Exhibit 10.2


 


EXECUTION VERSION


 


Notwithstanding
anything herein to the contrary, the liens and security interests granted to
the Agent pursuant to this Agreement and the exercise of any right or remedy by
the Agent hereunder are subject to the provisions of the Intercreditor
Agreement (as defined in the Indenture referred to below).  Any requirement to grant “control” to the
Agent over ABL Priority Collateral (as defined in the Intercreditor Agreement)
contained herein prior to the Discharge of the ABL Obligations (as defined in
the Intercreditor Agreement) shall be satisfied by granting control over such
ABL Priority Collateral to the ABL Agent (as defined in the Intercreditor
Agreement).  In the event of any conflict
between the terms of the Intercreditor Agreement and the terms of this
Agreement, the terms of the Intercreditor Agreement shall govern and control.


 


SECURITY
AGREEMENT


 


THIS SECURITY AGREEMENT
dated as of July 29, 2009 (as amended, modified, supplemented or restated
from time to time, this “Agreement”), is
made by and among FREEDOM GROUP, INC., a Delaware corporation (the “Company”), each of the subsidiaries of the Company listed on
Schedule 1 hereto or that becomes a
party hereto (the “Subsidiary Grantors”;
the Subsidiary Grantors and the Company are referred to collectively as the “Grantors”) and Wilmington Trust FSB, as Collateral Agent
under the Indenture (as defined below) (together with its successors in such
capacity, the “Agent”).


 


W
I T N E S S E T H:


 


WHEREAS, the Grantors have
entered into that certain Indenture, dated as of July 29, 2009 (as
amended, restated, supplemented or otherwise modified from time to time, the “Indenture”), by and among the Grantors and Wilmington Trust
FSB, as trustee (together with its successors in such capacity, the “Trustee”), on behalf of the holders (the “Noteholders”) of the Notes (as defined below) pursuant to
which the Company is issuing $200,000,000 aggregate principal amount of its
101⁄4% Senior Secured Notes due 2015 (together with any Additional Notes and
Exchange Securities, the “Notes”), which
are guaranteed by each of the Grantors;


 


WHEREAS, the Trustee has
been appointed to serve as Collateral Agent under the Indenture and in such
capacity, to enter into this Agreement;


 


WHEREAS, following the date
hereof, the Grantors may incur Permitted Additional Pari Passu Obligations (as
defined in the Indenture) which are secured equally and ratably with the
Grantors’ obligations in respect of the Notes in accordance with Section 8.9
of this Agreement;


 


WHEREAS, each Grantor will
receive substantial benefits from the execution, delivery and performance of
the obligations under the Indenture, the Notes and any Additional Pari Passu
Agreement and each is, therefore, willing to enter into this Agreement;


 


WHEREAS, the Grantors are
executing and delivering this Agreement pursuant to the terms of the Indenture
to induce the Trustee to enter into the Indenture and induce the Noteholders to
purchase the Notes; and


 

















 


WHEREAS, this Agreement is
made by the Grantors in favor of the Agent for the benefit of the Secured
Parties to secure the payment and performance in full when due of the
Obligations;


 


NOW, THEREFORE, in
consideration of the foregoing premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
each Grantor and the Agent hereby agree as follows:


 


SECTION 1.                                                         DEFINITIONS


 


1.1          Definitions


 


Capitalized terms used and
not otherwise defined herein shall have the respective meanings provided for in
the Indenture.  Additionally, the
following terms shall have the meanings set forth below:


 


“Additional
Interests” means all shares of capital stock, membership interests,
partnership interests and all other equity interests of any corporation,
limited liability company, limited partnership or other legal entity owned by
each Grantor, other than any shares or interests that constitute Pledged
Shares.


 


“Additional
Notes” has the meaning assigned to the term “Additional Securities”
in the Indenture.


 


“Additional
Pari Passu Agent”  means the
Person appointed to act as trustee, agent or representative for the holders of
Permitted Additional Pari Passu Obligations pursuant to any Additional Pari
Passu Agreement.


 


“Additional
Pari Passu Agreement”  means the
indenture, credit agreement or other agreement under which any Permitted
Additional Pari Passu Obligations (other than Additional Notes) are incurred
and any notes or other instruments representing such Permitted Additional Pari
Passu Obligations.


 


“Additional
Pari Passu Joinder Agreement” means an agreement substantially in
the form of Annex I.


 


“Default”
or “Event of Default” means a “default” or “event
of default” under the Indenture or under any Additional Pari Passu Agreement.


 


“Discharge of
Obligations” means, both (i) in the case of the Indenture, the
discharge or defeasance of the Indenture in accordance with Section 8.01
thereof and (ii) in the case of each Additional Pari Passu Agreement, the
repayment of the Permitted Additional Pari Passu Obligations under such agreement
which entitles the Grantors to obtain a release of the Liens securing such
Permitted Additional Pari Passu Obligations under the Security Documents.


 


“Excluded
Assets” shall have the meaning assigned to it in the second
paragraph of Section 2.1.


 


2

















 


“Indemnitees”
means Agent (as such as in its individual capacity) and its officers,
directors, employees, stockholders, affiliates, agents and attorneys.


 


“Intellectual
Property” means the collective reference to all rights, priorities
and privileges relating to all intellectual property, whether arising under
United States, multinational or foreign laws, including, without limitation,
copyrights, copyright licenses, patents, patent licenses, trademarks and
trademark licenses, and all rights to sue at law or in equity for any
infringement or other impairment thereof, including the right to receive all proceeds
and damages therefrom.


 


“Mortgage”
means an agreement, including, but not limited to, a mortgage, deed of trust or
any other document creating and evidencing a Lien on a Mortgaged Property in
favor of the Agent, which shall be in form which, in the opinion of counsel to
the Company, is effective to grant a Lien in a favor of the Agent enforceable
against the applicable Grantor and third parties and creates rights in favor of
the Agent in respect of the applicable Mortgaged Property to substantially the
same extent as the mortgages of the Grantors in favor of the Agent provided on
the Issue Date, in each case, with such schedules and including such provisions
as shall, in the opinion of such counsel, be necessary or desirable to conform
such document to applicable local law or as shall be customary under applicable
local law.


 


“Mortgaged Property” means (a) each Real Property
identified as a Mortgaged Property on Schedule 2.2 and
(b) each Real Property, if any, which shall be subject to a Mortgage
delivered after the Issue Date pursuant to Section 2.2.


 


“Obligations” means any principal, premium, interest
(including any interest accruing subsequent to the filing of a petition in
bankruptcy, reorganization or similar proceeding at the rate provided for in
the documentation with respect thereto, whether or not such interest is an
allowed claim under applicable state, federal or foreign law), penalties, fees,
indemnifications, reimbursements (including reimbursement obligations with
respect to letters of credit and banker’s acceptances), damages and other
liabilities, and guarantees of payment of such principal, interest, penalties,
fees, indemnifications, reimbursements, damages and other liabilities, payable
under any of (i) the Indenture, the Notes (other than any Additional Notes
except to the extent constituting Permitted Additional Pari Passu Obligations)
and the Security Documents and (ii) any Additional Pari Passu Agreement
and other documentation relating to any other Permitted Additional Pari Passu
Obligations; provided that no obligations in
respect of Permitted Additional Pari Passu Obligations (other than Additional
Notes) shall constitute “Obligations” unless the Additional Pari Passu Agent
for the holders of such Permitted Additional Pari Passu Obligations has
executed an Additional Pari Passu Joinder Agreement in the form of Annex I hereto.


 


“Perfection
Certificate” shall mean that certain perfection certificate dated as
of July 29, 2009, executed and delivered by each Grantor in favor of the
Agent for the benefit of the Secured Parties, and each Perfection Certificate
executed and delivered by the applicable Grantor in favor of the Agent for the
benefit of the Secured Parties in accordance with Section 8.10 hereof.


 


3

















 


“Pledged
Shares” means all shares of capital stock, membership interests,
partnership interests and all other equity interests of any corporation,
limited liability company, limited partnership or other legal entity that is a
Subsidiary Guarantor.


 


“Real Property” means, collectively, all right, title and
interest (including any leasehold, mineral or other estate) in and to any and
all parcels of or interests in real property owned, leased or operated by any
person, whether by lease, license or other means, together with, in each case,
all easements, hereditaments and appurtenances relating thereto, all improvements
and appurtenant fixtures and equipment, all general intangibles and contract
rights and other property and rights incidental to the ownership, lease or operation
thereof.


 


“Required
Secured Parties” means the holders of a majority in aggregate
principal amount of (i) the Notes plus (ii) any
Indebtedness constituting Permitted Additional Pari Passu Obligations, in each
case, excluding any holder of such Indebtedness whose vote is required to be
disregarded under the Indenture or the applicable Additional Pari Passu
Agreement.


 


“Secured
Parties” means, collectively, the Agent, the Trustee, each
Additional Pari Passu Agent, the Noteholders and any other holders of
Obligations.


 


“Senior Secured Note Documents” means the Indenture, the
Notes and the Security Documents.


 


“UCC”
means the Uniform Commercial Code as in effect from time to time in the State
of New York; provided, however,
that, at any time, if by reason of mandatory provisions of law, any or all of
the perfection or priority of the Agent’s security interest in any item or
portion of the Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the State of New York, the term “UCC” shall
mean the Uniform Commercial Code as in effect, at such time, in such other jurisdiction
for purposes of the provisions hereof relating to such perfection or priority
and for purposes of definitions relating to such provisions.


 


1.2          Uniform
Commercial Code


 


As used herein, the
following terms are defined in accordance with the UCC:  “Accounts,” “Bank,” “Certificated Security,” “Chattel
Paper,” “Commercial Tort Claim,” “Deposit Account,” “Document,” “Equipment,” “Fixtures,”
“General Intangibles,” “Goods,” “Instrument,” “Inventory,” “Investment
Property,” “Letter-of-Credit Right,” “Proceeds,” “Promissory Notes,” “Supporting
Obligation” and “Uncertificated Security.”


 


1.3          Certain
Matters of Construction


 


This Agreement shall be
subject to the rules of construction contained in Section 1.04 of the
Indenture, mutatis mutandis.


 


4

















 


SECTION 2.                                                         COLLATERAL


 


2.1          Grant
of Security Interest


 


To secure the prompt payment
and performance of all Obligations each Grantor hereby grants to the Agent, for
the benefit of the Secured Parties, a continuing security interest in and Lien
upon all property of such Grantor, including all of the following property,
whether now owned or hereafter acquired, and wherever located (all being
collectively referred to herein as the “Collateral”):


 


(a)           all Accounts;


 


(b)           all Additional Interests and Pledged
Shares;


 


(c)           all Chattel Paper, including
electronic chattel paper;


 


(d)           the Collateral Account;


 


(e)           all Commercial Tort Claims listed in Schedule 2.3.1;


 


(f)            all Deposit Accounts and all Trust Monies;


 


(g)           all Documents;


 


(h)           all General Intangibles, including
Intellectual Property;


 


(i)            all Goods, Inventory, Equipment and
Fixtures;


 


(j)            all Instruments (including, without
limitation, Promissory Notes);


 


(k)           all Investment Property;


 


(l)            all Letter-of-Credit Rights;


 


(m)          all Supporting Obligations;


 


(n)           all monies, whether or not in the
possession or under the control of Agent;


 


(o)           all accessions to, substitutions for,
and all replacements, products, and cash and non-cash Proceeds of the foregoing,
including Proceeds of and unearned premiums with respect to insurance policies,
and claims against any Person for loss, damage or destruction of any
Collateral; and


 


(p)           all books and records (including
customer lists, files, correspondence, tapes, computer programs, printouts and
computer records) pertaining to the foregoing.


 


Notwithstanding anything to
the contrary in this Agreement, and except for so long as a security interest
in such Collateral is then in effect to secure the ABL Obligations, the 


 


5

















 


Collateral
shall not include (collectively, the “Excluded Assets”):
(i) any of the outstanding voting Capital Stock of a “controlled foreign
corporation” (as defined in Section 957 of the Code) in excess of 65% of
the voting power of all classes of Capital Stock of such controlled foreign
corporation entitled to vote; (ii) any interest of a Grantor in any
contract, lease, license or other agreement if the granting of a security
interest therein is prohibited by, or would cause a termination of all or any
material rights of a Grantor under applicable law or would cause a breach,
default or invalidation of, or create a right to terminate, the terms of the
written agreement creating such contract, lease, license or other agreement, to
the extent such prohibition, termination, breach, default or right to terminate
is not rendered unenforceable or ineffective under sections 9-406 through 9-409
of the UCC or other applicable law, it being understood that, notwithstanding
anything set forth in this clause (ii) to the contrary, to the extent not
prohibited by applicable law, the Agent, for the benefit of the Secured
Parties, shall at all times have a security interest in all rights of such
Grantor to payments of money due or to become due under any such contract,
lease, license or other agreement, and all proceeds thereof, and if and when
the prohibition or event which prevents the granting of a security interest in
such property (or would cause such termination, breach or default) is removed,
terminated or otherwise becomes unenforceable as a matter of applicable law,
the Agent, for the benefit of the Secured Parties, will be deemed to have, and
at all times to have had, a security interest in such property and Collateral,
to the fullest extent permitted under applicable law, will be deemed to include,
and at all times to have included, such property; (iii) Capital Stock of
any Person which is not a Subsidiary to the extent and for so long as the
certificate of incorporation, bylaws, any shareholder agreement or similar
agreement governing the ownership of such Capital Stock by the applicable
Grantor prohibits the granting of a security interest therein; (iv) assets
and proceeds thereof securing Indebtedness permitted to be incurred pursuant to
Sections  4.03(b)(iv), (xii) and (xx) of
the Indenture to the extent such Indebtedness prohibits the granting of a
security interest in such assets and proceeds thereof, and assets and proceeds
thereof subject to Liens pursuant to clauses (8) and (9) of the
definition of “Permitted Liens” to the extent and for so long as the agreements
relating to such Liens prohibit such assets and proceeds thereof from being Collateral;
(v) the Capital Stock and other securities of any Person that is not
required to be a Guarantor (other than any Capital Stock or securities held in
a securities account); (vi) any property or assets owned by a Foreign
Subsidiary or a Subsidiary that is not required to be a Guarantor under Section 4.11
of the Indenture; (vii) assets of any Grantor located outside the United
States to the extent a lien on such assets cannot be perfected by the filing of
UCC financing statements in the jurisdictions of organization of such Grantor; (viii) any
leasehold interest of any Grantor, as tenant, in real property; (ix) motor
vehicles and other assets subject to certificates of title to the extent that a
lien therein cannot be perfected by the filing of UCC financing statements in
the jurisdictions of organization of the applicable Grantor; and (x) proceeds
and products of any and all of the foregoing excluded assets described in
clause (i) through (ix) above only to the extent such proceeds and
products would constitute property or assets of the type described in clause (i) through
(ix) above.


 


In addition, notwithstanding
anything herein to the contrary, in the event that Rule 3-16 of Regulation
S-X under the Securities Act requires (or is replaced with another rule or
regulation, or any other law, rule or regulation is adopted, which would
require) the filing with the SEC (or any other governmental agency) of separate
financial statements of any Subsidiary Grantor of the Company due to the fact
that such Subsidiary Grantor’s Capital Stock or other 


 


6

















 


securities
of such Grantor secure the Notes and/or Permitted Additional Pari Passu
Obligations affected thereby, then the Capital Stock and such other securities
of such Subsidiary Grantor will automatically be deemed not to be part of the
Collateral securing the Notes and/or Permitted Additional Pari Passu
Obligations affected thereby but only to the extent necessary to not be subject
to such requirement, only for so long as required to not be subject to such
requirement and only with respect to Obligations affected thereby.


 


In the event that Rule 3-16
of Regulation S-X under the Securities Act is amended, modified or interpreted
by the SEC to permit (or is replaced with another rule or regulation, or
any other law, rule or regulation is adopted, which would permit) such
Subsidiary Grantor’s Capital Stock and other securities to secure the Notes
and/or Permitted Additional Pari Passu Obligations in excess of the amount then
pledged without the filing with the SEC (or any other governmental agency) of
separate financial statements of such Subsidiary Grantor, then the Capital
Stock and other securities of such Subsidiary Grantor will automatically be
deemed to be a part of the Collateral for the relevant Notes and/or Permitted
Additional Pari Passu Obligations but only to the extent necessary to not be
subject to any such financial statement requirement.


 


2.2          Real
Estate Collateral


 


The Obligations shall also
be secured by (i) Mortgages and fixture filings upon all Mortgaged
Property and Fixtures owned by each Grantor and listed on Schedule 2.2
and (ii) to the extent not excluded from “Collateral” pursuant to clause (i) of
Section 2.1, all Real Property acquired in fee simple following the Issue
Date with a book value of $2.0 million or more as of the date of acquisition
(or, if later, upon the date of acquisition or completion of construction of
any improvements thereon) (a “Specified Real Property”)
and the Grantors shall provide a Mortgage in favor of the Agent in any
Specified Real Property within
90 days following the date of acquisition thereof (or, if later, upon the date
such Real Property becomes a Specified Real Property) subject only to those
encumbrances and such other similar items which Grantors determine in good
faith are consistent with those permitted to exist on the Mortgaged Property on
the Issue Date.  The amount of Obligations
secured by any Real Property which becomes a Mortgaged Property following the
Issue Date may be limited to an amount equal to at least 100% of the Fair
Market Value of such Mortgaged Property in the event that securing a greater
principal amount of Obligations would require the payment of recording or
similar taxes in excess of $5,000.  In
the event that any Permitted Additional Pari Passu Obligations are incurred
following the Issue Date, the Grantors shall notify the Agent thereof in
writing and take all such action as may be reasonably required to amend each
then existing Mortgage in order to appropriately ensure that such Permitted
Additional Pari Passu Obligations are secured equally and ratably with the Note
Obligations.  In connection with the
provision of any Mortgage or any amendment to any Mortgage pursuant this Section 2.2,
the related Grantors will provide (i) an opinion of counsel which the Grantors determine in good faith
to be consistent with those provided on the Issue Date, (ii) a title
insurance policy (or amendments
to existing title insurance policy)
providing title insurance in an amount determined in good faith by the Company
to be consistent with the manner in which the amounts were determined on the
Issue Date and including such endorsements, exceptions and other similar items
which the Grantors determine in good faith are consistent with those provided
on the Issue Date, (iii) evidence
of flood insurance, if such property is located in a special flood hazard area,
(iv) survey (or an existing 


 


7

















 


survey together with an “affidavit of no change” to
the extent necessary for the title insurance company to issue the title
insurance policy without the so called standard “survey” exception and with all
survey related endorsements consistent with those provided on the Issue Date),
and (v) such other items which the Grantors determine in good faith
are consistent with those provided on the Issue Date.


 


2.3          Representations,
Warranties and Covenants


 


Each Grantor represents,
warrants and covenants, as of the date hereof, as follows:


 


2.3.1.             Commercial
Tort Claims


 


Schedule 2.3.1 contains a
true and correct list of all Commercial Tort Claims held by each Grantor,
including a brief description thereof in excess of $1,000,000.  Each Grantor shall promptly notify the Agent
in writing if such Grantor has a Commercial Tort Claim (other than, as long as no
Event of Default exists, a Commercial Tort Claim for less than $1,000,000) and
shall promptly take such actions as counsel to such Grantor deems appropriate
to confer upon the Agent (for the benefit of Secured Parties) a duly perfected,
first priority Lien upon such claim, subject to Permitted Liens.


 


2.3.2.             Chattel
Paper, Instruments and Letter-of-Credit Rights


 


Schedule 2.3.2 contains a
true and correct list of all Chattel Paper and Instruments (including, without
limitation, Promissory Notes), in each case with a Fair Market Value in excess
of $1,000,000 in the aggregate.  Each
Grantor shall promptly (a) notify the Agent in writing if, after the Issue
Date, such Grantor obtains any interest in any Collateral consisting of Chattel
Paper, Instruments or Letter-of-Credit Rights (except to the extent
constituting Supporting Obligations for any Collateral), in each case with a
Fair Market Value in excess of $1,000,000 in the aggregate, and (b) deliver
such Chattel Paper and Instruments to the Agent,  and with respect to the Letter-of-Credit
Rights, use its commercially reasonable efforts to take such actions as such
Grantor deems appropriate to effect Agent’s “control” (within the meaning of
the UCC) over such Letter-of-Credit Rights. 
All instruments (if any) representing or evidencing any Collateral shall
be delivered to the Agent (or its bailee) and held by or on behalf of the Agent
pursuant hereto and shall either be in suitable form for transfer by delivery,
and shall be accompanied by duly executed undated instruments of transfer or
assignments in blank.


 


2.3.3.             Pledged
Shares


 


All Pledged Shares
represented by Certificated Securities that are pledged hereunder on the date
hereof have been delivered to the Agent. 
Each Grantor shall promptly (a) notify the Agent in writing if,
after the Issue Date, such Grantor obtains any interest in any Pledged Shares,
and (b) within 30 days of their acquisition, deliver any Certificated
Securities evidencing such Pledged Shares to the Agent, and with respect to the
Uncertificated Securities, take all actions to effect Agent’s “control” (within
the meaning of the UCC) over such Uncertificated Securities, in each case, to
the extent such Pledged Shares are Collateral hereunder.  All certificates (if any) representing or evidencing
any Pledged Shares shall be 


 


8

















 


delivered
to the Agent (or its bailee) and held by or on behalf of the Agent pursuant
hereto and shall either be in suitable form for transfer by delivery, and shall
be accompanied by duly executed undated instruments of transfer or assignments
in blank, all in form sufficient to grant “control” (as defined in Article 9
of the UCC) to the Agent over such certificates.


 


2.3.4.             Deposit
Accounts.


 


As of the date hereof, no
Grantor has any Deposit Accounts other than the accounts listed in Schedule 13
to the Perfection Certificate.  No
Grantor shall maintain any Deposit Account unless the Bank where such Deposit
Account is maintained and such Grantor shall have duly executed and delivered
to the ABL Agent prior to the Discharge of ABL Obligations and thereafter to
the Agent, a control agreement with respect to such Deposit Account granting “control”
(within the meaning of the UCC) over such Deposit Account to the Agent. Prior
to the Discharge of ABL Obligations, the requirements of this Section 2.3.4
shall be deemed satisfied with respect to a Deposit Account so long as the ABL
Agent (as such term is defined in the Intercreditor Agreement) is a party to a
control agreement granting “control” (within the meaning of the UCC) with
respect to such Deposit Account to the ABL Agent; provided
that upon the Discharge of ABL Obligations each Grantor shall cooperate with
the ABL Agent, Agent and each Bank to have each control agreement assigned to
the Agent.


 


2.3.5.             After-Acquired
Intellectual Property


 


At the time of delivery of
any quarterly or annual financial statements pursuant to Section 4.02 of
the Indenture following the date any Grantor (i) obtains any rights to any
additional Intellectual Property constituting Collateral which is registered
with the United States Copyright Office or the United States Patent &
Trademark Office or (ii) becomes entitled to the benefit of any additional
Intellectual Property constituting Collateral or any renewal or extension
thereof, including any reissue, division, continuation, or continuation-in-part
of any Intellectual Property constituting Collateral which is registered with
the United States Copyright Office or the United States Patent & Trademark
Office, or any improvement on any Intellectual Property constituting Collateral
which is registered with the United States Copyright Office or the United
States Patent & Trademark Office, such Grantor shall notify the Agent
thereof in writing and cause a short form security agreement in favor of the
Agent to be filed in the United States Copyright Office or the Unites States
Patent & Trademark Office, as the case may be, with respect to such
Intellectual Property.


 


2.4          No
Assumption of Liability


 


The Lien on Collateral
granted hereunder is given as security only and shall not subject Agent or any
other Secured Party to, or in any way modify, any obligation or liability of
any Grantor relating to any Collateral.


 


2.5          Further
Assurances


 


Each Grantor shall deliver
such instruments, assignments, title certificates, or other documents or
agreements, and shall take such actions, as such Grantor deems appropriate
under applicable law to evidence or perfect the Agent’s Lien on any Collateral,
or otherwise to 


 


9

















 


give
effect to the intent of this Agreement; provided that
notwithstanding anything in this Agreement to the contrary, the Grantors shall
not be required to take any action to perfect the security interest of the
Agent, other than the filing of UCC-1 financing statements, in any of the
following assets: (i) any vehicles or equipment subject to certificate of
title statutes, (ii) any Real Property except as provided in Section 2.2,
(iii) assets located in any country other than the United States of
America, (iv) Excluded Assets and (v) Intellectual Property that is
not registered with the United States Copyright Office or the United States
Patent & Trademark Office, or any successor office thereto.  Each Grantor authorizes Agent to file any
financing statement that indicates the Collateral as “all assets” or “all
personal property” of such Grantor, or words to similar effect, and ratifies
any action taken by Agent before the Issue Date to effect or perfect the Agent’s
Lien on any Collateral.  The rights and
powers conferred on the Agent hereunder are solely to protect its interest (on
behalf of the Secured Parties) in the Collateral and shall not impose any duty
on it to exercise any such powers. Except for the reasonable care of any
Collateral in its possession and the accounting for moneys actually received by
it hereunder, the Agent shall have no duty as to any Collateral or
responsibility for ascertaining or taking any necessary steps to preserve
rights against other parties or any other rights pertaining to any Collateral
(including, without limitation, the filing of UCC financing or continuation
statements).


 


SECTION 3.                                                         COLLATERAL
ADMINISTRATION


 


3.1          Records
and Schedules of Collateral


 


Each Grantor shall keep
accurate and complete records of its Accounts, Inventory, Equipment, Mortgaged
Property and all other material Collateral.


 


3.2          Taxes


 


If an Account of any Grantor
includes a charge for any taxes, Agent is authorized (but shall be under no
obligation to any Secured Party or to any Grantor) to pay the amount thereof to
the proper taxing authority for the account of such Grantor and to charge such
Grantor therefor; provided, however,
that neither Agent nor Secured Parties shall be liable for any taxes that may
be due from any Grantor or with respect to any Collateral.


 


3.3          Account
Verification


 


While any Event of Default
exists, Agent shall have the right at any time, in the name of Agent, any
designee of Agent or any Grantor, to verify the validity, amount or any other
matter relating to any Accounts of such Grantor by mail, telephone or
otherwise.  Each Grantor shall cooperate
fully with Agent in an effort to facilitate and promptly conclude any such
verification process.


 


3.4          Voting
Rights; Dividends; Etc.


 


(a)           So long as no Event of Default has occurred and is then
continuing in respect of which the Agent has provided the Grantors with notice
of its election to exercise the rights and remedies set forth in Section 3.4(b) below:


 


10














 


(i)            The Grantors shall be
entitled to exercise any and all voting and other consensual rights pertaining
to the Pledged Shares, or any part thereof, for any purpose not inconsistent
with the terms of this Agreement or the Indenture; and


 


(ii)           To the extent permitted
under the Indenture, the Grantors shall be entitled to receive all
distributions, dividends (in the form of cash, securities or otherwise), cash,
instruments, chattel paper and other rights, property or proceeds and products
from time to time received, receivable or otherwise distributed in respect of
the Pledged Shares.


 


(b)           At any time that an Event of
Default has occurred and is then continuing in respect of which the Agent has
provided the Grantors with notice of its election to exercise the rights and
remedies set forth in this Section 3.4(b):


 


(i)            All rights of the Grantors
to exercise voting and other consensual rights in respect of the Pledged Shares
shall immediately cease to be effective upon their receipt of notice from the
Agent of the Agent’s intent to exercise its rights hereunder, and upon the
delivery of such notice all such voting and other consensual rights shall
become vested in the Agent and the Agent shall thereupon have the sole right to
exercise such voting and other consensual rights (including, without
limitation, the right to vote in favor of, and to exchange any or all of the
Pledged Shares upon, the consolidation, recapitalization, merger or other
reorganization with respect to an issuer of such Pledged Shares).  In order to effect the foregoing, each
Grantor hereby grants to the Agent an irrevocable proxy to vote the Pledged
Shares and, any time that an Event of Default exists in respect of which the
Agent has provided the Grantors with notice of its election to exercise the
rights and remedies set forth in this Section 3.4(b), each Grantor agrees
to execute such other proxies as Agent may request; and


 


(ii)           All rights of the Grantors
to receive and retain any distributions, dividends (in the form of cash,
securities or otherwise), instruments, chattel paper or other property paid or
payable with respect to any of the Pledged Shares shall immediately cease and
any such distributions, dividends (in the form of cash, securities or
otherwise), instruments, chattel paper or other property paid or payable with
respect to any of the Pledged Shares shall be paid to the Agent (for
application to the Obligations as set forth in Annex III hereto, with respect
to any cash or cash equivalents, or to be held by the Agent as additional security
for the Obligations, with respect to any other type of property).  Any distributions, dividends (in the form of
cash, securities or otherwise), instruments, chattel paper or other property
paid or payable with respect to any of the Pledged Shares and received by the
Grantors contrary to the provisions of this Agreement shall be received in
trust for the benefit of the Agent, shall be segregated from other assets
(including, in the case of cash or cash equivalents, other funds) of the
Grantors and shall be forthwith paid to the Agent (for application to the
Obligations as set forth in Annex III hereto, with respect to any cash or cash
equivalents, or to be held by the Agent as additional security for the
Obligations, with respect to any other type of property).


 


11

















 


3.5          Insurance of Collateral and Mortgaged
Property; Condemnation Proceeds


 


Each Grantor shall maintain insurance with
respect to the Collateral and Mortgaged Property, covering casualty, hazard,
public liability, theft, malicious mischief, flood and other risks, in amounts,
with endorsements and with insurers (including, if the Company determines it is
prudent, through self-insurance) providing protection in amounts and against
risks substantially consistent with that in effect on the Issue Date.  All proceeds under each policy in respect of
Collateral and Mortgaged Property constituting Net Loss Proceeds shall, subject
to the Intercreditor Agreement, be payable to the Agent as Trust Monies.  Each Grantor shall deliver certified copies
of all insurance policies or a certificate of an insurance broker to the Agent;
cause each such policy to provide that it shall not be canceled or not renewed
upon less than 30 days’ prior written notice thereof by the insurer to the
Agent; deliver to the Agent, prior to the cancellation or nonrenewal of any
such policy of insurance, a copy of a renewal or replacement policy (or other
evidence of renewal of a policy previously delivered to the Agent), or insurance
certificate with respect thereto, together with evidence of payment of the
premium therefor. The Grantors shall use commercially reasonable efforts
(consistent with industry practice) to cause each such policy to include
satisfactory endorsements (i) showing the Agent as loss payee or
additional insured, as appropriate; and (ii) specifying that the interest
of the Agent shall not be impaired or invalidated by any act or neglect of any
Grantor or the owner of the property, nor by the occupation of the premises for
purposes more hazardous than are permitted by the policy.  If any Grantor fails to provide and pay for
any insurance, the Agent may, at its option (but shall not be under any
obligation to any Secured Party or any Grantor to), procure the insurance and
charge such Grantor therefor.  While no
Event of Default exists, each Grantor may, but the Agent may not, settle,
adjust or compromise any insurance claim, as long as the proceeds are delivered
to the Agent.  If an Event of Default
exists, the Agent may (but shall not be under any obligation to any Secured
Party or any Grantor to) reasonably settle, adjust and compromise such claims.


 


3.6          Protection of Collateral


 


All reasonable expenses of
protecting, storing, warehousing, insuring, handling, maintaining and shipping
any Collateral, all taxes payable with respect to any Collateral (including any
sale thereof), and all other payments required to be made by the Agent to any
Person to realize upon any Collateral, shall be borne and paid by the Grantors.  The Agent shall not be liable or responsible
in any way for the safekeeping of any Collateral, for any loss or damage
thereto (except for reasonable care in its custody while Collateral is in the
Agent’s actual possession), for any diminution in the value thereof, or for any
act or default of any warehouseman, carrier, forwarding agency or other Person
whatsoever, but the same shall be at each Grantor’s sole risk.


 


3.7          Defense of Title to Collateral


 


Each Grantor shall at all
times defend its title to Collateral and Mortgaged Property and Agent’s Liens
therein against all Persons, claims and demands whatsoever, except Permitted
Liens.


 


12

















 


3.8          Power of Attorney


 


Upon the occurrence and
during the continuance of an Event of Default or an event of default under any
Additional Pari Passu Agreement, each Grantor hereby irrevocably constitutes
and appoints the Agent (and all Persons designated by the Agent) as such
Grantor’s true and lawful attorney (and agent-in-fact) for the purposes
provided in this Section 3.8.  The
Agent, or the Agent’s designee, may, following the occurrence or and during the
continuance of an Event of Default, without notice and in either its or the
applicable Grantor’s name, but at the cost and expense of such Grantor:


 


(a)           Endorse such Grantor’s name
on any payment item or other proceeds of Collateral or Mortgaged Property
(including proceeds of insurance) that come into the Agent’s possession or
control; and


 


(b)           (i)  settle,
adjust, modify, compromise, discharge or release any Accounts or other
Collateral or Mortgaged Property, or any legal proceedings brought to collect
Accounts or other Collateral or Mortgaged Property; (ii) sell or assign
any Accounts and other Collateral or Mortgaged Property upon such terms, for
such amounts and at such times as Agent deems advisable; (iii) take
control, in any manner, of any proceeds of Collateral or Mortgaged Property; (iv) prepare,
file and sign such Grantor’s name to any notice, assignment or satisfaction of
Lien or similar document; (v) receive, open and dispose of mail addressed
to such Grantor, and notify postal authorities to change the address for
delivery thereof to such address as the Agent may designate; (vi) endorse
any Chattel Paper, Document, Instrument, invoice, freight bill, bill of lading,
or similar document or agreement relating to any Accounts, Inventory or other
Collateral or Mortgaged Property; (vii) use the information recorded on or
contained in any data processing equipment and computer hardware and software
relating to any Collateral or Mortgaged Property; (viii) make and adjust
claims under policies of insurance; (ix) take any action as may be
necessary or appropriate to obtain payment under any letter of credit or banker’s
acceptance for which such Grantor is a beneficiary; and (x) take all other
actions as the Agent deems appropriate.


 


SECTION 4.                   REPRESENTATIONS AND
WARRANTIES


 


Each Grantor represents and
warrants that:


 


4.1          Organization and Qualification


 


Such Grantor is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization.  Such Grantor is duly
qualified to transact business and in good standing as a foreign corporation in
each jurisdiction where failure to be so qualified could reasonably be expected
to have a material adverse effect on the business, financial condition or
results of operations of the Grantors (taken as a whole) (a “Material Adverse Effect”).


 


13

















 


4.2          Power and Authority


 


Such Grantor is duly
authorized to enter into and perform its obligations under this Agreement.  The execution, delivery and performance of
this Agreement have been duly authorized by all necessary action, and do not (a) require
any consent or approval of any holders of Capital Stock of such Grantor, other
than those already obtained; (b) contravene the organizational documents
of such Grantor; (c) violate or cause a default under any applicable law
or any material contract to which such Grantor is a party; or (d) result
in or require the imposition of any Lien (other than Permitted Liens) on any
property of such Grantor.


 


4.3          Enforceability and Validity and
Perfection of Liens


 


This Agreement is a legal,
valid and binding obligation of such Grantor, enforceable in accordance with
its terms, except (i) as enforceability may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors’ rights
generally and (ii) equitable limitations upon the enforcement (whether by
an action for specific performance, injunctive relief or otherwise) of remedies
or obligations enforceable in a court of equity and the discretion of courts in
granting or withholding equitable relief with respect to such enforcement.


 


The security interest in and
Lien on the Collateral granted to the Agent for the benefit of the Secured
Parties hereunder constitutes (a) a legal and valid security interest in
all the Collateral securing the payment and performance of the Obligations and (b) subject
to the filings and other actions described in Schedule 6
to the Perfection Certificate (to the extent required to be listed on the
schedules to the Perfection Certificate as of the date this representation is
made or deemed made), a perfected security interest in all the Collateral,
except to the extent perfection therein is not required hereunder.  The security interest and Lien granted to the
Agent for the benefit of the Secured Parties pursuant to this Agreement in and
on the Collateral will at all times constitute a perfected, continuing security
interest therein, prior to all other Liens on the Collateral except for
Permitted Liens and except as otherwise provided for in the Indenture and the
Intercreditor Agreement.


 


4.4          Title to Properties; Priority of Liens


 


Each Grantor has good and
marketable title to (or valid leasehold interests in) all of its Real Property,
and good title to, or valid leasehold interests in, all of its personal
property purported to be owned by it, except as would not result in a Material
Adverse Effect, including all property reflected in any financial statements
delivered to the Agent, in each case free of Liens except Permitted Liens.


 


4.5          Intellectual Property


 


Each Grantor owns or has the
lawful right to use all Intellectual Property necessary for the conduct of its
business, without known conflict with any rights of others.  There is no pending or, to such Grantor’s
knowledge, threatened Intellectual Property claim with respect to such Grantor
or any of its property (including any Intellectual Property), except for any
such Intellectual Property claim that could not reasonably be expected to have
a Material 


 


14

















 


Adverse
Effect.  Except as disclosed on Schedules 11(a) and (b) to
the Perfection Certificate, on the Issue Date each Grantor neither pays
nor owes any royalty or other compensation to any Person with respect to any
material Intellectual Property.


 


4.6          Governmental Approvals


 


Such Grantor has, is in
compliance with, and is in good standing with respect to, all governmental
approvals necessary to conduct its business and such Grantor has not received
any notice of proceedings relating to the revocation or modification of, or
non-compliance with any such government approvals, individually or in the
aggregate, except as would not have a Material Adverse Effect.  All necessary import, export or other
licenses, permits or certificates for the import or handling of any goods or
other Collateral have been procured and are in effect except as would not have
a Material Adverse Effect, and such Grantor has complied with all foreign and
domestic laws with respect to the shipment and importation of any goods or
Collateral, except where noncompliance could not reasonably be expected to have
a Material Adverse Effect.


 


4.7          Compliance with Laws


 


Such Grantor has duly
complied, and its properties and business operations are in compliance, in all
material respects with all applicable law, except where noncompliance could not
reasonably be expected to have a Material Adverse Effect.  There have been no material citations,
notices or orders of material noncompliance received by such Grantor under any
applicable law.


 


4.8          Compliance with Environmental Laws


 


Except as disclosed on Schedule 4.8 on the Issue Date, or as otherwise would not result in a Material
Adverse Effect, on the Issue Date such Grantor is not subject to any federal,
state or local investigation to determine whether any remedial action is needed
to address any environmental pollution, hazardous material or environmental
clean-up.  Except as disclosed on Schedule 4.8 as of the Issue Date,  such
Grantor has not received any notice of any material environmental liability of
any Grantor.


 


4.9          Pledged Shares


 


All Pledged Shares has been
duly and validly authorized and issued to the applicable Grantor and, if
applicable, is fully paid and nonassessable.


 


Except in connection with
the local law requirements for pledges of Pledged Shares issued by Foreign
Subsidiaries, the delivery of the Pledged Shares to the Agent pursuant to this
Agreement (and, with respect to Pledged Shares consisting of membership
interests or partnership interests that are not “securities” under Article 8
of the UCC, the filing in the appropriate filing office of a UCC financing
statement describing the same as collateral) is effective to create a valid and
perfected first priority security interest in the Pledged Shares, free of any
adverse claim, securing the payment of the Obligations.  Subject only to the consummation of the
delivery described in the immediately preceding sentence (and, if 


 


15

















 


applicable,
the filing of a financing statement described in such sentence), Agent has a
valid and perfected first priority security interest in the Pledged Shares
securing the payment of the Obligations, and such security interest is entitled
to all of the rights, priorities and benefits afforded by the UCC or other
applicable law as enacted in any relevant jurisdiction which relates to
perfected security interests.


 


No Pledged Shares consisting
of either (i) a membership interest in an issuer that is a limited
liability company or (ii) a partnership interest in an Issuer that is a
partnership, provides by its terms that it is a “security” governed by Article 8
of the UCC.


 


None of the Pledged Shares
constitutes margin stock, as defined in Regulation U of the Board of Governors
of the Federal Reserve System.


 


4.10        Complete Disclosure


 


Such Grantor has disclosed
to the Agent all agreements, instruments and corporate or other restrictions to
which it or any of its Subsidiaries is subject, and all other matters known to
it, that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect.  The
Agent, each Secured Party and each Grantor agree that the Perfection
Certificate and all descriptions of Collateral, schedules, amendments and
supplements thereto are and shall at all times remain a part of this Agreement.


 


SECTION 5.                   AFFIRMATIVE COVENANTS


 


As long as any Obligations
are outstanding (other than contingent obligations which by their terms survive
the discharge or defeasance of the Indenture and each Additional Pari Passu
Agreement), each Grantor shall:


 


5.1          Notices


 


Notify the Agent in writing,
promptly after such Grantor’s obtaining knowledge thereof, of any of the
following that affects such Grantor:  any
environmental release by such Grantor or on any property owned, leased or
occupied by such Grantor, which environmental release could reasonably be
expected to have a Material Adverse Effect; or receipt of any environmental
notice, if an adverse resolution could reasonably be expected to have a
Material Adverse Effect.  In the event of
any change by any Grantor of (i) such Grantor’s legal name, (ii) such
Grantor’s jurisdiction of organization, (iii) such Grantor’s
organizational identification number, if any, (iv) such Grantor’s federal
taxpayer identification number or (v) such Grantor’s chief executive
office, the Grantors will notify the Agent thereof and will cause such
amendments to any UCC financing statements and other filings or registrations
relating to the Collateral as may be reasonably required to maintain the
perfection and priority of the Agent’s security interest in the Collateral of
such Grantor.


 


5.2          ABL Agent


 


In the event any Grantor
takes any action to grant or perfect a Lien in favor of the ABL Agent (as
defined in the Intercreditor Agreement) in any assets (other than granting 


 


16

















 


“control”
over any ABL Priority Collateral to the ABL Agent (as defined in the
Intercreditor Agreement) but including actions to perfect security interests in
leasehold mortgages or under the laws of foreign jurisdictions), such Grantor
shall also take such action to grant or perfect a Lien in favor of the Agent to
secure the Obligations.


 


5.3          Compliance with Laws


 


Comply with all applicable
laws, and maintain all governmental approvals necessary to the ownership of its
properties or conduct of its business, unless failure to comply or maintain
could not reasonably be expected to have a Material Adverse Effect.


 


SECTION 6.                   THE COLLATERAL AGENT


 


6.1          Duties of Agent


 


(a)           If an Event of Default has
occurred and is continuing and the Agent has received written notice thereof
from the Company, the Trustee or any Additional Pari Passu Agent, the Agent
shall exercise such of the rights and powers vested in it by this Agreement and
the Security Documents, and use the same degree of care and skill in their
exercise as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs, it being understood that the Agent shall
have no obligation to exercise such rights request unless instructed in writing
to do so by the Required Secured Parties.


 


(b)           Except during
the continuance of an Event of Default:


 


(i)            the duties of the Agent
shall be determined solely by the express provisions of this Agreement and the
Agent need perform only those duties that are specifically set forth in this
Agreement and the Security Documents and no others, and no implied covenants or
obligations shall be read into this Agreement or the Security Documents against
the Agent; and


 


(ii)           in the absence of bad faith
on its part, the Agent may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Agent.


 


(c)           The Agent may not be
relieved from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that:


 


(i)            this paragraph does not
limit the effect of paragraph (b) or (e) of this Section 6.1;


 


(ii)           the Agent shall not be
liable for any error of judgment made in good faith by an officer of the Agent,
unless it is proved that the Agent was negligent in ascertaining the pertinent
facts; and


 


(iii)          the Agent shall not be
liable with respect to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section 7 


 


17

















 


hereof or otherwise in accordance with the
direction of the Required Secured Parties, or for the method and place of
conducting any proceeding for any remedy available to the Agent, or exercising
any trust or power conferred upon the Agent, under this Agreement or any
Security Document.


 


(d)           Whether or not therein
expressly so provided, every provision of this Agreement or any provision of
any Security Document that in any way relates to the Agent is subject to
paragraphs (a), (b), (c), (e) and (f) of this Section 6.1.


 


(e)           No provision of this
Agreement or any Security Document shall require the Agent to expend or risk
its own funds or incur any liability. 
The Agent shall be under no obligation to exercise any of its rights and
powers under this Agreement or any Security Document at the request of any
Secured Parties, unless such Secured Parties shall have offered to the Agent
security and indemnity satisfactory to it against any loss, liability or expense.


 


(f)            The Agent shall not be
liable for interest on any money received by it except as the Agent may agree
in writing with the Grantors.  Money held
in trust by the Agent need not be segregated from other funds except to the
extent required by law.


 


6.2          Rights of Agent


 


(a)           The Agent may conclusively
rely and shall be fully protected in acting or refraining from acting on any
document believed by it to be genuine and to have been signed or presented by
the proper Person.  The Agent need not
investigate any fact or matter stated in any such document. The Agent shall not
be obligated to communicate with or deal in any way with any Secured Party
other than the Trustee or any Additional Pari Passu Agent.  In determining (x) the amount of
Obligations outstanding under the Indenture or any Additional Pari Passu
Agreement or (y) whether the consent of any Secured Party to any
amendment, waiver or other action under this Agreement or any other Security
Document has been obtained, the Agent may conclusively rely on any statement by
the Trustee or the applicable Additional Pari Passu Agent as to such matter.


 


(b)           Before the Agent acts or
refrains from acting, it may require an Officers’ Certificate or an Opinion of
Counsel or both.  The Agent shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers’ Certificate or Opinion of Counsel.  The Agent may consult with counsel of the
Agent’s own choosing and the Agent shall be fully protected from liability in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance on the advice or opinion of such counsel or on any Opinion of
Counsel.


 


(c)           The Agent may act through
its attorneys and agents and shall not be responsible for the misconduct or negligence
of any attorney or agent appointed with due care.


 


(d)           The Agent shall not be
liable for any action it takes or omits to take in good faith that it believes
to be authorized or within the rights or powers conferred upon it by this
Agreement or any Security Document.  Any
request or direction of the Company mentioned herein shall be sufficiently
evidenced by an Officers’ Certificate. 
Whenever in the 


 


18

















 


administration of this
Agreement or any Security Document the Agent shall deem it desirable that a
matter be proved or established prior to taking, suffering or omitting any
action hereunder, the Agent (unless other evidence be herein specifically
prescribed) may, in the absence of bad faith on its part, conclusively rely
upon an Officers’ Certificate.


 


(e)           Unless otherwise
specifically provided in this Agreement or any Security Document, any demand,
request, direction or notice from any Grantor shall be sufficient if signed by
an Officer of such Grantor.


 


(f)            The Agent shall be under no
obligation to exercise any of the rights or powers vested in it by this
Agreement or any Security Document at the request or direction of any of the
Secured Parties unless such Secured Parties shall have offered to the Agent
security and indemnity satisfactory to the Agent against the costs, expenses
and liabilities that might be incurred by it in compliance with such request or
direction.


 


(g)           The Agent shall not be bound
to make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or documents, but the Agent, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may
see fit, and, if the Agent shall determine to make such further inquiry or
investigation, it shall be entitled to examine during normal business hours the
books, records and premises of any Grantor, personally or by agent or attorney
at the sole cost of the Grantors, and shall incur no liability or additional
liability of any kind by reason of such inquiry or investigation.


 


(h)           The rights, privileges,
protections and benefits given to the Agent, including, without limitation, its
rights to be indemnified, are extended to, and shall be enforceable by, the
Agent in each of its capacities hereunder, and to each agent, custodian and
other Persons employed to act hereunder or under any Security Document.


 


(i)            The Agent may request that
the Company deliver an Officers’ Certificate setting forth the names of
individuals and/or titles of officers authorized at such time to take specified
actions pursuant to this Agreement or any other Security Document, which
Officers’ Certificate may be signed by any person authorized to sign an
Officers’ Certificate, including any person specified as so authorized in any
such certificate previously delivered and not superseded.


 


(j)            The permissive right of the Agent to take or refrain from taking any
actions enumerated in this Agreement or any Security Document shall not be
construed as a duty.


 


(k)           In the event that the Agent (in such capacity or in any other capacity
hereunder or under any Security Document) is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or any Security Document, or in the event that the Agent is unsure as
to the application of any provision of this Agreement or any Security Document,
or believes any such provision is ambiguous as to its application, or is, or
appears to be, in conflict with any other applicable provision, or in the event
that this Agreement or any Security Document permits any determination by or
the exercise of discretion on the part 


 


19

















 


of the
Agent or is silent or is incomplete as to the course of action that the Agent
is required to take with respect to a particular set of facts, the Agent shall
promptly give notice (in such form as shall be appropriate under the
circumstances) to the Noteholders requesting instruction as to the course of
action to be adopted, and to the extent the Agent acts in good faith in
accordance with any written instructions received from a majority in aggregate
principal amount of the then outstanding Notes, the Agent shall not be liable
on account of such action to any Person. 
If the Agent shall not have received appropriate instruction within 10
days of such notice (or such shorter period as reasonably may be specified in
such notice or as may be necessary under the circumstances) it may, but shall
be under no duty to, take or refrain from taking such action as it shall deem
to be in the best interests of the Noteholders and the Agent shall have no
liability to any Person for such action or inaction.


 


6.3          Individual Rights of Agent


 


The Agent in its individual
or any other capacity may become the owner or pledgee of Obligations and may
otherwise deal with any Grantor or any Affiliate of any Grantor with the same
rights it would have if it were not Agent.


 


6.4          Agent’s Disclaimer


 


The Agent shall not be
responsible for and makes no representation as to the validity or adequacy of
this Agreement or any other Security Document, or the existence, genuineness,
value or protection of any Collateral or Mortgaged Property (except for the
safe custody of Collateral in its possession and the accounting for Trust
Monies actually received by it in accordance with the terms hereof) for the
legality, effectiveness or sufficiency of any Security Document, or for the
creation, perfection, priority, sufficiency or protection of any Lien on any
Collateral or Mortgaged Property, and it shall not be responsible for any
statement or recital herein or any statement in this Agreement or any Security
Document.


 


6.5          Replacement of Agent


 


A resignation or removal of
the Agent and appointment of a successor Agent shall become effective only upon
the successor Agent’s acceptance of appointment as provided in this Section 6.5.


 


The Agent may resign in
writing at any time and be discharged from the trust hereby created upon 45
days prior notice to the Company, the Trustee and each Additional Pari Passu
Agent.  The Company may remove the Agent
if:


 


(a)           the Agent is removed as
Trustee under the Indenture;


 


(b)           the Agent fails to comply
with Section 6.7 hereof;


 


(c)           the Agent is adjudged a
bankrupt or an insolvent or an order for relief is entered with respect to the
Agent under any Bankruptcy Law;


 


(d)           a custodian or public officer
takes charge of the Agent or its property; or


 


20






 










 


(e)           the Agent becomes incapable of
acting.


 


If the Agent resigns or is
removed or if a vacancy exists in the office of Agent for any reason, the
Company shall promptly appoint a successor Agent which complies with the
eligibility requirements contained in the Indenture and each Additional Pari
Passu Agreement.  Within one year after
the successor Agent takes office, the Required Secured Parties may appoint a
successor Agent to replace the successor Agent appointed by the Grantors and
prior to an Event of Default, with the consent of the Company (not to be
unreasonably withheld).


 


If a successor Agent does
not take office within 10 days after the retiring Agent resigns or is removed,
the retiring Agent, the Company or the holders of at least 10% in principal
amount of the then outstanding principal amount of Obligations may petition any
court of competent jurisdiction for the appointment of a successor Agent.


 


A successor Agent shall
deliver a written acceptance of its appointment to the retiring Agent and to
the Company.  Thereupon, the resignation
or removal of the retiring Agent shall become effective, and the successor
Agent shall have all the rights, powers and the duties of the Agent under this
Agreement and the Security Documents. 
The successor Agent shall mail a notice of its succession to the Trustee
and each Additional Pari Passu Agent. 
The retiring Agent shall promptly transfer all property held by it as
Agent to the successor Agent, provided that
all sums owing to the Agent hereunder have been paid.  Notwithstanding replacement of the Agent
pursuant to this Section 6.5, the Grantors’ obligations under Section 8.2
and Section 8.3 shall continue for the benefit of the retiring agent.


 


6.6          Successor
Agent by Merger, Etc.


 


If the Agent consolidates,
merges or converts into, or transfers all or substantially all of its corporate
trust business to, another Person, the successor Person without any further act
shall be the successor Agent under this Agreement and the other Security
Documents.


 


6.7          Eligibility


 


There shall at all times be
an Agent hereunder that (i) meets the requirements for being a Trustee
under the Indenture (prior to the discharge or defeasance of the Indenture) and
(ii) following the discharge or defeasance of the Indenture, meets the requirements
for being the Additional Pari Passu Agent under any then extant Additional Pari
Passu Agreement.


 


6.8          Agent’s
Application for Instructions from the Company


 


Any application by the Agent
for written instructions from the Company may, at the option of the Agent, set
forth in writing any action proposed to be taken or omitted by the Agent under
this Agreement or any other Security Document and the date on and/or after
which such action shall be taken or such omission shall be effective.  The Agent shall not be liable for any action
taken by, or omission of, the Agent in accordance with a proposal included in
such application on or after the date specified in such application (which date
shall not be less than 20 Business Days after the date any officer of the
Company actually receives such application, unless any such officer shall have
consented in writing to any earlier date) unless prior to taking 


 


21

















 


any
such action (or the effective date in the case of an omission), the Agent shall
have received written instructions in response to such application specifying
the action to be taken or omitted.


 


6.9          Co-Agent;
Separate Agent


 


At any time or times, for
the purpose of meeting the legal requirements of any jurisdiction in which any
of the Collateral or Mortgaged Property may at the time be located, the Company
and the Agent shall have power to appoint agents and sub-agents to the extent
permitted under the Indenture.


 


SECTION 7.                                                         REMEDIAL PROVISIONS


 


7.1          General


 


If any Event of Default
exists, the Agent may (but, except as provided below, shall be under no
obligation to any Secured Party or any Grantor to unless instructed in writing
to do so by the Required Secured Parties) from time to time exercise any rights
or remedies afforded under any agreement, by law, at equity or otherwise,
including the rights and remedies of a secured party under the UCC.  Such rights and remedies include the rights
to (i) take possession of any
Collateral; (ii) require each Grantor to assemble Collateral, at such
Grantor’s expense, and make it available to the Agent at a place designated by
the Agent; (iii) enter any premises where Collateral is located and store
Collateral on such premises until sold (and if the premises are owned or leased
by any Grantor, such Grantor agrees not to charge for such storage); and (iv) sell
or otherwise dispose of any Collateral in its then condition, or after any
further manufacturing or processing thereof, at public or private sale, with such
notice as may be required by applicable law, in lots or in bulk, at such
locations, all as the Agent, acting only upon the written direction of the
Required Secured Parties (or, in the absence of such direction, in any manner),
deems advisable.  Each Grantor agrees
that 10 days’ notice of any proposed sale or other disposition of Collateral by
the Agent shall be reasonable.  The Agent
shall have the right to (but shall be under no obligation to any Secured Party
or any Grantor to unless instructed in writing to do so by Required
Secured Parties) conduct such sales on
any Grantor’s premises, without charge, and such sales may be adjourned from
time to time in accordance with applicable law. 
The Agent shall have the right to (but shall be under no obligation to
any Secured Party or any Grantor to) sell, lease or otherwise dispose of any
Collateral for cash, credit or any combination thereof, and the Agent may
purchase any Collateral at public or, if permitted by law, private sale and, in
lieu of actual payment of the purchase price, may set off the amount of such
price against the Obligations.


 


7.2          License


 


The Agent is hereby granted
an irrevocable, non-exclusive license or other right to use, license or
sub-license (without payment of royalty or other compensation to any Person)
any or all Intellectual Property of each Grantor, computer hardware and
software, trade secrets, brochures, customer lists, promotional and advertising
materials, labels, packaging materials and other property, in advertising for sale,
marketing, selling, collecting, completing manufacture of, or otherwise
exercising any rights or remedies with respect to, any Collateral.  Each Grantor’s rights and interests under
Intellectual Property shall inure to the Agent’s benefit.


 


22

















 


7.3          [Reserved]


 


7.4          Remedies
Cumulative; No Waiver


 


7.4.1.             Cumulative
Rights


 


All covenants, conditions,
provisions, warranties, guaranties, indemnities and other undertakings of any
Grantor contained in the Senior Secured Note Documents are cumulative and not
in derogation or substitution of each other. 
In particular, the rights and remedies of the Agent are cumulative, may
be exercised at any time and from time to time, concurrently or in any order,
and shall not be exclusive of any other rights or remedies that the Agent may
have, whether under any agreement, by law, at equity or otherwise.


 


7.4.2.             Waivers


 


The failure or delay of the
Agent to require strict performance by any Grantor with any terms of this
Agreement, or to exercise any rights or remedies with respect to Collateral or
otherwise, shall not operate as a waiver thereof nor as establishment of a
course of dealing.  All rights and
remedies shall continue in full force and effect until the Discharge of Obligations.  No modification of any terms of this
Agreement or any Security Document (including any waiver thereof) shall be
effective, unless such modification is specifically provided in a writing
directed to the applicable Grantor and executed by the Agent with the consent
of any Secured Parties required by the Indenture and any Additional Pari Passu
Agreement, and such modification shall be applicable only to the matter
specified.


 


SECTION 8.                                                         MISCELLANEOUS


 


8.1          Notices


 


All
notices, approvals, requests, demands and other communications hereunder shall
be given if to:


 


(i)                                     Freedom Group, Inc.
 870 Remington Drive

Madison, NC  27025

Attn:  Fredric E. Roth, Jr.

Telecopy No.:  336-548-8810;


 


(ii)                                  Wilmington
Trust FSB

246 Goose Lane, Suite 105

Guildford, CT 06437

Attn:  Joseph O’Donnell

Telecopy No.:  203-453-1183;


 


(iii)                               any Additional
Pari Passu Agent, to it at the address specified in the applicable Additional
Pari Passu Joinder Agreement;


 


23

















 


in each case, or to such
other address as may be specified by such party to the other parties hereto in
writing from time to time.


 


8.2          Indemnity


 


EACH GRANTOR SHALL
INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES AGAINST ANY CLAIMS THAT MAY BE
INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER SECURITY DOCUMENT, INCLUDING CLAIMS ARISING FROM THE
NEGLIGENCE OF AN INDEMNITEE.  In no event shall any Grantor have any
obligation thereunder to indemnify or hold harmless an Indemnitee to the extent
a claim is determined in a final, non-appealable judgment by a court of
competent jurisdiction to have resulted from the gross negligence, bad faith or
willful misconduct of such Indemnitee.


 


8.3          Reimbursement
Obligations


 


Each Grantor shall be
obligated to reimburse the Agent, as part of the Obligations, for all fees,
costs and expenses incurred by it in connection with this Agreement, including
without limitation, any fees, costs and expenses incurred by it in enforcing
its rights and remedies under this Agreement and the Security Documents.


 


8.4          Successors
and Assigns


 


This Agreement shall be
binding upon Grantors and their respective successors and assigns and shall
inure to the benefit of the Agent and its respective successors and assigns.


 


8.5          Changes
in Writing


 


No amendment, modification,
termination or waiver of any provision of this Agreement shall be effective
unless the same shall be in writing signed by the Agent and each Grantor,
subject to any consent requirements of the Indenture and each Additional Pari
Passu Agreement.


 


8.6          GOVERNING
LAW


 


THIS AGREEMENT SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY
CONFLICT OF LAW PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF
ANY OTHER STATE (BUT GIVING EFFECT TO FEDERAL LAWS RELATING TO NATIONAL BANKS).


 


8.7          Consent
to Forum


 


8.7.1.             Forum


 


EACH GRANTOR HEREBY
CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF ANY FEDERAL OR STATE COURT
SITTING IN OR WITH 


 


24

















 


JURISDICTION
OVER NEW YORK, IN ANY PROCEEDING OR DISPUTE RELATING IN ANY WAY TO THIS
AGREEMENT, AND AGREES THAT ANY SUCH PROCEEDING SHALL BE BROUGHT BY IT SOLELY IN
ANY SUCH COURT.  EACH GRANTOR IRREVOCABLY
WAIVES ALL CLAIMS, OBJECTIONS AND DEFENSES THAT IT MAY HAVE REGARDING SUCH
COURT’S PERSONAL OR SUBJECT MATTER JURISDICTION, VENUE OR INCONVENIENT
FORUM.  EACH PARTY HERETO IRREVOCABLY
CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 8.1
HEREIN.  Nothing herein shall limit the
right of the Agent to bring proceedings against any Grantor in any other court,
nor limit the right of any party to serve process in any other manner permitted
by applicable law.  Nothing in this Agreement
shall be deemed to preclude enforcement by the Agent of any judgment or order
obtained in any forum or jurisdiction.


 


8.7.2.             Waivers by Grantors


 


To the fullest extent
permitted by applicable law, each party hereto waives (a) the right to
trial by jury in any proceeding or dispute of any kind relating in any way to
this Agreement or any Security Document; (b) presentment, demand, protest,
notice of presentment, default, non-payment, maturity, release, compromise,
settlement, extension or renewal of any commercial paper, accounts, documents,
instruments, chattel paper and guaranties at any time held by the Agent on
which each Grantor may in any way be liable, and hereby ratifies anything the
Agent may do in this regard, such ratification to apply only if the Agent has
not acted with bad faith, willful misconduct or gross negligence; (c) notice
prior to taking possession or control of any Collateral; (d) any bond or
security that might be required by a court prior to allowing the Agent to
exercise any rights or remedies; (e) the benefit of all valuation,
appraisement and exemption laws; (f) any claim against the Agent, on any
theory of liability, for special, indirect, consequential, exemplary or
punitive damages (as opposed to direct or actual damages) in any way relating
to any enforcement action; and (g) notice of acceptance hereof.  Each party hereto acknowledges
that the foregoing waivers are a material inducement to the Agent entering into
this Agreement and that the Agent is relying upon the foregoing in its dealings
with each Grantor.  Each Grantor has
reviewed the foregoing waivers with its legal counsel and has knowingly and
voluntarily waived its jury trial and other rights following consultation with
legal counsel.  In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.


 


8.8          Counterparts; Integration


 


This Agreement may be
executed in counterparts, each of which shall constitute an original, but all
of which when taken together shall constitute a single contract.  This Agreement shall become effective when
the Agent has received counterparts bearing the signatures of all parties
hereto.  Delivery of a signature page of
this Agreement by telecopy or other electronic communication shall be effective
as delivery of a manually executed counterpart of such agreement.


 


25

















 


8.9          Permitted
Additional Pari Passu Obligations


 


On or after the Issue Date,
the Company may from time to time designate additional obligations as Permitted
Additional Pari Passu Obligations by delivering to the Agent, the Trustee and
each Additional Pari Passu Agent (a) a certificate signed by the chief
financial officer of the Company (i) identifying the obligations so
designated and the aggregate principal amount or face amount thereof, stating
that such obligations are designated as “Permitted Additional Pari Passu
Obligations” for purposes hereof, (ii) representing that such designation
of such complies with the terms of the Indenture and each then extant
Additional Pari Passu Agreement, (iii) specifying the name and address of
the Additional Pari Passu Agent for such obligations (if other than the
Trustee) and (iv) stating that the Grantors have complied with their
obligations under Section 2.3; (b) except in the case of Additional
Notes, a fully executed Additional Pari Passu Joinder Agreement (in the form
attached as Annex I); and (c) an Opinion
of Counsel to the effect that the designation of such obligations as “Permitted
Additional Pari Passu Obligations” does not violate the terms of the Indenture
and each then extant Additional Pari Passu Agreement (upon which the Agent may
conclusively and exclusively rely).


 


8.10        Additional
Grantors


 


If, pursuant to the terms of
the Indenture or any Additional Pari Passu Agreement, the Company shall be
required to cause any Subsidiary that is not a Grantor to become a Grantor
hereunder, such Subsidiary shall execute and deliver to the Agent a Joinder
Agreement in the form of Annex II and a
Perfection Certificate substantially in the form of the Perfection Certificate
dated as of the date hereof and shall thereafter for all purposes be a party
hereto and have the same rights, benefits and obligations as a Grantor party
hereto on the Issue Date (it being understood that each Subsidiary that becomes
a Guarantor pursuant to the Indenture shall become a Grantor under this
Agreement).


 


8.11        Intercreditor
Matters


 


By accepting the benefits of
this Agreement and the other Security Documents, each Secured Party agrees that
it is bound by (i) the terms of the Intercreditor Agreement applicable to
such Secured Party and (ii) the provisions of Annex III.


 


8.12        Release
of Liens


 


(a)           This Agreement, the security interest
in the Collateral, the pledge of the Pledged Shares and all other security
interests granted hereby shall terminate and be released (i) in full upon
the Discharge of Obligations, (ii) with respect to any Permitted
Additional Pari Passu Obligation, upon repayment of such Permitted Additional
Pari Passu Obligation which entitles the Grantor to obtain a release of the
Liens securing such Permitted Additional Pari Passu Obligation and (iii) in
whole or in part (1) as to the Obligations under the Indenture, as
provided in the Indenture and (2) as to the Permitted Additional Pari
Passu Obligations under any Additional Pari Passu Agreement, as provided in
such Additional Pari Passu Agreement.


 


(b)           In addition the security interest in
the Collateral, the pledge of the Pledged Shares and all other security
interests granted hereby shall be released as provided in the 


 


26

















 


Indenture with respect to
liens securing the Notes and Additional Notes and each Additional Pari Passu
Agreement with respect to liens securing Permitted Additional Pari Passu
Obligations.


 


(c)           In connection with any termination or
release pursuant to paragraph (a) or (b) above, the Agent shall
promptly execute and deliver to any Grantor, at such Grantor’s expense, all
Uniform Commercial Code termination statements and similar documents that such
Grantor shall reasonably request to evidence such termination or release.  Any execution and delivery of documents
pursuant to this Section 8.12 shall be without recourse to or
representation or warranty by the Agent or any other Secured Party.  Without limiting the provisions of Section 6.1(e),
the Company shall reimburse the Agent upon demand for all reasonable
out-of-pocket costs and expenses, including the fees, charges and expenses of
counsel, incurred by it in connection with any action contemplated by this Section 8.12.


 


[Signature page follows]


 


27

















 


Witness
the due execution hereof by the respective duly authorized officers of the
undersigned as of the date first written above.


 


	
   

  	
  FREEDOM
  GROUP, INC., a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Address:

  	
  870
  Remington Drive

  
	
   

  	
   

  	
  Box
  700

  
	
   

  	
   

  	
  Madison,
  North Carolina 27025

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GRANTORS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RACI
  HOLDING, INC., a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Address:

  	
  870
  Remington Drive

  
	
   

  	
   

  	
  Box
  700

  
	
   

  	
   

  	
  Madison,
  North Carolina 27025

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  REMINGTON
  ARMS COMPANY, INC., a

  Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Address:

  	
  870
  Remington Drive

  
	
   

  	
   

  	
  Box
  700

  
	
   

  	
   

  	
  Madison,
  North Carolina 27025

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  REMINGTON
  STEAM, LLC, a New York Limited Liability Company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Address:

  	
  870
  Remington Drive

  
	
   

  	
   

  	
  Box
  700

  
	
   

  	
   

  	
  Madison,
  North Carolina 27025

  



 


S-1

















 


	
   

  	
  RA
  BRANDS, L.L.C., a Delaware Limited Liability Company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Address:

  	
  870
  Remington Drive

  
	
   

  	
   

  	
  Box
  700

  
	
   

  	
   

  	
  Madison,
  North Carolina 27025

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE
  MARLIN FIREARMS COMPANY, a Connecticut corporation

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Address:

  	
  870
  Remington Drive

  
	
   

  	
   

  	
  Box
  700

  
	
   

  	
   

  	
  Madison,
  North Carolina 27025

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  H&R
  1871, LLC, a Connecticut Limited Liability Company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Address:

  	
  870
  Remington Drive

  
	
   

  	
   

  	
  Box
  700

  
	
   

  	
   

  	
  Madison,
  North Carolina 27025

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DA
  ACQUISITIONS, LLC, a Delaware Limited Liability Company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Address:

  	
  870
  Remington Drive

  
	
   

  	
   

  	
  Box
  700

  
	
   

  	
   

  	
  Madison,
  North Carolina 27025

  



 


S-2

















 


	
   

  	
  BUSHMASTER
  HOLDINGS, LLC, a Delaware Limited Liability Company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Address:

  	
  999
  Roosevelt Trail

  
	
   

  	
   

  	
  Windham,
  Maine 04062

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BUSHMASTER
  FIREARMS INTERNATIONAL, LLC, a Delaware Limited Liability Company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Address:

  	
  999
  Roosevelt Trail

  
	
   

  	
   

  	
  Windham,
  Maine 04062

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DPMS
  FIREARMS, LLC, a Delaware Limited Liability Company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Address:

  	
  999
  Roosevelt Trail

  
	
   

  	
   

  	
  Windham,
  Maine 04062

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  E-RPC,
  LLC, a Delaware Limited Liability Company

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Address:

  	
  870
  Remington Drive

  
	
   

  	
   

  	
  Box
  700

  
	
   

  	
   

  	
  Madison,
  North Carolina 27025

  



 


S-3

















 


	
   

  	
   

  	
   

  
	
   

  	
  WILMINGTON
  TRUST FSB, not in its individual capacity, but solely as Collateral Agent
  appointed under the Indenture, as Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


S-4






 










 


SCHEDULE 1


 


Subsidiary Grantors


 


Bushmaster
Firearms International, LLC


Bushmaster
Holdings, LLC


DA
Acquisitions, LLC


DPMS
Firearms, LLC


E-RPC,
LLC


H&R
1871, LLC


RA
Brands, L.L.C.


RACI
Holding, Inc.


Remington
Arms Company, Inc.


Remington
Steam, LLC


The
Marlin Firearms Company


 

















 


Annex I to

Security Agreement


 


ADDITIONAL
PARI PASSU JOINDER AGREEMENT


 


The undersigned is the agent
for Persons wishing to become “Secured Parties” (the “New Secured Parties”)
under the Security Agreement, dated as of 
July 29, 2009 (as amended and/or supplemented, the “Security
Agreement” (terms used without definition herein have the meanings assigned to
such terms by the Security Agreement)) among Freedom Group, Inc., the
other Grantors party thereto and Wilmington Trust FSB, as Agent (the “Agent”)
and the other Security Documents.


 


In consideration of the
foregoing, the undersigned hereby:


 


(i)           represents that the
Additional Pari Passu Agent has been authorized by the New Secured Parties to
become a party to the Security Agreement on behalf of the New Secured Parties
under that [DESCRIBE OPERATIVE AGREEMENT] (the “New Secured Obligations”) and
to act as the Additional Pari Passu Agent for the New Secured Parties
hereunder;


 


(ii)            acknowledges that
the New Secured Parties have received a copy of the Security Agreement;


 


(iii)            irrevocably
appoints and authorizes the Agent to take such action as agent on its behalf
and to exercise such powers under the Security Agreement and the other Security
Documents as are delegated to the Agent by the terms thereof, together with all
such powers as are reasonably incidental thereto; and


 


(iv)           accepts and
acknowledges the terms of Agreement applicable to it and the New Secured
Parties and agrees to serve as Additional Pari Passu Agent for the New Secured
Parties with respect to the New Secured Obligations and agrees on its own
behalf and on behalf of the New Secured Parties to be bound by the terms of the
Security Agreement and the other Security Documents applicable to holders of
Obligations, with all the rights and obligations of a Secured Party thereunder
and bound by all the provisions thereof as fully as if it had been a Secured
Party on the effective date of the Security Agreement.


 


The name and address of the
representative for purposes of Section 8.1 of the Security Agreement are
as follows:


 


[name
and address of Additional Pari Passu Agent]


 


A-I-1

















 


IN WITNESS WHEREOF, the
undersigned has caused this Additional Pari Passu Joinder Agreement to be duly
executed by its authorized officer as of the
           day of
                  ,
20    .


 


	
   

  	
  [NAME]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


A-I-2

















 


Annex
II to

Security Agreement


 


FORM OF
JOINDER AGREEMENT


 


This JOINDER AGREEMENT,
dated as of
[               ],
20[  ], is delivered pursuant to Section 8.10 of the Security
Agreement, dated as of  July 29,
2009 (as amended and/or supplemented, the “Security Agreement” (terms used
without definition herein have the meanings assigned to such terms by the
Security Agreement)), among Freedom Group, Inc., the other Grantors party
thereto and Wilmington Trust FSB, as Agent (the “Agent”) and the other Security
Documents.  Capitalized terms used herein
but not defined herein are used with the meanings given them in the Security
Agreement.


 


By executing and delivering
this Joinder Agreement, the undersigned, as provided in Section 8.10 of
the Security Agreement, hereby becomes a party to the Security Agreement as a
Grantor thereunder with the same force and effect as if originally named as a
Grantor therein and, without limiting the generality of the foregoing, hereby
grants to the Agent, as collateral security for the full, prompt and complete
payment and performance when due (whether at stated maturity, by acceleration
or otherwise) of the Obligations, hereby collaterally assigns, conveys,
mortgages, pledges, hypothecates and transfers to the Agent and grants to the
Agent Liens on and security interest in, all of its right, title and interest
in, to and under the Collateral and expressly assumes all obligations and
liabilities of a Grantor thereunder.


 


The undersigned hereby
represents and warrants that each of the representations and warranties
contained in the Security Agreement applicable to it is true and correct on and
as the date hereof as if made on and as of such date.


 


A-II-1

















 


IN WITNESS WHEREOF, the
undersigned has caused this Joinder Agreement to be duly executed and delivered
as of the date first above written.


 


	
   

  	
  [ADDITIONAL GRANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


 


ACKNOWLEDGED
AND AGREED

as of the date of this Joinder Agreement

first above written.


 


	
  WILMINGTON TRUST FSB, not in its individual capacity, but solely as
  Collateral Agent appointed under the Indenture, as Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


A-II-2