Exhibit 10.4


 


EXECUTION VERSION


 


INTERCREDITOR
AGREEMENT


 


THIS INTERCREDITOR
AGREEMENT (this “Agreement”) is made on July 29, 2009,
among WACHOVIA BANK, NATIONAL ASSOCIATION, in
its capacity as agent (in such capacity, together with its successors in such capacity,
the “ABL Agent”) for the financial institutions (each, an “ABL Lender”
and, collectively, the “ABL Lenders”) parties from time to time to the
ABL Loan Agreement (as defined below); and WILMINGTON TRUST FSB,
in its capacity as collateral agent (in such capacity, together with its
successors in such capacity, the “Notes Agent”) for the holders of the
Notes (as defined below) (each a “Note Holder” and collectively, the “Note
Holders”) and the holders of Permitted Additional Pari Passu Obligations
(as defined below)(each, an “Additional Pari Passu Obligations Holder”
and collectively, the “Additional Pari Passu Obligations Holders”; and
together with the Note Holders, the “Holders” and each a “Holder”).


 


Recitals:


 


FREEDOM
GROUP, INC., a Delaware corporation (“FGI”), REMINGTON ARMS COMPANY, INC., a Delaware corporation (“Remington”),
THE MARLIN FIREARMS COMPANY, a
Connecticut corporation (“Marlin”), H&R 1871, LLC,
a Connecticut limited liability company (“H&R”), BUSHMASTER FIREARMS INTERNATIONAL, LLC, a Delaware limited
liability company (“Bushmaster”), DPMS FIREARMS, LLC,
a Delaware limited liability company (“DPMS”), E-RPC, LLC,
a Delaware limited liability company (“E-RPC”), DA
ACQUISITIONS, LLC, a Delaware limited liability company (“Dakota
Arms”), and RA BRANDS, L.L.C., a Delaware
limited liability company  (“Brands,”  and together with FGI, Remington,
Marlin, H&R, Bushmaster, DPMS, E-RPC and Dakota Arms, each individually a “Borrower”
and collectively, “Borrowers” as further defined in the ABL Loan Agreement),
RACI HOLDING, INC., a Delaware
corporation (“RACI”), BUSHMASTER HOLDINGS, LLC, a
Delaware limited liability company (“Bushmaster Holdings”), and REMINGTON STEAM, LLC, a New York limited liability company (“Steam”
and together with RACI and Bushmaster Holdings, each individually a “Guarantor”
and collectively, “Guarantors” as further defined in the ABL Loan
Agreement), are parties to a Loan and Security Agreement, dated
on or about the date hereof, with ABL Lenders and ABL Agent (as at any time amended,
restated, renewed, refinanced or extended, the “ABL Loan Agreement”),
pursuant to which ABL Lenders may from time to time make loans and other
extensions of credit to Borrowers secured by Liens upon substantially all of
the assets of each Obligor.  Capitalized
terms used in these Recitals, unless otherwise defined, shall have the meanings
ascribed to them in Section 1 below.


 


FGI, as issuer, and the
other Borrowers and Guarantors, as guarantors, are parties to an Indenture,
dated on or about the date hereof, with WILMINGTON TRUST FSB,
in its capacity as Trustee (“Trustee”), and Notes Agent (as at any time
amended, restated, renewed, refinanced or extended, the “Notes Indenture”),
pursuant to which FGI has issued its $200,000,000 senior secured notes due 2015
(as at any time amended, restated, renewed, refinanced or extended, the “Initial
Notes”), secured by Liens upon substantially all of the assets of each
Obligor (as defined below)(the “Notes Liens”).


 


FGI may at a later date
issue Permitted Additional Pari Passu Obligations (as defined in the Notes
Indenture as in effect on the date hereof or as amended with the consent of the
ABL Required Lenders (as defined below)) pursuant to Additional Pari Passu
Documents (as defined below) with the Notes Agent as trustee and collateral
agent, pursuant to which FGI may issue additional notes from time to time (the 


 

















 


“Additional
Notes” and together with the Initial Notes, the “Notes” and each a “Note”),
secured by the Notes Liens.


 


The parties hereto desire to
enter into this Agreement for the purpose of establishing the relative
priorities of their respective Liens in the Collateral and setting forth
certain other agreements between them with respect to the Collateral and
Obligors.


 


NOW, THEREFORE, for TEN
DOLLARS ($10.00) in hand paid and in consideration of the foregoing premises
and other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and the mutual covenants herein, the parties hereto,
intending to be legally bound hereby, agree as follows:


 


1.                                        Certain
Definitions; Rules of Construction.


 


(a)                                   Capitalized
terms used herein and not otherwise defined herein shall have the meaning
ascribed to them in the ABL Loan Agreement as in effect on the date of this
Agreement and without giving effect to any subsequent amendments to any of
those terms except to the extent that such amendments are consented to in
writing by Notes Agent or are otherwise permitted hereunder.  As used in this Agreement
(and in the Exhibits hereto), the following terms shall have the meanings
ascribed to them (with terms used in the singular to have the same meanings
when used in the plural, and vice versa) as
follows:


 


“ABL Agent” shall have the meaning ascribed thereto in the
preamble to this Agreement.


 


“ABL Cash Collateral” shall have the meaning ascribed to it in Section 7(b).


 


“ABL Debt” shall mean all of the “Obligations” under (and as defined in) the ABL
Loan Agreement, including all ABL Loans, Letter of Credit Obligations, Accruals
and Indemnity Payments.  ABL Debt shall
expressly include any and all interest accruing and out-of-pocket costs and
Enforcement Expenses incurred after the date of any filing by or against any
Obligor of any petition or complaint initiating any Insolvency Proceeding,
regardless of whether any ABL Secured Party’s claim therefor is allowed or
allowable in the Insolvency Proceeding commenced by the filing of such petition
or complaint.


 


“ABL
Document Default” shall mean an “Event of Default” (as defined in the ABL
Loan Agreement as in effect on the date hereof or as amended with the consent
of Notes Agent or as otherwise permitted hereunder) under the ABL Loan
Agreement.


 


“ABL Document Default Day” shall mean
a day on which an ABL Document Default exists and the ABL Debt has been accelerated
or matured, but only if prior to such day ABL Agent has given to Notes Agent
written notice pursuant to Section 13 that such ABL Document Default
exists and that the ABL Debt has been accelerated or matured.  The notice of an ABL Document Default and
acceleration or maturity shall not constitute the giving of any notice required
under applicable law with respect to any Lien Enforcement Action by ABL Agent,
and Notes Parties do not waive any rights to any such notice.


 


“ABL
Documents” shall mean “Financing Agreements” under (and as defined in) the
ABL Loan Agreement.


 


“ABL Lenders” shall have the meaning ascribed thereto in the
preamble to this Agreement.


 


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“ABL Loan Agreement” shall have the meaning ascribed to it in
the recitals to this Agreement.


 


“ABL Loans” shall mean all “Revolving Loans” under (and as
defined in) the ABL Loan Agreement.


 


“ABL Parties” shall mean,
collectively, ABL Agent and ABL Lenders.


 


“ABL Priority Collateral” shall mean all of the types and items
of property of each Obligor that are described in Exhibit A
attached hereto and made a part hereof.


 


“ABL Required Lenders” shall mean the “Required Lenders” as
defined in the ABL Loan Agreement.


 


“ABL Secured Parties” shall mean, collectively, each ABL Party
and each Affiliate or Subsidiary of such ABL Party to the extent any ABL Debt
is owed to such Affiliate or Subsidiary.


 


“Accruals” shall mean, on any date of determination thereof, all
accrued but unpaid interest, fees, and other charges (including Enforcement
Expenses) owing by any Obligor to any Party under any of the Debt Documents on
such date, including any advances made by any Parties to pay such amounts and
interest accrued upon any such advances. 
Accruals shall expressly include any and all interest accruing or
out-of-pocket costs or expenses (including Enforcement Expenses) incurred after
the commencement of any Insolvency Proceeding, regardless of whether any Party’s
claim therefor is allowed or allowable in such Insolvency Proceeding.


 


“Actionable ABL Document Default” shall mean the occurrence of
any of the following events:  (i) the
first date during any 365-day period on which 180 consecutive ABL Document
Default Days have occurred, provided that ABL Agent shall have delivered
to Notes Agent written notice of such ABL Document Default(s) required by
the definition of ABL Document Default Day; or (ii) the commencement of an
Insolvency Proceeding by or against an Obligor.


 


“Actionable Notes Document Default” shall mean the occurrence of
any of the following events:  (i) the
first date during any 365-day period on which 180 consecutive Notes Document
Default Days have occurred, provided that Notes Agent shall have
delivered to ABL Agent written notice of such Notes Document Default(s) required
by the definition of Notes Document Default Day; or (ii) the commencement
of an Insolvency Proceeding by or against an Obligor.


 


“Adequate Protection” means the protection described in Section 361
of the Bankruptcy Code (or any similar provision of any federal, state or
foreign law) that is required to be given, pursuant to Sections 362, 363 or 364
of the Bankruptcy Code (or any similar provision of any federal, state or
foreign law), to the holder of a claim against a debtor that is secured by a
Lien on property of such debtor.


 


“Additional Notes” shall have the meaning ascribed to it in the
recitals to this Agreement.


 


“Additional Pari Passu Debt” shall mean Permitted Additional
Pari Passu Obligations (as such term is defined in the Notes Security Agreement
as in effect on the date hereof or as amended with the consent of the ABL
Required Lenders).


 


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“Additional Pari Passu Documents” shall mean any Additional Pari
Passu Agreement (as such term is defined in the Notes Indenture as in effect on
the date hereof or as amended with the consent of the ABL Required Lenders) and
other documentation relating to any other Permitted Additional Pari Passu
Obligations (as defined in the Notes Indenture as in effect on the date hereof
or as amended with the consent of the ABL Required Lenders).


 


“Additional Pari Passu Obligations
Holders” shall have the meaning ascribed to it in the
preamble to this Agreement.


 


“Agent” shall mean ABL Agent or Notes Agent, as the context may
require, and “Agents” shall mean both ABL Agent and Notes Agent.


 


“Banking Relationship Debt” shall mean indebtedness or other
obligations of Obligors to any ABL Secured Party arising out of or relating to
Bank Products.


 


“Bankruptcy Case” shall mean a case commenced by or against an
Obligor as debtor under any chapter of the Bankruptcy Code (or any similar
provision of any federal, state or foreign law) and any case under another
chapter of the Bankruptcy Code (or any similar provision of
any federal, state or foreign law) to which any such case is
converted.


 


“Bankruptcy Code” shall mean title 11 of the United States Code.


 


“Borrower” shall have the meaning ascribed to it in the recitals
to this Agreement.


 


“Borrowing Base” shall have the meaning ascribed to it in the
Notes Indenture (as it exists on the date hereof).


 


“Borrowing Base Certificate” shall mean a certificate that
includes a calculation of the Borrowing Base delivered to ABL Agent under the
ABL Loan Agreement or in connection with any DIP Financing by which a Borrower
certifies to the ABL Agent the amount of the Borrowing Base as of the date of
the certificate.


 


“Capped ABL Debt” shall mean, on any date of determination
thereof, the sum of (a) an amount equal to the greater of (i) the
Capped ABL Line on such date and (ii) the Maximum ABL Formula Amount on
such date, plus (b) Banking Relationship Debt on such date, plus
(c) all Accruals (other than Accruals consisting of interest accrued on
the principal balance of ABL Debt that is Non-Priority ABL Debt, from and after
the date on which such ABL Debt becomes Non-Priority ABL Debt or consisting of
Enforcement Expenses incurred solely in connection with the collection of any
Non-Priority ABL Debt) and all Indemnity Amounts (excluding those relating
solely to the payment of any Non-Priority ABL Debt).


 


“Capped ABL Line” shall mean, on any date of determination
thereof, an amount equal to  $180,000,000.


 


“Capped Notes Debt” shall mean, on any date of determination
thereof, an amount equal to (a) the original principal amount of the
Initial Notes, minus all principal payments on the Initial Notes after
the date of this Agreement, plus (b) the original principal amount
of any Additional Notes to the extent the incurrence of such Additional Notes
is permitted pursuant to the Notes Indenture as it exists on the date hereof or
as amended with the consent of ABL Required Lenders, minus all principal
payments on the Additional Notes after the issuance thereof, plus (c) all
Accruals (other than Accruals consisting of interest accrued on, or Enforcement
Expenses 


 


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incurred
solely in connection with, the collection of the principal balance of Notes
Debt that exceeds the amounts described in clauses (a) and (b) of
this definition), plus (d) Indemnity Amounts (excluding those
Indemnity Amounts relating solely to the payment of Notes Debt that exceeds the
amounts described in clauses (a), (b) and (c) of this definition).


 


“Collateral” shall mean all real and personal property of each
Obligor that is at any time subject to a Lien in favor of either Agent,
including all property and property interests encompassed within the definition
of “Collateral” in any of the ABL Documents or within the definitions of “ABL
Priority Collateral” or “Notes Priority Collateral,” and regardless of whether
such property now exists or is hereafter created or acquired (and including any
such property created, acquired or arising during the pendency of an Insolvency
Proceeding).


 


“Court” shall mean a court of competent jurisdiction.


 


“Debt Documents” shall mean, in the case of any ABL Party, the
ABL Documents to which such ABL Party is a party or in respect of which such
ABL Party is a beneficiary; and, in the case of any Notes Party, the Notes
Documents to which such Notes Party is a party or in respect of which such
Notes Party is a beneficiary.


 


“DIP Financing” shall mean an extension of credit pursuant to Section 364
of the Bankruptcy Code (or any similar provision of any federal, state or
foreign law) by a Person (including any Party) to an Obligor in a
Bankruptcy Case of such Obligor, whether such extension of credit is in the
form of loans, letters of credit, Bank Products or otherwise and whether such
extension of credit is secured by a Lien that is subordinate to, on parity
with, or, in the case of any such financing by a Party, senior to or on parity
with any Lien of a Party.


 


“DIP Lender” shall mean a Person who provides DIP Financing to
an Obligor, whether individually or in concert with one or more other providers
of such financing.


 


“Discharge of the Priority ABL Debt” shall mean, except to the
extent otherwise provided in Section 7(d), the occurrence of all of
the following:  (i) termination of
all Commitments of ABL Parties for ABL Loans, Letters of Credit or other
extensions of credit; (ii) Payment in Full of all principal, interest,
premium (if any), fees and other charges comprising Priority ABL Debt (other
than undrawn Letters of Credit), whether or not such interest, fees or other
charges accrue or are incurred prior to or during pendency of an Insolvency
Proceeding and whether or not any of the same are allowed or recoverable in any
Bankruptcy Case pursuant to Section 506 of the Bankruptcy Code or otherwise;
(iii) discharge or cash collateralization (at 105% of the aggregate
undrawn amount) of all outstanding Letters of Credit constituting Priority ABL
Debt; and (iv) Payment in Full of all other Priority ABL Debt that is
outstanding and unpaid at the time that the termination, expiration, payment,
discharge and/or cash collateralization set forth in clauses (i) through (iii) above
have occurred (other than any obligations for taxes, indemnifications, and
other contingent liabilities in respect of which no claim or demand for payment
has been made at such time).


 


“Discharge of the Priority Notes Debt” shall mean, except to the
extent otherwise provided in Section 7(d), the occurrence of all of
the following:  (i) Payment in Full
of all principal, interest, premium (if any), fees and other charges comprising
Priority Notes Debt, whether or not such interest, fees or other charges accrue
or are incurred prior to or during pendency of an Insolvency Proceeding and
whether or not any of the same are allowed or recoverable in any Bankruptcy
Case pursuant to Section 506 of the Bankruptcy Code or otherwise; and (ii) Payment
in Full of all other Priority Notes Debt that is outstanding and unpaid 


 


5

















 


at
the time that payment set forth in clause (i) above has occurred (other
than any obligations for taxes, indemnifications, and other contingent
liabilities in respect of which no claim or demand for payment has been made at
such time).


 


“Enforcement Expenses” shall mean all
costs, expenses, fees or advances that any Party may make, suffer or incur, in
each case after the occurrence of an ABL Document Default or Notes Document
Default on account of or in connection with (i) the repossession, storage,
repair, field examination, audit, appraisal, insuring, completion of the
manufacture of, preparing for sale, advertising for sale, selling, collecting,
or otherwise preserving or realizing upon any Collateral; (ii) the
settlement or satisfaction of any prior Lien or other encumbrance upon any of
the Collateral (other than Liens in favor of a Party); (iii) the retention
by a Party of consultants, including turnaround management consultants,
accountants, attorneys, appraisers, auctioneers and environmental engineers; or
(iv) the enforcement of any of the Debt Documents or the collection
of any of the ABL Debt or Notes Debt, as applicable.  Such costs, expenses, and advances may
include, without limitation, storage fees, legal fees, appraisal fees,
brokers’ fees and commissions, auctioneers’ fees and commissions, environmental
assessment fees, and wages and salaries paid to employees of any Obligor
or any independent contractors in liquidating or collecting any Collateral.


 


“Enforcement Notice” shall mean a written notice provided by an
Agent to the other Agent in which the notifying Agent indicates its intent to
initiate a Lien Enforcement Action and specifies the date on or after which the
notifying Agent proposes to initiate such Lien Enforcement Action (but such
notice need not be sent to any Obligor or any other Party).


 


“Equipment Collateral” shall mean any portion of the Collateral
consisting of equipment, as that term is defined in the UCC.


 


“Holder” and “Holders” shall have the
meanings ascribed to it in the preamble to this Agreement.


 


“Inadequate Protection Claim” shall mean the claim under Section 507(b) of
the Bankruptcy Code that may be asserted by the holder of a secured claim to
the extent that the Adequate Protection afforded the holder of such claim
proves to be inadequate.


 


“Indemnity Amount” shall mean, on any date of determination
thereof, the amount required to be paid by any Obligor to any Party on such
date pursuant to any indemnity provisions contained in any of the Debt
Documents (excluding any obligations to pay the principal amount of any Loans,
the reimbursement amount of any Letter of Credit or Accruals).


 


“Initial Notes” shall have the meaning ascribed to it in the
recitals to this Agreement.


 


“Insolvency Proceeding” shall mean any action, case or
proceeding commenced by or against an Obligor, or any agreement of such
Obligor, for (i) the entry of an order for relief against such Obligors
under any chapter of the Bankruptcy Code or other insolvency or debt adjustment
law (whether state, federal or foreign), (ii) the appointment of a
receiver, trustee, liquidator or other custodian for such Obligor or any part
of such Obligor’s assets, (iii) an assignment or trust mortgage for the
benefit of creditors of such Obligor, or (iv) the total or partial
liquidation, dissolution or winding up of the affairs of such Obligor.


 


“Lien” shall mean any security interest, lien, security title or
other interest in property securing an obligation owed to, or a claim by, a
Person, whether such security interest, lien, 


 


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security
title or other interest is based on common law, statute, contract, judgment or
court order, including any Adequate Protection or other Liens granted in any
Insolvency Proceeding (including any agreement to provide any of the foregoing,
and any conditional sale or other title retention agreement, and any lease in
the notice thereof).  The term “Lien”
shall also include reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases and other title
exceptions and encumbrances affecting property.


 


“Lien Enforcement Action” shall mean any action taken by an
Agent, during any period that an ABL Document Default or Notes Document Default
exists, to seize, repossess, replevy, attach, garnish, levy upon, collect the
proceeds of, foreclose its Lien upon, sell or otherwise dispose of any
Collateral, whether by judicial action, under power of sale, by self-help
repossession, by notification to account debtors or otherwise, including any
effort to seek relief from the automatic stay in any Insolvency Proceeding, the
exercise of any right of setoff or recoupment or the exercise of any rights
under any landlord, bailee, control, mortgage or similar agreement with a
Person who is not an Obligor and that relates to any Collateral; provided
that, for the avoidance of doubt, none of the following shall constitute a Lien
Enforcement Action: (i) making demand for payment or accelerating the
maturity of the ABL Debt or the Notes Debt; (ii) the receipt and
application by ABL Agent to the ABL Debt of collections of Accounts or proceeds
of other ABL Priority Collateral received from account debtors or through any
lockbox or other cash management arrangement, whether or not any ABL Document Default
exists at the time of application; (iii) the implementation of reserves
under the ABL Loan Agreement; (iv) the reduction of advance rates under
the ABL Loan Agreement; (v) the cessation (whether temporary or permanent)
of lending under the ABL Loan Agreement due to the existence of an overadvance,
the existence of an ABL Document Default or failure to satisfy conditions
precedent; (vi) the exercise by any ABL Secured Party of any right of
offset with respect to Banking Relationship Debt; or (vii) the filing by a
Party of a proof of claim in any Insolvency Proceeding.


 


“Maximum ABL Formula Amount” shall mean, on any date of
determination thereof, an amount equal to the Borrowing Base.  The
Maximum ABL Formula Amount shall be calculated solely by reference to the most
recent Borrowing Base Certificate received by ABL Agent (or, if not required to
be delivered to ABL Agent under the ABL Loan Agreement or any DIP Financing,
solely by reference to the most recent consolidated balance sheet of FGI and
its Restricted Subsidiaries (as defined in the Notes Indenture)) prior to the
funding of any Revolver Loans or the incurrence of any Letter of Credit
Obligations and without regard to any events, transactions or occurrences
subsequent to ABL Agent’s receipt of such Borrowing Base Certificate (or, if
applicable, such consolidated balance sheet), including any decreases in the
Maximum ABL Formula Amount occurring as a result of (i) any decrease in
the book value (calculated in accordance with GAAP) of accounts receivable or
inventory thereafter; (ii) the return of uncollected checks or other items
of payment applied to the reduction of the Revolver Loans, or other similar or
involuntary or unintentional actions; (iii) any failure of Borrowers to
report accurately the book value of accounts receivable or inventory on any
Borrowing Base Certificate (or, if applicable, such consolidated balance
sheet); or (iv) the appraisal or revaluation of any account or inventory.


 


“Non-Priority ABL Debt” shall mean, on any date, the amount of ABL Debt on such date in excess
of the Capped ABL Debt.  Non-Priority ABL
Debt shall not include any portion of the ABL Loans or Letter of Credit
Obligations that, on the date of funding by ABL Lenders in the case of ABL
Loans or the date of issuance in the case of Letter of Credit Obligations, did
not cause the aggregate amount of ABL Loans and Letter of Credit Obligations
outstanding on such date to exceed the Borrowing Base (as the calculation of
the Borrowing Base is described in the definition of Maximum ABL Formula
Amount).  The Capped ABL Debt on any date
shall not be 


 


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deemed
to have been exceeded on such date solely by the addition to the amount of ABL
Loans outstanding of any ABL Loan or Refunding Loan to pay Accruals, Indemnity
Amounts or Letter of Credit Obligations.


 


“Non-Priority Notes Debt” shall mean, on any date, the amount of
Notes Debt on such date that exceeds the Capped Notes Debt.


 


“Notes” shall have the meaning ascribed to it in the recitals to
this Agreement.


 


“Notes Agent” shall have the
meaning ascribed to it in the preamble to this Agreement.


 


“Notes Cash Collateral” shall have the meaning ascribed to it in
Section 7(c) hereof.


 


“Notes Debt” shall mean, on any date
of determination thereof, all liabilities and obligations of Obligors under the
Notes Indenture, the Initial Notes and the Additional Pari Passu Documents
(including the Additional Pari Passu Debt). 
Notes Debt shall expressly include any and all interest accruing and
out-of-pocket costs and Enforcement Expenses incurred after the date of any
filing by or against any Obligor of any petition or complaint initiating any
Insolvency Proceeding, regardless of whether any Notes Party’s claim therefor
is allowed or allowable in the Insolvency Proceeding commenced by the filing of
such petition or complaint.


 


“Notes Document Default” shall mean
an  “Event of
Default” (as defined in the Notes Security Agreement as in effect on the date
hereof or as amended with the consent of ABL Required Lenders or as permitted
hereunder) under the Notes Indenture.


 


“Notes Document Default Day” shall
mean a day on which a Notes Document Default exists and the Notes Debt (other
than the Additional Pari Passu Debt) or the Additional Pari Passu Debt, or
both, has or have been accelerated or matured, but only if prior to such day
Notes Agent has given to ABL Agent written notice pursuant to Section 13
that such Notes Document Default exists and that the Notes Debt (other than the
Additional Pari Passu Debt) or the Additional Pari Passu Debt, or both, has or
have been accelerated or matured.  The
notice of a Notes Document Default and acceleration or maturity shall not
constitute the giving of any notice required under applicable law with respect
to any Lien Enforcement Action by Notes Agent, and ABL Parties do not waive any
rights to any such notice.


 


“Notes Documents” shall mean the
Notes Indenture, the Initial Notes, the Notes Security Agreement, the
Additional Pari Passu Documents and all other instruments or agreements now or
hereafter evidencing or securing the payment or performance of all or any part
of the Notes Debt.


 


“Notes Holder” shall have the
meaning ascribed to it in the preamble to this Agreement.


 


“Notes Indenture” shall have the meaning ascribed to it in the
recitals to this Agreement.


 


“Notes Liens” shall have the meaning ascribed to it in the
recitals to this Agreement.


 


“Notes Parties”
shall mean, collectively, Notes Agent, Trustee and Holders.


 


“Notes Priority
Collateral” shall mean all the types and items of Collateral that are
described in Exhibit B attached hereto and made a part hereof.


 


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“Notes Security Agreement” shall mean the Security Agreement
dated as of the date hereof among Obligors and Notes Agent, as amended,
restated or otherwise modified from time to time.


 


“Obligor” shall mean each Borrower, each Guarantor and each
other Person who is at any time liable for payment of the whole or any part of
the ABL Debt or the Notes Debt or who has granted a Lien upon any of such
Person’s assets to secure the payment of the whole or any part of the ABL Debt
or the Notes Debt.


 


“Party” shall mean each ABL Secured Party and each Notes Party.


 


“Payment in Full” shall mean, with respect to any debt
(including any ABL Debt or any Notes Debt), the full, final and indefeasible
payment, in cash, of such debt.


 


“Person” shall mean any natural person, sole proprietorship,
corporation, partnership, limited liability company, joint venture, business
trust, other business entity, or any governmental unit, agency, bureau or
political subdivision.


 


“Priority ABL Debt” shall mean all ABL Debt other than Non-Priority ABL Debt, and shall
include all DIP Financing provided by one or more ABL Lenders to the extent
permitted by Section 7(b) or otherwise approved by a Court and
subject to the last sentence of Section 7(b).


 


“Priority Notes Debt” shall mean all Notes Debt other than
Non-Priority Notes Debt, and shall include all DIP Financing provided by one or
more Notes Parties to the extent permitted by Section 7(c) or
otherwise approved by a Court and subject to the last sentence of Section 7(c).


 


“Qualified Refinancing” shall mean, on any date, a refinancing
of all of the ABL Debt or the Notes Debt by loans, notes or other extensions of
credit to one or more Obligors, but only if the Person providing such
refinancing is not an Obligor or an Affiliate of an Obligor and agrees to be
bound by the terms of this Agreement and such refinancing would not (i) shorten
the date for any scheduled principal payment of the indebtedness being
refinanced, (ii) increase the default or the non-default rate of interest
that would otherwise be applicable to the indebtedness being refinanced in
excess of 2% of the rate of interest in effect on the date of this Agreement, (iii) subject
Borrowers to covenants or events of default that are materially more
restrictive or onerous than those contained in the documentation evidencing the
indebtedness being refinanced in the good faith judgment of the Company, (iv) subject
Borrowers to a greater rate of principal amortization than the rate required in
documentation evidencing the indebtedness being refinanced, or (v) fail to
comply with the restrictions in Section 8(e) or Section 8(f),
as applicable.


 


“Real Estate Collateral” shall mean any portion of the
Collateral consisting of real estate and any improvements thereon or fixtures
thereto.


 


“Refunding Loan” shall mean an advance made by any ABL Party,
after the occurrence and during the continuance of any ABL Document Default, to
pay or cash collateralize any ABL Loan, Indemnity Amounts, Letter of Credit
Obligations or Accruals (except to the extent that any of the foregoing
components of ABL Debt constitute, on the date of funding any such Refunding
Loan used to pay such components, Non-Priority ABL Debt).


 


“Required Lenders” shall mean “Required Lenders” under (and as
defined in) the ABL Loan Agreement.


 


9

















 


“Superpriority Claim” shall mean a claim under Section 364(c)(1) of
the Bankruptcy Code.


 


“Trustee” shall have the meaning ascribed to it in the recitals
to this Agreement.


 


“UCC” shall mean the Uniform Commercial Code as in force and
effect in the State of New York or any other applicable jurisdiction, the laws
of which are required to be applied in connection with the issuance,
perfection, enforcement, validity or effect of security interests.


 


(b)                                  The terms “herein,”
“hereof” and “hereunder” and other words of similar import refer to this
Agreement as a whole and not to any particular Section or subdivision; all
references to a “Section” shall be to a section of this Agreement unless
otherwise specifically provided herein; all references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations; all references to any instruments or agreements shall include any
and all amendments or modifications thereto and any and all restatements,
extensions or renewals thereof; all references to “including” and “include”
shall be understood to mean “including, without limitation” and “include,
without limitation”; all references to Liens in favor of an Agent shall be
understood to mean Liens held by such Agent for its benefit and for the benefit
of ABL Secured Parties or Notes Parties, as applicable; all references to a
Person (including a Party) shall be understood to mean such Person’s successors
and permitted assigns; and all references to any dollar amount or payment in
cash shall be understood to mean such amount in Dollars and such payment in
Dollars.


 


(c)                                   All agreements
made herein by ABL Agent shall be deemed to have been made by ABL Agent on
behalf of itself and the other ABL Secured Parties; all agreements made herein
by Notes Agent shall be deemed to have been made by Notes Agent on behalf of
itself and the other Notes Parties; and all representations and agreements by a
Party that is not a signatory hereto shall be deemed to have been made by such
Party and binding upon it to the extent that such Party is a party to any of
the Notes Documents or ABL Documents.


 


2.                                      Consents to Liens.  ABL Agent hereby consents to each Obligor’s
grant of Liens in the Collateral to Notes Agent pursuant to the  Notes Documents as security for payment and performance
of all of the Notes Debt and agrees that the existence of such Liens shall not
constitute an ABL Document Default. 
Notes Agent hereby consents to each Obligor’s grant of Liens in the
Collateral to ABL Agent pursuant to the ABL Documents as security for the
payment and performance of all of the ABL Debt and agrees that the existence of
such Liens shall not constitute a Notes Document Default.  ABL Agent does not consent to any Notes Party
(other than Notes Agent) obtaining any Liens with respect to any of the
Collateral (other than Liens obtained by operation of law or a judicial
proceeding, which Liens shall be subject to Section 3(a) regardless
of whether such Liens are in favor of Notes Agent or any other Notes Party),
and Notes Agent does not consent to any ABL Party (other than ABL Agent)
obtaining any Liens with respect to any of the Collateral (other than Liens
obtained by operation of law or a judicial proceeding, which Liens will be
subject to Section 3(a) regardless of whether such Liens are
in favor of ABL Agent or any other ABL Party); and if any ABL Party (other than
ABL Agent) or any Notes Party (other than Notes Agent) obtains any Lien with
respect to the Collateral to secure the ABL Debt or Notes Debt, respectively,
such Lien shall be subject to all of the provisions of this Agreement as if it
were obtained and held by Notes Agent, in the case of any Lien obtained by any
other Notes Party, or by ABL Agent, in the case of any Lien obtained by any
other ABL Party.


 


10














 


3.                                      Priority of Liens.


 


(a)                                   Agents agree
that, at all times, whether before, after or during the pendency of any
Insolvency Proceeding and notwithstanding the priorities that would ordinarily
result from the order of granting, attachment or perfection of any Liens, the
order of filing or recording of any financing statements, mortgages,
assignments, or other charges or encumbrances in respect of the Collateral or
of possession or control of any Collateral, the priorities that would otherwise
apply under applicable law or the enforceability of any such Liens, (i) any
Liens that ABL Agent may at any time have in or with respect to any of the ABL
Priority Collateral shall constitute first priority Liens in such property to
secure the payment and performance of all of the ABL Debt and any DIP Financing
provided by any ABL Parties in accordance with Section 7(b) and
shall be superior to all Liens or other interests at any time held by Notes
Agent in the same property arising pursuant to the Notes Documents, by operation
of applicable law or otherwise, and all Liens and other interests at any time
held by Notes Agent in any of the ABL Priority Collateral shall be subordinate
and junior in priority to any Liens at any time held by ABL Agent therein; and (ii) any
Liens that Notes Agent may at any time have in or with respect to any of the
Notes Priority Collateral shall constitute first priority Liens in such
property to secure the payment and performance of all of the Notes Debt and any
DIP Financing provided by any Notes Parties in accordance with Section 7(c) and
shall be superior to all Liens or other interests, if any, at any time held by
ABL Agent in the same property arising pursuant to the ABL Documents, by
operation of applicable law or otherwise, and all Liens and other interests, if
any, at any time held by ABL Agent in any of the Notes Priority Collateral
shall be subordinate and junior in priority to any Liens at any time by Notes
Agent therein.  For purposes of the foregoing
priorities, any claim of a right of setoff by any Party shall be treated in all
respects as a Lien and no claim to right of setoff by any Party shall be
asserted to defeat or diminish the rights or priorities provided for herein in
favor of another Party having a senior Lien in respect of the property of an
Obligor that is subject to offset, provided that nothing herein shall
affect, impair or defeat in any way the right of any ABL Party to assert offset
rights in respect of Banking Relationship Debt.


 


(b)                                  The
subordination provisions contained in Section 3(a) relate to
the priority of all Liens granted to, or otherwise obtained by, each Agent by
Obligors (whether by grant, possession, statute, operation of law, subrogation
or otherwise).  It is not Notes Agent’s
responsibility to ensure the validity, perfection or enforceability of the
Liens granted by each Obligor to ABL Agent for the benefit of ABL Parties; and
it is not ABL Agent’s responsibility to ensure the validity, perfection or
enforceability of the Liens granted by each Obligor to Notes Agent for the
benefit of Notes Parties.  No Party shall
(and each Party waives any right it may ever have to) institute, encourage, or
join as a party in the institution of, or assist in the prosecution of, any
action, suit or other proceeding (including any adversary proceeding or
contested matter in any Bankruptcy Case or other Insolvency Proceeding) seeking
a determination that the Lien of any other Party in any of the Collateral is
invalid, unenforceable, unperfected, avoidable, subject to equitable
subordination or recharacterization or not entitled to the priorities described
herein.  Nothing in this Agreement shall
be construed to prevent or impair the rights of either of the Agents to enforce
this Agreement, including the priority of the Liens established by this
Agreement, or to be or operate as a subordination of any of the Notes Debt to
any of the ABL Debt, or vice versa.


 


(c)                                   If at any time
either Agent shall make a Permitted Subordination (as defined below), with
respect to any Collateral, to or in favor of any Person, the priority of such
Agent’s Liens vis-à-vis the Liens therein of
the other Agent shall not be affected thereby and the subordinating Agent’s
Liens shall continue to be junior in priority to the other Agent’s Liens in the
affected Collateral as and to the extent provided in this Section 3.  As used herein, the term “Permitted
Subordination” shall mean a voluntary subordination by ABL Agent of its
Liens with respect to any or all ABL Priority Collateral, or by Notes Agent of
its Liens with respect to any or all Notes Priority Collateral, in favor of
depository banks, securities or commodities intermediaries, landlords,
mortgagees, custom brokers, freight forwarders, carriers, warehousemen,
factors, Persons who provide DIP Financing and other Persons who provide goods
or services to an Obligor in the ordinary course of business.


 


11

















 


4.                                      Lien Enforcement Action.


 


(a)                                  Notwithstanding
any rights or remedies available to any Party under its Debt Documents,
applicable law or otherwise, and whether before, during or after the pendency
of any Insolvency Proceeding, (i) no Notes Party shall initiate any Lien
Enforcement Action with respect to any ABL Priority Collateral prior to the
Discharge of the Priority ABL Debt, and no ABL Party shall initiate any Lien
Enforcement Action with respect to any Notes Priority Collateral prior to the
Discharge of the Priority Notes Debt; (ii) ABL Agent shall have the
exclusive right and sole power to initiate any Lien Enforcement Action with
respect to, and thereby to collect, foreclose upon, sell, transfer, liquidate
or otherwise dispose of, the ABL Priority Collateral as provided in the ABL
Documents or by applicable law, in the manner deemed appropriate by ABL Agent,
without regard to any Lien of Notes Agent therein and without consultation with
or the consent of any Notes Parties and Notes Parties will not oppose, object
to or delay ABL Agent’s action in enforcing its Liens and remedies with respect
to any of the ABL Priority Collateral, unless and to the extent ABL Agent shall
act in a manner that is violative of applicable law or this Agreement; and (iii) Notes
Agent shall have the exclusive right and sole power to initiate any Lien
Enforcement Action with respect to, and thereby to collect, foreclose upon,
sell, transfer, liquidate or otherwise dispose of, the Notes Priority
Collateral as provided in the Notes Documents or by applicable law, in the
manner deemed appropriate by Notes Agent, without regard to any Lien of ABL
Agent therein (subject to Section 9) and without consultation with
or the consent of any ABL Parties, and ABL Parties will not oppose, object to
or delay Notes Agent’s action in enforcing its Liens and remedies with respect
to any of the Notes Priority Collateral unless and to the extent that Notes
Agent shall act in a manner that is violative of applicable law or this
Agreement.  If a Party, in violation of
the terms of this Agreement, initiates any Lien Enforcement Action against any
Obligor or any of the Collateral, the Agent for the other Parties may intervene
in any such Lien Enforcement Action and may interpose this Agreement as a
defense or plea thereto (in its name or in the name of Obligors) and shall be
entitled to specific performance of the terms hereof.


 


(b)                                  (i)                                     Notwithstanding
the foregoing Section 4(a), if any Actionable Notes Document
Default shall occur and be continuing, Notes Agent may initiate a Lien
Enforcement Action with respect to any ABL Priority Collateral, subject to
Notes Agent’s providing prior notice to ABL Agent (no more than 30 days and no
less than 10 days prior to the commencement of any Lien Enforcement Action,
which notice may be given during the 180 day period described in the definition
of Actionable Notes Document Default) of Notes Agent’s intent to do so; provided,
however, that, until Discharge of the Priority ABL Debt, Notes Agent
will not take (or continue to take) any Lien Enforcement Action or seek or
exercise (or continue to seek or exercise) any remedies under the Notes
Documents or applicable law with respect to any of the ABL Priority Collateral
if and for so long as ABL Agent is either diligently pursuing, in good faith,
its own Lien Enforcement Action with respect to all or a material part of the
ABL Priority Collateral or is enjoined or stayed or otherwise prohibited by
applicable law from taking such Lien Enforcement Action.


 


(ii)                                  Notwithstanding
the foregoing Section 4(a), if any Actionable ABL Document Default
shall occur and be continuing, ABL Agent may initiate a Lien Enforcement Action
with respect to any Notes Priority Collateral, subject to ABL Agent’s providing
prior written notice to Notes Agent (no more than 30 days and no less than 10
days prior to the commencement of any Lien Enforcement Action, which notice may
be given during the 180 day period described in the definition of Actionable
ABL Document Default) of ABL Agent’s intent to do so; provided, however,
that, until Discharge of the Priority Notes Debt, ABL Agent will not take (or
continue to take) any Lien Enforcement Action or seek or exercise (or continue
to seek or exercise) any remedies under the ABL Documents or applicable law
with respect to any of the Notes Priority Collateral if and for so long as
Notes Agent is either diligently pursuing in good faith, its own Lien
Enforcement Action with respect to


 


12

















 


all
or a material part of the Notes Priority Collateral or is enjoined or stayed or
otherwise prohibited by applicable law from taking such Lien Enforcement
Action.


 


(c)                                   Nothing in this
Agreement shall be construed to limit or impair in any manner any right of (i) Notes
Agent to commence a Lien Enforcement Action with respect to any Notes Priority
Collateral in accordance with the Notes Documents and applicable law or ABL
Agent to commence a Lien Enforcement Action with respect to any ABL Priority
Collateral in accordance with the ABL Documents and applicable law, (ii) any
Party otherwise having authority under applicable law to do so to bid for and
purchase, for cash (in the case of a bid by any Notes Party with respect to ABL
Priority Collateral prior to Discharge of the Priority ABL Debt, or in the case
of a bid by any ABL Party with respect to Notes Priority Collateral prior to
Discharge of the Priority Notes Debt), any Collateral at any private, public or
judicial foreclosure or other sale initiated by any other Party, (iii) any
Party to seek to join (but not control or unreasonably delay in any manner) any
foreclosure or other judicial Lien enforcement proceeding with respect to any
of the Collateral initiated by any other Party if such joinder is required
under applicable law for such Party to be entitled to receive any proceeds of
Collateral to the extent allowed by this Agreement, (iv) any Party to
receive the proceeds of any authorized Lien Enforcement Action in respect of
any Collateral in accordance with the terms of this Agreement, (v) any
party to file any necessary responsive or defensive pleadings in opposition to
any motion, claim, adversary proceeding or other pleading by any other Person
objecting to or otherwise seeking the disallowance of the claims of such Party,
including any claims secured by any of the Collateral, subject in all events to
the terms of this Agreement, (vi) any Party to vote on any plan of
reorganization or liquidation and to file any proof of claim in any Insolvency
Proceeding or otherwise, in each case subject to all of the terms of this
Agreement, (vii) any Agent to file a claim or statement of interest with
respect to the Note Debt or ABL Debt, as applicable; provided that an
Insolvency Proceeding has been commenced by or against any Obligor, or (viii) any
Agent to take any action (not adverse to the priority status of the Liens described
hereunder) in order to create, perfect, preserve or protect (but, subject to
the provisions of Section 4(b) hereof, not enforce) its Lien on any
of the ABL Priority Collateral or Notes Priority Collateral.


 


(d)                                  (i)                                     ABL Agent’s
Liens on the proceeds of ABL Priority Collateral shall not be released,
terminated, discharged, impaired, or extinguished by any Lien Enforcement
Action by Notes Agent undertaken by Notes Agent with respect to any ABL
Priority Collateral, and the priority of such Liens shall continue to be
governed by Section 3.  If
any Notes Party shall receive proceeds from any sale, collection, liquidation,
casualty or other disposition of any ABL Priority Collateral in connection with
the initiation of any Lien Enforcement Action, the Notes Party in receipt of
such proceeds shall be obligated to hold such proceeds in trust and promptly
turn over such proceeds to ABL Agent for application to the ABL Debt or Notes
Debt, as applicable, in accordance with Section 5.  ABL Agent shall be empowered to endorse, in
the name and on behalf of any Notes Party, any check or other payment item made
payable to such Notes Party and turned over to ABL Agent pursuant to the
provisions of this Section 4(d)(i).


 


(ii)                                   Notes Agent’s
Liens on the proceeds of Notes Priority Collateral shall not be released,
terminated, discharged, impaired, or extinguished by any Lien Enforcement
Action by ABL Agent undertaken by ABL Agent with respect to any Notes Priority
Collateral, and the priority of such Liens shall continue to be governed by Section 3.  If any ABL Party shall receive proceeds from
any sale, collection, liquidation, casualty or other disposition of any Notes
Priority Collateral in connection with the initiation of any Lien Enforcement
Action, the ABL Party in receipt of such proceeds shall be obligated to hold
such proceeds in trust and promptly turn over such proceeds to Notes Agent for
application to the Notes Debt or ABL Debt, as applicable, in accordance with Section 5.  Notes Agent shall be empowered to endorse, in
the name and on behalf of any ABL Party, any check or other payment 


 


13

















 


item
made payable to such ABL Party and turned over to Notes Agent pursuant to the
provisions of this Section 4(d)(ii).


 


(e)                                   Each Party
waives any right to require any other Party to marshal any security or
Collateral or otherwise to compel any Party to seek recourse against or
satisfaction of any of the ABL Debt or Notes Debt, as applicable, from one
source before seeking recourse or satisfaction from any other source.  Except as expressly set forth in this
Agreement or as may be imposed under or required by applicable law, no Party
shall have any duties or responsibilities to any other Parties with respect to
any of the Collateral.  Notes Parties
will not contest, protest or object to any Lien Enforcement Action taken by ABL
Parties in respect of ABL Priority Collateral, including the method, manner or
timing of any such Lien Enforcement Action, and ABL Parties will not contest,
protest or object to any Lien Enforcement Action with respect to the Notes
Priority Collateral taken by Notes Parties, including the method, manner or
timing of any such Lien Enforcement Action.


 


(f)                                     In the event
that the ABL Agent becomes a judgment Lien creditor in respect of Notes
Priority Collateral or the Notes Agent becomes a judgment Lien creditor in
respect of ABL Priority Collateral, such judgment Lien shall be subject to the
terms of this Agreement for all purposes as the other Liens securing the Notes
Debt and ABL Debt, respectively, are subject to this Agreement.


 


5.                                      Allocation of Proceeds of Collateral.


 


(a)                                  (i)                                     All proceeds that are received by any Party from any sale, collection,
lease or other disposition of any ABL Priority Collateral (whether received
from an Obligor, pursuant to a Lien Enforcement Action or in connection with
any claim under any insurance policy or condemnation award) shall be
distributed as follows:  (A) first,
in payment of any Enforcement Expenses incurred by the Agent conducting Lien
Enforcement Action with respect to such ABL Priority Collateral, provided such
Lien Enforcement Action was not initiated in violation of this Agreement; (B) second,
to ABL Agent for application to the Priority ABL Debt, in such order of application
as the holders of such Priority ABL Debt may elect consistent with the ABL
Documents, until Discharge of the Priority ABL Debt; (C) third, to
Notes Agent for application to the Priority Notes Debt, in such order of
application as Notes Parties may elect consistent with the Notes Documents,
until Discharge of the Priority Notes Debt; (D) fourth, to ABL
Agent for application to any Non-Priority ABL Debt remaining until Payment in
Full of all such Non-Priority ABL Debt; and (E) fifth, to Notes
Agent for application to any Non-Priority Notes Debt remaining until Payment in
Full of all such Non-Priority Notes Debt; provided, that notwithstanding
anything in this Agreement that may be construed to the contrary in the event
Notes Agent receives, in connection with any Bankruptcy Case or other
Insolvency Proceeding, any proceeds of any ABL Priority Collateral and the Lien
in favor of ABL Agent with respect to such ABL Priority Collateral has been
voided, avoided or equitably subordinated by a court of competent jurisdiction
pursuant to a final order, then such proceeds received by Notes Agent with
respect to the ABL Priority Collateral in respect of which the Lien in favor of
ABL Agent has been voided, avoided, equitably subordinated or otherwise
invalidated may be applied, to the extent permitted under applicable law, to
the payment of the Notes Debt in accordance with the Notes Documents.


 


(ii)                                  All proceeds that are received by any Party from any sale, collection,
lease or other disposition of any Notes Priority Collateral (whether
received from an Obligor, pursuant to a Lien Enforcement Action or in
connection with any claim under any insurance policy or condemnation award)
shall be distributed as follows:  (A) first,
in payment of any Enforcement Expenses incurred by the Agent conducting Lien
Enforcement Action with respect to such Notes Priority Collateral,
provided such Lien Enforcement Action was not initiated in violation of this
Agreement; (B) second, to Notes Agent for application to the
Priority Notes Debt, in such order of application as the holders of such
Priority Notes Debt may elect consistent with the Notes Documents, until
Discharge of the Priority Notes Debt; (C)


 


14

















 


third,
to ABL Agent for application to the Priority ABL Debt, in such order
of application as ABL Parties may elect consistent with the ABL
Documents, until Discharge of the Priority ABL Debt; (D) fourth,
to Notes Agent for application to any Non-Priority Notes Debt
remaining until Payment in Full of all such Non-Priority Notes Debt; and (E) fifth,
to ABL Agent for application to any Non-Priority ABL Debt remaining
until Payment in Full of all such Non-Priority ABL Debt; provided,
that notwithstanding anything in this Agreement that may be construed to the
contrary in the event ABL Agent receives, in connection with any Bankruptcy
Case or other Insolvency Proceeding, any proceeds of any Notes Priority
Collateral and the Lien in favor of Notes Agent with respect to such Notes
Priority Collateral has been voided, avoided or equitably subordinated by a
court of competent jurisdiction pursuant to a final order, then such proceeds
received by ABL Agent with respect to the Notes Priority Collateral in respect
of which the Lien in favor of Notes Agent has been voided, avoided, equitably
subordinated or otherwise invalidated may be applied, to the extent permitted
under applicable law, to the payment of the ABL Debt in accordance with the ABL
Documents.


 


(b)                                 Nothing herein shall be construed to require ABL Loan Parties to reduce
any of their Commitments with respect to the funding of ABL Loans or the
issuance of Letters of Credit as a result of their receipt of any amounts
applied to any portion of the ABL Debt. 
If any ABL Party shall receive any insurance proceeds or condemnation
awards related to the ABL Priority Collateral, such ABL Party shall be
authorized to hold such proceeds or awards and release them to Borrowers in
accordance with the provisions of such ABL Party’s Debt Documents; and if any
Notes Party shall receive any insurance proceeds or condemnation awards related
to the Notes Priority Collateral, such Notes Party shall be authorized to hold
such proceeds or awards and release them to Borrowers in accordance with the
provisions of such Notes Party’s Notes Documents.


 


6.                                      Release of Liens.


 


(a)                                   In connection with any sale or other disposition of any ABL Priority
Collateral (A) by an Obligor, if such sale or other disposition of ABL
Priority Collateral is authorized by the Notes Documents or otherwise permitted
under the ABL Documents (as in effect on the date hereof or as hereafter in
effect); or (B) by ABL Agent pursuant to a Lien Enforcement Action, in
each case which results in the release of the ABL Lien on such item of ABL
Priority Collateral, the Notes Lien on such item of ABL Priority Collateral
will be automatically released and all Notes Parties shall be deemed to have
consented to any sale or other disposition of any ABL Priority Collateral to
the extent that Notes Agent is obligated pursuant to the foregoing provisions
to release and discharge its Liens with respect to such Collateral; provided
that the net proceeds realized from any sale or other disposition of ABL
Priority Collateral as described in this Section 6(a) shall be
allocated and applied in accordance with Section 5 and this Section 6(a) and
neither Agent’s Liens in respect of such proceeds shall be deemed to have been
released or discharged prior to such application of such proceeds.  Notes Agent promptly shall execute and
deliver to ABL Agent such termination statements, releases and other documents
as ABL Agent may request to confirm such release and discharge.


 


(b)                                      Subject to the provisions of Section 9, in connection with
any sale or other disposition of any Notes Priority Collateral (A) by an
Obligor, if such sale or other disposition of Notes Priority Collateral is
authorized by the ABL Documents or otherwise permitted under the Notes
Documents (as in effect on the date hereof or as hereafter in effect); or (B) by
Notes Agent pursuant to a Lien Enforcement Action, in each case which results
in the release of the Notes Lien on such item of Notes Priority Collateral, the
ABL Lien on such item of Notes Priority Collateral will be automatically
released and all ABL Parties shall be deemed to have consented to any sale or
other disposition of any Notes Priority Collateral to the extent that ABL Agent
is obligated pursuant to the foregoing provisions to release and discharge its
Liens with respect to such Collateral; provided that the net proceeds
realized from any sale or other disposition of Notes Priority Collateral as
described in this Section 6(b) shall be 


 


15

















 


allocated and applied in accordance with Section 5
and this Section 6(b) and neither Agent’s Liens in respect of
such proceeds shall be deemed to have been released or discharged prior to such
application of such proceeds.  ABL Agent
promptly shall execute and deliver to Notes Agent such termination statements,
releases and other documents as Notes Agent may request to confirm such release
and discharge.


 


7.                                      Agreement on Certain Bankruptcy Matters.


 


(a)                                   This Agreement
shall be applicable both before and after the commencement by or against any
Obligor of a Bankruptcy Case or other Insolvency Proceeding and all converted
or succeeding cases or proceedings in respect thereof.  The relative rights of the Parties, as
provided for in this Agreement, in or to any distributions from or in respect
of any Collateral or proceeds thereof shall continue after the commencement of
any such Insolvency Proceeding.  If in
any Insolvency Proceeding debt obligations of a reorganized Obligor secured by
any Liens upon property of such reorganized Obligor are distributed pursuant to
a plan of reorganization or similar restructuring plan, both on account of ABL
Debt and on account of Notes Debt, then to the extent the debt obligations
distributed on account of the ABL Debt and on account of the Notes Debt are
secured by Liens upon the same property, the provisions of this Agreement shall
survive distribution of such debt obligations pursuant to such plan and will
apply with like effect to the Liens securing such debt obligations.


 


(b)                                  If, in any
Insolvency Proceeding, ABL Agent (in its discretion or acting at the direction
of Required Lenders) consents to the use of cash proceeds of any ABL Priority
Collateral (“ABL Cash Collateral”) or provides or supports others in
providing a DIP Financing secured by a Lien on the ABL Priority Collateral ranking
prior to the Note Lien on such ABL Priority Collateral, then no Notes Party
shall object to or contest (or support any other Person in objecting or
contesting) the use of such ABL Cash Collateral or the provision of such DIP
Financing so long as (i) the interest rates, fees, advance rates, lending
sub-limits and other terms of such DIP Financing are determined by the Court to
be fair and reasonable under the circumstances, (ii) any Lien on Notes
Priority Collateral to secure any such DIP Financing is subordinate in priority
and right of enforcement to all valid, perfected and unavoidable Liens on Notes
Priority Collateral at any time held by Notes Agent as security for the Notes
Debt (including Liens granted as Adequate Protection), (iii) DIP Lenders
agree that they will not make loans or issue letter of credit accommodations
pursuant to such DIP Financing that would intentionally and with actual
knowledge on the part of such DIP Lenders at the time such loans or letter of
credit accommodations are made cause the aggregate principal balance of the ABL
Debt on any date, when added to the outstanding principal balance of such DIP
Financing on such date, to exceed the Capped ABL Debt on such date, and (iv) such
financing or use of ABL Cash Collateral does not compel any Obligor to seek
confirmation of a specific plan of reorganization (other than payment in full
of any DIP Financing on the effective date thereof) for which all or
substantially all of the material terms are set forth in the financing documentation
approved or otherwise authorized by the Court in connection with the DIP
Financing or use of ABL Cash Collateral. 
Nothing in this Agreement shall limit (x) the right of ABL Parties
to consent to the use of ABL Cash Collateral or consent to or provide any DIP
Financing on terms other than the terms set forth herein or (y) the right
of any Notes Party to object to DIP Financing or the use of ABL Cash Collateral
on terms other than those set forth herein; provided, that any Lien on
Notes Priority Collateral securing any such DIP Financing provided by any ABL
Parties shall be subject to the Lien priorities established hereunder.


 


(c)                                   If, in any Insolvency Proceeding, Notes Agent (in its discretion or
acting at the direction of the requisite holders of the Notes Debt) consents to
the use of cash proceeds of any Notes Priority Collateral (“Notes Cash
Collateral”) or provides or supports others in providing a DIP Financing
secured by a Lien on Notes Priority Collateral ranking prior to the Lien of the
ABL Agent on such Notes Priority Collateral, then no ABL Party shall object to
or contest (or support any other Person in objecting 


 


16

















 


or contesting) the use of such Notes Cash Collateral
or the provision of such DIP Financing so long as (i) the interest rates,
fees, advance rates, lending sub-limits and other terms of such DIP Financing
are determined by the Court to be fair and reasonable under the circumstances, (ii) any
Lien on ABL Priority Collateral to secure any such DIP Financing is subordinate
in priority and right of enforcement to all valid, perfected and unavoidable
Liens on ABL Priority Collateral at any time held by ABL Agent as security for
the ABL Debt (including Liens granted as Adequate Protection), (iii) DIP
Lenders agree that they will not make loans or issue letter of credit
accommodations pursuant to such DIP Financing that would intentionally and with
actual knowledge on the part of such DIP Lenders at the time such loans or
letter of credit accommodations are made cause the aggregate principal balance
of the Notes Debt on any date, when added to the outstanding principal balance
of such DIP Financing on such date, to exceed the Capped Notes Debt on such
date, and (iv) such financing or use of Notes Cash Collateral does not
compel any Obligor to seek confirmation of a specific plan of reorganization
(other than payment in full of any DIP Financing on the effective date thereof)
for which all or substantially all of the material terms are set forth in the
financing documentation approved or otherwise authorized by the Court in
connection with the DIP Financing or use of Notes Cash Collateral.  Nothing in this Agreement shall limit (x) the
right of Notes Parties to consent to the use of Notes Cash Collateral or
consent to or provide any DIP Financing on terms other than the terms set forth
herein or (y) the right of any ABL Party to object to DIP Financing or the
use of Notes Cash Collateral on terms other than those set forth herein; provided,
that any Lien on ABL Priority Collateral securing any such DIP Financing
provided by any Notes Parties shall be subject to the Lien priorities
established hereunder.


 


(d)                                  If any Party
shall be required by order of a Court to return, refund or repay (i) to an
Obligor or any trustee or other custodian or committee appointed in the
Bankruptcy Case or other Insolvency Proceeding any payment or proceeds of the
Collateral in connection with any action, suit or proceeding alleging that such
Party’s receipt of such payments or proceeds was a transfer voidable under
state, federal or foreign law or (ii) to any other Person for any other
reason, then such Party shall not be deemed ever to have received such payment
or proceeds for purposes of this Agreement in determining whether and when
Payment in Full of the ABL Debt or Notes Debt, as applicable, has occurred; provided,
however,  that, if any such
return, refund or repayment by any ABL Party of any amounts applied to the ABL
Debt, and the resulting reinstatement of such amount of ABL Debt, shall be
included in the calculation of the Capped ABL Debt then in no event shall the
Capped ABL Debt be deemed to have been exceeded by virtue of any such
reinstatement of ABL Debt by any ABL Party.


 


(e)                                   No Notes Party
shall oppose (or support the opposition of any other Person) in any Bankruptcy
Case or other Insolvency Proceeding to (i) any motion or other request by
any ABL Secured Party for Adequate Protection or similar remedy with respect to
its Liens upon the ABL Priority Collateral, including any claim of any ABL
Secured Party to post-petition interest as a result of the ABL Lien on the ABL
Priority Collateral (so long as any post-petition interest paid as a result
thereof is not paid from the proceeds of Notes Priority Collateral) or (ii) any
objection by any ABL Secured Party to any motion, relief, action or proceeding
based on such ABL Secured Party claiming a lack of Adequate Protection with
respect to ABL Agent’s Liens in the ABL Priority Collateral.  No ABL Party shall oppose (or support the
opposition of any other Person) in any Bankruptcy Case or other Insolvency
Proceeding to (i) any motion or other request by any Notes Party for
Adequate Protection or similar remedy of Notes Agent’s Liens upon any of the
Notes Priority Collateral, including any claim of any Notes Party to
post-petition interest as a result of the Notes Lien on the Notes Priority
Collateral (so long as any post-petition interest paid as a result thereof is
paid solely from the proceeds of Notes Priority Collateral) or (ii) any
objection by any Notes Party to any motion, relief, action or proceeding based
on such Notes Party claiming a lack of Adequate Protection with respect to
Notes Agent’s Liens in the Notes Priority Collateral.  No Notes Party shall seek Adequate Protection
with respect to Notes Agent’s Liens in the ABL Priority Collateral unless (A) such
request for Adequate Protection consists solely of a request for a replacement
Lien upon pre-petition or post-petition assets of such Obligor and the grant of
an Inadequate 


 


17

















 


Protection
Claim in respect of Note Agent’s Lien on the ABL Priority Collateral to the
extent authorized by Section 507(b) of the Bankruptcy Code, (B) ABL
Agent receives a replacement Lien on the same assets of such Obligor as are
made subject to a replacement Lien in favor of Notes Agent, and (C) such
replacement Lien of ABL Priority Collateral in favor of Notes Agent is
subordinate to all Liens at any time held by ABL Agent in the ABL Priority
Collateral (including all pre-petition and post-petition Liens of ABL Agent
thereon whether arising under the ABL Documents, securing DIP Financing
provided by any ABL Secured Parties or constituting Adequate Protection
replacement Liens) and such Inadequate Protection Claim in respect of the ABL
Priority Collateral is subordinate in right of payment to any Inadequate
Protection Claim or Superpriority Claim granted to any ABL Secured Parties with
respect to the ABL Priority Collateral. 
In the event Notes Agent, on behalf of itself or any Notes Parties,
seeks or requests Adequate Protection in respect of Notes Agent’s Liens upon
any of the ABL Priority Collateral and such Adequate Protection is granted in
the form of additional collateral of a type of asset or property that would
constitute ABL Priority Collateral, then Notes Agent agrees that ABL Agent
shall also be granted a Lien on such property as security for the ABL Debt and
for any DIP Financing provided by any ABL Secured Parties and that any Lien on
such property in favor of Notes Agent shall be subordinated to the Lien on such
property in favor of ABL Agent securing the ABL Debt and any such DIP Financing
provided by any ABL Secured Parties (and all obligations relating thereto) and
to any other Liens granted to the ABL Secured Parties as Adequate Protection on
the same basis as the other Liens on ABL Priority Collateral in favor of Notes
Agent are so subordinated to the Liens on ABL Priority Collateral in favor of
ABL Agent under this Agreement.  No ABL
Party shall seek Adequate Protection with respect to ABL Agent’s Liens in the
Notes Priority Collateral unless (A) such request for Adequate Protection
consists solely of a request for a replacement Lien upon pre-petition or
post-petition assets of such Obligor and the grant of an Inadequate Protection
Claim in respect of ABL Agent’s Liens on Notes Priority Collateral to the
extent authorized by Section 507(b) of the Bankruptcy Code, (B) Notes
Agent receives a replacement Lien on the same assets of such Obligor as are
made subject to a replacement Lien in favor of ABL Agent, and (C) such
replacement Lien of Notes Priority Collateral in favor of ABL Agent is
subordinate to all Liens at any time held by Notes Agent in the Notes Priority
Collateral (including all pre-petition and post-petition Liens of Notes Agent
thereon whether arising under the Notes Documents, securing DIP Financing
provided by any Notes Parties or constituting Adequate Protection replacement
Liens) and such Inadequate Protection Claim in respect of Notes Priority
Collateral is subordinate in right of payment to any Inadequate Protection
Claim or Superpriority Claim granted to any Notes Parties in respect of the
Notes Priority Collateral.  In the event
ABL Agent, on behalf of itself or any ABL Parties, seeks or requests Adequate
Protection in respect of ABL Agent’s Liens upon any of the Notes Priority
Collateral and such Adequate Protection is granted in the form of additional
collateral of a type of asset or property that would constitute Notes Priority
Collateral, then ABL Agent agrees that Notes Agent shall also be granted a Lien
on such property as security for the Notes Debt and for any DIP Financing
provided by any Notes Parties and that any Lien on such property in favor of
ABL Agent shall be subordinated to the Lien on such property in favor of Notes
Agent securing the Notes Debt and any such DIP Financing provided by any Notes
Parties (and all obligations relating thereto) and to any other Liens granted
to the Notes Parties with respect to the Notes Priority Collateral as Adequate
Protection on the same basis as the other Liens on Notes Priority Collateral in
favor of ABL Agent are so subordinated to the Liens on Notes Priority
Collateral in favor of Notes Agent under this Agreement.


 


(f)                                     Prior to
Discharge of the Priority ABL Debt (including any portion thereof consisting of
DIP Financing), no Notes Party shall seek relief from the automatic stay in any
Insolvency Proceeding with respect to any ABL Priority Collateral unless (i) otherwise
consented to by ABL Agent or (ii) ABL Agent or DIP Lenders under Section 7(b)
shall seek relief from the automatic stay to commence a Lien Enforcement
Action.  Prior to Discharge of the
Priority Notes Debt (including any portion thereof consisting of DIP
Financing), no ABL Party shall seek relief from the automatic stay in any
Insolvency Proceeding with respect to any Notes Priority Collateral unless (i) otherwise
consented to 


 


18

















 


by
Notes Agent or (ii) Notes Agent or DIP Lenders under Section 7(c) shall
seek relief from the automatic stay to commence a Lien Enforcement Action.


 


(g)                                 If in any
Insolvency Proceeding an Obligor (or any trustee or fiduciary appointed for
such Obligor or its assets) shall request approval of a Court to conduct a sale
of any ABL Priority Collateral (whether pursuant to Section 363 of the
Bankruptcy Code or in accordance with any analogous insolvency law) and if any
such sale is consented to by ABL Agent, then no Notes Party shall make (and
shall not support the making by any other Person of) any objection to such sale
as the holder of a Lien upon any ABL Priority Collateral that is the subject of
such sale and, without limiting the generality of the foregoing, shall not
object on the basis that the proposed purchase price for the assets is less
than the “value” of the Liens of Notes Parties within the meaning of Section 363(f)(3) of
the Bankruptcy Code (or any similar provision of any federal, state or
foreign law), but Notes Parties may object to a sale on any
basis that the holder of an unsecured claim against such Obligor could properly
raise (including an objection that the proposed purchase price is
inadequate).  If in any Insolvency
Proceeding an Obligor (or any trustee or fiduciary appointed for such Obligor
or its assets) shall request approval of a Court to conduct a sale of any Notes
Priority Collateral (whether pursuant to Section 363 of the Bankruptcy
Code or in accordance with any analogous insolvency law) and if any such sale
is consented to by Notes Agent, then no ABL Party shall make (and shall not
support the making by any other Person of) any objection to such sale as the
holder of a Lien upon any Notes Priority Collateral that is the subject of such
sale and, without limiting the generality of the foregoing, shall not object on
the basis that the proposed purchase price for the assets is less than the “value”
of the Liens of ABL Parties within the meaning of Section 363(f)(3) of
the Bankruptcy Code (or any similar provision of any federal, state or
foreign law), but ABL Parties may object to a sale on any basis
that the holder of an unsecured claim against such Obligor could properly raise
(including an objection that the proposed purchase price is inadequate).


 


(h)                                 Each Notes
Party hereby waives any claim that it may have against any ABL Secured Party
arising out of the election of any ABL Secured Party for the application of Section 1111(b)(2) of
the Bankruptcy Code.  Each ABL Party
hereby waives any claim that it may have against any Notes Party arising out of
the election of any Notes Party for the application of Section 1111(b)(2) of
the Bankruptcy Code.


 


8.                                      Loan Administration; Amendments to Documents.


 


(a)                                   This Agreement
is entered into solely for the purposes set forth herein and, except as is
expressly provided otherwise herein, no Party assumes any responsibility to the
other Parties to advise such other Parties of information known to such Party
regarding the financial condition of any Obligor or regarding the Collateral,
or of any other circumstances bearing upon the risk of nonpayment of the
obligations of any Obligor under any Debt Documents.  Each Party shall be responsible for managing
its relationship with each Obligor and its Debt Documents.  No Party shall be deemed the agent of the
others for any purpose except as expressly provided in Section 10
hereof or in the ABL Documents or Notes Documents.


 


(b)                                  ABL Secured
Parties may, subject to the provisions of Section 8(e), agree to
modify the terms of any of the ABL Debt and grant extensions of the time of
payment or performance to and make compromises (including releases of Liens on
ABL Priority Collateral or of guaranties) and settlements with any and all
Obligors and all other Persons, in each case without the consent of Notes
Parties and without affecting the agreements of Notes Parties in this
Agreement.  If an ABL Secured Party
should amend or waive any provisions of the ABL Documents, whether or not any
ABL Secured Party has knowledge that such amendment or waiver would result in a
breach of any Notes Documents or a Notes Document Default, or knowledge of an
act, condition or event which with notice or passage of time or both would
constitute a Notes Document Default, in no event shall ABL Secured Parties have
any 


 


19

















 


liability
to any Notes Parties as a result of such breach and, without limiting the
generality of the foregoing, ABL Secured Parties shall not have any liability
for tortious interference with contractual relations or for inducement by ABL
Parties of any Obligor to breach any contract or otherwise.  Nothing contained in this Section 8(b) shall
limit, impair or waive any right that Notes Parties have to enforce any of the
provisions of the Notes Documents against any Obligor and the provisions of
this Agreement against any ABL Secured Party.


 


(c)                                   Notes Parties
may, subject to the provisions of Section 8(f), agree to modify the
terms of any of the Notes Debt and grant extensions of time of payment or
performance to and make compromises (including releases of liens on Collateral
or of guaranties) and settlements with any and all Obligors and all other
Persons, in each case without the consent of ABL Parties and without affecting
the agreements of ABL Parties in this Agreement.  If a Notes Party should amend or waive any
provisions of the Notes Documents, whether or not any Notes Party has knowledge
that such amendment or waiver would result in a breach of any ABL Documents or
an ABL Document Default, or knowledge of an act, condition or event, which with
notice or passage of time or both would constitute an ABL Document Default, in
no event shall Notes Parties have any liability to any ABL Party as a result of
such breach and, without limiting the generality of the foregoing, Notes
Parties shall not have any liability for tortious interference with contractual
relations or for inducement by Notes Parties of any Obligor to breach of
contract or otherwise.  Nothing in this Section 8(c) shall
limit, impair or waive any right that ABL Parties have to enforce any of the
provisions of the ABL Documents against any of Obligor and the provisions of
this Agreement against any Notes Party.


 


(d)                                  ABL Parties may
make ABL Loans and other extensions of credit to any or all Obligors from time
to time pursuant to the ABL Documents or otherwise, and all such ABL Loans and
other extensions of credit (to the extent such other extensions of credit are
secured by ABL Agent’s Liens upon the Collateral) shall constitute a part of
the ABL Debt and nothing herein shall restrict in any manner or in any respect
the right of Obligor to obtain additional credit from ABL Secured Parties or
the right of ABL Secured Parties to make available such additional credit to any
Obligor as ABL Secured Parties may elect in their sole and absolute
discretion.  If any ABL Party shall honor
a request by Borrowers for any ABL Loans or other financial accommodations
under the ABL Loan Agreement, whether or not such ABL Party has knowledge that
the honoring of such request would result in a Notes Document Default or has
knowledge of any act, condition or event which with notice or passage of time,
or both, would constitute a Notes Document Default under the Notes Documents,
in no event shall any ABL Party have any liability to any Notes Party as a
result of such breach, and, without limiting the generality of the foregoing,
ABL Parties shall not have any liability for tortious interference with
contractual relations or for inducement by any ABL Party of any Obligor to
breach a contract or otherwise.  Nothing
in this Section 8(d) shall limit or waive any right Notes
Parties may have to enforce any of the Notes Documents against any Obligor on
account of a Notes Document Default under the Notes Documents, subject to all
of the other terms of this Agreement, including Section 2, Section 4
and Section 7 hereof.


 


(e)                                   Without the
prior written consent of Notes Agent, ABL Parties shall not enter into any
amendments to the ABL Documents that would (i) increase the rate
of interest (including any amendment to the default rate of interest chargeable
under the ABL Documents, but excluding, in any event, any increase resulting
from the accrual of interest at the default rate of interest) chargeable under
the ABL Loan Agreement by more than 200 basis points, (ii) shorten
the term of the credit facility under the ABL Loan Agreement by more than
12 months except after the occurrence of any ABL Document Default, (iii) add
any additional material fees, except in connection with the provision of any
Bank Products, Letters of Credit or overadvance or in connection with any
amendment or restructuring after the occurrence of an ABL Document Default, (iv) condition
or place restrictions upon the right of any Obligor to pay (other than to
prepay or repurchase) any of the Notes Debt in accordance with the Notes


 


20














 


Documents
as in effect on the date hereof except for a restriction on payments that would
be violative of this Agreement, or (v) add or make more restrictive any
representations, warranties, events of default or covenants unless an ABL
Document Default exists and notice thereof is given to Notes Agent or Borrowers
concurrently agree to enter into amendments to the Notes Documents to contain
substantially the same representations, warranties, events of default or
covenants; provided, however, (1) ABL Agent’s discretion to
establish additional reserves, release reserves, determine eligibility,
reduce/modify advance rates or make overadvances shall not otherwise be limited
or affected in any way and (2) the definition of  Reserves
may be amended to increase the amount of reserves so that the amount of
borrowing availability may be reduced, or to release or eliminate such
additional reserves to restore or increase the amount of borrowing availability
that previously existed.


 


(f)            Without the prior written
consent of ABL Agent, Notes Parties will not agree to any amendment or
modification of the Notes Documents that would (i) alter (other than to
extend) the amortization schedule or maturity date for the Notes Debt to a date
earlier than such amortization schedule or maturity date as in effect on the
date hereof; (ii) require prepayments or repurchases of the Notes (in
addition to those requirements included in the Notes Indenture on the date
hereof); (iii) increase the rate of interest (including any amendment to the
default rate of interest chargeable under the Notes Documents, but excluding,
in any event, any increase resulting from the accrual of interest at the
default rate of interest) chargeable on the Notes by more than 200 basis
points; (iv) add any additional material fees, except in connection with
any amendment or restructuring after the occurrence of a Notes Document
Default; (v) condition or place restrictions upon the right of any Obligor
to pay any of the ABL Debt in accordance with the ABL Documents as in effect on
the date hereof; or (vi) add or make more restrictive any representations,
warranties, events of default or covenants unless a Notes Document Default
exists and notice thereof is given to ABL Agent or Borrowers concurrently agree
to enter into amendments to the ABL Documents to contain substantially the same
representations, warranties, events of default or covenants.  Notes Parties acknowledge the restrictions
contained in Section 9.10(c) of the ABL Loan Agreement upon Borrowers’
right to make certain payments in respect of the Notes Debt and agree that they
will not knowingly accept or retain any payment of the principal amount of the
Notes Debt if such payment is or would be violative of Section 9.10(c) of
the ABL Loan Agreement as in effect on the date hereof.


 


(g)           ABL Agent shall ensure that
the ABL Loan Agreement, and Notes Agent shall ensure that the Notes Documents,
contain provisions to the effect that each Party thereto or beneficiary thereof
(and its successors and assigns), by accepting the benefits thereof, is bound
by the terms of this Agreement whether or not a signatory hereto and agrees to
abide by and perform all of its obligations hereunder.  Each Agent agrees to include on any now existing
or hereafter filed UCC financing statements naming any Obligor as debtor and
such Agent as secured party the following text: 
The liens of secured party are subject to that certain Intercreditor
Agreement among Wachovia Bank, National Association, as ABL Agent, Wilmington
Trust FSB, as Notes Agent and the other parties thereto, as amended, restated,
supplemented or otherwise modified from time to time” or words of similar
effect.


 


9.             Access to
and Use of Notes Priority Collateral.


 


(a)           Prior
to the completion of foreclosure by Notes Agent of its Lien on any Real Estate
Collateral, Notes Parties will not take any action to impede or impair the
rights of ABL Agent to enter upon any Real Estate Collateral to inspect or
count any ABL Priority Collateral thereon or to remove any ABL Priority Collateral
therefrom, without any obligation on the part of ABL Agent to pay rent or other
compensation to any Notes Party.  Notes
Parties will permit (and will require any purchaser of any of the real property
constituting part of the Real Estate Collateral at any foreclosure or other
sale to permit) ABL Agent to use such Real Estate Collateral to store, repair,
prepare for sale, sell or otherwise dispose of any of the ABL Priority
Collateral, without charge, for a period of 180 days from the date


 


21

















 


Notes Agent provides to ABL Agent written notice of
the completion of foreclosure upon such Real Estate Collateral by Notes Agent
(the “Period of Use”; provided, that as used in Section 9(b),
“Period of Use” shall be deemed to be for a period of 180 days from the
date Notes Agent provided to ABL Agent written notice of any sale of Equipment
Collateral as contemplated by such Section 9(b)), which Period of
Use under this Section 9(a) and under Section 9(b) shall
be tolled for each day that ABL Agent is enjoined, stayed or otherwise
precluded (whether by order of a Court, the imposition of the automatic stay in
any Bankruptcy Case, other Insolvency Proceeding or otherwise by applicable
law) from continuing its Lien Enforcement Action with respect to ABL Priority
Collateral and each reference herein to “Period of Use” shall be to such Period
of Use as so tolled.


 


(b)           Prior
to Notes Agent’s sale or other disposition of any Equipment Collateral pursuant
to a Lien Enforcement Action, Notes Agent shall not interfere with ABL Agent’s
access to any of the Equipment Collateral and use thereof to the extent ABL
Agent deems it necessary to do so in effectively realizing upon any of the ABL
Priority Collateral.  To the extent that
any of the Equipment Collateral constitutes computer hardware or software that
is used to store or maintain information relating to any ABL Priority
Collateral or to process any such information, Notes Agent shall not sell or
otherwise dispose of any such Equipment Collateral pursuant to a Lien
Enforcement Action or otherwise unless the purchaser in any such sale agrees to
allow ABL Agent use of such Equipment Collateral, for so long as ABL Agent may
require the use of such Equipment Collateral, without charge, but in no event
to exceed the Period of Use.


 


(c)           ABL
Parties shall promptly repair, at ABL Parties’ expense (but with Obligors
remaining liable to reimburse ABL Parties), any physical damage to the Real
Estate Collateral or Equipment Collateral directly caused by ABL Agent or its
agent during the use and occupancy of the Real Estate Collateral or Equipment
Collateral pursuant to this Section 9.


 


(d)           If Notes Agent has obtained
possession or control of any or all of the Collateral consisting of books or
records, ABL Agent may make copies (including in the case of any books and
records stored in electronic form, electronic copies thereof) of such books and
records that are in Notes Agent’s possession and which pertain to any ABL
Priority Collateral, to deal with or dispose of any such ABL Priority
Collateral; provided, that if and to the extent such books and records relate
solely to ABL Priority Collateral and upon request by ABL Agent, Notes Agent
shall turnover to ABL Agent the original copies of such books and records.  To the extent that any such books and records
constitute Notes Priority Collateral, each of Notes Agent (to the extent it may
lawfully do so) and Obligors hereby grant to ABL Agent an irrevocable and
non-exclusive license to use any and all such books and records for the purpose
of dealing with and realizing upon the ABL Priority Collateral.  Such license shall be worldwide and none of
Obligors, Notes Agent nor any other Notes Party shall be entitled to any
payment or other compensation in respect of such license from ABL Agent.


 


(e)           If
ABL Agent has obtained possession or control of any or all of the Collateral
consisting of books or records, Notes Agent may make copies (including in the
case of any books and records stored in electronic form, electronic copies
thereof) of such books and records that are in ABL Agent’s possession and which
pertain to any Notes Priority Collateral, to deal with or dispose of any such
Notes Priority Collateral; provided, that if and to the extent such
books and records relate solely to Notes Priority Collateral and upon request
by Notes Agent, ABL Agent shall turnover to Notes Agent the original copies of
such books and records.  To the extent that any such books and records
constitute ABL Priority Collateral, each of ABL Agent (to the extent it may
lawfully do so) and Obligors hereby grant to Notes Agent an irrevocable and
non-exclusive license to use any and all such books and records for the purpose
of dealing with and realizing upon the Notes Priority Collateral.  Such license shall be worldwide and none of
Obligors, ABL Agent nor any ABL Lender shall be entitled to any payment or
other compensation in respect of such license from Notes Agent.


 


22

















 


10.          Bailee for
Perfection Purposes; Delivery or Surrender of Collateral.


 


(a)           Each Agent agrees that, with
respect to any Collateral at any time or times in its possession or control and
in which the other Agent has a Lien (whether or not subordinate pursuant to the
terms hereof to the Lien of the Agent in possession), the Agent in possession
or control of any such Collateral shall be the agent and bailee of the other
Agent solely for purposes of perfecting (to the extent not otherwise perfected)
such other Agent’s Lien in such Collateral, subject in all events to the
relative priorities established pursuant to Section 3 hereof.


 


(b)           If an Agent shall be in
possession or control of any Collateral subject to its Lien after Payment in
Full of the ABL Debt (other than in connection with a Qualified Refinancing as
contemplated by Section 24(d) in which the Person providing such
Qualified Refinancing (or its agent) elects to become a party hereto), in the
case of ABL Agent, or the Notes Debt (other than in connection with a Qualified
Refinancing as contemplated by Section 24(d) in which the Person
providing such Qualified Refinancing (or its agent) elects to become a party
hereto), in the case of Notes Agent, such Agent shall (unless otherwise
restricted by applicable law and subject in all events to the receipt of an
indemnification of all liabilities arising from such delivery or surrender of
possession) promptly deliver or surrender possession of the same or execute an
assignment of any agreement giving such Agent control of the same under the UCC
(to the extent permitted by the terms of such agreement and applicable law) to
the other Agent in accordance with the priorities of Liens established pursuant
to Section 3 hereof, without recourse to or warranty by such Agent
in possession.


 


11.          Provisions
Concerning Insurance. 
Proceeds of Collateral include insurance proceeds and condemnation
proceeds (including proceeds of business interruption insurance), and therefore
the priorities set forth in Section 3 hereof and the provisions of Section 5
hereof govern the ultimate disposition of insurance and condemnation
proceeds.  ABL Agent, for the benefit of
the other ABL Parties, shall have the sole and exclusive right, as against
Notes Parties, to adjust settlement of insurance claims in the event of any
covered loss, theft or destruction of any ABL Priority Collateral or any
settlement of any business interruption claim. 
Notes Agent, for the benefit of Notes Parties, shall have the sole and exclusive
rights, as against ABL Parties, to adjust settlement of insurance claims in the
event of any covered loss, theft or destruction of any Notes Priority
Collateral and approve.  All Parties
shall cooperate to the extent reasonably necessary and in a reasonable manner
to facilitate the payment of insurance proceeds to the appropriate Agent for
disposition in accordance with Section 5 hereof.  ABL Agent shall have the right (as against
Notes Parties) to determine whether insurance proceeds may be used to replace
any affected ABL Priority Collateral. 
Notes Agent shall have the right (as against ABL Parties) to determine
whether insurance proceeds may be used to repair or replace any affected Notes
Priority Collateral.


 


23

















 


12.          Certain Matters in Connection
with Sale or Loss of Assets.  If any sale or other disposition of assets
(including any casualty loss) includes ABL Priority Collateral and Notes
Priority Collateral, unless otherwise agreed to by the Agents, as between the
Parties the Parties agree that the amount of the purchase price allocated to
Receivables and Inventory (each as defined on Exhibit A attached
hereto) sold or otherwise disposed of shall not be less than the book value (in
accordance with GAAP) of such Receivables and Inventory and the amount of the
purchase price allocated to IP Collateral (as defined on Exhibit A
attached hereto) sold or otherwise disposed of shall not be less than the
orderly liquidation value of such IP Collateral as determined by the most
recent appraisal of such property. 
Nothing in this Section 12 shall be deemed to be a consent by any
ABL Secured Party to any sale of the ABL Priority Collateral that is
insufficient to satisfy in full the amount of the ABL Debt and nothing in this Section 12
shall be deemed to be a consent by any Notes Party to any sale of the Notes
Priority Collateral that is insufficient to satisfy in full the amount of the
Notes Debt.


 


13.          Notices.  All notices, requests and demands to or upon
a party hereto shall be in writing and shall be delivered by hand, sent by
certified or registered mail, return receipt requested, or by telecopier and
shall be deemed to have been validly served, given or delivered when delivered
against receipt or three (3) Business Days after deposit in the U.S. mail,
postage prepaid, or, in the case of telecopy notice, when received at the
office of the noticed party during normal business hours, in each case
addressed as follows:


 


	
  (A)

  	
  If
  to ABL Parties:

  	
  Wachovia
  Bank, National Association, as Agent

  
	
   

  	
   

  	
  301
  South College Street

  
	
   

  	
   

  	
  Charlotte,
  NC 28288-0737

  
	
   

  	
   

  	
  Attention: Freedom
  Group Loan Administration

  
	
   

  	
   

  	
  Telecopy:
  (704) 374-273

  
	
   

  	
   

  	
   

  
	
   

  	
  With
  a courtesy copy (which shall not

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  constitute
  notice) to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Parker,
  Hudson, Rainer & Dobbs LLP

  
	
   

  	
   

  	
  1500
  Marquis Two Tower

  
	
   

  	
   

  	
  285
  Peachtree Center Avenue, N.E.

  
	
   

  	
   

  	
  Atlanta,
  GA 30303

  
	
   

  	
   

  	
  Attention: Mitchell
  Purvis, Esq.

  
	
   

  	
   

  	
  Telecopy:
  (404) 522-8409

  
	
   

  	
   

  	
   

  
	
  (B)

  	
  If
  to Notes Parties:

  	
  Wilmington
  Trust FSB

  
	
   

  	
   

  	
  246
  Goose Lane, Suite 105

  
	
   

  	
   

  	
  Guilford,
  CT 06437

  
	
   

  	
   

  	
  Attention: Joseph
  O’Donnell

  
	
   

  	
   

  	
  Telecopy:
  (203) 453-1183

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With
  a courtesy copy (which shall not

  
	
   

  	
   

  	
  constitute
  notice) to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Dorsey &
  Whitney LLP

  
	
   

  	
   

  	
  Suite 1500

  
	
   

  	
   

  	
  50
  South Sixth Street

  
	
   

  	
   

  	
  Minneapolis,
  MN 55402

  
	
   

  	
   

  	
  Attention:
  Steven J. Heim

  
	
   

  	
   

  	
  Telecopy:
  (612) 340-2643

  



 


24

















 


or
to such other address as each party may designate for itself by like notice
given in accordance with this Section; provided, however, that
any notice, request or demand to or upon an Agent pursuant to Section 4(b) shall
not be effective until received by such Agent. 
Any written notice that is not sent in conformity with the provisions
hereof shall nevertheless be effective on the date that such notice is actually
received by the noticed party.  Each Agent
hereby agrees that any requirement for the giving of notice by an Agent under
the UCC or otherwise in connection with any exercise by such Agent of any of
its rights or remedies with respect to the Collateral (including the taking of
any Lien Enforcement Action) shall be satisfied by the giving of written notice
at least ten (10) days prior to the date on which such rights or remedies
are to be exercised by such Agent, provided that nothing herein shall be
deemed to require the giving of any notice when such notice is not required by
applicable law.


 


14.          No Duties
Imposed Upon Parties.  The
rights granted to the Parties in this Agreement are solely for their protection
and nothing herein contained imposes on any Party any duties with respect to
any of the Collateral.  No Party has any
duty to preserve rights against prior parties on any instrument or chattel
paper received from any Obligor as collateral security for any of the ABL Debt
or Notes Debt.


 


15.          Representations
of Parties.  Each Party
represents and warrants to the other Parties that (i) the execution,
delivery and performance of this Agreement by such Party is within the powers
of such Party, has been duly authorized by all internal action of such Party
(including, as applicable, approval of its board of directors, partners,
shareholders or a limited liability company members) and does not contravene
any applicable law, any provision of any applicable Debt Documents, or any
agreement by which such Party or its property is bound; (ii) this Agreement
constitutes the legal, valid and binding obligation of such Party, enforceable
against it in accordance with its terms; and (iii) this Agreement has been
duly executed and delivered on its behalf by an individual officer, director,
shareholder, partner or other authorized person.


 


16.          No
Additional Rights of Obligors Hereunder; No Effect on Liens.  Nothing herein shall be construed to confer
additional rights upon any Obligor. 
Without limiting the generality of the foregoing, if either of Agents
shall enforce its rights or remedies in violation of this Agreement, no Obligor
shall be authorized to use such violation as a defense to any right or remedy
exercised by such Agent, nor assert such violation as a counterclaim or basis
of setoff or recoupment against any Party. 
Nothing contained in this Agreement is intended to affect or limit in
any way the Liens of either of Agents with respect to any of the Collateral or
other assets of any Obligor, whether tangible or intangible, insofar as such
Obligor and third parties are concerned. 
Agents specifically reserve all of their respective Liens, and rights to
assert such Liens, as against each Obligor and all third parties.


 


17.          Independent
Credit Investigations. 
Neither the Parties nor any of their respective directors, officers,
agents or employees shall be responsible to any other Party or any other Person
for any Obligor’s solvency, financial condition or ability to repay any of the
Notes Debt or any of the ABL Debt, or for statements of any Obligor, oral or
written, or for the validity, sufficiency or enforceability of any of the
applicable Debt Documents, or the validity, perfection or priority of any Liens
granted by any Obligor to either of Agents in connection with any of the
applicable Debt Documents.  Each Party
hereto has entered into its agreements with each Obligor based upon its own
independent investigation, and makes no warranty or representation to any other
Party and does not rely upon any representation of any other Party with respect
to matters identified or referred to in this Section.


 


18.          Term of
Agreement.  This
Agreement shall continue in full force and effect and shall be irrevocable by
any Party hereto until the earliest to occur of the following:  (i) the Parties hereto in writing mutually
agree to terminate this Agreement; (ii) Payment in Full of the Notes Debt;
or (ii) Payment in 


 


25

















 


Full
of the ABL Debt and termination of the Commitments.  Notwithstanding the foregoing, the provisions
of this Agreement shall continue to be effective or be reinstated, as the case
may be, if at any time payment of any of the ABL Debt or Notes Debt, as
applicable, is made in a manner that is violative of this Agreement, or is
rescinded or otherwise must be returned by a Party connection with an
Insolvency Proceeding, all as if any such payment had not been made.


 


19.          Governing
Law.  This Agreement shall be
interpreted, and the rights and obligations of the parties hereto determined,
in accordance with the laws of the State of New York (without giving effect to
any conflict of laws principles).


 


20.          No Third
Party Beneficiaries. 
Nothing contained in this Agreement shall be deemed to indicate that
this Agreement has been entered into for the benefit of any Person other than (i) Agents
and their respective successors and permitted assigns and (ii) ABL Secured
Parties and Notes Parties, together with their respective successors and
permitted assigns.  No Person other than
a Party shall be authorized to enforce any of the provisions of this Agreement.


 


21.          Conflict
with Documents.  The
provisions of this Agreement are intended by the Parties to control any
conflicting provisions in the Debt Documents, including any covenants
prohibiting further borrowing or encumbrances of Collateral; provided, however,
that nothing herein shall modify or relieve any Obligor from any liability or
obligations that such Obligor may have to any Party under any ABL Documents or
any Notes Document.  The definitions of “Payment
in Full,” “Discharge of the Priority ABL Debt,” and “Discharge of the Priority
Notes Debt,” as used herein, are intended solely to define the circumstances
under which the ABL Debt, Notes Debt, Priority ABL Debt or Priority Notes Debt
are deemed to be paid in full under this Agreement as a condition to the
exercise of certain rights or the discharge of certain duties by ABL Parties or
Notes Parties, as applicable, and nothing herein shall be deemed to limit,
restrict or otherwise affect any of the indemnities or other undertakings of
Obligors that are set forth in the ABL Documents or the Notes Documents, all of
which indemnities and other undertakings of Obligors shall survive Payment in
Full of the ABL Debt or the Notes Debt, as applicable, and shall continue in full
force and effect as if this Agreement had never been entered into by the
Parties.


 


22.          Section Headings.  The section headings contained in this
Agreement are and shall be deemed to be without substantive meaning or content
of any kind whatsoever and are not a part of the agreement between the parties
hereto.


 


23.          Counterparts;
Facsimile Signatures.  This
Agreement may be executed in any number of counterparts and by different
Parties hereto in separate counterparts, each of which when so executed and delivered
shall be deemed to be an original and all of which counterparts taken together
shall constitute but one and the same instrument.  In proving this Agreement in any judicial
proceeding, it shall not be necessary to produce or account for more than one
such counterpart signed by the Party against whom such enforcement is
sought.  Any signature delivered by a
Party by facsimile or other electronic mail transmission shall be deemed to be
an original signature hereto.


 


26

















 


24.         Binding Effect;
Participations and Assignments.


 


(a)            This Agreement shall be
binding upon each of Obligors, ABL Secured Parties and Notes Parties and shall
inure to the benefit of the Parties and their respective successors and
permitted assigns.  In no event shall any
Obligor or any Affiliate of an Obligor be deemed to be a permitted assign of
any Party.  Each Agent represents that it
has not agreed to any modification of the provisions of the applicable ABL
Documents or Notes Documents authorizing it to execute this Agreement and to
bind all of the ABL Secured Parties or Notes Parties, as applicable.  Notwithstanding any implication to the
contrary in any provision in this Agreement, neither Agent makes any
representation regarding the validity or binding effect of any of the ABL
Documents or Notes Documents or its authority to bind any of the ABL Secured
Parties or Notes Parties, as applicable, through its execution of this
Agreement.


 


(b)           To the extent provided in
the ABL Documents or Notes Documents, as applicable, each ABL Lender and Holder
reserves the right to grant participations in, or otherwise sell, assign,
transfer or negotiate all or any part of, or any interest in, the ABL Debt or
the Notes Debt, as the case may be; provided, however, that no
Party shall be obligated to give any notices to or otherwise in any manner deal
directly with any such participant in the ABL Debt or Notes Debt, as the case
may be, and no participant shall be entitled to any rights or benefits under
this Agreement except through the ABL Lender or Holder, as applicable, with
which it is a participant and any sale of a participation in the ABL Debt or
the Notes Debt shall be expressly made subject to the provisions of this
Agreement.


 


(c)            In no event shall an Agent
transfer or assign any Lien that it may have with respect to any of the
Collateral to any Person unless the transferee or assignee thereof shall first
agree in writing to be bound by the terms of this Agreement the same as if an
original signatory hereto.


 


(d)           If Payment in Full of all of
the ABL Debt or Notes Debt is made by loans, notes or other extensions of
credit made to one or more Obligors in connection with a Qualified Refinancing,
each Person providing (or in the case of notes, purchasing) such loans, notes
or other extensions of credit (or an agent or authorized representative acting
on its behalf) may elect by written notice to Agents to be a party hereto and
substituted for the ABL Parties (if such Person’s loans, notes or other extensions
of credit are used for Payment in Full of the ABL Debt) or Notes Parties (if
such Person’s loans, notes or other extensions of credit are used for Payment
in Full of the Notes Debt).


 


25.          Obligations
Unconditional; Several Obligations.  All rights, interest, agreements and
obligations of the Parties under this Agreement shall remain in full force and
effect irrespective of (a) except as otherwise expressly provided in this
Agreement, any lack of validity or enforceability of any Notes Document or any
ABL Document; (b) except as otherwise provided in this Agreement, any
change in the time, manner or place of payment of, or in any other terms of,
any of the Notes Debt or ABL Debt, or any amendment, waiver or other
modification, whether by course of conduct or otherwise, of the terms of any of
the Notes Documents or any ABL Documents; (c) any exchange of any security
interest or other Lien in any of the Collateral or any amendment, waiver or
other modification permitted hereunder, whether in writing, by course of
conduct or otherwise, of any of the Notes Debt or ABL Debt; or (d) the
commencement of any Insolvency Proceeding in respect of any Obligor.


 


26.          Further
Assurances.  Each of the
Parties agrees to execute such amendments to financing statements and other
documents as may be necessary to reflect of record the existence of this
Agreement and the relative priorities established pursuant to Section 3
hereof.  If at any time or from time to
time hereafter it becomes necessary or advisable in connection with any Lien
Enforcement Action or other disposition of any ABL Priority Collateral by
ABL Agent for ABL Agent to obtain a subordination, release or discharge of
Notes Agent’s Liens in any such ABL Priority Collateral in order to convey good
and marketable title to such ABL Priority Collateral, then, so long as such
Lien Enforcement Action or 


 


27

















 


other
disposition, and the application of the proceeds derived therefrom, have
been accomplished in conformity herewith, upon the request of ABL Agent, Notes
Agent shall execute such instruments of subordination, release or discharge of
such Liens, in recordable and registerable form, as may be reasonable and
appropriate in the circumstances; provided, however, that in no
event shall any such subordination, release or discharge alter, impair,
release, discharge, terminate or otherwise modify any Liens of Notes Agent in
and to any other portion of the Collateral then existing or any proceeds of
such ABL Priority Collateral or the claims of Notes Parties against Obligors
for any of the Notes Debt. If at any time or from time to time hereafter it
becomes necessary or advisable in connection with any Lien Enforcement Action
or other disposition of any Notes Priority Collateral by Notes Agent for Notes
Agent to obtain a subordination, release or discharge of ABL Agent’s Liens in
any such Notes Priority Collateral in order to convey good and marketable title
to such Notes Priority Collateral, then, so long as such Lien Enforcement
Action or other disposition, and the application of the proceeds derived
therefrom, have been accomplished in conformity herewith, upon the request of
Notes Agent, ABL Agent shall execute such instruments of subordination, release
or discharge of such Liens, in recordable and registerable form, as may be
reasonable and appropriate in the circumstances; provided, however,
that in no event shall any such subordination, release or discharge alter,
impair, release, discharge, terminate or otherwise modify any Liens of ABL
Agent in and to any other portion of the Collateral then existing or any
proceeds of such Notes Priority Collateral or the claims of ABL Parties against
Obligors for any of the ABL Debt.


 


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


 


28.          Specific
Performance.  Each Agent, on behalf of itself and the other
Parties for which it serves as such agent, may demand specific performance of
this Agreement, and each Party irrevocably waives any defense based upon the
adequacy of the remedy at law and any other defense that might be asserted to
bar the remedy of specific performance in any action that may be brought by
either Agent.


 


29.          Entire
Agreement; Amendments.  This
Agreement expresses the entire understanding and agreement of the Parties
hereto with respect to the subject matter hereof and supersedes all prior
understandings and agreements of the Parties regarding the same subject
matter.  This Agreement may not be
amended or modified except by a writing signed by the Parties hereto.


 


30.          Jury Trial Waiver.  To the fullest extent permitted by applicable
law, each Party hereby waives all rights to a trial by jury in connection with
any action, suit or other proceeding arising out of or related to this
Agreement.


 


[Signatures
on following pages]


 


28














 


IN WITNESS WHEREOF, the
parties hereto have executed this Agreement on the day and year first above
written.


 


	
   

  	
  ABL AGENT:

  
	
   

  	
   

  	
   

  
	
   

  	
  WACHOVIA
  BANK, NATIONAL ASSOCIATION, as ABL Agent

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
				



 

















 


	
   

  	
  NOTES AGENT:

  
	
   

  	
   

  	
   

  
	
   

  	
  WILMINGTON TRUST, FSB,
  as Notes Agent

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
				



 

















 


ACKNOWLEDGMENT,
CONSENT AND AGREEMENT


 


The undersigned, the
Obligors described in the foregoing Intercreditor Agreement (the “Agreement”),
each (i) acknowledges receipt of a copy of the Agreement, (ii) to the
extent required, consents to the terms and conditions thereof and (iii) agrees
to be bound by the allocation of proceeds of Collateral as between the Notes
Parties and ABL Secured Parties provided for in the Agreement; acknowledges and
agrees that it is not a third-party beneficiary of, and does not have any
rights or benefits under, the Agreement; although it is signing below,
acknowledges and agrees that it is not a party to the Agreement and that the
Agreement may be modified or amended at any time or times without notice to or
the consent of any of the undersigned (provided that its consent to the
Agreement shall not extend to any modification or amendment thereof that is not
itself consented to by the undersigned (it being understood that nothing herein
is intended to imply that any such consent is required)); and agrees not to
assert any provision of the Agreement as a defense to, or otherwise assert any
provision thereof in connection with, any action, suit or other proceeding
relating to any of the Debt Documents or Collateral, or as a counterclaim or
basis for setoff or recoupment against any Party.


 


This Acknowledgment, Consent
and Agreement and any amendment hereof may be executed in several
counterparts and by each Obligor on a separate counterpart, each of which,
when so executed and delivered, shall be an original, but all of which together
shall constitute but one and the same instrument.  Capitalized terms used in
this Acknowledgment, Consent and Agreement without definition have the meanings
specified in the Agreement unless the context otherwise requires.


 


July       ,
2009.


 


	
   

  	
   

  	
  “OBLIGORS”

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  FREEDOM
  GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Secretary

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  REMINGTON
  ARMS COMPANY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Secretary

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  THE
  MARLIN FIREARMS COMPANY  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Secretary

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  



 


[Signatures continue on following page.]


 

















 


	
  ATTEST:

  	
   

  	
  H&R
  1871, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Secretary

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  BUSHMASTER
  FIREARMS INTERNATIONAL, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Secretary

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  DPMS
  FIREARMS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Secretary

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  E-RPC,
  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Secretary

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  DA
  ACQUISITIONS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Secretary

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  RA BRANDS, L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Secretary

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  



 


[Signatures continue on following page.]


 

















 


	
  ATTEST:

  	
   

  	
  RACI
  HOLDING, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Secretary

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  REMINGTON
  STEAM, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Secretary

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  BUSHMASTER
  HOLDINGS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Secretary

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  



 

















 


EXHIBIT A


 


ABL Priority Collateral


 


“ABL Priority Collateral” shall mean
all of each Obligor’s right, title or interest in or to all of the following
types and items of property of such Obligor, whether now owned or existing or
hereafter created, acquired or arising and wherever located:


 


(i)              all
Inventory;


 


(ii)             all
contracts and Documents that evidence the ownership of or right to receive or
possess, or that otherwise relate to, any Inventory, including, without
limitation, contracts and documents that relate to the acquisition or sale or
other disposition of any Inventory;


 


(iii)            all
rights of an unpaid vendor with respect to Inventory;


 


(iv)            all
Receivables;


 


(v)             all
contracts out of which any Receivable has arisen and all rights under each such
contract;


 


(vi)            all
Deposit Accounts Collateral;


 


(vii)           all
Notes Receivable given to evidence one or more Receivables, however evidenced
and whenever made;


 


(viii)          all
Instruments, Chattel Paper, Documents, Letter-of-Credit Rights and Supporting
Obligations, in each case to the extent arising out of, relating to or given in
exchange or settlement for any of the Inventory, Receivables or Notes
Receivable referred to in clause (vii) above or given to evidence the
obligation to pay any Receivables or Notes Receivable referred to in clause (vii) above;


 


(ix)            all
General Intangibles that relate in any way to any of the Inventory, including,
without limitation, all warranties of title, or any other ABL Priority
Collateral;


 


(x)             all
cash and cash equivalents of any kind at any time deposited with or held by or
under the control of ABL Agent or any other ABL Party (but excluding on any
date amounts on deposit therein that are traceable to and identifiable on such
date as the direct cash proceeds of Notes Priority Collateral);


 


(xi)            all
Commercial Tort Claims related to or arising out of (a) the manufacture,
distribution, sale or other disposition of an Obligor’s Inventory or (b) the
collection of or realization upon any Receivables of an Obligor;


 


(xii)           the
proceeds of any business interruption insurance policy, including, without limitation,
all rights to payment thereunder;


 


(xiii)          all
IP Collateral;


 


(xiv)          all
substitutions for and replacements, products, accessions, rents, profits and
cash and non-cash Proceeds of any of the foregoing items of ABL Priority
Collateral, including, without 


 

















 


limitation, Proceeds of any insurance
policies, claims against third parties, and condemnation or requisition
payments with respect to all or any of the foregoing items of ABL Priority
Collateral;


 


(xv)           all
Collateral Records; and


 


(xvi)          to
the extent not included above, all Collateral Support and Supporting
Obligations relating to any of the foregoing.


 


For
the avoidance of doubt, (A) no proceeds of ABL Loans shall constitute ABL
Priority Collateral to the extent that the proceeds thereof are used to acquire
assets or property that would otherwise constitute Notes Priority Collateral
and (B) no assets or property that would otherwise constitute Notes
Priority Collateral shall constitute ABL Priority Collateral to the extent such
assets or property are purchased with funds in any disbursement account of an
Obligor that are transferred to such disbursement account from an account
described in clause (vi) or (x) above in compliance with the ABL
Documents at a time when no Cash Management Event has occurred.


 


Applicable Definitions


 


Capitalized terms used in this Exhibit A
and not otherwise defined herein shall have the respective meanings ascribed
thereto in the Intercreditor Agreement to which this Exhibit A is
attached.


 


“Account” shall mean and include
an “account” as defined in the UCC.


 


“Agent Payment Account” shall mean a Deposit Account maintained by
Agent to which (a) all monies from time to time deposited to any Blocked
Accounts shall be transferred and (b) collections, deposits, and other
payments on or with respect to ABL Priority Collateral may be made pursuant to
the terms of the ABL Documents.


 


“Blocked Account” shall mean a special account established by
Obligors or ABL Agent at a bank selected by Obligors, but acceptable to ABL
Agent in its discretion, and over which ABL Agent shall have sole and exclusive
access and control for withdrawal purposes on or after any Cash Management
Event.


 


“Chattel
Paper” shall mean and include all “chattel paper” as defined in the UCC,
including, without limitation, “electronic chattel paper” or “tangible chattel
paper,” as each term is defined in Article 9 of the UCC.


 


“Collateral
Records” shall mean books, records, ledger cards, files, correspondence,
customer lists, blueprints, technical specifications, manuals, computer
software, computer printouts, tapes, disks and related data processing software
and similar items that at any time evidence or contain information relating to
any of the ABL Priority Collateral or are otherwise necessary or helpful in the
collection thereof or realization thereupon.


 


“Collateral
Support” shall mean all property (real or personal) assigned, hypothecated
or otherwise securing any ABL Priority Collateral and shall include any
security agreement or other agreement granting a lien or security interest in
such real or personal property.


 


“Commercial Tort Claim” shall have the meaning given to the term “commercial
tort claim” in the UCC.


 


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“Deposit Account” shall have the meaning given to the term “deposit
account” in the UCC and shall include, without limitation, all checking and
other deposit accounts maintained with any financial institution.


 


“Deposit Accounts Collateral” shall mean Deposit Accounts (and any
associated lockboxes) maintained by any ABL Party or other bank for the deposit
of proceeds of ABL Priority Collateral pursuant to the ABL Documents or for
disbursing the proceeds of ABL Loans made by ABL Lenders pursuant to the ABL
Documents and all amounts from time to time deposited in such Deposit Accounts
(but excluding on any date amounts on deposit therein that are traceable to and
identifiable on such date as the direct cash proceeds of Notes Priority
Collateral).  For the avoidance of doubt,
all Blocked Accounts and the Agent Payment Account shall constitute Deposit
Accounts Collateral.


 


“Document” shall mean and include a “document” as defined in the UCC
and shall include, without limitation, for each Obligor, all of such Obligor’s
bills-of-lading, warehouse receipts or other documents of title.


 


“General Intangible” shall mean and include a “general intangible”
as defined in the UCC.


 


“Goods” shall mean and include “goods”
as defined in the UCC.  The term “Goods”
shall include Inventory.


 


“Instrument” shall mean and include an
“instrument” as defined in the UCC.


 


“Inventory”
shall mean (i) all “inventory” as defined in Article 9 of the UCC, (ii) all
Goods which are returned to or repossessed by any Obligor and that prior to the
sale or lease thereof constituted “inventory” as defined in Article 9 of
the UCC, (iii) all computer programs embedded in any such Goods described
in clauses (i) and (ii) of this definition and (iv) all
accessions thereto and products thereof (in each case, regardless of whether
characterized as inventory under the UCC).


 


“IP
Collateral” shall mean any and all patents, patent rights, patent
applications, copyrights, works which are the subject matter of copyrights,
copyright applications, copyright registrations, trademarks, servicemarks,
trade names, trade styles, trademark and service mark applications, and
licenses and rights to use any of the foregoing and all applications,
registrations and recordings relating to any of the foregoing as may be filed
in the United States Copyright Office, the United States Patent and Trademark
Office or in any similar office or agency of the United States, any State
thereof, any political subdivision thereof or in any other country or
jurisdiction, together with all rights and privileges arising under applicable
law with respect to any Obligor’s use of any of the foregoing; all extensions,
renewals, reissues, divisions, continuations, and continuations-in-part of any
of the foregoing; all rights to sue for past, present and future infringement
of any of the foregoing; inventions, trade secrets, formulae, processes,
compounds, drawings, designs, blueprints, surveys, reports, manuals, and
operating standards; goodwill (including any goodwill associated with any
trademark or servicemark, or the license of any trademark or servicemark);
customer and other lists in whatever form maintained; trade secret rights,
copyright rights, rights in works of authorship, domain names and domain name
registration; software and contract rights relating to computer software programs,
in whatever form created or maintained.


 


“Letter-of-Credit
Right” shall have the meaning given to the term “letter-of-credit right” in
the UCC.


 


3

















 


“Notes
Receivable” means any promissory note or other writing evidencing an
obligation to pay money to an Obligor.


 


“Payment Intangible” shall have the meaning given to the term “payment
intangible” in the UCC.


 


“Proceeds” shall mean:  (i) all
“proceeds” as defined in Article 9 of the UCC, (ii) payments or
distributions made with respect to any Notes Receivable referred to in clause (vii) of
the definition of ABL Priority Collateral or Deposit Accounts Collateral, and (iii) whatever
is receivable or received when ABL Priority Collateral or proceeds are sold,
exchanged, collected or otherwise disposed of, whether such disposition is
voluntary or involuntary.


 


“Receivables” shall mean (i) all Accounts (and related
Supporting Obligations), and (ii) all other rights to payment, in each
case under clauses (i) and (ii), arising from services rendered or to be
rendered or from the sale, lease, license, assignment or other disposition of
Inventory or Documents evidencing Inventory, whether such rights to payment
constitute Payment Intangibles, Letter-of-Credit Rights, Supporting Obligations
or any other classification of property, or are evidenced in whole or in part
by Instruments, Chattel Paper or Documents.


 


“Supporting Obligation” shall mean and include “supporting
obligation” as defined in the UCC.


 


“UCC”
means the Uniform Commercial Code (or any successor statute), as adopted and in
force in the State of New York or, when the laws of any other state govern the
method or manner of the perfection or enforcement of any security interest in
any of the Collateral, the Uniform Commercial Code (or any successor statute)
of such state.


 


4

















 


EXHIBIT B


 


Notes Priority Collateral


 


“Notes
Priority Collateral” shall mean all “Collateral” as defined in the Notes
Documents and all other assets pledged pursuant to the Notes Documents to
secure the Notes Debt (in each case, other than ABL Priority Collateral).