any amounts then due to such Affected Lender
under Section 2.12 or Section 2.13(a), as applicable) may, unless prior to the
effective date of any such assignment the Affected Lender withdraws its request
for such additional amounts under Section 2.12 or Section 2.13(a), as
applicable, may seek a substitute Lender acceptable to the Required Lenders to
purchase the Obligations owed to such Affected Lender and such Affected Lender’s
Commitments hereunder (a “Replacement Lender”), and if such Replacement Lender
agrees to such purchase, such Affected Lender shall assign to the Replacement
Lender its Obligations and Commitments, 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.

 

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(d)                                 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.

 

(e)                                  Except as otherwise expressly provided in
this Agreement, each Borrower hereby waives notice of acceptance of its joint
and several liability, 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 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 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

 

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respect of any of the Obligations, is rescinded or must otherwise be restored or
returned by Agent or any Lender upon 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 in cash.  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 in cash of the Obligations and, in the event of any insolvency,
bankruptcy, receivership, liquidation, reorganization, winding up, arrangement,
or other similar proceeding under the laws of any jurisdiction relating to any
Borrower, its debts or its assets, whether voluntary or involuntary, 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 in cash.  If, notwithstanding the foregoing
sentence, 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 Extension
of Credit.  The obligation of each Lender to make its initial extension of
credit provided for hereunder 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                               [Reserved].

 

3.3                               Maturity.  This Agreement shall continue in
full force and effect for a term ending on August 15, 2018 (the “Maturity
Date”).  The foregoing notwithstanding, the Lender Group, upon the election of
the Required Lenders, shall have the right to terminate its obligations under
this Agreement immediately and upon notice by Agent to Administrative Borrower
or any other Loan Party upon the occurrence and during the continuation of an
Event of Default.

 

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, Agent (upon the direction of the
Required Lenders) 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

 

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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 satisfactory to Agent and the Required Lenders.

 

3.5                               Early Termination by Borrowers.  Borrowers
have the option, at any time at any time upon 5 Business Days’ prior written
notice to Agent, to terminate this Agreement by repaying to Agent all of the
Obligations in full in accordance with the provisions of Section 2 (which, for
the avoidance of doubt, shall include any prepayment fees required by
Section 2.10).

 

3.6                               Conditions Subsequent. The obligation of the
Lender Group (or any member thereof) to continue to maintain the Term Loan (or
otherwise extend credit hereunder) is subject to the fulfillment, on or before
the date applicable thereto, of the conditions subsequent set forth on Schedule
3.6 (the failure by Borrowers to so perform or cause to be performed such
conditions subsequent as and when required by the terms thereof (unless such
date is extended, in writing, by the Required Lenders, which the Required
Lenders may do without obtaining the consent of the other members of the Lender
Group), shall constitute an immediate Event of Default).

 

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 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) has all requisite power and authority to own and operate
its material properties, to carry on its material business as now conducted and
as proposed to be conducted and (iv) 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.

 

(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), 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.  No Borrower nor any
Subsidiary of Borrowers 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 have been validly issued and are fully paid and,
except with respect to the shares of Colt Canada, non-assessable.

 

(d)                                 Neither 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.

 

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4.2                               Due Authorization; No Conflict.

 

(a)                                 As to each Loan Party, 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)                                 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 any material
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 material breach of, or constitute
(with due notice or lapse of time or both) a material 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 or, except as set forth on Schedule
4.2, 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.  Except as set forth on
Schedule 4.3, 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 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.

 

4.4                               Binding Obligations; Perfected Liens.

 

(a)                                 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 are validly created Liens. 
Agent’s Liens will be perfected, first priority Liens, subject as to priority
only to the Permitted Liens that have priority by operation of law or unless
otherwise permitted hereby, upon (i) in the case of all Collateral in which a
security interests may be perfected by filing a financing statements under the
Code or the PPSA, as applicable, the filing of the UCC financing statement or
PPSA financing statement, as applicable, naming such Borrower or Guarantor as
“debtor” and Agent as “secured party” in the filing offices set forth opposite
such Borrower’s or such Guarantor’s name on Schedule 4.4(b), (ii) with respect
to any deposit account, securities account, commodity account, securities
entitlement or commodity contract, the execution of a Control Agreement,
(iii) in the case of U.S. or Canadian copyrights, trademarks and patents to the
extent that UCC financing statements or PPSA financing statements, as
applicable, may be insufficient to establish the rights of a secured party as to
certain parties, the recording of the appropriate filings in the United States
Patent and Trademark Office, the United States Copyright Office and the Canadian
Intellectual Property Office, as applicable, (iv) in the case of
letter-of-credit rights that are not supporting obligations (as defined in the
Code), the execution by the issuer or any nominated person of an agreement
granting control to Agent over such letter-of-credit rights, and (v) in the case
of electronic

 

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chattel paper, the completion of steps necessary to grant control to Agent over
such electronic chattel paper.

 

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; 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 $50,000
or more in any one case or $100,000 or more in the aggregate, except as set
forth on Schedule 4.6(d).

 

(e)                                  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 $50,000 and (z) 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)                                 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)                                 Schedule 4.7 sets forth a complete and
accurate description, with respect to each of the actions, suits, or 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.

 

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4.8                               Compliance with Laws.  No Loan Party nor any
of its Subsidiaries (a) is in violation of any applicable material laws, rules,
regulations, executive orders, or codes (including Environmental Laws) in any
material respect or (b) is subject to or in default in any material respect with
respect to any material 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.

 

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 the Lenders 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 and
(y) as set forth on Schedule 4.9) and present fairly in all material respects,
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, 2013 (but without regard to any change or development expressly
included in any reports filed with the Securities and Exchange Commission on
forms 8-K, 10-Q or 12b-25 on or prior to November 12, 2014)  no event,
circumstance, or change has occurred that has or could reasonably be expected to
result in a Material Adverse Change.

 

4.10                        Solvency; Fraudulent Transfer.

 

(a)                                 Based on reasonable assumptions and plans,
after giving effect to the Closing Date Transactions, Parent and its
Subsidiaries (taken as a whole) on a consolidated basis (after giving effect to
any rights of contribution or subrogation) are Solvent.

 

(b)                                 No transfer of property is being made by any
Loan Party and no obligation is being incurred by any Loan Party in connection
with the Closing Date Transactions with the intent to hinder, delay, or defraud
either present or future creditors of such Loan Party.

 

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)                                 (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 material liability in respect of any Specified Canadian Pension Plan,
nor has any such Person ever maintained, sponsored, administered, contributed or
participated in any Specified 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 Specified 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 Specified Canadian Pension Plans have been
made on a timely basis in accordance with the terms of such plans and all
applicable laws.

 

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(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, nothing has occurred which would reasonably be expected to prevent, or
cause the loss of, such qualification.

 

(d)                                 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 Matters.  Except as set forth on
Schedule 4.12:

 

(a)                                 The operation of the business of, and each
of the properties owned or operated by, each Loan Party are in compliance with
all Environmental Laws and each Loan Party holds and is in compliance with all
Environmental Permits required under Environmental Law, except where any such
non-compliance with Environmental Law or failure to hold or comply with such
Environmental Permits individually or in the aggregate could not reasonably be
expected to result in a Material Adverse Change.

 

(b)                                 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.

 

(c)                                  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.

 

(d)                                 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 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.

 

(e)                                  No property now, or to the knowledge of any
Loan Party, formerly owned or operated by a Loan Party has been used as
treatment or disposal site for any Hazardous Material.

 

(f)                                   No Loan Party has received written notice
that an Environmental Lien has attached to any revenues or to any assets or to
any property owned or operated by a Loan Party.

 

(g)                                  No Environmental Law regulates, or requires
notification to a Governmental Authority of the Closing Date Transactions

 

(h)                                 To the knowledge of each Loan Party, there
are no facts, conditions or circumstances, including any contractual
obligations, that could reasonably be expected to result in an Environmental
Action or Environmental Liabilities asserted against a Loan Party or which would
require a Loan Party to perform a Remedial Action, which individually or in the
aggregate could reasonably be expected to result in a Material Adverse Change.

 

(i)                                     The Loan Parties have made available to
Lenders true and complete copies of all material environmental reports, audits,
and investigations in any Loan Party’s possession or under its reasonable
control related to each Real Property and the operations of business of the Loan
Parties.

 

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4.13                        Intellectual Property.  Except as set forth on the
Perfection Certificate dated as of the Closing Date:

 

(a)                                 Each Loan Party owns, licenses or otherwise
has the right to use all Intellectual Property that is necessary for the
operation of its business, without infringement upon, misappropriation of,
dilution of, or conflict with the rights of any other Person or other Loan
Party.

 

(b)                                 To the knowledge of the Loan Parties, no
Loan Party nor any of its agents or representatives has engaged in any conduct,
or omitted to perform any necessary act, the result of which would invalidate
any material Intellectual Property of a Loan Party or hinder its enforcement. 
To the knowledge of the Loan Parties, no other Person has infringed or is
infringing any material Intellectual Property of a Loan Party.  For the
avoidance of doubt, all registered trademarks or service marks of a Loan Party
shall be deemed material Intellectual Property.

 

(c)                                  None of the Loan Parties’ registered
Intellectual Property that is material to the operation of a Loan Party’s
business is currently involved in any reexamination, reissue, interference,
invalidity, opposition or cancellation proceeding before any patent office or
patent authority, including the United States Patent and Trademark Office and
the Canadian Intellectual Property Office, or any similar proceeding, and no
such proceedings are pending.

 

(d)                                 All of the Loan Parties’ Intellectual
Property identified in the Perfection Certificate is subsisting and has not been
adjudged invalid or unenforceable, in whole or in part, and, to the knowledge of
the Loan Parties, is valid and enforceable.

 

(e)                                  Other than Permitted Liens, all rights with
respect to the Intellectual Property owned by each Loan Party are free of all
Liens and are fully assignable by the Loan Parties to any Person, without
payment, consent of any Person or other condition or restriction.

 

(f)                                   (i) No claim has been asserted in writing
and is pending by any Person challenging or questioning the use of any of the
Loan Parties’ Intellectual Property, or the validity or effectiveness of any
such Intellectual Property, and (ii) no claim has been asserted in writing and
is pending by any Person challenging or questioning the use of any material
Intellectual Property owned by any of the Loan Parties, or the validity or
effectiveness of any such material Intellectual Property.  Each Loan Party has
made or performed all filings, recordings and other acts and has paid all
maintenance fees, annuities and any other required fees and taxes, as deemed
necessary by such Loan Party in its reasonable business judgment, to maintain
and protect its interest in all Intellectual Property owned by such Loan Party
in full force and effect.

 

(g)                                  To the knowledge of the Loan Parties, no
slogan or other advertising device, product, process, method, substance, part or
other material now employed, or now contemplated to be employed, by any Loan
Party infringes upon, misappropriates, dilutes or conflicts with, any rights
owned by any other Person.  No claim or litigation regarding any of the
foregoing is pending or, to the knowledge of the Loan Parties, threatened.

 

4.14                        Leases.  Except as set forth on Schedule 4.14, 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, subject to Permitted Protests, all of such
material leases are valid and subsisting and no material default beyond any
applicable cure period by the applicable Loan Party or its Subsidiaries exists
under any of them.

 

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4.15                        Deposit Accounts and Securities Accounts.  Set forth
on Schedule 4.15 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) 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 the Lenders on
November 6, 2014, 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 the Lenders (it being 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.  Each Material Contract is not
in default due to the action or inaction of the applicable Loan Party or any of
its Subsidiaries.

 

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                        Indebtedness.  Set forth on Schedule 4.19 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 (other than
unsecured Indebtedness outstanding immediately prior to the Closing Date with
respect to any one transaction or a series of related transactions in an amount
not to exceed $50,000, provided that all such Indebtedness, in the aggregate,
shall not exceed $250,000) that is to remain outstanding immediately after
giving effect to the closing hereunder on the Closing Date and such Schedule
accurately sets forth the aggregate principal amount of such Indebtedness as of
the Closing Date.

 

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4.20                        Payment of Taxes.  All federal and other material
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 to the extent the validity of such Taxes shall be the
subject of a Permitted Protest.  No Loan Party knows of any proposed tax
assessment (other than those with respect to which the aggregate potential tax
liability is less than $100,000) against a Loan Party or any of its Subsidiaries
that is not the subject of a Permitted Protest.

 

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 Term Loan made to Borrowers 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 or state 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 set forth on
Schedule 4.24, 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, to the knowledge of Borrowers, 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 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.

 

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4.25                        Amended ABL Loan Documents.  Borrowers have
delivered or made available to the Lenders true and correct copies of the ABL
Loan Documents.  The transactions contemplated by the ABL Loan Documents will
be, contemporaneously with the making of the Term Loan hereunder, consummated in
accordance with their respective terms and all of the representations and
warranties of Parent or its Subsidiaries in the ABL Loan Documents are true and
correct in all material 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.

 

4.26                        [Reserved].

 

4.27                        [Reserved].

 

4.28                        Use of Proceeds.  Borrowers will use the proceeds of
the Term Loan made hereunder (a) on the Closing Date to refinance the Existing
Credit Agreement and to pay transactional fees, costs, and expenses incurred in
connection with this Agreement, the other Loan Documents, and the transactions
contemplated hereby and thereby and (b) thereafter, consistent with the terms
and conditions hereof, for their lawful and permitted purposes (including that
no part of the proceeds of the loans made to Borrowers 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).

 

4.29                        Common Enterprise.  The Loan Parties make up a
related organization of various entities constituting a single economic and
business enterprise so that the Loan Parties share an identity of interests such
that any benefit received by any one of them benefits the others.  The Loan
Parties render services to or for the benefit of certain of the other Loan
Parties and purchase or sell and supply goods to or from or for the benefit of
certain of the others.  Certain of the Loan Parties have the same chief
executive office, certain common officers and directors and generally do not
provide consolidating financial statements to creditors.

 

4.30                        [Reserved].

 

4.31                        Senior Note Indenture.  All Obligations, including,
without limitation, those to pay principal of and interest (including
post-petition interest) on the Term Loan and fees and expenses in connection
therewith, constitute Indebtedness (under and as defined in the Senior Note
Indenture) that is permitted under Section 3.2(b)(2) of the Senior Note
Indenture.  The Obligations constitute Indebtedness senior in priority to the
obligations of the Borrowers under the Senior Note Indenture.  Parent
acknowledges that Agent and the Lenders are entering into this Agreement, and
extending their Commitments, in reliance upon this Section 4.31.

 

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.

 

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4.33                        Centre of Main Interests and Establishments.  Each
Dutch Loan Party has its “centre of main interests” (as that term is used in
Article 3(7) of the Council of the European Union Regulation No. 1346/2000 as
Insolvency Proceeding (the “Regulation”) in its jurisdiction of incorporation. 
The Dutch Loan Parties do not have an establishment (as that term is used in
Article 2(h) of the Regulation) in any jurisdiction other than The Netherlands.

 

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

 

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. 
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.  In addition, Parent agrees that it
shall not change its fiscal year.  In addition, Parent agrees to maintain a
system of accounting that enables Parent to produce financial statements in
accordance with GAAP.

 

5.2                               Collateral Reporting.  Provide Agent (and if
so requested by Agent or the Required Lenders, with copies for each Lender) with
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, (b) all rights and franchises, licenses and
permits related to any Intellectual Property that are necessary or otherwise
material to the conduct of its business as currently conducted, unless otherwise
consented to by the Required Lenders, and (c) all other rights and franchises,
licenses and permits that are necessary or otherwise material to the conduct of
the business of Parent and its Subsidiaries; provided, however, that no Loan
Party or any of its Subsidiaries shall be required to preserve any such right or
franchise, licenses or permits under clause (c) if such Person’s board of
directors (or similar governing body) 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.

 

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 for
payment thereof), except (a)  to the extent that the validity of such Tax shall
be the subject of a Permitted Protest or (b) delinquent Taxes outstanding in an
aggregate amount not to exceed $100,000 at any one time.

 

5.6                               Insurance.  Each Loan Party shall, at such
Loan Party’s expense, (a) maintain insurance respecting each Loan Party’s assets
wherever located, covering liabilities, losses or damages as are customarily are
insured against by other Persons engaged in same or similar businesses and
similarly situated and located.  All such policies of insurance shall be with
financially sound and reputable insurance companies reasonably acceptable to the
Required Lenders (it being agreed that, as of the Closing Date, the insurance
companies identified on Schedule 4.32 are acceptable to the Required Lenders)
and in such amounts as is carried generally in accordance with sound business
practice by

 

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companies in similar businesses similarly situated and located and, in any
event, in amount, adequacy, and scope reasonably satisfactory to the Required
Lenders (it being agreed that the amount, adequacy, and scope of the policies of
insurance of the Loan Parties in effect as of the Closing Date are acceptable to
the Required Lenders and it being further agreed and understood that with
respect to insurance in respect of director and officer liability, the amount,
adequacy and scope of the policies of such insurance shall be determined in the
sole discretion of Parent).  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 noncontributory “lender” or “secured
party” clause and are to contain such other provisions as Agent or the Required
Lenders may reasonably require to fully protect the Lenders’ interest in the
Collateral and to any payments to be made under such policies (and any payments
received by Agent shall be applied by Agent or otherwise returned to Borrowers
in accordance with the provisions set forth in this Agreement).  All
certificates of property and general liability insurance are to be delivered to
Agent, with the loss payable (but only in respect of Collateral) and additional
insured endorsements (other than directors and officers policies and workers
compensation) in favor of Agent and shall provide for not less than 30 days (10
days in the case of non-payment) prior written notice to Agent of the exercise
of any right of cancellation.  If any Loan Party fails to maintain such
insurance, Agent (upon the direction of the Required Lenders) shall arrange for
such insurance, but at such Loan Party’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 $50,000 covered by any Loan
Party’s 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 in respect of the 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.

 

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 reasonable 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 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 and one (1) appraisal of Intellectual Property in any twelve
(12) month period shall be at the expense of Borrowers.

 

5.8                               Compliance with Laws.  Comply with the
requirements of all applicable material laws, rules, regulations, and orders of
any Governmental Authority in all material respects.

 

5.9                               Environmental.

 

(a)                                 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

 

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all material documents filed with, and material responses from, the Connecticut
Department of Environmental Protection, with respect to Connecticut’s Transfer
Act.

 

(b)                                 Keep any property either owned or operated
by any Loan Party free of any Environmental Liens or post bonds or other
financial assurances sufficient to satisfy the obligations or liability
evidenced by such Environmental Liens.

 

(c)                                  Comply, and use reasonable efforts to cause
all tenants and other Persons who may come upon any property owned, leased or
operated by a Loan Party to comply, with all Environmental Laws in all material
respects and provide to Agent documentation of such compliance which Agent
reasonably requests.

 

(d)                                 Maintain and comply in all material respects
with all Environmental Permits required under applicable Environmental Laws.

 

(e)                                  Take all commercially reasonable steps to
prevent any Release of Hazardous Materials in violation of Environmental Law at,
on or migrating from the any property owned, leased or operated by the Loan
Parties.

 

(f)                                   Undertake or cause to be undertaken any
and all Remedial Actions in response to any Environmental Claim, Release of
Hazardous Materials in violation of Environmental Law or violation of
Environmental Law, to the extent required by Environmental Law or any
Governmental Authority and to repair or remedy any environmental condition or
impairment to the Real Property consistent with its current use and, upon
request of Agent or the Required Lenders, provide Agent with copies of all data,
information and reports generated in connection therewith as Agent or the
Required Lenders may request.

 

(g)                                  Promptly, but in any event within 5
Business Days of its receipt thereof, (i) provide Agent with written notice of
any of the following:  (A) any Release of which any Loan Party has knowledge of
a Hazardous Material in any reportable quantity from or onto property owned or
operated by any Loan Party; (B) written notice that an Environmental Lien has
been filed against any of the real or personal property of any Loan Party,
(C) commencement of any Environmental Action or written notice that an
Environmental Action will be filed against any Loan Party that such Loan Party
reasonably estimates liability in excess of $50,000; (D) material violation of
Environmental Laws in, at, on, under or from any part of the Real Property or
any improvements constructed thereon; and (E) 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 (ii) provide
such other documents and information as reasonably requested by Agent in
relation to any matter pursuant to this Section 5.9(g);

 

(h)                                 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 requested
Phase I Report and Phase II report will not be provided

 

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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                        Intercompany Trademark Agreement. Within 30 days of
the Closing Date (or such longer period as the Agent may agree at the written
direction of the Required Lenders), the applicable Borrowers shall execute an
intercompany trademark license agreement acknowledging the ownership and control
by Colt’s Manufacturing Company LLC and Colt Canada Corporation in the
trademarks registered in their respective names, and associated goodwill, and
confirming the grant of rights to Colt Defense LLC and each of its Subsidiaries
to use such trademarks in the conduct of its business as conducted in the past,
as currently conducted, and as contemplated to be conducted, in form and
substance reasonably acceptable to the Agent (at the written direction of the
Required Lenders).

 

5.11                        Formation of Subsidiaries.  At any time that any
Loan Party forms any direct or indirect Subsidiary or acquires any direct
Subsidiary after the Closing Date, such Loan Party shall (a) within 30 days of
such formation or acquisition (or such later date as permitted by the Required
Lenders in their sole discretion) cause any such new Subsidiary to provide to
Agent a Guaranty and a joinder to the applicable Security Documents, together
with such other security documents (including mortgages with respect to any Real
Property owned in fee of such new Subsidiary with a fair market value of at
least $200,000), as well as appropriate financing statements (and with respect
to all property subject to a mortgage, fixture filings), all in form and
substance reasonably satisfactory to the Required Lenders (including being
sufficient to grant Agent a first priority Lien (subject to Permitted Liens) in
and to the assets of such newly formed or acquired Subsidiary); provided, that,
a Guaranty or a joinder to the applicable Security Documents, and such other
security documents shall not be required to be provided to Agent if the costs to
the Loan Parties of providing such Guaranty, executing any such Security
Documents or perfecting the security interests created thereby are unreasonably
excessive (as determined by the Required Lenders in consultation with Borrowers)
in relation to the benefits of Agent and the Lenders of the security or
guarantee afforded thereby, (b) within 30 days of such formation or acquisition
(or such later date as permitted by the Required Lenders in their sole
discretion) provide to Agent a pledge agreement (or an addendum to the
applicable Security Document) and appropriate certificates and powers or
financing statements, pledging all of the direct or beneficial ownership
interest in such new Subsidiary reasonably satisfactory to the Required Lenders;
provided, that, no other pledge shall be required if the costs to the Loan
Parties of providing such other pledge are unreasonably excessive (as determined
by the Required Lenders in consultation with Borrowers) in relation to the
benefits of Agent and Lenders of the security afforded thereby, and (c) within
30 days of such formation or acquisition (or such later date as permitted by the
Required Lenders in their sole discretion) provide to Agent all other
documentation reasonably requested by Agent or the Required Lenders (including
policies of title insurance or other documentation with respect to all Real
Property owned in fee and subject to a mortgage).

 

5.12                        Further Assurances. Execute or deliver to Agent any
and all financing statements, fixture filings, security agreements, pledges,
assignments, endorsements of certificates of title, mortgages, deeds of trust,
opinions of counsel and all other documents (the “Additional Documents”) that
are required by applicable law, or that Agent or the Required Lenders may
reasonably request, in form and substance reasonably satisfactory to Agent and
the Required Lenders, to create, perfect, and maintain Agent’s Liens in all of
the assets of Parent and its Subsidiaries (other than Excluded Property but, for
the avoidance of doubt, including any Intellectual Property and other Collateral
located in jurisdictions outside the United States or Canada) (whether now owned
or hereafter arising or acquired, tangible or

 

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intangible, real or personal), to create and perfect Liens in favor of Agent in
any Real Property acquired by Parent or its Subsidiaries after the Closing Date
with a fair market value in excess of $200,000, and in order to fully consummate
all of the transactions contemplated hereby and under the other Loan Documents;
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
the Required Lenders in consultation with Borrowers) in relation to the benefits
of Agent and the Lenders of the benefits afforded thereby.  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 Agent
or 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 set forth in Section 5.11 above, 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).

 

5.13                        Lender Meetings.  On a weekly basis from the Closing
Date until June 30, 2015 and thereafter on a twice-monthly basis (or less
frequently as the Required Lenders shall agree), hold a meeting (at a mutually
agreeable location and time or, at the option of Agent, by conference call) 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 projections presented for the current fiscal year
of Parent; provided, however, that following the occurrence of a Default or an
Event of Default, such meetings shall be held as often as the Agent or the
Required Lenders shall request.

 

5.14                        Material Contracts.  Contemporaneously with the
delivery of each Compliance Certificate pursuant to Section 5.1, provide Agent
with copies of each (a) Material Contract entered into since the delivery of the
previous Compliance Certificate, and (b) each material amendment or modification
of any Material Contract entered into since the delivery of the previous
Compliance Certificate.

 

5.15                        Locations of Inventory and Equipment.  Keep each
Loan Parties’ 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
$50,000 and (z) Inventory consigned pursuant to the DCAM Consignment described
in clause (b) of the definition of Permitted Dispositions) only at the locations
identified on Schedule 4.6(e); provided, that, any Borrower may amend Schedule
4.6(e) 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) 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

 

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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,
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 required pursuant to ERISA.

 

5.17                        Canadian Employee Benefits.

 

(a)                                 Cause the Canadian Pension Plans to be duly
registered under the Income Tax Act (Canada) and any other applicable laws which
require registration and cause such Canadian Pension Plans to be administered in
accordance with the Income Tax Act (Canada) and such other applicable law and
maintain such registered status.

 

(b)                                 Cause each Loan Party and its Subsidiaries
to perform its obligations (including fiduciary, funding, investment and
administration obligations) required to be performed in connection with the
Canadian Pension Plans and cause the funding agreements therefor to be performed
on a timely basis.

 

(c)                                  Cause all contributions or premiums
required to be made or paid by the Loan Parties and their Subsidiaries to the
Canadian Pension Plans to be made or paid on a timely basis in accordance with
the terms of such plans and all applicable laws.

 

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 and amalgamations (i) between US
Loan Parties, (ii) between Canadian Loan Parties, (iii) between Dutch Loan
Parties, provided that, a Borrower is the surviving entity of such merger,
amalgamation or consolidation, (iv) between Subsidiaries of Parent which are not
Loan Parties and (v) between Guarantors to the extent required for a Permitted
Acquisition; provided, that, nothing in this Section 6.3 or in Section 6.5 shall
restrict or prohibit Colt Canada from registering as a limited liability company
under the laws of the Province of Nova Scotia, Canada (Colt Canada currently
being an unlimited liability company) or from continuing its certificate of
amalgamation under the laws of another Canadian provincial, territorial or
federal jurisdiction, so long as Colt Canada otherwise complies with the
provisions of Section 6.5 concerning change of corporate name, if applicable,
and Section 5.12.

 

(b)                                 Liquidate, wind up, or dissolve itself (or
suffer any liquidation or dissolution), except for (i) the wind up, liquidation
or dissolution of non-operating Subsidiaries of Parent with nominal

 

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assets and nominal liabilities or (ii) the wind up, liquidation or dissolution
of a Loan Party (other than Borrowers) or any of Borrowers’ wholly-owned
Subsidiaries so long as all of the assets (including any interest in any Equity
Interests) of such liquidating or dissolving Loan Party or Subsidiary are
transferred to a Loan Party that is not liquidating or dissolving, or

 

(c)                                  Suspend or terminate all or a substantial
portion of its or their business, except as permitted pursuant to clause (a) or
(b) above or in connection with the transactions permitted pursuant to
Section 6.4.

 

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 or transactions expressly permitted by Section 6.3 or 6.11.

 

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 written notice to Agent of such change within ten
(10) days following such change.

 

6.6                               Nature of Business.  Make any change in the
nature of its or their business as presently conducted on the Closing Date or
acquire any properties or assets that are not reasonably related to the conduct
of such business activities; provided, that, the foregoing shall not be
construed to prohibit Parent and its Subsidiaries from engaging in any business
that is reasonably related or ancillary to its or their business.

 

6.7                               Certain Payments of Debt and Amendments.

 

(a)                                 Make any payment, prepayment, redemption,
retirement, defeasance, purchase or sinking fund payment or other acquisition
for value of any of its Indebtedness or make any payment, prepayment,
redemption, defeasance, sinking fund payment or repurchase of any Indebtedness
as a result of any asset sale, change of control issuance and sale of debt and
equity securities or similar event, or giving notice of any notice with respect
to any of the foregoing, other than the Indebtedness hereunder, under the other
Loan Documents, or under the ABL Loan Documents (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)                                The Loan Parties may make regularly scheduled
payments of principal and interest in respect of Indebtedness permitted under
clause (p) of the definition of “Permitted Indebtedness” as and when due in
respect of such Indebtedness in accordance with the terms thereof;

 

(ii)                             Borrowers and Guarantors may make payments in
respect of Indebtedness permitted under clause (b), (c), (g) or (p) of the
definition of “Permitted Indebtedness,” in each case with proceeds of
Refinancing Indebtedness as permitted in the definition of the term “Permitted
Indebtedness”;

 

(iii)                          all Loan Parties may make optional prepayments
and redemptions of Indebtedness solely with the proceeds of the issuance and
sale of Qualified Equity Interests of Parent that constitutes an Excluded
Issuance (as described in clause (d) of the definition thereof);

 

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provided, that, as of the date of any such prepayment or redemption, and after
giving effect thereto, no Event of Default shall exist or have occurred and be
continuing;

 

(iv)                         Borrowers and Guarantors may make optional
prepayments and redemptions of Indebtedness not otherwise expressly provided for
in this Section 6.7 (other than Indebtedness owed to Specified Loan Parties
unless agreed to in writing by the Required Lenders) in an aggregate amount not
exceeding $2,500,000 during the term of this Agreement; provided, that,
immediately before and after giving effect to any such payment, (x) the Secured
Leverage Ratio is less than 1.00:1.00 and (y) no Default or Event of Default
shall exist or have occurred and be continuing.

 

(v)                            Parent and its Subsidiaries may make optional
prepayments of Permitted Intercompany Advances to the extent permitted by the
Intercompany Subordination Agreement; provided, that, (x) so long as on and as
of the date of any such prepayment, and after giving effect thereto, no Event of
Default shall exist or have occurred and be continuing and (y) unless agreed to
in writing by the Required Lenders, optional prepayments by a Loan Party of
Permitted Intercompany Advances owing to a Specified Loan Party shall not exceed
$500,000 in aggregate principal amount during the term of this Agreement;

 

(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 and interest
or other mandatory prepayments as and when due in respect of such Indebtedness
in accordance with the terms 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);

 

(vii)                      the Loan Parties may make any payment, prepayment,
redemption, retirement, retirement, defeasance, purchase or sinking fund payment
or other acquisition for value of Indebtedness evidenced by the Senior Note
Indenture so long as the Agent shall have received a certificate of the chief
financial officer of Parent certifying that: (x) the purchase price is at a
discount to the face value of the Senior Notes; and (y) at the time of such
payment, (a) no Default or Event of Default shall have occurred and be
continuing, (b) pro forma for such repurchase, the aggregate cash interest
expense of the Loan Parties has been reduced, and (c) immediately following such
repurchase, Excess Availability will be at least $7,500,000 (any such payments
meeting these conditions, “Permitted Senior Note Discounted Buybacks”).

 

(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)                                (x) any agreements, documents or instruments
in respect of any subordinated indebtedness except to the extent permitted under
any intercreditor or subordination agreement applicable thereto and
(y) Indebtedness permitted pursuant to clause (w), to the extent not prohibited
under the ABL Intercreditor Agreement;

 

(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, except for amendments, modifications or other

 

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changes that do not adversely affect the rights and privileges of any Borrower
or its Subsidiaries in any material respect and do not adversely affect in any
material respect the ability of a Loan Party to be in compliance with the terms
hereof or to amend, modify, renew or supplement the terms of this Agreement or
any of the other Loan Documents, or otherwise adversely affect the interests of
Agent or Lenders in any material respect;

 

(iii)                          [reserved];

 

(iv)                         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                               Senior Note Indenture; Secured Debt Cap.

 

(a)                                 Incur (under and as defined in the Senior
Note Indenture) or suffer to exist any Indebtedness (under and as defined in the
Senior Note Indenture) pursuant to Section 3.2(b)(1) of the Senior Note
Indenture other than (i) Indebtedness under this Agreement and the other Loan
Documents and (ii) Indebtedness under the ABL Credit Agreement and the other ABL
Loan Documents.

 

(b)                                 Permit the amount of the Senior Note
Indenture Secured Debt Cap with respect to the Loan Parties at any time to be
less than the aggregate outstanding principal amount of the Term Loan (including
any accrued PIK Interest), plus all Advances, Swing Line Loans, Letter of Credit
Usage and Overadvances (as such terms are defined in the ABL Credit Agreement).

 

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

 

(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)                                 any Subsidiary of Parent may make Restricted
Payments described in Section 6.12(f);

 

(c)                                  any Subsidiary of Parent may pay or make
distributions to Parent that are used to make substantially contemporaneous
payments to, and Parent may make payments to, repurchase or redeem Equity
Interests and options to purchase Equity Interests of Parent held by officers,
directors or employees or former officers, directors or employees (or their
transferees, estates or beneficiaries under their estates) of Parent pursuant to
any management equity subscription agreement, employee agreement or stock option
agreement or other agreement with such officer, director or employee or former
officer, director or employee; provided, that, (i) no Default or Event of
Default shall have occurred and be continuing or would result therefrom and
(ii) the aggregate cash consideration paid for all such payments, repurchases or
redemptions shall not in any fiscal year of Parent exceed $250,000;

 

(d)                                 Parent may repurchase its Equity Interests
to the extent such repurchase is deemed to occur upon (i) the non-cash exercise
of stock options to the extent such Equity Interests represents a portion of the
exercise price of such options and (ii) the withholding of a portion of such
Equity Interests to pay taxes associated therewith, and the purchase of
fractional shares of Equity Interests of Parent or any Subsidiary arising out of
stock dividends, splits or combinations or business combinations;

 

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(e)                                  for each taxable year ending after the
Closing Date with respect to which Parent is treated as a partnership or a
disregarded entity for U.S. federal income tax purposes, Parent may make
distributions, advances or other payments to each owner of its Equity Interests,
in an amount equal to the product of (i) the portion of Parent’s “taxable
income” (as modified below) allocable to such member for such year and (ii) the
highest combined marginal federal, state and/or local income tax rate applicable
to any such owner for such year; provided, that, for purposes of this clause
(e), Parent’s “taxable income” for any year shall be computed (A) with respect
to any taxable year (or portion thereof) through and including Parent’s fiscal
quarter ending September 28, 2014, without any deduction for any interest
expense for such year attributable to any indebtedness of Parent used to finance
distributions (as determined in accordance with Treasury Regulation
Section 1.163-8T) or any indebtedness treated as having refinanced any such
indebtedness, or any other interest expense incurred by Parent, that, in each
case, is not treated as deductible or federal income tax purposes by each holder
of Equity Interests issued by Parent, and (B) with respect to any taxable year,
whether ended prior to or after the Closing Date, by including any increases to
taxable income for such year as a result of any tax examination, audit or other
adjustment; and

 

(f)                                   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 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.  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 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:

 

(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;

 

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(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)                                  (x) fees payable by Parent to Sciens
Management LLC and Sciens Institutional Services LLC and (y) 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 in respect of subclause (x) not to exceed
$1,000,000 in the aggregate in any fiscal year of Parent and in respect of
subclause (y) 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 2014 of Parent, any such payments under (i) clause
(x) following the Closing Date shall not exceed $250,000 in the aggregate and
(ii) clause (y) shall have been for expenses incurred following the Closing Date
and shall not exceed $10,000 in the aggregate.

 

(f)                                   the payment of reasonable and customary
(i) fees and reasonable out-of-pocket expenses paid to and (ii) indemnities
provided on behalf of, the directors of Parent or any Subsidiary;

 

(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; and

 

(h)                                 any transaction or series of related
transactions involving aggregate payments or the transfer of assets or
provisions or services (other than any transactions with Sciens Capital
Management), in each case, solely to the extent that (i) the value of any single
such transaction (or series of related transactions) does not exceed $50,000 in
the aggregate, (ii) the value of all such transactions does not exceed $500,000
in the aggregate during the term of this Agreement, (iii) any such transaction
is made pursuant to the reasonable requirements of Parent’s or such Subsidiary’s
business (as the case may be) and (iv) any such transaction is upon fair and
reasonable terms no less favorable to Parent or such Subsidiary than Parent or
such Subsidiary would obtain in a comparable arm’s length transaction with a
Person that is not an Affiliate.

 

6.13                        Use of Proceeds.  Use the proceeds of any loan made
hereunder for any purpose other than (a) on the Closing Date to refinance in
full the Existing Credit Agreement and to pay transactional fees, costs, and
expenses incurred in connection with this Agreement, the other Loan Documents,
and the transactions contemplated hereby and thereby and (b) thereafter,
consistent with the terms and conditions hereof, for their lawful and permitted
purposes (including that no part of the proceeds of the loans made to Borrowers
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).

 

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6.14                        Limitation on Issuance of Equity Interests.  Except
for the issuance or sale of Qualified Equity Interests of Parent and 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.

 

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, unless the obligation to pay any deficit under any such Specified
Canadian Pension Plan would not have priority under applicable law over any
Liens created by the Security Documents.

 

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, except
for any sale and leaseback transaction, so long as the aggregate amount of all
sale and leaseback transactions shall not exceed $1,000,000 in any fiscal year
of Parent.

 

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 ABL Credit Agreement and the other ABL
Loan Documents;

 

(ii)                                  the Senior Note Indenture;

 

(iv)                              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);

 

(v)                                 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

 

(vi)                              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

 

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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 ABL Credit Agreement and the
other ABL Loan Documents, (c) the Senior Note Indenture and any related security
documents, (d) restrictions or conditions imposed by any agreement relating to
secured Indebtedness permitted by Section 6.1 of this Agreement if such
restrictions or conditions apply only to the property or assets securing such
Indebtedness, (e) 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
(f) 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
Sections 3.4 and 3.6 of the Senior Note Indenture to the extent in effect.

 

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 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
Plan under the IRC.

 

7.                                      [RESERVED].

 

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:

 

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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 that 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 3.6, 5.1, 5.2, 5.3 (solely if
any Borrower or any other Loan Party is not in good standing in its jurisdiction
of organization), 5.6, 5.7 (solely if any Borrower refuses to allow Agent or its
representatives or agents to visit such Borrower’s properties, inspect its
assets or books or records, examine and make copies of its books and records, or
discuss such Borrower’s affairs, finances, and accounts with officers and
employees of such Borrower), 5.10, 5.11, 5.13, or 5.16 of this Agreement;
provided, that the Loan Parties’ failure to deliver the financial statements,
reports and other items described as items (a), (b), (c), (d), (e), (g), (h),
(j) and (k) on Schedule 5.1 shall not be an Event of Default until such failure
continues for a period of three (3) Business Days; or

 

(b)                                 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 10 days 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;

 

8.3                               If one or more judgments, orders, or awards
for the payment of money involving an aggregate amount of $2,000,000, or more
(except to the extent fully covered by cash escrowed to satisfy such judgment,
order or award or (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 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                               If an Insolvency Proceeding is commenced by a
Loan Party or any of its Subsidiaries;

 

8.5                               If an Insolvency Proceeding is commenced
against a Loan Party or any of its Subsidiaries and any of the following events
occur: (a) such Loan Party or such Subsidiary consents to the institution of
such Insolvency Proceeding against it, (b) the petition commencing the
Insolvency Proceeding is not timely controverted, (c) the petition commencing
the Insolvency Proceeding is not dismissed within 60 calendar days of the date
of the filing thereof, (d) an interim trustee is appointed to take possession of
all or any substantial portion of the properties or assets of, or to operate all
or any substantial portion of the business of, such Loan Party or its
Subsidiary, or (e) an order for relief shall have been issued or entered
therein;

 

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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 and its
Subsidiaries, taken as a whole;

 

8.7                               If there is (a) a default in respect of 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 $2,000,000 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, (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 $2,000,000 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;

 

8.9                               If the obligation of any Guarantor under the
applicable Guaranty ceases to be in full force and effect;

 

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 and, except to the extent of Permitted Liens which are
permitted purchase money Liens or the interests of lessors under Capital Leases,
first priority Lien on Collateral covered thereby having an aggregate book value
in excess of $100,000, except (a) as a result of a disposition of the applicable
Collateral in a transaction permitted under this Agreement or (b) as the result
of an action or failure to act on the part of Agent;

 

8.11                        (a) The occurrence of any damage to, or loss, theft
or destruction of, any Collateral having an aggregate book value in excess of
$500,000 (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 120 days of such occurrence and
(ii) such Collateral is not repaired and/or replaced within 150 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;

 

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

 

8.13                        (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;

 

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8.14                        The validity or enforceability of any Loan Document
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 by any
Governmental Authority having jurisdiction over a Loan Party or its
Subsidiaries, seeking to establish the invalidity or unenforceability thereof,
or a 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;

 

8.15                        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;

 

8.16                        (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 $2,500,000; (b) the imposition of any liability in excess of
$2,500,000 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 $1,000,000, (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 Internal Revenue Code, or the failure of any trust forming
part of any Employee Plan to fail to qualify for exemption from taxation under
Section 501(a) of the Internal Revenue Code or (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;

 

8.17                        An event, circumstance, or change has occurred that
has or could reasonably be expected to result in a Material Adverse Effect 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);

 

8.19                        A Change of Control shall occur; or

 

8.20                        If, after August 15, 2017, the stated maturity date
of more than $25.0 million aggregate principal amount of the Senior Notes, at
any time, fails to be at least 91 days following the Maturity Date.

 

9.                                      RIGHTS AND REMEDIES.

 

9.1                               Rights and Remedies.  Upon the occurrence and
during the continuation of an Event of Default, Agent, upon the written
instruction of the Required Lenders, shall (in each case under clause (a) 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)                                 declare the Obligations, whether evidenced
by this Agreement or by any of the other Loan Documents to be 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

 

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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)                                 [reserved]; and

 

(c)                                  exercise all other rights and remedies
available to Agent or the Lenders under the Loan Documents or applicable law.

 

The foregoing to the contrary notwithstanding, upon the occurrence of any Event
of Default described in Section 8.4 or Section 8.5, in addition to the remedies
set forth above, without any notice to any Borrower or any other Person or any
act by the Lender Group, and the Obligations, inclusive of all accrued and
unpaid interest thereon and all fees and all other amounts owing under this
Agreement or under any of the other Loan Documents, shall automatically and
immediately become due and payable and Borrowers shall be obligated to repay all
of such Obligations in full, without presentment, demand, protest, or notice of
any kind, all of which are expressly waived by each Loan Party.

 

Without limiting the generality of the foregoing, it is understood and agreed
that if the Obligations are accelerated or otherwise become due prior to the
third anniversary of the Closing Date, in each case, in respect of any Event of
Default (including, but not limited to, upon the occurrence of a an Insolvency
Proceeding (including the acceleration of claims by operation of law)), the
Applicable Prepayment Premium and the Repayment Fee will also be due and payable
and shall constitute part of the Obligations, in view of the impracticability
and extreme difficulty of ascertaining actual damages and by mutual agreement of
the parties as to a reasonable calculation of each Lender’s lost profits as a
result thereof, and such premiums shall be presumed to be the liquidated damages
sustained by each Lender as a result of the early prepayment and the Borrowers
agree that it is reasonable under the circumstances currently existing.  The
Applicable Prepayment Premium and the Repayment Fee shall also be payable in the
event the Term Loan (and/or this Agreement) are satisfied or released by
foreclosure (whether by power of judicial proceeding), deed in lieu of
foreclosure or by any other means.  THE BORROWERS EXPRESSLY WAIVE (TO THE
FULLEST EXTENT OF APPLICABLE LAW) THE PROVISIONS OF ANY PRESENT OR FUTURE
STATUTE OR LAW THAT PROHIBITS OR MAY PROHIBIT THE COLLECTION OF THE FOREGOING
PREMIUMS IN CONNECTION WITH ANY SUCH ACCELERATION.  The Borrowers expressly
agree (to the fullest extent of applicable law) that: (A) the Applicable
Prepayment Premium and the Repayment Fee are reasonable and the product of an
arms’ length transaction between sophisticated business people, ably represented
by counsel; (B) the Applicable Prepayment Premium and the Repayment Fee shall be
payable notwithstanding the then prevailing market rates at the time payment is
made; (C) there has been a course of conduct between the Lenders and the
Borrowers giving specific consideration in this transaction for such agreement
to pay the premium; and (D) the Borrowers shall be estopped hereafter from
claiming differently than as agreed to in this paragraph.  The Borrowers
expressly acknowledge that its agreement to pay the Applicable Prepayment
Premium and the Repayment Fee as herein described is a material inducement to
the Lenders to make the Term Loans.

 

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.

 

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9.3                               Appointment of a Receiver.  Upon the
occurrence and during the continuance of an Event of Default, Agent (upon the
written direction of the Required Lenders) shall seek the appointment of a
receiver, interim receiver, manager or receiver and manager (a “Receiver”) under
the laws of Canada or any province thereof to take possession of all or any
portion of the Collateral of any Loan Party or to operate same and, to the
maximum extent permitted by law, may seek the appointment of such a Receiver
without the requirement of prior notice or a hearing.  Any such Receiver shall,
to the extent permitted by law, so far as concerns responsibility for his/her
acts, be deemed to be an agent of such Loan Party and not Agent and the Lenders,
and Agent and the Lenders shall not be in any way responsible for any
misconduct, negligence or non-feasance on the part of any such Receiver, or
his/her servants or employees, absent the gross negligence, willful misconduct
or bad faith of the Agent or the Lenders as determined pursuant to a final,
non-appealable order of a court of competent jurisdiction.  Subject to the
provisions of the instrument appointing him/her, any such Receiver shall have
power to take possession of Collateral of any Loan Party, to preserve Collateral
of such Loan Party or its value, to carry on or concur in carrying on all or any
part of the business of such Loan Party and to sell, lease, license or otherwise
dispose of or concur in selling, leasing, licensing or otherwise disposing of
Collateral of such Loan Party.  To facilitate the foregoing powers, any such
Receiver may, to the exclusion of all others, including a Loan Party, enter
upon, use and occupy all premises owned or occupied by a Loan Party wherein
Collateral of such Loan Party may be situated, maintain Collateral of a Loan
Party upon such premises, borrow money on a secured or unsecured basis and use
Collateral of a Loan Party directly in carrying on such Loan Party’s business or
as security for loans or advances to enable the Receiver to carry on such Loan
Party’s business or otherwise, as such Receiver shall, in its discretion,
determine.  Except as may be otherwise directed by Agent (upon the direction of
the Required Lenders), all money received from time to time by such Receiver in
carrying out his/her appointment shall be received in trust for and paid over to
Agent.  Every such Receiver may, in the discretion of the Required Lenders, be
vested with all or any of the rights and powers of Agent and the Lenders.  Agent
(upon the direction of the Required Lenders) shall, either directly or through
its nominees, exercise any or all powers and rights given to a Receiver by
virtue of the foregoing provisions of this paragraph.

 

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) so long as Agent complies with its
obligations, if any, under the Code and the PPSA, 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 finally determined by a court of
competent jurisdiction.

 

10.3                        Indemnification.  Borrowers 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 U.S. counsel to
Agent-Related Persons and one U.S. counsel to Lender-Related Persons, one
Canadian counsel to Agent-Related Persons and one Canadian counsel to
Lender-Related

 

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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 5 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 incurred in advising, structuring, drafting, reviewing, administering
or syndicating the Loan Documents), enforcement, performance, or administration
(including any restructuring or workout with respect hereto) 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 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, no
Borrower shall be obligated to indemnify any Indemnified Person under this
Section 10.3 for any Taxes (except Taxes that represent claims, demands, suits,
actions, investigations, proceedings, liabilities, fines, costs, penalties,
disbursements, etc., arising solely from any non-Tax claim), which shall be
governed solely 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 finally determines to have resulted from the gross negligence,
willful misconduct or bad faith 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 Borrower was required to
indemnify the Indemnified Person receiving such payment, the Indemnified Person
making such payment is entitled to be indemnified and reimbursed by Borrowers
with respect thereto.

 

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

 

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West Hartford, CT 06110

Attn: John Coghlin

Fax No. (860) 244-1442

Phone: (860) 232-4489

Email: jcoghlin@colt.com

 

with copies
to:                                                                                                                 
Cahill Gordon & Reindel LLP
80 Pine Street
New York, New York 10005
Attn:  William J. Miller, Esq.
Fax No.: (212) 269-5420

Phone: (212) 701-3036

Email: wmiller@cahill.com

 

and

 

Cahill Gordon & Reindel LLP
80 Pine Street
New York, New York 10005
Attn:  Josiah M. Slotnick, Esq.
Fax No.: (212) 378-2925

Phone: (212) 701-3637

Email: jslotnick@cahill.com

 

If to
Agent:                                                                                                                                
Wilmington Savings Fund Society, FSB
500 Delaware Avenue, 11th Floor
Wilmington, Delaware 19801
Attn:  Kristin Moore
Fax No.: (302) 421-9137

Phone: (302) 573-3239

Email: kmoore@wsfsbank.com

 

with copies
to:                                                                                                                 
Pryor Cashman LLP

7 Times Square
New York, New York 10036
Attn: Eric M. Hellige, Esq.
Fax No.: (212) 798-6380

Phone: (212) 326-0846

Email: ehellige@pryorcashman.com

 

If to a
Lender:                                                                                                                
to the address of such Lender specified on Schedule C-1

 

with copies
to:                                                                                                                 
Willkie Farr & Gallagher LLP

787 Seventh Avenue

New York, New York 10019
Attn: Leonard Klingbaum

Fax No. (212) 728-9290

Phone: (212) 728-8290

Email: lklingbaum@willkie.com

 

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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).

 

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 WITHOUT
GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES.

 

(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

 

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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 (D) EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO
THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY
OF NEW YORK AND THE STATE OF NEW YORK, 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 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.

 

13.                               ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

 

13.1                        Assignments and Participations.

 

(a)                                 Any Lender may at any time assign to one or
more other Lenders or other entities (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 aggregate amount of 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 Required Lenders otherwise
consent, 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 a
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 assigning
Lender’s 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 under this Agreement;

 

(iii)                     The consent of the Agent shall be required for any
assignment, other than any assignment to a Lender, an Affiliate of a Lender or a
Related Fund;

 

(iv)                    The consent of the Borrower (such consent not to be
unreasonably withheld or delayed) shall be required unless (1) a Default or
Event of Default has occurred and is continuing at the time of such assignment
or (2) such assignment is to a Lender, an Affiliate of a Lender or a Related
Fund; provided that the Borrower shall be deemed to have consented to any such
assignment unless it shall object thereto by written notice to the Agent within
ten (10) Business Days after having received notice thereof;

 

(v)                       The parties to each assignment shall execute and
deliver to the Agent an Assignment and Acceptance (substantially in the form of
Exhibit A-1), together with a processing

 

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

 

(vi)                    No such assignment shall be made to (A) a Loan Party or
an Affiliate of any 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;

 

(vii)                 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)                                 From and after the date that Agent has
recorded the assignment in the Register and Agent notifies the assigning Lender
(with a copy to Administrative Borrower) 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).

 

(c)                                  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 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 a copy of this Agreement, together with such other 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

 

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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.

 

(d)                                 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(b), this Agreement shall be deemed to be amended
to the extent, but only to the extent, necessary to reflect the addition of the
Assignee.

 

(e)                                  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,
its Commitment, 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 (other than with respect to Section 16) 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 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.  For
the avoidance of doubt, a Participant shall be entitled to the benefits of
Section 16 (subject to the requirements and limitations therein, including the
requirements under Section 16.2 and the provisions of Section 14.2) to the same
extent as if it were a Lender and had acquired its interest by assignment
pursuant to this Section 13.1.  No Participant shall have the right to
participate directly in the making of decisions by the Lenders among themselves.

 

(f)                                   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.

 

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(g)                                  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.

 

(h)                                 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 Term Loan (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.

 

(i)                                     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
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.

 

(j)                                    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.

 

(k)                                 In order to comply with the Dutch Financial
Supervision Act (Wet op het financieel toezicht), the amount transferred under
this Section 13.1 shall include an outstanding portion of at least EUR 100,000
(or its equivalent in other currencies) per Lender or such other amount as may
be required from time to time by the Dutch Financial Supervision Act (or
implementing legislation) or if less, the new Lender shall confirm in writing to
Borrower that it is a professional market party within the meaning of the Dutch
Financial Supervision Act.

 

13.2                        Successors.  This Agreement shall bind and inure to
the benefit of the respective successors and assigns of each of the parties;
provided, however, that no Borrower may assign this Agreement or any rights or
duties hereunder without the Lenders’ prior written consent and notice thereof
to Agent 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

 

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the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to Section 13.1 and 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, 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 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)                           increase the amount of or extend the expiration
date of any Commitment of any Lender,

 

(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,

 

(v)                       amend, modify, or eliminate Section 15.11,

 

(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, wind
up, liquidation, dissolution or sale of such Person expressly permitted by the
terms hereof or the other Loan Documents,

 

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

 

(xi)                    amend, modify, or eliminate the definition of Term Loan
Amount, or

 

(xii)                 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) any of the terms or
provisions of Section 2.10, without the written consent of the Required Lenders
and Borrowers, 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.  Notwithstanding anything to the contrary contained in this Agreement
or the other Loan Documents, the consent of Loan Parties and Lenders shall not
be required for the exercise by Agent of any of its rights under this Agreement
in accordance with the terms of this Agreement.

 

(c)                                  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)(ii) and (iii).

 

14.2                        Replacement of Certain Lenders.

 

(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 and such Lender has declined to designate a
different lending office, 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 and its existing rights to payment pursuant
to Section 16).  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

 

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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 Term Loan.

 

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 Wilmington Savings Fund Society, FSB as its agent
under this Agreement, the other Loan Documents and the ABL Intercreditor
Agreement and each Lender hereby irrevocably authorizes Agent to execute and
deliver each of the other Loan Documents and the ABL Intercreditor Agreement on
its behalf and to take such other action on its behalf under the provisions of
this Agreement and each other Loan Document and the ABL Intercreditor Agreement
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 and the ABL
Intercreditor Agreement, 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, proofs of
claim, notices and other written agreements with respect to the Loan Documents,
(c) exclusively receive, apply, and distribute the Collections of Parent and its
Subsidiaries as

 

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provided in the Loan Documents, (d) 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, (e) 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 (f) incur and pay such Lender Group
Expenses 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.  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.

 

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 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. Notwithstanding the terms and provisions of the ABL
Intercreditor Agreement or any reference to the ABL Intercreditor Agreement or
the ABL Loan Documents herein, none of the Agent-Related Persons shall be liable
for any action taken or omitted to be taken by any of them under the ABL
Intercreditor Agreement or under this Agreement relating to the ABL
Intercreditor Agreement or the ABL Loan Documents unless directed in writing by
the Required Lenders to take or to omit to take any such action, which direction
shall, in the case of a payment required to be made to the ABL Agent, specify
the amount of such payment.

 

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 or
refraining from taking 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

 

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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 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 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 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 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

 

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obligated to reimburse Agent or Lenders for such expenses pursuant to this
Agreement or otherwise.  Agent 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 share 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 gross
negligence or willful misconduct nor shall any Lender be liable for the
obligations of any Defaulting Lender in failing to make an 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, the termination of this Agreement and the
resignation or replacement of Agent.

 

15.8                        Agent in Individual Capacity.  Agent and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, provide bank products to, 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 Agent 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, Agent 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.  The terms “Lender” and
“Lenders” may include Agent in its individual capacity.

 

15.9                        Successor Agent.  Agent may resign as Agent upon 30
days (10 days if an Event of Default has occurred and is continuing) prior
written notice to the Lenders (unless such notice is waived by the Required
Lenders) and Administrative Borrower (unless such notice is waived by
Administrative Borrower).  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
Administrative Borrower and with the consent of the Required Lenders, a
successor Agent.  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

 

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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, provide bank products to, 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 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 its 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.

 

(a)                                 The Lenders hereby irrevocably authorize
Agent, upon the written direction of the Required Lenders, to release, or
subordinate, any Lien on any of the Collateral (i) upon payment and 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 and the
Required Lenders that the sale or disposition is made in compliance with
Section 6.4 (and Agent and the Required Lenders 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 (at the direction of the Required Lenders) 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 the 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 and the Security Documents, if the release is approved, authorized
or ratified in writing by the Required Lenders.  Upon request by Agent or
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 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 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,
upon the direction of the Required Lenders, 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, upon the written 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

 

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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, 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).

 

(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 that any
particular items of Collateral meet the eligibility criteria applicable in
respect thereof or whether to impose, maintain, reduce, or eliminate any
particular reserve hereunder or whether the amount of any such reserve is
appropriate or not, 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, regardless of whether Agent shall obtain
its own interest in the Collateral in its capacity as one of the Lenders, and
that Agent shall have no other duty or liability whatsoever to any Lender as to
any of the foregoing, except as otherwise provided herein.

 

(d)                                 In no event shall the Agent be responsible
or liable for special, indirect, or consequential loss or damage of any kind
whatsoever (including, but not limited to, loss of profit) irrespective of
whether the Agent has been advised of the likelihood of such loss or damage and
regardless of the form of action. Notwithstanding any provision of this
Agreement, the Agent shall not have any duties or responsibilities except those
expressly set forth herein and the permissive provisions with respect to the
Agent set forth herein shall not be deemed to be duties. Notwithstanding
anything to the contrary contained herein, the Agent shall have no
responsibility for the preparing, recording, filing, re-recording, or re-filing
of any financing statement, continuation statement or other instrument in any
public office. In no event shall the Agent be responsible or liable for any
failure or delay in the performance of its obligations hereunder arising out of
or caused by, directly or indirectly, forces beyond its control, including,
without limitation, strikes, work stoppages, accidents, acts of war or
terrorism, civil or military disturbances, nuclear or natural catastrophes or
acts of God, and interruptions, loss or malfunctions of utilities,
communications or computer (software and hardware) services; it being understood
that the Agent shall use reasonable efforts which are consistent with accepted
practices in the banking industry to resume performance as soon as practicable
under the circumstances.

 

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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 the Required Lenders, and that it
shall, to the extent it is lawfully entitled to do so, upon the written request
of the Required Lenders, 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 the Required Lenders, 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 and the
Required Lenders thereof, and, promptly upon Agent’s request (upon the direction
of the Required Lenders) 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, or promptly
following each such payment, Agent shall identify whether such payment (or any
portion thereof) represents principal, premium, fees, or interest of the
Obligations.

 

15.15                 Concerning the Collateral and Related Loan Documents. 
Each member of the Lender Group authorizes and directs Agent to enter into this
Agreement and the other Loan Documents and the ABL Intercreditor Agreement. 
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.

 

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15.16                 Collateral 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 collateral
report respecting Parent or its Subsidiaries (each, a “Report”) delivered in
accordance with Section 5.2, 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 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, (ii) 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 (iii) 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.

 

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15.17                 Agent May File Proofs of Claim.

 

(a)                                 In case of the pendency of any receivership,
insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceeding relative to any Loan Party, Agent
(irrespective of whether the principal of any Obligations shall then be due and
payable as herein expressed or by declaration or otherwise and irrespective of
whether Agent shall have made any demand on Borrowers) shall be entitled and
empowered, upon the direction of the Required Lenders, by intervention in such
proceeding or otherwise:

 

(i)                           to file and prove a claim for the whole amount of
the principal and interest owing and unpaid in respect of the Obligations and
all other Obligations that are owing and unpaid and to file such other documents
as may be necessary or advisable in order to have the claims of Lenders and
Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of Lenders and Agent and their respective agents and
counsel and all other amounts due Lenders and Agent allowed in such judicial
proceeding; and

 

(ii)                        to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the same; and any
custodian, receiver, interim receiver, receiver and manager, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Lender to make such payments to Agent
and, in the event that Agent and the Required Lenders shall consent to the
making of such payments directly to Lenders, to pay to Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of Agent and
its agents and counsel, and any other amounts due Agent.

 

(b)                                 Nothing contained herein shall be deemed to
authorize Agent to authorize or consent to or accept or adopt on behalf of any
Lender any plan of reorganization, arrangement, adjustment or composition
affecting the Obligations or the rights of any Lender or to authorize Agent to
vote in respect of the claim of any Lender in any such proceeding.

 

15.18                 Several Obligations; No Liability.  Notwithstanding that
certain of the Loan Documents now or hereafter may have been or will be executed
only by or in favor of Agent in its capacity as such, and not by or in favor of
the Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder, shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis in accordance with such
Lender’s percentage of the Term Loan outstanding.  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
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

 

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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 such 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) upon
the direction of the Required Lenders 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 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 Debts.

 

(a)                                 Each Loan Party undertakes with Agent to pay
to Agent its Dutch Parallel Debt.

 

(b)                                 Each Dutch Parallel Debt is a separate and
independent obligation and shall not constitute Agent and any Finance Party as
joint creditors (hoofdelijk schuldeisers) of any Underlying Debt.

 

(c)                                  If any Underlying Debt is avoided or
reduced other than (i) as a result of payment to, or recovery or discharge by,
the Finance Party to which the Underlying Debt is owed or (ii) otherwise with
the consent of such Finance Party, the amount of the Dutch Parallel Debt
corresponding to such Underlying Debt shall be equal to the amount which such
Underlying Debt would have had if the avoidance or reduction had not occurred.

 

(d)                                 No Loan Party may pay any Dutch Parallel
Debt other than at the instruction of, and in the manner determined by, Agent
(at the direction of the Required Lenders).

 

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(e)                                  Any payment made, or amount recovered, in
respect of a Loan Party’s Dutch Parallel Debts shall reduce the Underlying Debt
owed to a Finance Party by the amount which that Finance Party has received out
of that payment or recovery under the Loan Documents.

 

(f)                                   Notwithstanding any provision to the
contrary in any Loan Document, in relation to the Dutch Parallel Debt and any
Dutch Security Documents, Agent shall act in its own name and not as agent of
any Lender (but always for the benefit of the Required Lenders and the other
Finance Parties in accordance with the provisions of the Loan Documents).

 

16.                               WITHHOLDING TAXES.

 

16.1                        No Setoff; Payments.

 

(a)                                 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 Tax is required by law, the applicable withholding agent
shall make such deduction or withholding and shall timely pay to the relevant
Governmental Authority such amounts in accordance with applicable law.  To the
extent such Tax is an Indemnified Tax, 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) by any Loan Party is equal to same amount that
would have been so payable had no such deduction or withholding of Indemnified
Tax been required under applicable law.

 

(b)                                 The Loan Parties shall indemnify each Agent
or Lender (as applicable), within 10 days after demand therefor, for the full
amount of any Indemnified Taxes (including Indemnified Taxes on the additional
amounts payable under this Section 16.1) payable or paid by such Agent or Lender
or required to be withheld or deducted from a payment to such Agent or Lender
and any reasonable expenses arising therefrom or with respect thereto, whether
or not such Indemnified Taxes were correctly or legally imposed or asserted by
the relevant Governmental Authority.  A certificate as to the amount of such
payment or liability delivered to Administrative Borrower by a Lender (with a
copy to Agent), or by Agent on its own behalf or on behalf of a Lender, shall be
conclusive absent manifest error.

 

(c)                                  Administrative Borrower will furnish to
Agent as promptly as possible after payment by any Loan Party 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 the
Required Lenders.

 

(d)                                 The Loan Parties agree to pay any present or
future stamp, value added or documentary Taxes, intangible, recording or any
other similar property Taxes 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.

 

16.2                        Exemptions.

 

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

 

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(i)                           In the case of a Lender claiming an exemption from
U.S. withholding tax pursuant to the portfolio interest exception, (A) a
statement of the Lender, substantially in the form of Exhibit D-1, 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 (a “U.S. Tax Compliance Certificate”), and (B) an original, properly
completed and executed IRS Form W-8BEN;

 

(ii)                        in the case of a Lender claiming an exemption from,
or reduction of, U.S. federal withholding tax under a U.S. tax treaty, a
properly completed and executed copy of IRS Form W-8BEN;

 

(iii)                     an original, properly completed and executed copy of
IRS Form W-8ECI;

 

(iv)                    to the extent a Lender is not the beneficial owner, a
properly completed and executed copy of IRS Form W-8IMY, accompanied by IRS
Form W-8ECI, IRS Form W-8BEN, a U.S. Tax Compliance Certificate substantially in
the form of Exhibit D-2 or Exhibit D-3, IRS Form W-9, and/or other certification
documents from each beneficial owner, as applicable; provided that if the Lender
is a partnership and one or more direct or indirect partners of such Lender are
claiming the portfolio interest exemption, such Lender may provide a U.S. Tax
Compliance Certificate substantially in the form of Exhibit D-4 on behalf of
each such direct and indirect partner;

 

(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,
U.S. withholding or backup withholding tax; or

 

(vi)                    if a payment made to a Lender under any Loan Document
would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender
were to fail to comply with the applicable reporting requirements of FATCA
(including those contained in Section 1471(b) or 1472(b) of the IRC, as
applicable), such documentation prescribed by applicable law (including as
prescribed by Section 1471(b)(3)(C)(i) of the IRC) and such additional
documentation reasonably requested by the Administrative Borrower or Agent as
may be necessary for Administrative Borrower and Agent to comply with their
obligations under FATCA and to determine that such Lender has complied with such
Lender’s obligations under Section 1471 through 1474 of the IRC or to determine
the amount to deduct and withhold from such payment.  Solely for purposes of
this clause (vi), “FATCA” shall include any amendments made to FATCA after the
date of this Agreement.

 

(b)                                 Each Lender 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 in writing of any change in circumstances which would modify or render
invalid any claimed exemption or reduction.

 

(c)                                  If a Lender is entitled to claim an
exemption from, or reduction of, withholding or backup withholding tax in a
jurisdiction other than the United States, such Lender agrees with and in favor
of Agent and Administrative Borrower to deliver to Administrative Borrower and
Agent at the times reasonably requested by Agent or Administrative Borrower such
forms or other information reasonably requested by Administrative Borrower or
Agent as will permit exemption from, or reduction of, withholding or backup
withholding tax, but only if such Lender or such Participant (i) is legally

 

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eligible to deliver such forms and (ii) in such Lender’s reasonable judgment
delivery of such forms or other information does not subject such Lender to any
material unreimbursed cost or expense or does not materially prejudice the legal
or commercial position of such Lender.  Each Lender shall provide new forms (or
successor forms) or information upon the expiration, invalidity or obsolescence
of any previously delivered forms or information and to promptly notify
Administrative Borrower and Agent in writing of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.

 

(d)                                 Each Borrower agrees that each Participant
shall be entitled to the benefits of this Section 16 with respect to its
participation in any portion of the Commitments and the Obligations so long as
such Participant complies with the obligations set forth in this Section 16
(including the requirements under this Section 16.2) subject to the provisions
of Section 14.2, in each case, with respect thereto as if it were a Lender.

 

16.3                        Lender Indemnification.  Each Lender shall severally
indemnify the Agent, within 10 days after demand therefor, for (i) any
Indemnified Taxes attributable to such Lender (but only to the extent that any
Loan Party has not already indemnified the Agent for such Indemnified Taxes and
without limiting the obligation of the Loan Parties to do so in accordance with
Section 16.1), (ii) any Taxes attributable to such Lender’s failure to comply
with the provisions of Section 13.1(i) relating to the maintenance of a
Participant Register and (iii) any non-Indemnified Taxes attributable to such
Lender, in each case, that are payable or paid by the Administrative Agent in
connection with any Loan Document, and any reasonable expenses arising therefrom
or with respect thereto, whether or not such Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority.  A certificate as to
the amount of such payment or liability delivered to any Lender by the Agent
shall be conclusive absent manifest error.  Each Lender hereby authorizes the
Agent to set off and apply any and all amounts at any time owing to such Lender
under any Loan Document or otherwise payable by the Administrative Agent to the
Lender from any other source against any amount due to the Administrative Agent
under this Section 16.3.

 

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 any Loan Party or
with respect to which any Loan Party has paid additional amounts pursuant to
this Section 16, it shall pay over such refund to Borrowers (but only to the
extent of payments made, or additional amounts paid, by any Loan Party 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 the Loan Parties, upon the request of Agent or such
Lender, agree to repay the amount paid over to the Loan Parties (plus any
penalties, interest or other charges, imposed by the relevant Governmental
Authority in respect thereof) 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
Agent or a Lender be required to pay any amount to the Loan Parties pursuant to
this Section 16.4 the payment of which would place Agent or such Lender in a
less favorable net after-tax position than Agent or such 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. 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.

 

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                        Right of Setoff.  If an Event of Default shall have
occurred and be continuing, any Lender and any Affiliate of any Lender is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by such Lender or Affiliate of a Lender to or for the credit or the
account of any Loan Party against any of and all the Obligations held by such
Lender or Affiliate of a Lender, irrespective of whether or not such Lender or
Affiliate of a Lender shall have made any demand under the Loan Documents and
although such obligations may be unmatured. The applicable Lender or Affiliate
of a Lender shall notify the Borrower and the Agent of such set-off or
application; provided that any failure to give or any delay in giving such
notice shall not affect the validity of any such set-off or application under
this Section. The rights of each Lender or Affiliate of a Lender under this
Section are in addition to other rights and remedies (including other rights of
setoff) which such Lender or Affiliate of a Lender may have.

 

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.

 

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17.8                        Revival and Reinstatement of Obligations.  If the
incurrence or payment of the Obligations by any Borrower or any Guarantor or the
transfer to the Lender Group of any property should for any reason subsequently
be asserted, or declared, to be void or voidable under any state or federal law
relating to creditors’ rights, including provisions of the Bankruptcy Code (or
under any bankruptcy or insolvency laws of Canada, including the BIA, the CCAA
and the Winding-Up and Restructuring Act (Canada)) relating to fraudulent
conveyances, preferences, or other voidable or recoverable payments of money or
transfers of property (each, a “Voidable Transfer”), and if the Lender Group is
required to repay or restore, in whole or in part, any such Voidable Transfer,
or elects to do so upon the advice of counsel, then, as to any such Voidable
Transfer, or the amount thereof that the Lender Group is required or elects to
repay or restore, and as to all reasonable costs, expenses, and attorneys’ fees
of the Lender Group related thereto, the liability of Borrowers or Guarantors
automatically shall be revived, reinstated, and restored and shall exist as
though such Voidable Transfer had never been made.

 

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 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 Administrative Borrower
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 Administrative Borrower 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 Administrative
Borrower 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,

 

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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
Administrative Borrower 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 otherwise use the name, logos, and other insignia of Borrowers and the Loan
Parties and the Commitments provided hereunder in any “tombstone,” press
releases, or other advertisements, on its website or in other marketing
materials of 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 Patriot Act, it is required to obtain, verify and record
information that identifies each Borrower, which information includes the name
and address of such 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.

 

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17.14                 Administrative Borrower as Agent for Borrowers.

 

(a)                                 Each Borrower hereby irrevocably appoints
and constitutes Parent (“Administrative Borrower”) as its agent and
attorney-in-fact to request and receive Term 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 Term Loans to such bank
account of Administrative Borrower or a Borrower or otherwise make such Term
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 (upon the direction of the Required Lenders)
may at any time and from time to time require that Term Loans to or for the
account of any Borrower be disbursed directly to an operating account of such
Borrower.

 

(b)                                 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.

 

(c)                                  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.

 

(d)                                 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.

 

(e)                                  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

 

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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 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

 

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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 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”.

 

[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, as a Borrower

 

 

 

 

 

By:

/s/ Dennis Veilleux

 

Name:

Dennis Veilleux

 

Title:

President and Chief Executive Officer

 

 

 

 

 

COLT FINANCE CORP., as a Borrower

 

 

 

 

 

By:

/s/ Dennis Veilleux

 

Name:

Dennis Veilleux

 

Title:

President and Chief Executive Officer

 

 

 

 

 

NEW COLT HOLDING CORP., as a Borrower

 

 

 

 

 

By:

/s/ Dennis Veilleux

 

Name:

Dennis Veilleux

 

Title:

President and Chief Executive Officer

 

 

 

 

 

COLT’S MANUFACTURING COMPANY, LLC, as a Borrower

 

 

 

 

 

By:

/s/ Dennis Veilleux

 

Name:

Dennis Veilleux

 

Title:

President and Chief Executive Officer

 

 

 

 

 

COLT DEFENSE TECHNICAL SERVICES LLC, as a Guarantor

 

 

 

 

 

By:

/s/ Dennis Veilleux

 

Name:

Dennis Veilleux

 

Title:

President and Chief Executive Officer

 

[Signature Page to Colt Term Loan Agreement]

 

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COLT CANADA CORPORATION, as a Borrower

 

 

 

 

 

By:

/s/ Dennis Veilleux

 

Name:

Dennis Veilleux

 

Title:

President and Chief Executive Officer

 

[Signature Page to Colt Term Loan Agreement]

 

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

 

 

COLT INTERNATIONAL COÖPERATIEF U.A., as a Guarantor

 

 

 

 

 

By:

/s/ Dennis Veilleux

 

Name:

Dennis Veilleux

 

Title:

President and Chief Executive Officer

 

[Signature Page to Colt Term Loan Agreement]

 

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WILMINGTON SAVINGS FUND SOCIETY, FSB,

 

as Agent

 

 

 

 

 

By:

/s/ Kristin L. Moore

 

Name:

Kristin L. Moore

 

Title:

Vice President

 

[Signature Page to Colt Term Loan Agreement]

 

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MORGAN STANLEY SENIOR FUNDING, INC.,

 

as a Lender

 

 

 

 

 

By:

/s/ John Ragusa

 

Name:

John Ragusa

 

Title:

Authorized Signatory

 

[Signature Page to Colt Term Loan Agreement]

 

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Schedule 1.1

 

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

 

“ABL Agent” means Wells Fargo Capital Finance, LLC, and its permitted successors
and assigns.

 

“ABL Credit Agreement” means that Credit Agreement, dated as of September 29,
2011, entered into by, among others, the Loan Parties and ABL Agent, as amended,
supplemented, modified, restated, renewed, refinanced or replaced, except to the
extent prohibited by the ABL Intercreditor Agreement.

 

“ABL Intercreditor Agreement” means that certain Intercreditor Agreement, dated
as of the date hereof, entered into between Agent and ABL Agent, as amended and
in effect from time to time.

 

“ABL Lenders” means the lenders from time to time party to the ABL Credit
Agreement.

 

“ABL Loan Documents” means each “Loan Document” as defined in the ABL Credit
Agreement, as amended, supplemented, modified, restated, renewed, refinanced or
replaced, except to the extent prohibited by the ABL Intercreditor Agreement.

 

“ABL Obligations” means the Obligations as such term is defined in the ABL
Credit Agreement.

 

“ABL Priority Collateral” has the meaning specified therefor in the ABL
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.

 

“Accounting Changes” means changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or successor thereto or any agency with similar functions).

 

“Acquired Indebtedness” means Indebtedness of a Person whose assets or Equity
Interests are acquired by Parent or its Subsidiaries in a Permitted Acquisition;
provided, however, that such Indebtedness (a) was in existence prior to the date
of such Permitted Acquisition, and (b) was not acquired, assumed or incurred in
connection with, or in contemplation of, such Permitted Acquisition.

 

“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.

 

“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.

 

“Affected Lender” has the meaning specified therefor in Section 2.13(b) of the
Agreement.

 

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“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
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 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.

 

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

 

“Agent Fee Letter” means that certain letter agreement of even date herewith
among the Borrowers and the 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 identified on Schedule A-1
as the Agent’s Account.

 

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

 

“Agreement” means the Term Loan Agreement to which this Schedule 1.1 is
attached.

 

“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 Agent (at the written direction of the Required Lenders) to
require that payments and proceeds of Collateral be applied pursuant to
Section 2.4(b)(ii) of the Agreement.

 

“Applicable Prepayment Premium”  means, as of any date of determination, an
amount equal to (A) during the period on and after the Closing Date up to and
including the 720th day following the Closing Date, the greater of: (a) 1.0% of
the amount of the Term Loans repaid; and (b) the present value as of the payment
date of all interest payments (including amounts that would have been paid as
PIK Interest) that would have become due on the amount being paid from the
payment date through the 720th day after the Closing Date, computed using a
discount rate equal to the Treasury Rate as of such payment date plus 0.50%; and
(B) from the 721st day following the Closing Date through the 1080th day after
the Closing Date, 1.0% of the amount of the Term Loans repaid.

 

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

 

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“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.

 

“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).

 

“Borrower” and “Borrowers” shall have the meanings assigned to such terms in the
Recitals of this Agreement.

 

“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, except
that, the term “Business Day” also shall exclude any day on which banks are
closed for dealings in Dollar deposits in the London interbank market.

 

“Canadian Loan Party” and “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 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 Documents” means (a) each document identified on Schedule S
to the Agreement (as such schedule may be amended or supplemented by Agent to
add additional Canadian Security Documents in connection with the Loan
Documents) and (b) any other documents governed by the laws of Canada or any
province or territory thereof under which a Lien is granted to Agent.

 

“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.

 

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

 

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

 

“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

 

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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 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 Interest” has the meaning specified therefor in Section 2.6(a) of the
Agreement.

 

“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.

 

“Change of Control” means:

 

(a)                                 prior to the first public offering of common
stock of Parent, the Permitted Holders cease to be the “beneficial owner” (as
defined in Rules 13 d-3 and 13 d-5 under the Exchange Act), directly or
indirectly, of a majority in the aggregate of the total voting power of the
Equity Interests of Parent then outstanding, whether as a result of the issuance
of securities of Parent, any merger, consolidation, winding up, liquidation or
dissolution of Parent, any direct or indirect transfer of securities by any
Permitted Holder or otherwise (for purposes of this clause (a) and clause
(b) below, the Permitted Holders shall be deemed to beneficially own any the
Equity Interests holding voting power of an entity (the “specified entity”) held
by any other entity (the

 

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“parent entity”) so long as (x) the Permitted Holders beneficially own (as so
defined), directly or indirectly, in the aggregate a majority of the voting
power of the Equity Interests of the parent entity) or (y) no “person” or
“group” of related persons (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act), beneficially owns, directly or indirectly, a larger
percentage of the voting power of the Equity Interests of the parent entity than
the Permitted Holders;

 

(b)                                 on the date of or after the first public
offering of common stock of Parent, any “person” or “group” of related persons
(as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other
than one or more Permitted Holders, becomes the beneficial owner (as defined in
Rules 13 d-3 and 13 d-5 under the Exchange Act, except that such person or group
shall be deemed to have “beneficial ownership” of all shares that any such
person or group has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than 35% of the total voting power of the Equity Interests of Parent or any of
its direct or indirect parent entities (or their successors by merger,
consolidation or purchase of all or substantially all of their assets);

 

(c)                                  the Continuing Directors shall cease for
any reason to constitute a majority of the Board of Directors of Parent then in
office;

 

(d)                                 except as otherwise expressly permitted
herein, Parent shall cease to be the direct or indirect holder and owner of one
hundred (100%) percent of the Equity Interests of the other Loan Parties; or

 

(e)                                  a “Change of Control” under (and as defined
in) the Senior Note Indenture or the ABL Credit Agreement.

 

“Closing Date” means the date of the making of the Term Loan under the
Agreement.

 

“Closing Date Transactions” means, collectively, the transactions contemplated
by the Loan Documents and the ABL Loan Documents, as amended in connection with
each of the foregoing.

 

“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 in or upon which a
Lien is granted by such Person 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
Agent and 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).

 

“Commitment” means, with respect to each Lender, its Term Loan Commitment, and,
with respect to all Lenders, their Term Loan Commitments, as the context
requires.

 

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

 

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

 

“Consolidated EBITDA” shall mean, as to any Person and its Subsidiaries, for any
period, the amount equal to (without duplication): (a) the Consolidated Net
Income of such Person and its Subsidiaries for such period determined in
accordance with GAAP, plus (b) as to such Person and its Subsidiaries, each of
the following (in each case to the extent deducted in or excluded from the
calculation of Consolidated Net Income for such period (in accordance with
GAAP)): (i) the Interest Expense for such period, (ii) all Taxes of such Person
and its Subsidiaries paid or accrued in accordance with GAAP for such period,
including any Permitted Tax Distributions, (iii) depreciation and amortization
(including, but not limited to, imputed interest and deferred compensation) for
such period, all in accordance with GAAP, (iv) extraordinary, unusual or
non-recurring charges, expenses or losses that are incurred outside the ordinary
course of business, other than contract start-up costs and losses, and other
non-cash charges, expenses or losses; provided, however, in the case of the Loan
Parties, the aggregate amount added back to Consolidated EBITDA pursuant to this
clause (iv) shall not exceed $1,000,000, and (v) other non-cash charges,
expenses or losses, and (vi) costs and expenses in connection with the Closing
Date Transactions in an aggregate amount not exceeding $2,500,000.

 

“Consolidated Net Income” shall mean, with respect to any Person for any period,
the aggregate of the net income (loss) of such Person and its Subsidiaries for
such period determined on a consolidated basis in accordance with GAAP;
provided, that, (a) except to the extent included pursuant to the foregoing
clause and except to the extent necessary to reflect Consolidated Net Income on
a pro forma basis as provided herein, the net income of any Person accrued prior
to the date it becomes a Subsidiary of such Person or is merged into or
consolidated or amalgamated with such Person or any of its Subsidiaries or that
Person’s assets are acquired by such Person or by any of its Subsidiaries shall
be excluded; and (b) the net income (if positive) of any Subsidiary to the
extent that the declaration or payment of dividends or similar distributions by
such Subsidiary to such Person or to any other Subsidiary of such Person is not
at the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to such Subsidiary shall be excluded, other than any distribution or
dividend actually received in cash by such Person or its Subsidiaries, (c) any
non-cash compensation expense recorded from grants of stock appreciation or
similar rights, stock options or other rights to officers, directors or
employees shall be excluded, (d) any impairment charges or asset writeoffs, in
each case pursuant to GAAP, and the amortization of intangibles arising pursuant
to GAAP shall be excluded, (e) any after tax effect of income (loss) from early
extinguishment of Indebtedness or Hedge Agreements or other derivative
instruments or any currency translation gains and losses related to currency
remeasurements of Indebtedness, and any net loss or gain resulting from hedging
transactions for currency exchange risk shall be excluded, (f) any extraordinary
non-cash gain or loss shall be excluded, (g) an amount equal to the Permitted
Tax Distributions in respect of such period shall be included as though such
amounts had been paid as income taxes directly by such Person for such period,
and (h) the cumulative effect of a change in accounting principles shall be
excluded.  For the purpose of this definition, net income excludes any gain
together with any related Taxes for such gain realized upon the sale or other
disposition of any assets outside of the ordinary course of business or of any
Equity Interests of such Person or a Subsidiary of such Person.

 

“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.

 

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“Continuing Director” means (a) any member of the Board of Directors of Parent
who was a director (or comparable manager) on the Closing Date, after giving
effect to the execution and delivery of this Agreement and the other
transactions contemplated hereby to occur on such date, and (b) any individual
who becomes a member of the Board of Directors of Parent after the Closing Date
if such individual was approved, appointed or nominated for election to the
Board of Directors by either the Permitted Holders or a majority of the
Continuing Directors.

 

“Control Agreement” means a control agreement, in form and substance
satisfactory to Agent and the Required Lenders, 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).

 

“Copyright Security Agreement” has the meaning specified therefor in the
Security Agreement.

 

“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,
Colt’s Manufacturing, and each of the Stockholder Representatives signatory
thereto, as in effect on the Closing Date.

 

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

 

“Current Assets” means, as at any date of determination, the total assets of
Parent and its Subsidiaries (other than cash and Cash Equivalents) which may
properly be classified as current assets on a consolidated balance sheet of
Parent and its Subsidiaries in accordance with GAAP, excluding any increase in
Current Assets in respect to any Excluded Issuances.

 

“Current Liabilities” means, as at any date of determination, the total
liabilities of Parent and its Subsidiaries which may properly be classified as
current liabilities (other than the current portion of the Term Loan or the ABL
Obligations) on a consolidated balance sheet of Parent and its Subsidiaries in
accordance with GAAP.

 

“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 determined by the
Required Lenders) 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, interim receiver, receiver and manager,
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, interim
receiver, receiver and manager, conservator, trustee, or custodian appointed for
it, or has

 

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taken any action in furtherance of, or indicating its consent to, approval of or
acquiescence in any such proceeding or appointment.

 

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

 

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

 

“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;

 

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 and the termination of
the Commitments.

 

“Disqualified Lender” means any of the Persons listed on Schedule E-1 and any
other Persons identified from time to time in writing to the Agent to the extent
reasonably acceptable to the Agent.

 

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

 

“Domestic Subsidiary” means any direct or indirect Subsidiary of a Loan Party
other than a Foreign Subsidiary.

 

“Dutch Guaranty” means a general continuing guaranty of the Obligations executed
and delivered by Colt Netherlands in favor of Agent, for the benefit of Agent
and the Lenders, in form and substance satisfactory to Agent and the Required
Lenders, as amended, modified, restated and/or supplemented from time to time.

 

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

 

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“Dutch Parallel Debt” means, in relation to an Underlying Debt (and subject to
clause (c) of Section 15.20), an obligation to pay to Agent an amount equal to
(and in the same currency as) the amount of that Underlying Debt.

 

“Dutch Security Documents” means (a) each document identified on Schedule S to
the Agreement (as such schedule may be amended or supplemented by Agent (at the
direction of the Required Lenders) to add additional Dutch Security Documents in
connection with the Loan Documents) and (b) any other documents governed by
Dutch law under which security rights are granted to Agent.

 

“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.

 

“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 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 or liabilities of any Loan Party under any
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 any Loan Party or any of their predecessors in interest.

 

“Environmental Law” means any applicable federal, state, provincial,
territorial, foreign or local statute, law, by-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, including without limitation, those
relating to the generation, processing, radiation, vibration, use, storage,
treatment, disposal, transport or handling of Hazardous Materials, in each case
as amended from time to time.

 

“Environmental Liabilities” means all liabilities, monetary obligations, losses
(including monies paid in settlement), 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 Remedial Action,
Release or threated Release of Hazardous Materials, any violation of
Environmental Law, or any Environmental Action.

 

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

 

“Environmental Permit” means any permit, registration, certificate,
qualification, approval, identification number, license or other authorization
required under or issued pursuant to any applicable Environmental Law or by any
Governmental Entity pursuant to its authority under Environmental Law.

 

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

 

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“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 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.

 

“Excess Availability” has the meaning ascribed to such term in the ABL Credit
Agreement as in effect of the date hereof.

 

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

 

“Excluded Issuances” means (a) the issuance of Qualified Equity Interests of
Parent to directors, officers and employees of Parent and its Subsidiaries
pursuant to employee stock option plans (or other employee incentive plans or
other compensation arrangements) approved by the Board of Directors of Parent
and permitted under this Agreement), (b) in the event that Parent or any of its
Subsidiaries forms any Subsidiary in accordance with the terms hereof, the
issuance by such Subsidiary of Qualified Equity Interests to Parent or such
Subsidiary, as applicable, (c) the issuance of Qualified Equity Interests of
Parent in order to finance (i) the purchase consideration (or a portion thereof)
in connection with a Permitted Acquisition or an Investment permitted under
clause (w)(ii) of the definition of Permitted Investments, (ii) Capital
Expenditures permitted under this Agreement, and/or (iii) so long as no Default
or Event of Default shall have occurred and be continuing, for working capital
purposes of Parent and its Subsidiaries (other than for the prepayment of
Indebtedness permitted under Section 6.7(a)(iii)), (d) the issuance of Qualified
Equity Interests of Parent in order to fund the prepayment of Indebtedness
permitted under Section 6.7(a)(iii) and (e) the issuance of Qualified Equity
Interests by a Subsidiary of Parent to its parent or member in connection with
the contribution by such parent or member to such Subsidiary of the proceeds of
an issuance described in clauses (a) through (e) above, but solely to the extent
that (i) in the case of clauses (a) through (e) above, prior to the issuance of
any such Qualified Equity Interests, Administrative Borrower has provided Agent
with written notice of Borrowers’ intention to apply the proceeds of such
Qualified Equity Interests in accordance with clause (a), (b), (c), (d) or
(e) above, and (ii) in the case of clauses (c)(i), (c)(ii) and (d) above, the
use of the proceeds of such issuance or sale of Qualified Equity Interests
occurs substantially contemporaneously with the issuance or sale of such
Qualified Equity Interests.

 

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

 

“Existing Credit Agreement” means that certain Term Loan Credit Agreement, dated
as of July 12, 2013, entered into by, among others, the Loan Parties and
Cortland Capital Market Services LLC, as agent, as amended, supplemented,
modified, restated, renewed, refinanced or replaced, except to the extent
prohibited by the ABL Intercreditor Agreement.

 

“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, in each case, 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.

 

“FATCA” means Sections 1471 through 1474 of the IRC, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any current or future
regulations or official interpretations thereof and any agreements entered into
pursuant to Section 1471(b)(1) of the IRC as of the date of this Agreement (or
any amended or successor version that is substantively comparable and not
materially more onerous to comply with).

 

“Federal Funds Rate” means, for any period, a fluctuating interest rate per
annum equal to, for each day during such period, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by Agent from three
Federal funds brokers of recognized standing selected by it.

 

“Finance Party” means Agent or any Lender.

 

“Flow of Funds Agreement” means a flow of funds agreement, dated as of even date
herewith, in form and substance satisfactory to Agent and the Required Lenders,
executed and delivered by each Loan Party, Agent, and ABL Agent.

 

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

 

“Foreign Security Documents” means each Canadian Security Document, each Dutch
Security Document and each other security document entered into by a Foreign
Subsidiary of Parent in favor of Agent.

 

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

 

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“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” has the meaning assigned to such term in the Recitals.

 

“Guaranty” means each guaranty, including the Dutch Guaranty, executed by the
Guarantors (or any Guarantor) in favor of Agent, for the benefit of the Lender
Group, in form and substance satisfactory to the Required Lenders, and as may be
amended or otherwise modified from time to time.

 

“Hazardous Materials” means, regardless of amount or quantity, (a) any element,
compound, substance or chemical that is defined or listed in, or otherwise
classified or regulated pursuant to, any Environmental Laws as a contaminant,
pollutant, “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 of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form and polychlorinated
biphenyls.

 

“Hedge Agreement” means a “swap agreement” as that term is defined in
Section 101(53B)(A) of the Bankruptcy Code.

 

“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 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.  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

 

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amount for which the guaranteeing Person may be liable pursuant to the terms of
the instrument embodying such Indebtedness, (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
and (iii) any earn out obligation of a Person shall not constitute Indebtedness
for the purposes of calculating any of the financial ratios herein until such
obligation constitutes a liability on the balance sheet of such Person.

 

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

 

“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 (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,
become a party to, 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) or (c) of the Agreement, (iii) any U.S.
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 acquires its interest in the applicable Obligation or Commitment
(or designates a new lending office), except to the extent that such Foreign
Lender (or its assignor, if any) was entitled to receive additional amounts
pursuant to Section 16.1 of the Agreement with respect to such withholding Tax
immediately prior to such assignment or change in lending office and (iv)  any
U.S. federal withholding Taxes imposed under FATCA.

 

“Insolvency Proceeding” means any proceeding commenced by or against any Person
under any provision of the Bankruptcy Code, the CCAA 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.

 

“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 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

 

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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 intercompany subordinated note
executed and delivered by the Loan Parties and the other parties thereto, the
form and substance of which is satisfactory to the Required Lenders.

 

“Interest Expense” means, for any period, as to any Person, as determined in
accordance with GAAP, the amount equal to total interest expense of such Person
and its Subsidiaries on a consolidated basis for such period, whether paid or
accrued (including the interest component of any Capital Lease for such period),
and in any event, including, without limitation, (a) discounts in connection
with the sale of any Accounts, (b) bank fees, commissions, discounts and other
fees and charges in each case owed with respect to letters of credit, banker’s
acceptances or similar instruments or any factoring, securitization or similar
arrangements, (c) interest payable by addition to principal or in the form of
property other than cash and any other interest expense not payable in cash, and
(d) the costs or fees for such period associated with Hedge Agreements to the
extent not otherwise included in such total interest expense; provided, that,
for purposes of the determination of Consolidated EBITDA, Interest Expense shall
include, to the extent treated as interest in accordance with GAAP, all non-cash
amounts in connection with borrowed money (including paid-in-kind interest).

 

“Interest Payment Date” has the meaning specified therefor in Section 2.6(d) of
the Agreement.

 

“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 amended.

 

“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 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.

 

“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

 

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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 the Dutch Loan Parties), 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), 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) [reserved], (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, financial advisors,
and other advisors fees and expenses) incurred in terminating, enforcing
(including attorneys, accountants, consultants, and other advisors fees and
expenses incurred in connection with 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.

 

“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” has the meaning specified therefor in Section 2.9 of the
Agreement.

 

“Loan Documents” means the Agreement, each Canadian Security Document, the
Control Agreements, any Copyright Security Agreement, each Dutch Security
Document, the Flow of Funds Agreement, each Guaranty, the Intercompany
Subordination Agreement, any Mortgage, any Patent

 

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Security Agreement, the Security Agreement, any Trademark Security Agreement,
any other Security Document, any UCC Filing Authorization Letter or similar
authorization, any Agent Fee Letter or similar document, any note or notes
executed by Borrower in connection with the Agreement and payable to any member
of the Lender Group, any letter of credit application entered into by any
Borrower in connection with the Agreement, 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 Borrower or any Guarantor.

 

“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 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, condition (financial or otherwise) or prospects 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 and its
Subsidiaries.

 

“Material Contract” means (i) the Senior Note Indenture, (ii) each ABL Loan
Document, (iii) any contract or agreement (other than a Loan Document or ABL
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
(vi) each other contract or agreement, the loss of which could reasonably be
expected to result in a Material Adverse Change.

 

“Maturity Date” has the meaning specified therefor in Section 3.3 of the
Agreement.

 

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

 

“Mortgage Policy” has the meaning specified therefor in Schedule 3.1.

 

“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 satisfactory
to Agent and the Required Lenders, 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, the amount of cash proceeds received (directly or
indirectly) from time to time (whether as initial consideration or through the
payment of deferred consideration) by or on behalf of Parent or its

 

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Subsidiaries, in connection therewith after deducting therefrom only (i) the
amount of any Indebtedness secured by any Permitted Lien on any asset (other
than (A) Indebtedness owing to Agent or any Lender under the Agreement or the
other Loan Documents and (B) Indebtedness assumed by the purchaser of such
asset) which is required to be, and is, repaid in connection with such sale or
disposition, (ii) reasonable fees, commissions, and expenses related thereto and
required to be paid by Parent or such Subsidiary in connection with such sale or
disposition, (iii) 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 (iv) all amounts that are set
aside as a reserve (A) for adjustments in respect of the purchase price of such
assets, (B) for any liabilities associated with such sale or casualty, to the
extent such reserve is required by GAAP, and (C) for the payment of unassumed
liabilities relating to the assets sold or otherwise disposed of at the time of,
or within 30 days after, the date of such sale or other disposition, to the
extent that in each case the funds described above in this clause (iv) are
(x) deposited into escrow with a third party escrow agent or set aside in a
separate Deposit Account that is subject to a Control 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, (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.

 

“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 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

 

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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, debts, principal, interest (including any
interest that 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), all amounts charged to the Loan Account pursuant to
the Agreement, premiums, liabilities, obligations (including indemnification
obligations), fees (including the fees provided in Section 2.10), Lender Group
Expenses (including any fees or expenses that accrue 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), 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 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.

 

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

 

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

 

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

 

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

 

“Patent Security Agreement” has the meaning specified therefor in the Security
Agreement.

 

“Patriot Act” has the meaning specified therefor in Section 4.18 of the
Agreement.

 

“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.

 

“Perfection Certificate” means the Perfection Certificate delivered to Agent and
the Lenders on the Closing Date, as such certificate may be updated pursuant to
Section 6(k) of the Security Agreement, which certificate provides information
with respect to the assets of each Loan Party.

 

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“Permitted Acquisition” means any Acquisition to the extent that each of the
following conditions shall have been satisfied:

 

(a)                                 as of the date of such Permitted Acquisition
and immediately after giving effect thereto, no Default or Event of Default
shall exist or shall have occurred and be continuing,

 

(b)                                 (i) the daily average Excess Availability
for the thirty (30) day period immediately preceding and, as projected on a pro
forma basis (after giving effect to such Permitted Acquisition) for the thirty
(30) day period immediately following, such Permitted Acquisition shall not be
less than $20,000,000, and (ii) as of the date of such Permitted Acquisition and
immediately after giving effect thereto, Excess Availability shall not be less
than $20,000,000,

 

(c)                                  Agent shall have received not less than ten
(10) days’ prior written notice of such Permitted Acquisition, together with
such information with respect thereto as the Required Lenders shall request,

 

(d)                                 the aggregate amount of the consideration
(including any deferred purchase price payment, indemnification payment,
purchase price adjustment, earn out or similar payment) for any Acquisition
shall not exceed $5,000,000 during the term of the Agreement,

 

(e)                                  the Acquisition shall be with respect to an
operating company or division or line of business that engages in a line of
business substantially similar, reasonably related or incidental to the business
that Borrowers are engaged in,

 

(f)                                   the Board of Directors of the Person to be
acquired shall have duly approved such Acquisition and such Person shall not
have announced that it will oppose such Acquisition or shall not have commenced
any action which alleges that such Acquisition will violate applicable law,

 

(g)                                  Parent has provided Agent with a
certificate of the chief financial officer of Parent, supported by financial
statements, certifying that on a pro forma basis, the Loan Parties and their
Subsidiaries would have been in compliance with a Secured Leverage Ratio of
4.50:1.00 for the most recently ended 12 fiscal month period ended immediately
prior to the proposed date of consummation of such Acquisition, together with a
reasonably detailed calculation thereof,

 

(h)                                 the assets being acquired are located within
the United States or Canada, or the Person whose Equity Interests are being
acquired is organized in a jurisdiction located within the United States or
Canada, except if the aggregate amount(s) of consideration payable in respect of
assets located outside the United States or Canada or Equity Interests of a
Person organized in a jurisdiction outside the United States or Canada
(including deferred purchase price payments, indemnity payments, purchase price
adjustments, earn-outs or similar payments) do not exceed $5,000,000 during the
term of the Agreement,

 

(i)                                     the subject assets or Equity Interests,
as applicable, are being acquired directly by Parent or one of its Subsidiaries
that is a Loan Party and, in connection therewith, such Parent or the applicable
Loan Party shall have complied with Section 5.11 or 5.12, as applicable, of the
Agreement, and

 

(j)                                    Administrative Borrower shall have
provided Agent with evidence satisfactory to the Required Lenders that each of
the conditions contained in this definition have been satisfied.

 

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“Permitted Disposition”  means:

 

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

 

(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 pursuant to a written
agreement (the “DCAM Consignment”); provided, that, the maximum value of
Inventory at the Government of the United Mexican States at any one time shall
not exceed $2,000,000,

 

(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 other than
Eligible Accounts, Eligible Inventory, Eligible Equipment and Eligible Real
Property as defined in the ABL Credit Agreement), in each case, in the ordinary
course of business 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 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, 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,

 

(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;

 

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

 

(m)                             the making of a Permitted Investment,

 

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

 

(o)                                 sales or other dispositions of assets of
Parent and its Subsidiaries not otherwise subject to the provisions set forth in
this definition, provided, that, as to any such sale or other disposition, each
of the following conditions is satisfied:

 

(i)                           such transaction does not involve the sale or
other disposition of any Intellectual Property, Equity Interest in any
Subsidiary or of Accounts or Inventory; and

 

(ii)                            the aggregate amount of such dispositions does
not exceed $1,000,000 during any fiscal year.

 

“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 4.19 and
any Refinancing Indebtedness in respect of such Indebtedness,

 

(c)                                  Permitted Purchase Money Indebtedness and
any Refinancing Indebtedness in respect of such Indebtedness,

 

(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,

 

(f)                                   unsecured Indebtedness of Parent or its
Subsidiaries that is incurred on the date of the consummation of a Permitted
Acquisition solely for the purpose of consummating such Permitted Acquisition so
long as (i) no Event of Default has occurred and is continuing or would result
therefrom, (ii) such unsecured Indebtedness does not mature prior to the date
that is 180 days after the Maturity Date, (iii) the terms of such Indebtedness
do not permit Parent or such Subsidiary to make any cash interest payment prior
to the Maturity Date and (iv) no amortization payments are required prior to the
Maturity Date,

 

(g)                                  Acquired Indebtedness in an amount not to
exceed $4,000,000 outstanding at any one time, and any Refinancing Indebtedness
in respect of such Indebtedness,

 

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(h)                                 Indebtedness incurred in the ordinary course
of business 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)                                    the incurrence by Parent or its
Subsidiaries of Indebtedness under unsecured Hedge Agreements that are incurred
for the bona fide purpose of hedging the interest rate, commodity, or foreign
currency risks associated with Parent’s and its Subsidiaries’ operations and not
for speculative purposes,

 

(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
treasury or Cash Management Services, in each case, incurred in the ordinary
course of business,

 

(l)                                     unsecured Indebtedness of Parent owing
to former employees, officers, or directors (or any spouses, ex-spouses, or
estates of any of the foregoing) incurred in connection with the repurchase by
Parent of the Equity Interests of Parent that has been issued to such Persons,
so long as (i) no Default or Event of Default has occurred and is continuing or
would result from the incurrence of such Indebtedness, (ii) such Indebtedness is
subordinated to the Obligations on terms and conditions acceptable to the
Required Lenders and (iii) the aggregate amount of all such Indebtedness
outstanding at any one time does not exceed $500,000,

 

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

 

(n)                                 Indebtedness arising from (i) agreements of
Parent or a Subsidiary providing for adjustment of purchase price, earnout
payments or similar obligations, in each case incurred or assumed in connection
with a Permitted Acquisition, other than guarantees of Indebtedness incurred by
any Person in connection with a Permitted Acquisition, to the extent that the
aggregate amount of all such Indebtedness outstanding at any one time does not
exceed $1,000,000, or (ii) agreements of Parent or a Subsidiary providing for
indemnification and similar obligations, in each case incurred or assumed in
connection with a Permitted Acquisition or a Permitted Disposition, other than
guarantees of Indebtedness incurred by any Person acquiring all or any portion
of such business, assets or a Subsidiary,

 

(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, and any Refinancing Indebtedness in respect of such Indebtedness;
provided, however, that for the purposes of Refinancing Indebtedness pursuant to
this clause (p): (x) to the extent the Borrowers determine to grant a Lien to
the holders of such Refinancing Indebtedness, (A) clause (h) of the definition
of Refinancing Indebtedness shall not apply, (B) the Lien securing such
Refinancing Indebtedness shall have a priority junior to the Obligations under
the Term Loans and (C) such Refinancing Indebtedness shall be subject to an
intercreditor agreement in form and substance reasonably satisfactory to the
Agent and the Required Lenders in their reasonable discretion (it being
understood that such intercreditor

 

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agreement shall include a provision that results in all payments on account of
such Refinancing Indebtedness being “last out” or subject to turnover to the
Lenders until such time as the Obligations have been paid in full in cash; and
(y) to the extent the Borrowers determine not to grant a Lien to the holders of
such Indebtedness, the Refinancing Indebtedness shall have a cash interest
expense that is less than or equal to the cash interest expense of the
Indebtedness being refinanced; together with reasonably detailed supporting
calculations, as to the satisfaction of clauses (x) and (y) of the immediately
preceding proviso.

 

(q)                                 [reserved],

 

(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,

 

(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; provided, that such Indebtedness is
extinguished with ten Business Days of incurrence,

 

(t)                                    [reserved],

 

(u)                                 [reserved],

 

(v)                                 other unsecured Indebtedness in an aggregate
principal amount not to exceed $1,000,000 at any time outstanding,

 

(w)                               Indebtedness evidenced by the ABL Credit
Agreement and any refinancings thereof in an aggregate principal amount not to
exceed $33,000,000 any time outstanding.

 

“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 $500,000 at any time outstanding unless otherwise agreed to in writing by
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,

 

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

 

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

 

(d)                                 Investments received in settlement of
amounts due to any Loan Party or any of its Subsidiaries effected in the
ordinary course of business or owing to any Loan Party or any of its

 

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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)                                  Investments owned by any Loan Party or any
of its Subsidiaries on the Closing Date and set forth on Schedule P-1,

 

(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)
or as security for any such Indebtedness or claims,

 

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

 

(j)                                    Permitted Acquisitions,

 

(k)                                 Investments resulting from entering into
agreements relative to Indebtedness that is permitted under clause (j) of the
definition of “Permitted Indebtedness,”

 

(l)                                     Investments held by a Person acquired in
a Permitted Acquisition to the extent that such Investments were not made in
contemplation of or in connection with such Permitted Acquisition and were in
existence on the date of such Permitted Acquisition,

 

(m)                             [reserved],

 

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

 

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

 

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

 

(q)                                 loans and advances by Parent and its
Subsidiaries to independent directors, officers and employees of Parent and its
Subsidiaries in the ordinary course of business for bona fide business purposes
not in excess of $250,000 at any time outstanding,

 

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

 

24

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(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,

 

(w)                               (i) other Investments in an aggregate
outstanding amount not to exceed $500,000 at any time and (ii) other Investments
not constituting Permitted Acquisitions made solely with the proceeds of any
Excluded Issuances (as described in clause (c)(i) of the definition thereof);
provided, that, as of the date of and such Investment and immediately after
giving effect thereto, no Default or Event of Default shall have occurred and be
continuing; and

 

(x)                                 Permitted Senior Note Discounted Buybacks.

 

“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 under Section 8.3 of the Agreement,

 

(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 and any Refinancing Indebtedness in respect thereof,

 

(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 and covering only such asset,

 

(f)                                   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 interests secure Permitted Purchase
Money Indebtedness and so long as (i) such Lien attaches only to the asset or
property purchased or acquired and the proceeds thereof, and (ii) such Lien only
secures the Indebtedness that was incurred to acquire the asset or property
purchased or acquired or any Refinancing Indebtedness in respect thereof,

 

(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 and

 

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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 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,

 

(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)                                     non-exclusive licenses of Intellectual
Property to the extent permitted under clause (k) of the definition of Permitted
Disposition, in the ordinary course of business,

 

(m)                             Liens that are replacements of Permitted Liens
to the extent that the original Indebtedness is the subject of permitted
Refinancing Indebtedness and so long as the replacement Liens only encumber
those assets that secured the original Indebtedness,

 

(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)                                 Liens granted in the ordinary course of
business on the unearned portion of insurance premiums securing the financing of
insurance premiums to the extent the financing is permitted under the definition
of “Permitted Indebtedness”,

 

(p)                                 Liens in favor of customs, revenue or 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 any cash earnest money deposits
made by Parent or any of its Subsidiaries in connection with any letter of
intent or purchase agreement with respect to an acquisition or disposition of
assets not prohibited by the terms of the Agreement,

 

(r)                                    [reserved],

 

(s)                                   any Lien existing on any asset or a Person
existing at the time such Person becomes a Subsidiary after the date of the
Agreement; provided, that (i) such Lien is not created in contemplation of or in
connection with such acquisition or such Person becoming a Subsidiary,

 

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as the case may be, (ii) such Lien shall not apply to any other assets of Parent
or any Subsidiary (other than proceeds of such asset), (iii) such Lien shall
secure only those obligations which it secures on the date of such acquisition
or the date such Person becomes a Subsidiary, as the case may be, and
Refinancing Indebtedness in respect thereof, (iv) neither (x) the aggregate
outstanding principal amount of the obligations secured thereby nor (y) the
aggregate fair market value (determined as of the date such Person becomes a
Subsidiary) of the assets subject thereto exceeds (as to Parent and all
Subsidiaries) $1,000,000 at any one time, and (v) such Lien shall not extend or
attach to any Inventory or Accounts,

 

(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)                               Liens securing Permitted Indebtedness pursuant
to clause (g) of the definition or “Permitted Indebtedness”; provided, that,
such Liens shall be subordinated to the Liens securing the Obligations pursuant
to an intercreditor agreement, in form and substance satisfactory to the
Required Lenders, duly executed and delivered by each holder of such Liens and
acknowledged by each grantor of such Liens,

 

(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”,

 

(z)                                  any Lien securing Indebtedness permitted by
clause (p)(x) of the definition of “Permitted Indebtedness”; provided, that,
such Lien satisfies the criteria specified in such clause,

 

(aa)                          Liens securing Permitted Indebtedness pursuant to
clause (w) of the definition or “Permitted Indebtedness”, provided that such
Liens are subject to the terms of the ABL Intercreditor Agreement; and

 

(bb) any Lien arising out of a prejudgment remedy to the extent ordered by the
court overseeing any Covered Claim, including any prejudgment writ of
attachment, solely to the extent that each of the following conditions have been
satisfied, as certified by Parent within three (3) Business Days of the date any
such prejudgment remedy is ordered by such Court: (i) the allocated amount
available for satisfaction of such Covered Claim in the Employee Litigation
Escrow Fund (the “Allocated Escrow”) shall not be less than the amount specified
in such

 

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prejudgment writ of attachment (collectively, the “Claim Amount”), (ii) the
Employee Litigation Escrow Fund shall be valid and in full force and effect at
all times that such Covered Claim is secured by such Lien, (iii) to the extent
the Claim Amount exceeds the Allocated Escrow, the Loan Parties shall have
posted bonds, cash collateral or other financial assurances acceptable to such
Court sufficient to satisfy the amount specified in such prejudgment writ of
attachment (the “Additional Security”), and (iv) such Lien shall be junior to
the Liens securing the Obligations pursuant to applicable law.

 

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 clauses (a) and (w) of the definition of “Permitted Liens,”
or (y) as consented to in writing by the Required Lenders.

 

“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, 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 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 $1,000,000.

 

“Permitted Senior Notes Discounted Buyback” has the meaning specified therefore
in Section 6.7(a)(vii) of this Agreement.

 

“Permitted Tax Distributions” means, for any period, the amount of tax
distributions that the Loan Parties are permitted to make, and actually make, to
Parent’s equityholders pursuant to Section 6.9(e) of the Agreement.

 

“Person” means natural persons, corporations, companies, 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.

 

“PIK Interest” has the meaning specified therefore in Section 2.6(b) of the
Agreement.

 

“PPSA” means the Personal Property Security Act (Ontario), the Civil Code of
Québec or any other applicable Canadian Federal, Provincial or Territorial
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.

 

“Pro Rata Share” means, as of any date of determination: with respect to a
Lender’s obligation to make all or a portion of the Term Loan and right to
receive payments of principal, interest, fees, costs, and expenses with respect
thereto, the percentage obtained by dividing (a) the outstanding principal
amount of the Term Loan owed to such Lender, by (b) the aggregate outstanding
principal amount of the Term Loan.

 

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“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.

 

“Qualified Equity Interests” means and refers to any Equity Interests issued by
Parent (and not by one or more of its Subsidiaries) that are not Disqualified
Equity Interests.

 

“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.

 

“Receiver” has the meaning specified therefore in Section 9.3 of the Agreement.

 

“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.

 

“Refinancing Indebtedness” means refinancings, renewals, or extensions of
Indebtedness so long as:

 

(a)                                 Agent shall have received not less than five
(5) Business Days’ prior written notice of the intention to incur such
Refinancing Indebtedness, which notice shall set forth in reasonable detail
satisfactory to the Required Lenders, the amount of such Indebtedness, the
schedule of repayments and maturity date with respect thereto and such other
information with respect thereto as the Required Lenders may request,

 

(b)                                 promptly upon the Required Lenders’ request,
Agent shall have received true, correct and complete copies of all agreements,
documents and instruments evidencing or otherwise related to such Indebtedness,
as duly authorized, executed and delivered by the parties thereto,

 

(c)                                  the Refinancing Indebtedness shall have a
Weighted Average Life to Maturity and a final maturity equal to or greater than
the Weighted Average Life to Maturity and the final maturity, respectively, of
the Indebtedness being extended, refinanced, replaced, or substituted for,

 

(d)                                 the Refinancing Indebtedness shall rank in
right of payment no more senior than, and be at least subordinated (if
subordinated) to, the Obligations as the Indebtedness being extended,
refinanced, replaced or substituted for,

 

(e)                              the Refinancing Indebtedness shall not include
terms and conditions with respect to any Borrower or Guarantor which are more
burdensome or restrictive in any material respect than those contained in this
Agreement, taken as a whole,

 

(f)                                   such Indebtedness incurred by any Borrower
or Guarantor shall be at rates and with fees or other charges that are
commercially reasonable,

 

(g)                                  the principal amount of such Refinancing
Indebtedness shall not exceed the principal amount of the Indebtedness so
extended, refinanced, replaced or substituted for (plus the

 

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amount of reasonable refinancing fees and expenses incurred in connection
therewith outstanding on the date of such event), and

 

(h)                                 if the Indebtedness being extended,
refinanced, replaced or substituted for is secured by any assets, the
Refinancing Indebtedness shall not be secured other than by such assets,
provided, that, such security interests (if any) with respect to the Refinancing
Indebtedness shall have a priority no more senior than, and be at least as
subordinated, if subordinated (on terms and conditions substantially similar to
the subordination provisions applicable to the Indebtedness so extended,
refinanced, replaced or substituted for or as is otherwise acceptable to the
Required Lenders) as the security interest with respect to the Indebtedness so
extended, refinanced, replaced or substituted for.

 

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

 

“Registered Loan” has the meaning set forth in Section 13.1(h) 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 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 or violations of Environmental Law,
in each case as required by Environmental Laws or Governmental Authority.

 

“Repayment Fee”  means 3.50% times the outstanding principal balance of the Term
Loan to be prepaid on such date (or if the Term Loan is being prepaid in full,
the outstanding principal balance of the Term Loan on the date immediately prior
to the date of determination).

 

“Replacement Lender” has the meaning specified therefor in Section 2.13(b) of
the Agreement.

 

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

 

“Required Availability” means that Excess Availability exceeds $15,000,000.

 

“Required Lenders” means, at any time, Lenders whose aggregate Pro Rata Shares
exceed 50.0%.

 

“Required Prepayment Date” has the meaning specified therefor in
Section 2.4(e)(vii) of the Agreement.

 

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“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.

 

“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.

 

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

 

“Secured Funded Indebtedness” means, as of any date of determination, all
secured Indebtedness for borrowed money or letters of credit of Parent,
determined on a consolidated basis in accordance with GAAP, including, in any
event, but without duplication, with respect to Parent and its Subsidiaries, the
Indebtedness under the ABL Loan Documents, the Term Loan, the amount of their
Capitalized Lease Obligations, and the amount of their Permitted Purchase Money
Indebtedness; provided, however, that “Secured Funded Indebtedness” shall not
include any Indebtedness of Parent and its Subsidiaries which has Liens junior
to the Liens securing, the Obligations.

 

“Secured Leverage Ratio” means, as of any date of determination the ratio of
(a) (i) the amount of Borrower’s Secured Funded Indebtedness as of such date,
less (ii) the aggregate amount of Unrestricted Cash on such date, to
(b) Consolidated EBITDA for the 12 fiscal month period ended as of such date.

 

“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 satisfactory to Agent and the Required Lenders,
executed and delivered by the US Loan Parties to Agent.

 

“Security Documents” means any Canadian Security Document, any Dutch Security
Document, any other Foreign Security Document, any US Security Document, and any
other security document entered into by a Loan Party in favor of Agent.

 

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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 8.75% Senior Notes due 2017, as may be amended from time to time in
accordance with the terms thereof.

 

“Senior Note Indenture Secured Debt Cap” means, on any date, the maximum
principal amount of all Advances, Swing Line Loans, Letter of Credit Usage and
Overadvances (as such terms are defined in the ABL Intercreditor Agreement),
plus the Term Loan permitted to be incurred by the Loan Parties in accordance
with, and without contravening Section 3.2(b)(2) of the Senior Note Indenture
and remain outstanding on a fully secured basis pursuant to clause (1) of the
definition of “Permitted Liens” (as defined in the Senior Note Indenture) in
accordance with Section 3.6 of the Senior Note Indenture.

 

“Senior Notes” means the 8.75% Senior Notes due 2017 issued under the Senior
Note Indenture.

 

“Solvent” means, at any time with respect to any Person, that at such time such
Person is able to pay its debts as they become due in the ordinary course.

 

“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 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.

 

“Specified Transaction” means (i) any Investment permitted under this Agreement
that results in a Person becoming a Subsidiary, (ii) any Permitted Acquisition,
(iii) any sale, disposition or transfer that results in a Subsidiary ceasing to
be a Subsidiary of Parent or any, in each case, whether by merger,
consolidation, amalgamation or otherwise, (iv) any incurrence or repayment of
Indebtedness (other than Indebtedness incurred or repaid under any revolving
credit facility or line of credit, unless such Indebtedness has been permanently
repaid and has not been replaced), or (iv) any other transaction that by the
terms of this Agreement requires any financial ratio (or component definition)
to be calculated on a pro forma basis.

 

“Sponsor” means Sciens Management LLC.

 

“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.

 

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

 

“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.

 

“Technical Data Package” or “TDP” means data that is used in the production of
firearms or accessories for firearms, including, but not limited to, engineering
drawings, three dimensional CAD models, associated lists, material
specifications, product specifications, tooling and gauging, including
associated drawings and models, assembly instructions, fixtures, including
associated drawings, engineering change information, previous revision
information, process specifications and standards, as may be revised from time
to time.

 

“Term Loan” means, collectively, the loans made pursuant to Section 2.2 of the
Agreement.

 

“Term Loan Amount” means $70,000,000.00, including, without limitation, any
increase in the principal amount of Term Loans as a result of PIK Interest.

 

“Term Loan Commitment” means, for any Lender, its obligation to make a portion
of the Term Loan in the principal amount shown on Schedule C-1 of the Agreement.

 

“Term Note” means a promissory note of Borrower payable to the order of a Lender
in substantially the form of Exhibit B-1 of the Agreement, evidencing
indebtedness of Borrower to each Lender pursuant to the Term Loan.

 

“Term Priority Collateral” has the meaning specified therefor in the ABL
Intercreditor Agreement.

 

“Trademark Security Agreement” has the meaning specified therefor in the
Security Agreement.

 

“Treasury Rate” means, as of the applicable prepayment date, the yield to
maturity as of such prepayment date of the United States Treasury securities
with a constant maturity most nearly equal to the period from such redemption
date to the Maturity Date; provided, however, that if no published maturity
exactly corresponds with such date, then the Treasury Rate shall be interpolated
or extrapolated on a straight-line basis from the arithmetic mean of the yields
for the next shortest and next longest published maturities; provided, further,
however, that if the period from such redemption date to the Maturity Date is
less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year will be used.

 

“UCC Filing Authorization Letter” means a letter duly executed by each Loan
Party authorizing Agent to file appropriate financing statements on Form UCC-1
in such office or offices as may be necessary or, in the opinion of Agent or the
Required Lenders, desirable to perfect the security interests purported to be
created by each US Security Document.

 

“Underlying Debt” means, in relation to a Loan Party and at any given time, each
Obligation (whether present or future, actual or contingent) owing by such Loan
Party to a Finance Party under the Loan Documents (including, for the avoidance
of doubt, any change or increase in those obligations pursuant to or in
connection with any amendment or supplement or restatement or novation of any
Loan Document, in each case whether or not anticipated as of the date of this
Agreement) excluding that Loan Party’s Dutch Parallel Debt.

 

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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) and (aa) 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 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 Loan Party” and “US Loan Parties” means, individually and collectively, each
Loan Party organized under the laws of the United States.

 

“US Security Documents” means the Security Agreement, any Copyright Security
Agreement, any Patent Security Agreement, any Trademark Security Agreements, any
Mortgage, and each other document identified on Schedule S (as such schedule may
be amended or supplemented by Agent (at the written direction of the Required
Lenders) to add additional US Security Documents in connection with in
connection with the Loan Documents), and such other mortgages, debentures,
charges, pledges, security agreements, joinder agreements, documents and
instruments as may be required by the Required Lenders.

 

“VAT” means Value Added Tax imposed in Canada (including Goods and Services Tax,
Harmonized Sales Tax and Quebec Sales Tax).

 

“Voidable Transfer” has the meaning specified therefor in Section 17.8 of the
Agreement.

 

“Waivable Mandatory Prepayment” has the meaning specified therefor in
Section 2.4(e)(vii) of the Agreement.

 

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at
any date, the number of years obtained by dividing (a) the then outstanding
principal amount of such Indebtedness into (b) the total of the product obtained
by multiplying (c) the amount of each then remaining installment, sinking fund,
serial maturity or other required payments of principal, including payment at
final maturity, in respect thereof, by (d) the number of years (calculated to
the nearest one-twelfth) that will elapse between such date and the making of
such payment.

 

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