Ex-10.2


 


EXECUTION VERSION


 




 





 


 





 


AMENDED AND RESTATED CREDIT AGREEMENT


 


dated as of


 


September 30, 2010


 


among


 


CLOPAY AMES TRUE TEMPER HOLDING CORP.,


as Borrower,


 


CLOPAY AMES TRUE TEMPER LLC,


as Holdings,


 


CERTAIN SUBSIDIARIES OF CLOPAY AMES TRUE
TEMPER HOLDING CORP.,


as Guarantors,


 


The Lenders Party Hereto


 


and


 


JPMORGAN CHASE BANK, N.A.,


as Administrative Agent


 






 


J.P. MORGAN SECURITIES LLC and DEUTSCHE BANK
SECURITIES INC.,


as Joint Lead Arrangers, Joint Bookrunners
and Co-Syndication Agents


 


WELLS FARGO CAPITAL FINANCE, LLC and U.S.
BANK, N.A.,


as Co-Documentation Agents


 




 





 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I

  
	
   

  
	
  Definitions

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.01.

  	
   

  	
  Defined Terms

  	
  2

  
	
  Section 1.02.

  	
   

  	
  Classification of Loans and Borrowings

  	
  39

  
	
  Section 1.03.

  	
   

  	
  Terms Generally

  	
  40

  
	
  Section 1.04.

  	
   

  	
  Accounting Terms; GAAP

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  
	
   

  
	
  The
  Credits

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.01.

  	
   

  	
  Commitments

  	
  40

  
	
  Section 2.02.

  	
   

  	
  Loans and Borrowings

  	
  40

  
	
  Section 2.03.

  	
   

  	
  Requests for Revolving Borrowings

  	
  41

  
	
  Section 2.04.

  	
   

  	
  Protective Advances

  	
  42

  
	
  Section 2.05.

  	
   

  	
  Swingline Loans and Overadvances

  	
  42

  
	
  Section 2.06.

  	
   

  	
  Letters of Credit

  	
  44

  
	
  Section 2.07.

  	
   

  	
  Funding of Borrowings

  	
  47

  
	
  Section 2.08.

  	
   

  	
  Interest Elections

  	
  48

  
	
  Section 2.09.

  	
   

  	
  Termination and Reduction of Commitments; Increase in
  Revolving Commitments; Canadian Facility

  	
  49

  
	
  Section 2.10.

  	
   

  	
  Repayment and Amortization of Loans; Evidence of Debt

  	
  51

  
	
  Section 2.11.

  	
   

  	
  Prepayment of Loans

  	
  51

  
	
  Section 2.12.

  	
   

  	
  Fees

  	
  52

  
	
  Section 2.13.

  	
   

  	
  Interest

  	
  53

  
	
  Section 2.14.

  	
   

  	
  Alternate Rate of Interest

  	
  54

  
	
  Section 2.15.

  	
   

  	
  Increased Costs

  	
  54

  
	
  Section 2.16.

  	
   

  	
  Break Funding Payments

  	
  55

  
	
  Section 2.17.

  	
   

  	
  Taxes

  	
  56

  
	
  Section 2.18.

  	
   

  	
  Payments Generally; Allocation of Proceeds; Sharing of
  Set-offs

  	
  58

  
	
  Section 2.19.

  	
   

  	
  Mitigation Obligations; Replacement of Lenders

  	
  60

  
	
  Section 2.20.

  	
   

  	
  Defaulting Lenders

  	
  60

  
	
  Section 2.21.

  	
   

  	
  Returned Payments

  	
  62

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  
	
   

  
	
  Representations
  and Warranties

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.01.

  	
   

  	
  Organization; Powers

  	
  62

  
	
  Section 3.02.

  	
   

  	
  Authorization; Enforceability

  	
  62

  



 


i

















 


	
  Section 3.03.

  	
   

  	
  Governmental Approvals; No Conflicts

  	
  63

  
	
  Section 3.04.

  	
   

  	
  Financial Condition; No Material Adverse Effect;
  Projections

  	
  63

  
	
  Section 3.05.

  	
   

  	
  Properties

  	
  63

  
	
  Section 3.06.

  	
   

  	
  Litigation and Environmental Matters

  	
  64

  
	
  Section 3.07.

  	
   

  	
  Compliance with Laws and Contractual Obligations

  	
  64

  
	
  Section 3.08.

  	
   

  	
  Investment Company Status

  	
  64

  
	
  Section 3.09.

  	
   

  	
  Taxes

  	
  65

  
	
  Section 3.10.

  	
   

  	
  ERISA; Employee Benefit Plans

  	
  65

  
	
  Section 3.11.

  	
   

  	
  Disclosure

  	
  65

  
	
  Section 3.12.

  	
   

  	
  Use of Credit

  	
  65

  
	
  Section 3.13.

  	
   

  	
  Burdensome Agreements

  	
  65

  
	
  Section 3.14.

  	
   

  	
  Insurance

  	
  66

  
	
  Section 3.15.

  	
   

  	
  Capitalization and Subsidiaries

  	
  66

  
	
  Section 3.16.

  	
   

  	
  Labor Matters

  	
  66

  
	
  Section 3.17.

  	
   

  	
  Security Interest in Collateral

  	
  66

  
	
  Section 3.18.

  	
   

  	
  Holdings

  	
  67

  
	
  Section 3.19.

  	
   

  	
  Solvency

  	
  67

  
	
  Section 3.20.

  	
   

  	
  No Restricted Payments

  	
  67

  
	
  Section 3.21.

  	
   

  	
  Related Agreements

  	
  67

  
	
  Section 3.22.

  	
   

  	
  Patriot Act Compliance

  	
  67

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  
	
   

  
	
  Conditions

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.01.

  	
   

  	
  Closing

  	
  67

  
	
  Section 4.02.

  	
   

  	
  Each Credit Event

  	
  72

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  
	
   

  
	
  AFFIRMATIVE COVENANTS

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.01.

  	
   

  	
  Financial Statements, Borrowing Base and Other Information

  	
  73

  
	
  Section 5.02.

  	
   

  	
  Notices of Material Events

  	
  77

  
	
  Section 5.03.

  	
   

  	
  Existence; Conduct of Business

  	
  78

  
	
  Section 5.04.

  	
   

  	
  Payment of Obligations

  	
  79

  
	
  Section 5.05.

  	
   

  	
  Maintenance of Properties

  	
  79

  
	
  Section 5.06.

  	
   

  	
  Maintenance of Insurance

  	
  79

  
	
  Section 5.07.

  	
   

  	
  Books and Records

  	
  79

  
	
  Section 5.08.

  	
   

  	
  Inspection Rights; Collateral Reports

  	
  79

  
	
  Section 5.09.

  	
   

  	
  Compliance with Laws and Contractual Obligations

  	
  80

  
	
  Section 5.10.

  	
   

  	
  Use of Proceeds

  	
  80

  
	
  Section 5.11.

  	
   

  	
  Casualty and Condemnation

  	
  80

  
	
  Section 5.12.

  	
   

  	
  Depositary Banks

  	
  80

  
	
  Section 5.13.

  	
   

  	
  Collateral; Further Assurances

  	
  80

  
	
  Section 5.14.

  	
   

  	
  Post-Closing Deliverables

  	
  80

  



 


ii

















 


	
  Section 5.15.

  	
   

  	
  Ratings

  	
  81

  
	
  Section 5.16.

  	
   

  	
  Interest Rate Protection

  	
  81

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  
	
   

  
	
  NEGATIVE
  COVENANTS

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.01.

  	
   

  	
  Indebtedness; Guarantees

  	
  81

  
	
  Section 6.02.

  	
   

  	
  Liens

  	
  84

  
	
  Section 6.03.

  	
   

  	
  Mergers, Consolidations, Etc.

  	
  86

  
	
  Section 6.04.

  	
   

  	
  Dispositions

  	
  86

  
	
  Section 6.05.

  	
   

  	
  Lines of Business

  	
  87

  
	
  Section 6.06.

  	
   

  	
  Investments and Acquisitions

  	
  88

  
	
  Section 6.07.

  	
   

  	
  Restricted Payments

  	
  89

  
	
  Section 6.08.

  	
   

  	
  Transactions with Affiliates

  	
  92

  
	
  Section 6.09.

  	
   

  	
  Restrictive Agreements

  	
  92

  
	
  Section 6.10.

  	
   

  	
  Swap Agreements

  	
  93

  
	
  Section 6.11.

  	
   

  	
  Fixed Charge Coverage Ratio

  	
  93

  
	
  Section 6.12.

  	
   

  	
  Stock Issuance

  	
  93

  
	
  Section 6.13.

  	
   

  	
  Modifications of Certain Documents

  	
  93

  
	
  Section 6.14.

  	
   

  	
  Passive Holding Company Status

  	
  94

  
	
  Section 6.15.

  	
   

  	
  Sale and Leaseback Transactions

  	
  94

  
	
  Section 6.16.

  	
   

  	
  Fiscal Year

  	
  94

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  
	
   

  
	
  EVENTS OF
  DEFAULT

  
	
   

  
	
  ARTICLE VIII

  
	
   

  
	
  The
  Administrative Agent

  
	
   

  
	
  ARTICLE IX

  
	
   

  
	
  Miscellaneous

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 9.01.

  	
   

  	
  Notices

  	
  99

  
	
  Section 9.02.

  	
   

  	
  Waivers; Amendments

  	
  100

  
	
  Section 9.03.

  	
   

  	
  Expenses; Indemnity; Damage Waiver

  	
  102

  
	
  Section 9.04.

  	
   

  	
  Successors and Assigns

  	
  103

  
	
  Section 9.05.

  	
   

  	
  Survival

  	
  107

  
	
  Section 9.06.

  	
   

  	
  Counterparts; Integration; Effectiveness

  	
  107

  
	
  Section 9.07.

  	
   

  	
  Severability

  	
  107

  
	
  Section 9.08.

  	
   

  	
  Right of Setoff

  	
  107

  



 


iii

















 


	
  Section 9.09.

  	
   

  	
  Release of Collateral

  	
  108

  
	
  Section 9.10.

  	
   

  	
  Governing Law; Jurisdiction; Consent to Service of Process

  	
  108

  
	
  Section 9.11.

  	
   

  	
  WAIVER OF JURY TRIAL

  	
  109

  
	
  Section 9.12.

  	
   

  	
  Headings

  	
  109

  
	
  Section 9.13.

  	
   

  	
  Confidentiality

  	
  109

  
	
  Section 9.14.

  	
   

  	
  Several Obligations; Nonreliance; Violation of Law

  	
  110

  
	
  Section 9.15.

  	
   

  	
  USA PATRIOT Act

  	
  110

  
	
  Section 9.16.

  	
   

  	
  Disclosure

  	
  110

  
	
  Section 9.17.

  	
   

  	
  Appointment for Perfection

  	
  110

  
	
  Section 9.18.

  	
   

  	
  Interest Rate Limitation

  	
  110

  
	
  Section 9.19.

  	
   

  	
  Effect of Agreement

  	
  111

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  
	
   

  
	
  Guaranty

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 10.01.

  	
   

  	
  Guaranty

  	
  111

  
	
  Section 10.02.

  	
   

  	
  Guaranty of Payment

  	
  111

  
	
  Section 10.03.

  	
   

  	
  No Discharge or Diminishment of Guaranty

  	
  111

  
	
  Section 10.04.

  	
   

  	
  Defenses Waived

  	
  112

  
	
  Section 10.05.

  	
   

  	
  Rights of Subrogation

  	
  112

  
	
  Section 10.06.

  	
   

  	
  Reinstatement; Stay of Acceleration

  	
  113

  
	
  Section 10.07.

  	
   

  	
  Information

  	
  113

  
	
  Section 10.08.

  	
   

  	
  [Reserved]

  	
  113

  
	
  Section 10.09.

  	
   

  	
  Maximum Liability

  	
  113

  
	
  Section 10.10.

  	
   

  	
  Contribution

  	
  113

  
	
  Section 10.11.

  	
   

  	
  Liability Cumulative

  	
  114

  



 


	
  SCHEDULES:

  
	
   

  
	
  Commitment
  Schedule

  
	
  Schedule
  1.01(a) — Account Debtors

  
	
  Schedule
  1.01(b) — Griffon Letters of Credit

  
	
  Schedule
  1.01(c) — Effective Date Guarantors

  
	
  Schedule
  3.05 — Properties

  
	
  Schedule
  3.06 — Disclosed Matters

  
	
  Schedule
  3.13 — Burdensome Agreements

  
	
  Schedule
  3.14 — Insurance

  
	
  Schedule
  3.15 — Capitalization and Subsidiaries

  
	
  Schedule
  3.16 — Labor Matters

  
	
  Schedule
  3.17 — Perfection Schedule

  
	
  Schedule
  4.01(p) — Post-Closing Perfection

  
	
  Schedule
  6.01(a) — Existing Indebtedness

  
	
  Schedule
  6.01(b) — Existing Guaranties

  
	
  Schedule
  6.02 — Existing Liens

  
	
  Schedule
  6.06 — Existing Investments

  
	
  Schedule
  6.09 — Existing Restrictive Agreements

  



 


iv

















 


	
  EXHIBITS:

  
	
   

  
	
  Exhibit
  A — Form of Assignment and Assumption

  
	
  Exhibit
  B — Form of Borrowing Base Certificate

  
	
  Exhibit
  C — Form of Compliance Certificate

  
	
  Exhibit
  D — Form of Joinder Agreement

  
	
  Exhibit
  E — Form of Security Agreement

  
	
  Exhibit
  F — Form of Intercreditor Agreement

  
	
  Exhibit
  G — Form of Effective Date Certificate

  
	
  Exhibit
  H — Form of Global Intercompany Note

  



 


v

















 


AMENDED
AND RESTATED CREDIT AGREEMENT dated as of September 30, 2010 (as it may be
amended or modified from time to time, this “Agreement”), among CLOPAY
AMES TRUE TEMPER LLC, a Delaware limited liability company (“Holdings”),
CLOPAY AMES TRUE TEMPER HOLDING CORP., a Delaware corporation (the “Borrower”),
the other Loan Parties party hereto, the Lenders party hereto, and JPMORGAN
CHASE BANK, N.A., as Administrative Agent.


 


W  I  T  N  E  S  S
E  T  H


 


WHEREAS,
Clopay Acquisition Corp., a Delaware corporation and a subsidiary of the
Borrower (“Acquisition Sub”), has entered into the Stock Purchase
Agreement, dated as of July 19, 2010 (the “Acquisition Agreement”), with
CHATT Holdings Inc., a Delaware corporation (the “Target”) and CHATT
Holdings LLC, pursuant to which Acquisition Sub has agreed to acquire all of
the Equity Interests of the Target and its subsidiaries (the “Acquisition”);


 


WHEREAS,
to fund, in part, the Acquisition, the Borrower will incur term loans in an
aggregate principal amount of $375,000,000;


 


WHEREAS,
certain Subsidiaries of the Borrower are parties to the Credit Agreement, dated
as of June 24, 2008, as amended, among Clopay Building Products Company, Inc.,
a Delaware corporation (“Clopay Building”), as a borrower, Clopay
Plastic Products Company, Inc., a Delaware corporation (“Clopay Plastic”),
as a borrower, JPMorgan Chase Bank, N.A., as administrative agent and the other
lender parties thereto (the “Existing Credit Agreement”);


 


WHEREAS,
the Borrower has requested to amend and restate the Existing Credit Agreement
such that (a) the Lenders will extend credit in the form of Revolving Loans,
(b) the Issuing Banks will issue Letters of Credit and (c) the Swingline Lender
will extend credit in the form of Swingline Loans, in each case at any time and
from time to time, in an aggregate principal amount of up to $125,000,000,
prior to the Maturity Date;


 


WHEREAS,
the Obligations of the Borrower under the Loan Documents will continue to be
guaranteed by the Guarantors;


 


WHEREAS,
the Borrower and the other Loan Parties will continue to secure the Obligations
(with the Administrative Agent, for the benefit of the Secured Parties,
receiving a First Priority Lien on all ABL Collateral and a Second Priority
Lien on all Term Collateral in accordance with the Intercreditor Agreement);
and


 


WHEREAS,
the Required Lenders (as defined in the Existing Credit Agreement) and the
Administrative Agent are willing to amend the Existing Credit Agreement and the
Lenders and the Issuing Banks are willing to make available to the Borrower
such revolving credit and letter of credit facilities, in each case upon the
terms and subject to the conditions set forth herein;


 


NOW,
THEREFORE, in consideration of the premises and the covenants and agreements
contained herein, the parties hereto hereby agree that, as of the Effective
Date, the Existing Credit Agreement shall be amended and restated in its
entirety as follows:


 


1

















 


ARTICLE I


 


Definitions


 


Section 1.01.          Defined Terms.  As used in this Agreement, the following
terms have the meanings specified below:


 


“ABL Collateral” has the meaning assigned to such term in the
Intercreditor Agreement.


 


“ABR”, when used in reference to any Loan or Borrowing, refers
to whether such Loan bears, or the Loans comprising such Borrowing bear,
interest at a rate determined by reference to the Alternate Base Rate.


 


“Account” has the meaning assigned to such term in the Security
Agreement.


 


“Account Debtor” means any Person obligated on an Account.


 


“Acquisition” has the meaning assigned to such term in the
recitals hereto.


 


“Acquisition Agreement” has the meaning assigned to such term in
the recitals hereto.


 


“Acquisition
Consideration”  means the
purchase consideration for any Permitted Acquisition and all other payments by
Holdings or any of its Subsidiaries in exchange for, or as part of, or in
connection with, any Permitted Acquisition, whether paid in cash or by exchange
of Equity Interests or of properties or otherwise and whether payable at or
prior to the consummation of such Permitted Acquisition or deferred for payment
at any future time, whether or not any such future payment is subject to the
occurrence of any contingency, and includes any and all payments representing
the purchase price and any assumptions of Indebtedness, “earn-outs” and other
agreements to make any payment the amount of which is, or the terms of payment
of which are, in any respect subject to or contingent upon the revenues,
income, cash flow or profits (or the like) of any Person or business.


 


“Acquisition Sub” has the meaning assigned to such term in the
recitals hereto.


 


“Act” has the meaning assigned to such term in Section 9.15.


 


“Adjusted LIBO Rate” means, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such
Interest Period multiplied by (b) the Statutory Reserve Rate.


 


“Administrative Agent” means JPMorgan Chase Bank, N.A., in its
capacity as administrative agent for the Lenders hereunder.


 


“Administrative Questionnaire” means an Administrative
Questionnaire in a form supplied by the Administrative Agent.


 


“Affiliate” means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person
specified.


 


2

















 


“Aggregate Credit Exposure” means, at any time, the aggregate
Credit Exposure of all the Lenders.


 


“Agreement” has the meaning assigned to such term in the
preamble hereto.


 


“Alternate Base Rate” means, for any day, a rate per annum equal
to the greater of (a) the Prime Rate in effect on such day, (b) the Federal
Funds Effective Rate in effect on such day plus 1⁄2 of 1% and (c) the Adjusted
LIBO Rate in effect on such day (or, if such day is not a Business Day, as of
the preceding Business Day) in respect of a proposed Eurodollar Loan with a
one-month Interest Period commencing two Business Days thereafter plus the
excess of the Applicable Rate with respect to Eurodollar Loans over the
Applicable Rate with respect to ABR Loans. 
Any change in the Alternate Base Rate due to a change in the Prime Rate,
the Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective
from and including the effective date of such change in the Prime Rate, the
Federal Funds Effective Rate or the Adjusted LIBO Rate, respectively.


 


“Alternative Currency” means any currency other than dollars that is
freely available, freely transferable and freely convertible into dollars and
in which dealings in deposits are carried on in the London interbank market.


 


“Ames”  means Ames
True Temper, Inc., a Delaware corporation.


 


“Applicable Percentage” means, with respect to any Lender, (a) with
respect to Revolving Loans, LC Exposure, Swingline Loans or Overadvances, a
percentage equal to a fraction the numerator of which is such Lender’s
Commitment and the denominator of which is the aggregate Commitments of all the
Lenders (if the Commitments have terminated or expired, the Applicable
Percentages shall be determined based upon such Lender’s share of the aggregate
Revolving Exposures at that time), and (b) with respect to Protective Advances
or with respect to the Aggregate Credit Exposure, a percentage based upon its
share of the Aggregate Credit Exposure and the unused Commitments; provided
that in the case of Section 2.20 when a Defaulting Lender shall exist, “Applicable
Percentage” shall, in each case, be calculated disregarding the Defaulting
Lender’s Commitment.


 


“Applicable Pricing Grid” means the table set forth below:


 


	
  Average
  Availability

  	
   

  	
  ABR Spread

  	
   

  	
  Eurodollar Spread

  	
   

  	
  Commitment Fee

  Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Category 1

  > $83,000,000

  	
   

  	
  1.25

  	
  %

  	
  2.25

  	
  %

  	
  0.50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Category 2

  > $42,000,000 but

  < $83,000,000

  	
   

  	
  1.50

  	
  %

  	
  2.50

  	
  %

  	
  0.50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Category 3

  < $42,000,000

  	
   

  	
  1.75

  	
  %

  	
  2.75

  	
  %

  	
  0.375

  	
  %

  



 


For purposes of the foregoing, (a) each of the Applicable Rate and the
Commitment Fee Rate shall be determined as of the end of each fiscal quarter of
the Borrower (commencing after the end of the first full fiscal quarter ended
after the Effective Date) based upon the daily average Availability for such
fiscal quarter and (b) each change in the Applicable Rate and the


 


3

















 


Commitment
Fee Rate as determined by the Administrative Agent pursuant to clause (a) shall
be effective on the first day of the next succeeding quarter (with such change
to be effective until the next successive change) and the Administrative Agent
shall promptly notify the Borrower and the Lenders of the determination of the
average Availability for the applicable quarter, provided that the
average Availability shall be deemed to be in Category 3 (A) at any time that
an Event of Default has occurred and is continuing or (B) at the option of the
Administrative Agent or at the request of the Required Lenders if the Borrower
fails to deliver a Borrowing Base Certificate required to be delivered by it
pursuant to Section 5.01(l), during the period from the expiration of the time
for delivery thereof until such Borrowing Base Certificate is delivered.


 


“Applicable Rate” means, for any day, with respect to any ABR
Loan or Eurodollar Loan, as the case may be, the applicable rate per annum
determined pursuant to the Applicable Pricing Grid under the caption “ABR
Spread” or “Eurodollar Spread”, as the case may be, based upon the daily
average Availability for the most recently completed fiscal quarter of the
Borrower, provided that, the first such adjustment shall be made in
respect of the first full fiscal quarter ended after the Effective Date and,
until such adjustment is made, the “Applicable Rate” shall be the applicable
rate per annum set forth in the Applicable Pricing Grid in Category 1.


 


“Approved Fund” has the meaning assigned to such term in Section
9.04.


 


“Arrangers” means J.P. Morgan Securities LLC and Deutsche Bank
Securities Inc. in their capacities as joint lead arrangers of the Commitments.


 


“Asset Sale” means any sale, transfer, lease (other than operating leases entered
into in the ordinary course of business) or other disposition of assets made in
reliance on Section 6.04(e), other than any such disposition resulting in
aggregate Net Asset Sale Proceeds not exceeding $2,000,000 in a single
transaction or a series of related transactions and not exceeding $5,000,000
when aggregated with the Net Asset Sale Proceeds of other such dispositions
during any fiscal year of Holdings.


 


“Assignment and Assumption” means an assignment and assumption
entered into by a Lender and an assignee (with the consent of any party whose
consent is required by Section 9.04), and accepted by the Administrative Agent,
in the form of Exhibit A or any other form approved by the
Administrative Agent.


 


“ATT” means ATT Holding Co., a subsidiary of the Target.


 


“Availability” means, at any time, an amount equal to (a) the
lesser of (i) the Revolving Commitment and (ii) the Borrowing Base minus (b) the Aggregate Credit
Exposure of all Lenders.


 


“Availability Period” means the period from and including the
Effective Date to but excluding the earlier of the Maturity Date and the date
of termination of the Commitments.


 


“Available Revolving Commitments” means, at any time, the
Revolving Commitments then in effect minus the
Revolving Exposure of all Lenders at such time.


 


“Banking Services” means each and any of the following bank
services provided to any Loan Party by any Lender or any of its Affiliates: (a)
commercial credit cards, (b) stored value cards and (c) treasury management
services (including, without limitation, controlled


 


4

















 


disbursement,
automated clearinghouse transactions, return items, overdrafts and interstate
depository network services).


 


“Banking Services Obligations” of the Loan Parties means any and
all obligations of the Loan Parties, whether absolute or contingent and
howsoever and whensoever created, arising, evidenced or acquired (including all
renewals, extensions and modifications thereof and substitutions therefor) in
connection with Banking Services.


 


“Banking Services Reserves” means all Reserves which the
Administrative Agent from time to time establishes in its Permitted Discretion
for Banking Services then provided or outstanding Banking Services Obligations.


 


“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy,” as
amended from time to time, or any successor statute.


 


“Bankruptcy Event” means, with respect to any Person, such
Person becomes the subject of a bankruptcy or insolvency proceeding, or has had
a receiver, conservator, trustee, administrator, custodian, assignee for the
benefit of creditors or similar Person charged with the reorganization or
liquidation of its business appointed for it, or such Person has consented to,
approved of, or acquiesced in, any such proceeding or appointment, provided
that a Bankruptcy Event shall not result solely by virtue of any ownership
interest, or the acquisition of any ownership interest, in such Person by a Governmental
Authority or instrumentality thereof, provided, further, that such ownership
interest does not result in or provide such Person with immunity from the
jurisdiction of courts within the United States or from the enforcement of
judgments or writs of attachment on its assets or permit such Person (or such
Governmental Authority or instrumentality) to reject, repudiate, disavow or
disaffirm any contracts or agreements made by such Person.


 


“Board” means the Board of Governors of the Federal Reserve System
of the United States of America.


 


“Borrower” has the meaning assigned to such term in the preamble
hereto.


 


“Borrowing” means (a) Revolving Loans of the same Type, made,
converted or continued on the same date and, in the case of Eurodollar Loans,
as to which a single Interest Period is in effect, (b) a Swingline Loan, (c) a
Protective Advance and (d) an Overadvance.


 


“Borrowing Base” means, at any time, the sum of (a) 85% of the
Loan Parties’ Eligible Accounts at such time, plus
(b) the lesser of (i) 70% of the Loan Parties’ Eligible Inventory, valued at
the lower of cost or market value, determined on a first-in-first-out basis, at
such time and (ii) the product of 85% multiplied
by the Net Orderly Liquidation Value percentage identified in the
most recent inventory appraisal ordered by the Administrative Agent multiplied by the Loan Parties’
Eligible Inventory, valued at the lower of cost or market value, determined on
a first-in-first-out basis, at such time, plus (c) 100% of cash and Permitted Investments in
Controlled Accounts with the Administrative Agent, minus (d) Reserves.  The Administrative Agent may, in its
Permitted Discretion, adjust Reserves, with
any such changes to be effective two Business Days after delivery of notice
thereof to the Borrower and the Lenders. 
The Borrowing Base at any time
shall be determined by reference to the most recent Borrowing Base Certificate
delivered to the Administrative Agent pursuant to Section 5.01(l) of the
Agreement.


 


5

















 


“Borrowing Base Certificate” means a certificate, signed and
certified as accurate and complete by a Financial Officer of the Borrower, in
substantially the form of Exhibit B or another form which is acceptable
to the Administrative Agent in its Permitted Discretion.


 


“Borrowing Request” means a request by the Borrower for a
Revolving Borrowing in accordance with Section 2.02.


 


“Business Day” means any day that is not a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to remain closed; provided that, when used in connection with a
Eurodollar Loan, the term “Business Day” shall also exclude any day on
which banks are not open for dealings in dollar deposits in the London
interbank market.


 


“Buying Group” means any Person (a) that provides Account
Debtors who are members of such Person discounts on the purchase of merchandise
and (b) to which any Account Debtor forwards payments on Accounts for such
Person to remit to the Loan Parties.


 


“Canadian Borrower” means any Subsidiary of the Borrower that is
organized under the laws of Canada and has been designated as the borrower
under the Canadian Facility in accordance with Section 2.09(h).


 


“Canadian Borrowing Base Assets” has the meaning assigned to
such term in Section 2.09(h).


 


“Canadian Commitment” means, with respect to any Lender, the
commitment, if any, of such Person to make loans to a Canadian Borrower in
accordance with Section 2.09(h).


 


“Canadian Facility” means the Canadian Commitments and the loans
thereunder.


 


“Canadian Lender” has the meaning assigned to such term in
Section 2.09(i).


 


“Capital Expenditures” means, for any period,
expenditures during such period for any purchase or other acquisition of any
asset which would be classified as a fixed or capital asset on a consolidated
balance sheet of Holdings and its Subsidiaries prepared in accordance with
GAAP.


 


“Capital Lease Obligations” of any Person means the obligations
of such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.  For
purposes of Section 6.01, a Capital Lease Obligation shall be deemed to be
secured by a Lien on the property being leased and such property shall be
deemed to be owned by the lessee.


 


“Cash Dominion Period” has the meaning assigned to such term in
the Security Agreement.


 


“Change of Control” means (a) any Person or “group” (within the
meaning of the Exchange Act and the rules of the SEC thereunder) (i) shall have
acquired ownership or control, directly or indirectly, beneficially or of
record, of 35% or more on a fully diluted basis of the


 


6

















 


aggregate
voting power and/or aggregate economic interest represented by the issued and
outstanding Equity Interests of the Control Person or (ii) shall have obtained
the power (whether or not exercised) to elect a majority of the members of the
board of directors (or similar governing body) of the Control Person; (b) prior
to a Permitted Change of Control Transaction, Griffon shall beneficially own
and control, directly or indirectly, less than 100% on a fully diluted basis of
the economic and voting interest in the Equity Interests of Holdings; (c)  Holdings shall beneficially own and control,
directly or indirectly, less than 100% on a fully diluted basis of the economic
and voting interest in the Equity Interests of Borrower; (d)  the majority of the seats (other than vacant
seats) on the board of directors (or similar governing body) of the Control
Person shall cease to be occupied by Persons who either (i) were members of the
board of directors of the Control Person on the Effective Date or (ii) were
nominated for election by the board of directors of the Control Person, a majority
of whom were directors on the Effective Date or whose election or nomination
for election was previously approved by a majority of such directors; or (e) any
“change of control” (as such term is defined in any Term Loan Document) under
any Term Loan Document shall occur.


 


“Change in Law” means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender or
any Issuing Bank (or, for purposes of Section 2.15(b), by any lending office of
such Lender or by such Lender’s or such Issuing Bank’s holding company, if any)
with any request, guideline or directive (whether or not having the force of
law) of any Governmental Authority made or issued after the date of this
Agreement.


 


“Class”, when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are Revolving
Loans, Swingline Loans, Protective Advances, or Overadvances.


 


“Clopay Building” has the meaning assigned to such term in the
recitals hereto.


 


“Clopay Plastic” has the meaning assigned to such term in the
recitals hereto.


 


“Code” means the Internal Revenue Code of 1986, as amended from
time to time.


 


“Collateral” means any and all assets (including Equity
Interests) on which a Lien is purported to be granted to the Administrative
Agent, for the benefit of the Secured Parties, pursuant to any Collateral
Document to secure the Secured Obligations.


 


“Collateral Access Agreement” has the meaning
assigned to such term in the Security Agreement.


 


“Collateral and Guarantee
Requirement” means, at any time, the requirement that:


 


(a)           the Administrative Agent shall have received from Holdings
and each of its Domestic Subsidiaries (other than any Immaterial Subsidiary)
either (i) a counterpart of this Agreement duly executed and delivered on
behalf of such Person as a “Guarantor” (or “Borrower”, in the case of the
Borrower) or (ii) in the case of any Person that becomes a Domestic Subsidiary
(other than an Immaterial Subsidiary), or a Domestic Subsidiary that ceases to
be an Immaterial Subsidiary, in each case after the Effective Date, a Joinder
Agreement duly executed and delivered on behalf of such Person;


 


7

















 


(b)           the Administrative Agent shall have
received from the Borrower, Holdings and each Domestic Subsidiary (other than
any Immaterial Subsidiary) either (i) a counterpart of the Security Agreement
duly executed and delivered on behalf of such Person or (ii) in the case of any
Person that becomes a Domestic Subsidiary (other than an Immaterial
Subsidiary), or a Domestic Subsidiary that ceases to be an Immaterial
Subsidiary, in each case after the Effective Date, a supplement to the Security
Agreement, in the form specified therein, duly executed and delivered on behalf
of such Person;


 


(c)           in the case of any Person that
becomes a Domestic Subsidiary (other than an Immaterial Subsidiary), or a
Domestic Subsidiary that ceases to be an Immaterial Subsidiary, in each case
after the Effective Date, the Administrative Agent shall have received
documents and opinions of the type referred to in Section 4.01(c), Section 4.01(p)
and Section 4.01(q) with respect to such Domestic Subsidiary;


 


(d)           all Equity Interests owned by or on
behalf of any Loan Party shall have been pledged pursuant to the Security
Agreement and, in the case of Equity Interests in any first-tier Foreign
Subsidiary (other than any Immaterial Subsidiary), where the Administrative
Agent so requests in connection with the pledge of such Equity Interests, a
Foreign Pledge Agreement (provided that the Loan Parties shall not be
required to pledge more than 65% of the outstanding voting Equity Interests in
any Foreign Subsidiary), and the Administrative Agent shall, to the extent
required by the Intercreditor Agreement, have received certificates or other
instruments representing all such Equity Interests, together with undated stock
powers or other instruments of transfer with respect thereto endorsed in blank;


 


(e)           (i) all Indebtedness of Griffon and
its Affiliates, Holdings, the Borrower and each Subsidiary that is owing to any
Loan Party shall be evidenced by the Global Intercompany Note (and no other
instrument) and (ii) such Global Intercompany Note (along with any other
promissory notes evidencing Indebtedness of any other Person in a principal
amount of $250,000 or more that is owing to any Loan Party, if any) shall have
been pledged pursuant to the Security Agreement, and, to the extent required by
the Intercreditor Agreement, the Administrative Agent shall have received such
Global Intercompany Note (and any such promissory notes), together with undated
instruments of transfer with respect thereto endorsed in blank;


 


(f)            all documents and instruments,
including UCC financing statements, required by applicable law or reasonably
requested by Administrative Agent to be filed, registered or recorded to create
the Liens intended to be created by the Collateral Documents and perfect such
Liens to the extent required by, and with the priority required by, the
Collateral Documents, shall have been filed, registered or recorded or
delivered to the Administrative Agent for filing, registration or recording;


 


(g)           in respect of a Mortgaged Property
not subject to a Mortgage pursuant to the Existing Credit Agreement as of the
Effective Date, the Administrative Agent shall have received (i) counterparts
of a Mortgage with respect to each Mortgaged Property duly executed and
delivered by the record owner of such Mortgaged Property, (ii) a policy or
policies of title insurance issued by a nationally recognized title insurance
company insuring the Lien of each Mortgage as a valid and enforceable Lien with
the priority required by the Intercreditor Agreement on the Mortgaged Property
described therein, free of any other Liens other than Permitted Encumbrances
and Liens under the Term Loan Documents, together with such endorsements,
coinsurance and reinsurance as the Administrative Agent may reasonably request,


 


8
















 


(iii)  (A) a “Life-of-Loan” Federal Emergency
Management Agency Standard Flood Hazard Determination with respect to such
Mortgaged Property (together with a notice about special flood hazard area
status and flood disaster assistance duly executed by the Borrower or the
applicable Loan Party in the event any such Mortgaged Property is located in a
special flood hazard area) and (B) if any portion of such Mortgaged Property is
located in an area identified by the Federal Emergency Management Agency (or
any successor agency) as a Special Flood Hazard Area with respect to which
flood insurance has been made available under the National Flood Insurance Act
of 1968 (now or as hereafter in effect or any successor act thereto), (1) flood
insurance with a financially sound and reputable insurer, in an amount and
otherwise sufficient to comply with all applicable rules and regulations
promulgated pursuant to (a) the National Flood Insurance Act of 1968 as now or
hereafter in effect or any successor statute thereto, (b) the Flood Disaster
Protection Act of 1973 as now or hereafter in effect or any successor statute
thereto, (c) the National Flood Insurance Reform Act of 1994 as now or
hereafter in effect or any successor statute thereto and (d) the Flood
Insurance Reform Act of 2004 as now or hereafter in effect or any successor
statute thereto and (2) evidence of such insurance in form and substance
reasonably acceptable to the Administrative Agent, and (iv) such surveys,
abstracts, appraisals, legal opinions and other documents (including an opinion
of counsel (which shall be reasonably satisfactory to the Administrative Agent)
in each state in which Mortgaged Property is located with respect to the
enforceability of the form(s) of Mortgages to be recorded in such state and
such other matters as the Administrative Agent may reasonably request, in each
case in form and substance reasonably satisfactory to the Administrative Agent)
as the Administrative Agent may reasonably request with respect to any such
Mortgage or Mortgaged Property;


 


(h)           in the case of Mortgaged Properties
subject to an Existing Mortgage, the Administrative Agent shall have received
(i) counterparts of an amendment to the Existing Mortgage covering such
Mortgaged Property in form and substance reasonably satisfactory to the
Administrative Agent, duly executed and delivered by the record owner of such Mortgaged
Property, (ii) either (A) a “date-down” endorsement to the existing title
insurance policy for such parcel of Mortgaged Property issued by the title
company that issued such existing title insurance policy, which endorsement
shall update the effective date of such existing title insurance policy, shall
amend the description of the insured Existing Mortgage to include the amendment
to such Existing Mortgage, which shall insure the Lien of each Existing
Mortgage, as amended,  as a valid and
enforceable Lien with the priority required by the Intercreditor Agreement on
the Mortgaged Property described therein, free of any other Liens other than
Permitted Encumbrances and Liens under the Term Loan Documents, and shall
otherwise be in form and substance reasonably satisfactory to the
Administrative Agent or (B) a policy or policies of title insurance issued by a
nationally recognized title insurance company insuring the Lien of each
Mortgage as a valid and enforceable Lien with the priority required by the
Intercreditor Agreement on the Mortgaged Property described therein, free of
any other Liens other than Permitted Encumbrances and Liens under the Term Loan
Documents, together with such endorsements, coinsurance and reinsurance as the
Administrative Agent may reasonably request, (iii) (A) a “Life-of-Loan” Federal
Emergency Management Agency Standard Flood Hazard Determination with respect to
such Mortgaged Property (together with a notice about special flood hazard area
status and flood disaster assistance duly executed by the Borrower or the
applicable Loan Party in the event any such Mortgaged Property is located in a
special flood hazard area) and (B) if any portion of such Mortgaged Property is
located in an area identified by the Federal Emergency Management Agency (or
any successor agency) as a Special Flood Hazard Area with respect to which
flood insurance has been made available under the National Flood Insurance Act
of 1968 (now or as hereafter in effect or any successor act thereto), (1) flood
insurance with a financially sound and reputable insurer, in an amount and
otherwise


 


9

















 


sufficient to comply with all
applicable rules and regulations promulgated pursuant to (a) the National Flood
Insurance Act of 1968 as now or hereafter in effect or any successor statute
thereto, (b) the Flood Disaster Protection Act of 1973 as now or hereafter in
effect or any successor statute thereto, (c) the National Flood Insurance
Reform Act of 1994 as now or hereafter in effect or any successor statute
thereto and (d) the Flood Insurance Reform Act of 2004 as now or hereafter in
effect or any successor statute thereto and (2) evidence of such insurance in
form and substance reasonably acceptable to the Administrative Agent, and (iv) such
surveys, abstracts, appraisals, legal opinions and other documents (including
an opinion of counsel (which shall be reasonably satisfactory to the
Administrative Agent) in each state in which Mortgaged Property is located with
respect to the enforceability of the form(s) of Mortgages to be recorded in
such state and such other matters as the Administrative Agent may reasonably
request, in each case in form and substance reasonably satisfactory to the
Administrative Agent) as the Administrative Agent may reasonably request with
respect to any such Mortgage or Mortgaged Property; and


 


(i)           with respect to each Deposit Account
(other than (x) any Deposit Account the funds in which are used, in the
ordinary course of business, solely for the payment of salaries and wages,
workers’ compensation and similar expenses and (y) Deposit Accounts with a
balance not exceeding $25,000 individually or $100,000 in the aggregate) and
each securities account maintained by any Loan Party with any depositary bank
or securities intermediary, the Collateral Agent shall have received a
counterpart, duly executed and delivered by the applicable Loan Party and such
depositary bank or securities intermediary, as the case may be, of a Control
Agreement.


 


The Administrative Agent may grant extensions of time for the creation
and perfection of security interests in or the obtaining of title insurance,
legal opinions or other deliverables with respect to particular assets or the
provision of any Guarantee by any Subsidiary (including extensions beyond the
Effective Date or in connection with assets acquired, or Subsidiaries formed or
acquired, after the Effective Date) where it determines that such action cannot
be accomplished without undue effort or expense by the time or times at which
it would otherwise be required to be accomplished by this Agreement or the
Collateral Documents.


 


“Collection Account” has the meaning assigned to such term in
the Security Agreement.


 


“Collateral Documents” means, collectively, the Security
Agreement, the Mortgages, the Intellectual Property Security Agreements, the
Perfection Certificate, the Control Agreements, the Collateral Access Agreements,
if any, and any other instruments, documents or agreements delivered by or on
behalf of a Loan Party pursuant to this Agreement or any of the other Loan
Documents in order to grant or perfect a Lien upon the Collateral as security
for payment of the Secured Obligations.


 


“Combined Material Adverse Effect” means any change, effect,
event, occurrence, state of facts or development that, individually or in the
aggregate with any other change, effect, event, occurrence, state of facts or
development, is or is reasonably likely to be materially adverse to the
financial condition or results of operations, assets, liabilities or business
of Holdings, the Target and their respective subsidiaries, taken as a whole
(the “Combined Business”), provided that any material adverse change
(including a prospective change) to the Combined Business’s, taken as a whole,
business relationship with The Home Depot Inc., Lowe’s Companies, Inc.,
Wal-Mart Stores, Inc., Menards, Inc. or Procter & Gamble, Co. or any of
their respective subsidiaries or affiliates with whom the Combined Business and
its subsidiaries, taken as a whole, has a material business relationship as of
the date hereof


 


10

















 


(collectively,
the “Combined Business Major Customers”) shall constitute the basis for a
Combined Material Adverse Effect or a material adverse change, since September 30,
2009 (with respect to Holdings and its Subsidiaries) and October 3, 2009 (with
respect to the Target and its Subsidiaries); provided, however,
that none of the following shall be deemed in itself, or in any combination, to
constitute, and none of the following shall be taken into account in
determining whether there has been or will be, a Combined Material Adverse
Effect: (a) any adverse change, effect, event, occurrence, state of facts or
development attributable to the announcement or pendency of the transactions
contemplated by the Acquisition Agreement (other than with respect to any of
the Combined Business’s and its subsidiaries’ relationships with any Combined
Business Major Customer); (b) any adverse change, effect, event, occurrence,
state of facts or development affecting the lawn and garden industry (that does
not disproportionately affect the Combined Business and its subsidiaries, taken
as a whole), the United States economy as a whole or the capital markets in
general; (c) any adverse change, event, development, or effect arising from or
relating to changes in GAAP; (d) any adverse change, effect, event, occurrence,
state of facts or development resulting from or relating to compliance with the
terms of, or the taking of any action required by, the Acquisition Agreement
(other than consummation of the closing of the transactions contemplated by the
Acquisition Agreement itself); or (e) any adverse change, effect, event,
occurrence, state of facts or development arising from or relating to the
commencement, continuation or escalation of a war, material armed hostilities
or other material international or national calamity or act of terrorism
directly involving the United States of America.


 


“Commitment” means, with respect to each Lender, the sum of such
Lender’s Revolving Commitment, together with the commitment of such Lender to
acquire participations in Protective Advances hereunder.  The initial amount of each Lender’s
Commitment is set forth on the Commitment Schedule, or in the Assignment
and Assumption pursuant to which such Lender shall have assumed its Commitment,
as applicable.


 


“Commitment Fee Rate” means, as of any date of determination,
the rate per annum determined pursuant to the Applicable Pricing Grid under the
caption “Commitment Fee Rate”, based upon the daily average Availability for
the most recently completed fiscal quarter of the Borrower, provided
that, the first such adjustment shall be made in respect of the first full
fiscal quarter ended after the Effective Date and, until such adjustment is
made, the Commitment Fee Rate shall be 0.50%.


 


“Commitment Schedule” means the Schedule attached hereto
identified as such.


 


“Company Intellectual Property” has the meaning assigned to such
term in Section 3.05(b).


 


“Company Material Adverse Effect” “ means any change, effect,
event, occurrence, state of facts or development that, individually or in the aggregate
with any other change, effect, event, occurrence, state of facts or
development, is or is reasonably likely to be materially adverse to (i) the
financial condition or results of operations, assets, liabilities or business
of the Target and its subsidiaries taken as a whole, provided that any
material adverse change (including a prospective change) to the Target’s and
its subsidiaries’, taken as a whole, business relationship with The Home Depot
Inc., Lowe’s Companies, Inc. or Wal-Mart Stores, Inc. or any of their
respective subsidiaries or affiliates with whom the Target and its
subsidiaries, taken as a whole, has a material business relationship as of the
date hereof (collectively, the “Company Major Customers”) shall constitute the
basis for a Company Material Adverse Effect or a material adverse change; provided,
however, that none of the following shall be deemed in itself,


 


11

















 


or
in any combination, to constitute, and none of the following shall be taken
into account in determining whether there has been or will be, a Company
Material Adverse Effect: (a) any adverse change, effect, event, occurrence,
state of facts or development attributable to the announcement or pendency of
the transactions contemplated by the Acquisition Agreement (other than with
respect to any of the Target’s and its subsidiaries’ relationships with any
Company Major Customer); (b) any adverse change, effect, event, occurrence,
state of facts or development affecting the lawn and garden industry (that does
not disproportionately affect the Target and its subsidiaries, taken as a
whole), the United States economy as a whole or the capital markets in general;
(c) any adverse change, event, development, or effect arising from or relating
to changes in GAAP; (d) any adverse change, effect, event, occurrence, state of
facts or development resulting from or relating to compliance with the terms
of, or the taking of any action required by, the Acquisition Agreement (other
than consummation of the closing of the transactions contemplated by the
Acquisition Agreement itself); or (e) any adverse change, effect, event,
occurrence, state of facts or development arising from or relating to the
commencement, continuation or escalation of a war, material armed hostilities
or other material international or national calamity or act of terrorism
directly involving the United States of America, or (ii) the ability of the
Target to timely consummate the transactions contemplated by the Acquisition Agreement.


 


“Contractual Obligation” means, as to any Person, any provision
of any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.


 


“Control” means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise.  “Controlling” and “Controlled”
have meanings correlative thereto.


 


“Control Agreement” has the meaning assigned to such term in the
Security Agreement.


 


“Control Person” means, prior to a Permitted Change of Control
Transaction, Griffon, and, thereafter, Holdings.


 


“Controlled Accounts” means deposit accounts and/or securities
accounts maintained with the Administrative Agent or with respect to which a
Control Agreement reasonably satisfactory to the Administrative Agent shall
been executed and delivered by the applicable Loan Party and depositary
institution or securities intermediary, as applicable; provided that in
no event shall any deposit account be a Controlled Account if such account is
established for the sole purpose of depositing the net cash proceeds of any
Loan Party with respect to any asset sale, incurrence of Indebtedness or
casualty event pending the application of such proceeds to the prepayment of
loans under the Term Loan Documents in accordance with the mandatory prepayment
provisions thereof.


 


“Covenant Defeasance”
with respect to any Senior Notes, has the meaning assigned to such term in the
Senior Notes Indenture under which such Senior Notes were issued.


 


“Credit Exposure” means, as to any Lender at any time, the sum
of (a) such Lender’s Revolving Exposure at such time, plus
(b) an amount equal to its Applicable Percentage, if any, of the aggregate
principal amount of Protective Advances outstanding at such time.


 


12

















 


“Credit Party” means the
Administrative Agent, any Issuing Bank, the Swingline Lender or any other
Lender.


 


“Default” means any event or condition which constitutes an
Event of Default or which upon notice, lapse of time or both would, unless
cured or waived, become an Event of Default.


 


“Defaulting Lender” means any Lender that (a) has failed, within
two Business Days of the date required to be funded or paid, to (i) fund any
portion of its Revolving Loans, (ii) fund any portion of its participations in
Letters of Credit, Swingline Loans, Protective Advances or Overadvances or
(iii) pay over to any Credit Party any other amount required to be paid by it
hereunder, unless, in the case of clause (i) above, such Lender notifies the
Administrative Agent in writing that such failure is the result of such Lender’s
good faith determination that a condition precedent to funding (specifically
identified and including the particular default, if any) has not been
satisfied, (b) has notified the Borrower or any Credit Party in writing, or has
made a public statement to the effect, that it does not intend or expect to
comply with any of its funding obligations under this Agreement (unless such
writing or public statement indicates that such position is based on such
Lender’s good faith determination that a condition precedent (specifically
identified and including the particular default, if any) to funding a loan
under this Agreement cannot be satisfied) or generally under other agreements
in which it commits to extend credit, (c) has failed, within three Business
Days after request by a Credit Party, acting in good faith, to provide a
certification in writing from an authorized officer of such Lender that it will
comply with its obligations (and is financially able to meet such obligations)
to fund prospective Revolving Loans and participations in then outstanding
Letters of Credit, Swingline Loans, Protective Advances and Overadvances under
this Agreement, provided that such Lender shall cease to be a Defaulting Lender
pursuant to this clause (c) upon such Credit Party’s receipt of such
certification in form and substance satisfactory to it and the Administrative
Agent, or (d) has become the subject of a Bankruptcy Event.


 


“Deposit Account” means a demand, time, savings, passbook or
like account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.


 


“Dilution Factors” shall mean, without duplication, with respect
to any period, the aggregate amount of all deductions, credit memos, returns,
adjustments, allowances, bad debt write-offs and other non-cash credits which
are recorded to reduce accounts receivable in a manner consistent with current
and historical accounting practices of the Loan Parties.


 


“Dilution Ratio” shall mean, at any date, the amount (expressed
as a percentage) equal to (a) the aggregate amount of the applicable Dilution
Factors for the twelve most recently ended fiscal months divided by (b) total
gross sales for such twelve most recently ended fiscal months.


 


“Dilution Reserve” shall mean, at any date on which the Dilution
Ratio exceeds 5%, an amount equal to the product of (i) the percentage by which
the applicable Dilution Ratio exceeds 5% multiplied by
(ii) the Eligible Accounts, in each case, on such date.


 


“Disclosed Matters” means the actions, suits and proceedings and
the environmental matters disclosed in Schedule 3.06.


 


“Disqualified Equity
Interests” means any Equity Interest which, by its terms (or by the
terms of any security or other Equity Interests into which it is convertible or
for which it is exchangeable), or upon the happening of any event or condition,
(i) matures or is mandatorily


 


13

















 


redeemable
(other than solely for Equity Interests which are not otherwise Disqualified
Equity Interests), pursuant to a sinking fund obligation or otherwise, (ii) is
redeemable at the option of the holder thereof (other than solely for Equity
Interests which are not otherwise Disqualified Equity Interests), in whole or
in part, (iii) provides for the scheduled payments or dividends in cash, or
(iv) is or becomes convertible into or exchangeable for Indebtedness or any
other Equity Interests that would constitute Disqualified Equity Interests, in
each case, prior to the date that is 91 days after the Maturity Date.


 


“Documents” has the meaning assigned to such term in the
Security Agreement.


 


“Dollar Equivalent” means, on any date of determination, with respect
to any amount in any currency other
than dollars, the equivalent in dollars of such amount, determined using the
Exchange Rate with respect to such currency in effect for such amount on such
date.


 


“dollars” or “$” refers to lawful money of the United
States of America.


 


“Domestic Subsidiary” means any Subsidiary organized under the
laws of the United States of America, any State thereof or the District of
Columbia.


 


“EBITDA” means, for any period, the sum of Net Income, plus to
the extent reducing net income, the sum, without duplication, of (i) Interest
Expense, (ii) total depreciation and amortization expense, (iii) foreign,
Federal, state and local income taxes for such period, computed in accordance
with GAAP, (iv) other non-cash charges reducing Net Income (excluding such
non-cash charge to the extent it represents an accrual or reserve for a
potential cash charge in any future period or amortization of a prepaid cash
charge that was paid in a prior period, and it being understood that any write
down or write off of current assets is not a non-cash charge), (v) transaction
costs, fees and expenses relating to the Transactions (if incurred prior to the
date that is 90 days after the Effective Date), (vi) management fees paid to
Castle Harlan, Inc. pursuant to the Target Management Agreement (if paid prior
to the Effective Date), (vii) restructuring charges incurred in connection with
the closing and restructuring of idle facilities (excluding restructuring
charges incurred in connection with the Louisville, Kentucky facility and the
internal legal entity restructuring of Garant Inc.) and non-recurring
restructuring charges incurred in connection with consolidation of facilities
of Clopay Building; provided that (A) the aggregate amount of such
charges referred to in this clause (vii) that occurred during any portion of
such period prior to the Effective Date shall not exceed $9,000,000 and (B) the
aggregate amount of such charges referred to in this clause (vii) for all
periods ending after the Effective Date shall not exceed $7,000,000, (viii) expenses
related to the acquisition of West Barrows Mix Pty Ltd., in aggregate amount
not to exceed $2,000,000, (ix) any severance or similar one time compensation
charges in an aggregate amount not to exceed $5,000,000 in any four fiscal
quarter period, provided that the aggregate amount of such charges for
all periods ending after the Effective Date shall not exceed $10,000,000, (x) fees,
expenses and charges relating to any offering of Equity Interests or
Indebtedness of Holdings or its Subsidiaries or any Permitted Acquisition, (xi)
stock options or other equity-based compensation charges that are non-cash,
(xii) any dividend on preferred Equity Interests (other than Disqualified
Equity Interests) and (xiii) any after-tax losses attributable to Asset Sales, Insurance/Condemnation
Events or returned surplus assets of any Plan or repurchase by the Borrower of
loans under the Term Loan Credit Agreement pursuant to Section 2.10(c) of the
Term Loan Credit Agreement, minus the sum of (a) other non-cash gains
increasing Net Income for such period (excluding any such non-cash gain to the
extent it represents the reversal of an accrual or reserve for potential cash
gain in any prior period), (b) any after-tax gains attributable to Asset Sales,
Insurance/Condemnation Events or returned surplus assets of any Plan or
repurchase by the


 


14

















 


Borrower
of loans under the Term Loan Credit Agreement pursuant to Section 2.10(c) of
the Term Loan Credit Agreement, (c) payments received from the distribution of
tariffs collected under the U.S. Continued Dumping and Subsidy Offset Act of
2000 and (d) any payments permitted by Section 6.07(a)(ii) made by the Borrower
to Holdings that do not otherwise reduce EBITDA.


 


“Effective Date” means the date on which the conditions
specified in Section 4.01 are satisfied (or waived in accordance with Section 9.02).


 


“Effective Date Certificate” means a certificate substantially
in the form attached hereto as Exhibit G.


 


“Eligible Accounts” means, at any time, the Accounts of the Loan
Parties which the Administrative Agent determines in its Permitted Discretion
are eligible as the basis for the extension of Revolving Loans, Swingline Loans
and the issuance of Letters of Credit hereunder (it being understood that any
representation and warranty by the Borrower as to whether Accounts constitute
Eligible Accounts shall be based on the eligibility criteria set forth in this
Agreement and any additional standards of eligibility or changes to eligibility
or standard of eligibility effected by the Administrative Agent in accordance
with this Agreement).  Without limiting
the Administrative Agent’s Permitted Discretion provided herein, Eligible
Accounts shall not include any Account:


 


(a)           which is not subject to a first
priority perfected security interest in favor of the Administrative Agent;


 


(b)           which is subject to any Lien other
than (i) a Lien in favor of the Administrative Agent, (ii) a Permitted
Encumbrance which does not have priority over the Lien in favor of the
Administrative Agent and (iii) a Lien permitted by Section 6.02(c);


 


(c)           with respect to which the scheduled
due date is more than 90 days after the original invoice date, is unpaid more
than 120 days after the date of the original invoice therefor or more than 60
days after the original due date, or which has been written off the books of
the applicable Loan Party or otherwise designated as uncollectible;


 


(d)           which is owing by an Account Debtor,
or for which payments shall be remitted by a Buying Group, for which more than
50% of the aggregate amount of Accounts owing from such Account Debtor or its
Affiliates, or with respect to which the Buying Group or its Affiliates will
remit payments, are ineligible pursuant to clause (c) above;


 


(e)           which is owing by an Account Debtor
to the extent the aggregate amount of Accounts owing from such Account Debtor
and its Affiliates (or, with respect to any Buying Group, the aggregate amount
of Accounts for which payments shall be remitted by such Buying Group) to the
Loan Parties exceeds, except as set forth on Schedule 1.01(a), (i) 25%,
with respect to Menards, Inc., and (ii) otherwise, 10%, in each case of the
aggregate amount of Eligible Accounts of such Loan Parties;


 


(f)            with respect to which any covenant,
representation, or warranty contained in this Agreement or in the Security
Agreement has been breached or is not true;


 


(g)           which (i) does not arise from the
sale of goods or performance of services in the ordinary course of business,
(ii) is not evidenced by an invoice or other documentation


 


15

















 


reasonably
satisfactory to the Administrative Agent which has been sent to the Account
Debtor, (iii) represents a progress billing, (iv) is contingent upon the
applicable Loan Party’s completion of any further performance, (v) represents a
sale on a bill-and-hold, guaranteed sale, sale-and-return, sale on approval,
consignment, cash-on-delivery or any other repurchase or return basis or (vi) relates
to payments of interest;


 


(h)           for which the goods giving rise to
such Account have not been shipped to the Account Debtor or for which the
services giving rise to such Account have not been performed by the applicable
Loan Party or if such Account was invoiced more than once;


 


(i)            with respect to which any check or
other instrument of payment has been returned uncollected for any reason;


 


(j)            which is owed by an Account Debtor,
or for which payments shall be remitted by a Buying Group, which has at the
time of the determination (i) applied for, suffered, or consented to the
appointment of any receiver, custodian, trustee, or liquidator of its assets,
(ii) has had possession of all or a material part of its property taken by any
receiver, custodian, trustee or liquidator, (iii) filed, or had filed against
it, any request or petition for liquidation, reorganization, arrangement,
adjustment of debts, adjudication as bankrupt, winding-up, or voluntary or
involuntary case under any state or federal bankruptcy laws (other than
post-petition accounts payable of an Account Debtor or a Buying Group that is a
debtor-in-possession under the Bankruptcy Code and reasonably acceptable to the
Administrative Agent), (iv) has admitted in writing its inability, or is
generally unable to, pay its debts as they become due, (v) become insolvent, or
(vi) ceased operation of its business;


 


(k)           which is owed by any Account Debtor
which has sold all or a substantially all of its assets;


 


(l)            which is owed by an Account Debtor,
or for which payments shall be remitted by a Buying Group, which, (i) does not
maintain its chief executive office in the U.S. or Canada, or (ii) is not
organized under applicable law of the U.S., any state of the U.S., Canada or
any province of Canada, unless, in either case, (x) such Account is backed by a
Letter of Credit reasonably acceptable to the Administrative Agent which is in
the possession of, has been assigned to and is directly drawable by the
Administrative Agent or (y) such Account Debtor is a foreign Affiliate of
either Proctor & Gamble, Co., Kimberly Clark, The Home Depot Inc., Lowe’s
Companies, Inc., or Wal-Mart Stores, Inc., but only to the extent to which the
Eligible Accounts of such Account Debtors do not exceed in the aggregate
$20,000,000 at any time;


 


(m)          which is owed in any currency other
than U.S. dollars;


 


(n)           which is owed by (i) the government
(or any department, agency, public corporation, or instrumentality thereof) of
any country other than the U.S. unless such Account is backed by a Letter of
Credit acceptable to the Administrative Agent which is in the possession of the
Administrative Agent, or (ii) the government of the U.S., or any department,
agency, public corporation, or instrumentality thereof, unless the Federal
Assignment of Claims Act of 1940, as amended (31 U.S.C. § 3727 et  seq.
and 41 U.S.C. § 15 et  seq.), and any other steps reasonably
necessary to perfect the Lien of the Administrative Agent in such Account have
been complied with to the Administrative Agent’s reasonable satisfaction;


 


(o)           which is owed by any Affiliate,
employee, officer, director, agent or stockholder of any Loan Party;


 


16

















 


(p)           which is owed by an Account Debtor or
any Affiliate of such Account Debtor, or for which payment shall be remitted by
any Buying Group or any Affiliate of such Buying Group, to which the applicable
Loan Party is indebted, but only to the extent of such indebtedness or is
subject to any security, deposit, progress payment, retainage or other similar
advance made by or for the benefit of an Account Debtor or a Buying Group, in
each case to the extent thereof;


 


(q)           which is subject to any counterclaim,
deduction, defense, setoff or dispute but only to the extent of any such
counterclaim, deduction, defense, setoff or dispute;


 


(r)            which is evidenced by any promissory
note, chattel paper, or instrument;


 


(s)           which is owed by an Account Debtor,
or for which payment shall be remitted by a Buying Group, located in any
jurisdiction which requires filing of a “Notice of Business Activities Report”
or other similar report in order to permit the applicable Loan Party to seek
judicial enforcement in such jurisdiction of payment of such Account, unless
such Loan Party has filed such report or qualified to do business in such
jurisdiction;


 


(t)            with respect to which the applicable
Loan Party has made any agreement with the Account Debtor for any reduction
thereof, other than discounts and adjustments given in the ordinary course of
business, or any Account which was partially paid and the applicable Loan Party
created a new receivable for the unpaid portion of such Account;


 


(u)           which does not comply in all material
respects with the requirements of all applicable laws and regulations, whether
Federal, state or local, including without limitation the Federal Consumer
Credit Protection Act, the Federal Truth in Lending Act and Regulation Z of the
Board;


 


(v)           which is for goods that have been
sold under a purchase order or pursuant to the terms of a contract or other
agreement or understanding (written or oral) that indicates or purports that
any Person other than the applicable Loan Party has an ownership interest in
such goods, or which indicates any party other than the applicable Loan Party
as payee or remittance party; or


 


(w)          which was created on cash on delivery
terms.


 


In the event that a material Account which was previously an Eligible
Account ceases to be an Eligible Account hereunder, the Borrower shall notify
the Administrative Agent thereof on and at the time of submission to the Administrative
Agent of the next Borrowing Base Certificate. 
In determining the amount of an Eligible Account, the face amount of an
Account may, in the Administrative Agent’s Permitted Discretion, be reduced by,
without duplication, to the extent not reflected in such face amount (without
duplication of any Reserve taken therefor), (i) the amount of all accrued and
actual discounts, claims, credits or credits pending, promotional program
allowances, price adjustments, finance charges or other allowances (including
any amount that the applicable Loan Party may be obligated to rebate to an
Account Debtor pursuant to the terms of any agreement or understanding (written
or oral)) and (ii) the aggregate amount of all cash received in respect of such
Account but not yet applied by the applicable Loan Party to reduce the amount
of such Account.  Standards of
eligibility may be made more restrictive from time to time solely by the
Administrative Agent in the exercise of its Permitted Discretion, with any such
changes to be effective two Business Days after delivery of written notice
thereof to the Borrower and the Lenders.


 


17

















 


“Eligible
Inventory” means, at any time, the Inventory of the Loan Parties which the
Administrative Agent determines in its Permitted Discretion is eligible as the
basis for the extension of Revolving Loans, Swingline Loans and the issuance of
Letters of Credit hereunder (it being understood that any representation and
warranty by the Borrower as to whether Inventory constitutes Eligible Inventory
shall be based on the eligibility criteria set forth in this Agreement and any
additional standards of eligibility or changes to eligibility or standards of
eligibility effected by the Administrative Agent in accordance with this
Agreement).  Without limiting the
Administrative Agent’s Permitted Discretion provided herein, Eligible Inventory
shall not include any Inventory:


 


(a)           which is not subject to a first priority perfected Lien in
favor of the Administrative Agent;


 


(b)           which is subject to any Lien other than (i) a Lien in
favor of the Administrative Agent, (ii) a Permitted Encumbrance which does not
have priority over the Lien in favor of the Administrative Agent and (iii) a
Lien permitted by Section 6.02(c);


 


(c)           which is, in the Administrative Agent’s opinion as
notified to the Borrower, slow moving, obsolete, unmerchantable, defective,
used, unfit for sale, not salable at prices approximating at least the cost of
such Inventory in the ordinary course of business or unacceptable due to age,
type, category and/or quantity;


 


(d)           with respect to which any covenant, representation, or
warranty contained in this Agreement or the Security Agreement has been
breached or is not true and which does not conform in any material respect to
all reasonably applicable standards imposed by any Governmental Authority;


 


(e)           in which any Person other than the applicable Loan Party
shall (i) have any direct or indirect ownership, interest or title to such
Inventory or (ii) be indicated on any purchase order or invoice with respect to
such Inventory as having or purporting to have an interest therein;


 


(f)            which is not finished goods (other than raw materials) or
which constitutes work-in-process, spare or replacement parts, subassemblies,
packaging and shipping material, manufacturing supplies, samples, prototypes,
displays or display items, bill-and-hold goods, goods that are returned or
marked for return, repossessed goods, defective or damaged goods, goods held on
consignment, or goods which are not of a type held for sale in the ordinary
course of business; provided that “Eligible Inventory” may include
work-in-process of Ames or any of its Subsidiaries, in an aggregate amount not
to exceed $10,000,000, to the extent such work-in-process is supported for
inclusion in the Borrowing Base by an Inventory appraisal acceptable to the
Administrative Agent;


 


(g)           which is not located in the U.S. or is in transit with a
common carrier from vendors and suppliers;


 


(h)           on or after the date which
is 90 days after the Effective Date, which is located in any location leased by
the applicable Loan Party where Inventory valued in excess of $500,000 is
located unless (i) the lessor has
delivered to the Administrative Agent a Collateral Access Agreement or (ii) a
Rent Reserve has been established by the Administrative Agent in its Permitted
Discretion;


 


18
















 


(i)            which is located in any third party warehouse or is in
the possession of a bailee (other than a third party processor) and is not
evidenced by a Document unless (i) such warehouseman or bailee has delivered to
the Administrative Agent a Collateral Access Agreement and such other
documentation as the Administrative Agent may reasonably require or (ii) an
appropriate Reserve has been established by the Administrative Agent in its
Permitted Discretion;


 


(j)            which is being processed offsite at a third party
location or outside processor, or is in-transit to or from said third party
location or outside processor;


 


(k)           which is a discontinued product or component thereof;


 


(l)            which is the subject of a consignment by the applicable
Loan Party as consignor;


 


(m)          which contains or bears any intellectual property rights
licensed to the applicable Loan Party unless the Administrative Agent is
reasonably satisfied that it may sell or otherwise dispose of such Inventory
without (i) infringing the rights of such licensor, (ii) violating any contract
with such licensor, or (iii) incurring any liability with respect to payment of
royalties other than royalties incurred pursuant to sale of such Inventory
under the current licensing agreement;


 


(n)           which is not reflected in a current perpetual inventory
report of the applicable Loan Party (unless such Inventory is reflected in a
report to the Administrative Agent as “in transit” Inventory); or


 


(o)           for which reclamation rights have been asserted by the
seller.


 


In the event that Inventory which was previously Eligible Inventory
ceases to be Eligible Inventory hereunder, the Borrower shall notify the
Administrative Agent thereof on and at the time of submission to the
Administrative Agent of the next Borrowing Base Certificate.  Standards of eligibility may be made more
restrictive from time to time solely by the Administrative Agent in the
exercise of its Permitted Discretion, with any such changes to be effective two
Business Days after delivery of written notice thereof to the Borrower and the
Lenders.


 


“Environmental Laws” means all applicable laws, rules,
regulations, codes, ordinances, orders, decrees, judgments, injunctions,
written notices of non-compliance or binding agreements issued, promulgated or
entered into by any Governmental Authority, relating in any way to the
environment, preservation or reclamation of natural resources, the management,
release or threatened release of any Hazardous Material or to health and safety
matters.


 


“Environmental Liability” means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of Holdings directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.


 


19

















 


“Equity Contribution” means a cash equity contribution (direct
or indirect) from Griffon to Holdings in an aggregate amount equal to the
excess of $196,000,000 over the aggregate amount of unrestricted freely
available cash on hand of Holdings and its Subsidiaries as of the Effective
Date (before giving effect to the Acquisition); provided that any Equity
Interests issued in respect thereof should be common Equity Interests of
Holdings.


 


“Equity Interests” means shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person, and any
warrants, options or other rights entitling the holder thereof to purchase or
acquire any such equity interest.


 


“ERISA” means the Employee Retirement Income Security Act of
1974, as amended from time to time.


 


“ERISA Affiliate” means any trade or business (whether or not
incorporated) that, together with Holdings, is treated as a single employer
under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414(m) of the Code.


 


“ERISA Event” means (a) any Reportable Event; (b) the existence
with respect to any Plan of a Prohibited Transaction, (c) any failure by any
Plan to satisfy the minimum funding standards (within the meaning of Sections
412 or 430 of the Code or Section 302 of ERISA), whether or not waived; (d) the
filing pursuant to Section 412 of the Code or Section 303 of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan, the failure to make by its due date a required installment under Section 430(j)
of the Code with respect to any Plan or the failure by Holdings or any of its
ERISA Affiliates to make any required contribution to a Multiemployer Plan; (e)
the incurrence by Holdings or any of its ERISA Affiliates of any liability
under Title IV of ERISA with respect to the termination of any Plan, including
but not limited to the imposition of any Lien in favor of the PBGC or any Plan;
(f) a determination that any Plan is, or is expected to be, in “at risk” status
(within the meaning of Section 430 of the Code or Section 303 of ERISA); (g) the
receipt by Holdings or any of its ERISA Affiliates from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan under Section 4042 of
ERISA; (h) the incurrence by Holdings or any of its ERISA Affiliates of any
liability with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (i) the receipt by Holdings or any ERISA Affiliate of
any notice, or the receipt by any Multiemployer Plan from Holdings or any ERISA
Affiliate of any notice, concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, Insolvent, in
Reorganization, or in “endangered” or “critical status” (within the meaning of
Section 432 of the Code or Section 305 of ERISA).


 


“Eurodollar”, when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are
bearing interest at a rate determined by reference to the Adjusted LIBO Rate.


 


“Event of Default” has the meaning assigned to such term in
Article VII.


 


“Exchange Rate”
means, on any day, with respect to dollars in relation to any Alternative
Currency, the rate at which dollars may be
exchanged into such currency, as set forth on such day on the applicable
Reuters World Currency Page.  In the
event such rate does not appear on the applicable Reuters World Currency Page,
the Exchange Rate shall be determined


 


20

















 


by reference to such other publicly available service
for displaying exchange rates, or such other method, as may be determined by
the Borrower (subject to the approval of Administrative Agent, not to be
unreasonably withheld), and such determination shall be conclusive and binding,
absent manifest error.


 


“Excluded Taxes” means, with respect to the Administrative
Agent, any Lender, any Issuing Bank or any other recipient of any payment to be
made by or on account of any obligation of any Loan Party hereunder, (a) income
or franchise taxes imposed on (or measured by) its net income or any similar
tax imposed in lieu of net income taxes by the United States of America, or by
the jurisdiction under the laws of which such recipient is organized or in
which its principal office is located or, in the case of any Lender, in which
its applicable lending office is located, (b) any branch profits taxes imposed
by the United States of America or any similar tax imposed by any other
jurisdiction referred to in clause (a), and (c) in the case of any Lender
(other than an assignee pursuant to a request by the Borrower under Section 2.19(b)),
any United States withholding tax resulting from any law in effect (including
FATCA) on amounts payable to such Lender at the time (and in the case of FATCA,
including any regulations or official interpretations thereof issued after) such
Lender becomes a party to this Agreement (or designates a new lending office)
or is attributable to such Lender’s failure to comply with Section 2.17(e),
except to the extent that such Lender (or its assignor, if any) was entitled,
at the time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to such withholding tax
pursuant to Section 2.17(a).


 


“Existing Credit Agreement” has the meaning assigned to such
term in the recitals hereto.


 


“Existing Debt Agreements” means all agreements, undertakings,
instruments and other documents in effect immediately prior to the Effective
Date under which Holdings or any of its Subsidiaries has any Indebtedness
(other than Indebtedness set forth on Schedule 6.01(a)), including (i) the
Amended and Restated Credit Agreement, dated as of April 7, 2006, as amended,
among Ames, Acorn Products, Inc., UnionTools, Inc. and Ames True Temper
Properties, Inc., as Borrower, ATT, as a parent guarantor, Bank of America,
N.A., as Administrative Agent, Swingline Lender and L/C Issuer, and the other
lender parties thereto and (ii) the Senior Notes Indentures.


 


“Existing Mortgages” means each of the mortgages, deeds of trust
or other agreements made pursuant to the Existing Credit Agreement by any Loan
Party in favor or the Administrative Agent.


 


“FATCA” means Sections 1471 through 1474 of the Code as of the
date of this Agreement.


 


“Federal Funds Effective Rate” means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day that is a Business Day, the average (rounded upwards,
if necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.


 


21

















 


“Fee Letters” means, collectively, (i) the Second Amended and
Restated Fee Letter, dated as of September 8, 2010, among the Parent, Clopay
Acquisition Corp., the Administrative Agent, Goldman Sachs Lending Partners
LLC, JPMorgan, J.P. Morgan Securities LLC, Deutsche Bank Securities Inc. and
Deutsche Bank Trust Company Americas and (ii) the Administrative Agent Fee
Letter, dated as of September 30, 2010, among the Borrower and the
Administrative Agent.


 


“Fee Payment Date” means the third Business Day following the
last day of each March, June, September and December.


 


“Financial Officer” means the chief financial officer, principal
accounting officer, treasurer or controller of a Loan Party or the Borrower, as
the case may be.


 


“First Priority” means, with respect to any Lien purported to be created in any
Collateral pursuant to any Collateral Document, that such Lien is perfected and
has priority over all other Liens to which such Collateral is subject, other
than any Permitted Encumbrances.


 


“Fixed Charges” means, with reference to any period, without
duplication, cash Interest Expense, plus
prepayments and scheduled principal payments on Indebtedness (other than
Indebtedness under this Agreement) made during such period, plus expense for taxes paid  in cash (net of any cash refunds in respect of such taxes,
but not less than zero), plus
dividends, distributions or management fees paid in cash, all calculated for
Holdings and its Subsidiaries on a consolidated basis in accordance with GAAP.


 


“Fixed Charge Coverage Ratio” means, the ratio, determined as of
the end of each fiscal month of Holdings for the most-recently ended twelve
fiscal months, of (a) EBITDA minus
Capital Expenditures paid in cash (excluding cash payments financed with
Indebtedness other than Revolving Loans) to (b) Fixed Charges, all calculated
for Holdings and its Subsidiaries on a consolidated basis in accordance with
GAAP (provided, that such determination in respect of any such period which
includes the Effective Date shall be made on a pro forma basis with respect to
the Acquisition as though the Acquisition had been consummated on the first day
of such period).


 


“Floating Rate Notes” means the Senior Floating Rate Notes due
2012, issued by Ames pursuant to the Floating Rate Notes Indenture.


 


“Floating Rate Notes Indenture” means the Indenture for Senior
Floating Notes due 2012, dated January 14, 2005, among Ames, as Issuer, ATT, as
Guarantor, and The Bank of New York, as Trustee, and the Supplemental Indenture
to the Indenture dated January 14, 2005, dated as of December 17, 2007 and
among Ames, Ames U.S. Holding Corp., Ames Holdings, Inc., Ames True Temper
Properties, Inc., ATT and The Bank of New York, as Trustee.


 


“Floating Rate Supplemental Indenture” means a Supplemental
Indenture to the Floating Rate Notes Indenture to be entered into on or prior
to the Effective Date among Ames, Ames U.S. Holding Corp., Ames Holdings, Inc.
Ames True Temper Properties, Inc., ATT, and The Bank of New York, as Trustee,
which Supplemental Indenture shall be substantially the same, in form and
substance, as the form of Supplemental Indenture previously delivered to the
Administrative Agent.


 


“Foreign Lender” means any Lender that is organized under the
laws of a jurisdiction other than the United States of America, any State
thereof or the District of Columbia.


 


22

















 


“Foreign Plan” means each employee benefit plan (within the
meaning of Section 3(3) of ERISA, whether or not subject to ERISA) that is not
subject to U.S. law and is maintained or contributed to by Holdings or any
ERISA Affiliate.


 


“Foreign Pledge Agreement” means a pledge or charge agreement
granting a Lien on Equity Interests in a Foreign Subsidiary to secure the
Obligations, governed by the laws of the jurisdiction of organization of such
Foreign Subsidiary and in form and substance reasonably satisfactory to the
Administrative Agent.


 


“Foreign Subsidiary” means any Subsidiary that is not a Domestic
Subsidiary.


 


“Funding Accounts” has the meaning assigned to such term in
Section 4.01(j).


 


“GAAP” means generally accepted accounting principles in the
United States of America as in effect as of the date of determination thereof.


 


“Global Intercompany Note” means a promissory note substantially
in the form of Exhibit H evidencing Indebtedness owed among the Loan Parties
and their Subsidiaries.


 


“Governmental Authority” means the government of the United States
of America, any other nation or any political subdivision thereof, whether
state or local, and any agency, authority, instrumentality, regulatory body,
court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.


 


“Griffon” means Griffon Corporation, a Delaware corporation.


 


“Griffon Letters of Credit” means the outstanding letters of
credit issued by JPMorgan Chase Bank, N.A. or Bank of America, N.A. described
on Schedule 1.01(b).


 


“Group Members” means the collective reference to Holdings, the
Borrower and their respective Subsidiaries.


 


“Guarantee” of or by any Person (the “guarantor”) means
any obligation, contingent or otherwise, of the guarantor guaranteeing or
having the economic effect of guaranteeing any Indebtedness or other obligation
of any other Person (the “primary obligor”) in any manner, whether
directly or indirectly, and including any obligation of the guarantor, direct
or indirect, (a) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation or to purchase
(or to advance or supply funds for the purchase of) any security for the
payment thereof, (b) to purchase or lease property, securities or services for
the purpose of assuring the owner of such Indebtedness or other obligation of
the payment thereof, (c) to maintain working capital, equity capital or any
other financial statement condition or liquidity of the primary obligor so as
to enable the primary obligor to pay such Indebtedness or other obligation or
(d) as an account party in respect of any letter of credit or letter of
guaranty issued to support such Indebtedness or obligation; provided,
that the term Guarantee shall not include endorsements for collection or
deposit in the ordinary course of business. 
The amount, as of any date of determination, of any Guarantee shall be
the principal amount outstanding on such date of Indebtedness or other
obligation guaranteed thereby (or, in the case of (i) any Guarantee the terms
of which limit the monetary exposure of the guarantor or (ii) any Guarantee of
an obligation that does not have a principal amount, the maximum monetary
exposure as of such date of the guarantor under such Guarantee (as determined,
in the case of


 


23

















 


clause
(i), pursuant to such terms or, in the case of clause (ii), reasonably and in
good faith by the chief financial officer of the Borrower)).


 


“Guaranteed Obligations” has the meaning assigned to such term
in Section 10.01.


 


“Guarantor” means each of Holdings and each Domestic Subsidiary
of Holdings (other than the Borrower) that is a party to this Agreement as a “Guarantor”
and a party to the Security Agreement as a “Grantor” thereunder.  The Guarantors as of the Effective Date are
set forth on Schedule 1.01(c).


 


“Guaranty” means Article X of this Agreement.


 


“Hazardous Materials” 
means all explosive or radioactive substances or wastes and all hazardous
or toxic substances, wastes or other pollutants, including petroleum or
petroleum distillates, asbestos or asbestos containing materials, hazardous or
toxic polychlorinated biphenyls, radon gas, infectious or medical wastes and
all other substances or wastes of any nature regulated pursuant to any
Environmental Law.


 


“Hazardous Materials
Activity” means any past, current or
proposed activity, event or occurrence involving any Hazardous Materials,
including the use, manufacture, possession, storage, holding, presence,
existence, location, Release, threatened Release, discharge, placement,
generation, transportation, processing, construction, treatment, abatement,
removal, remediation, disposal, disposition or handling of any Hazardous
Materials, and any corrective action or response action with respect to any of
the foregoing.


 


“Historical Financial Statements” means (a) separate audited
consolidated financial statements of each of Clopay Holding Co. and its
Subsidiaries (prior to the Acquisition) and of ATT and its Subsidiaries, for
the 2007, 2008 and 2009 fiscal years, consisting of audited consolidated
balance sheets and the related consolidated statements of income, stockholders’
equity and cash flows for such fiscal years, and (b) (i) separate unaudited consolidated
quarterly financial statements of each of Clopay Holding Co. and its
Subsidiaries (prior to the Acquisition) and of ATT and its Subsidiaries as of
the end of and for each fiscal quarter subsequent to the financial statements
provided for the 2009 fiscal year pursuant to clause (a), consisting of a
consolidated balance sheet and the related consolidated statements of income,
stockholders’ equity and cash flows for the twelve-month period, ending on such
date and (ii) internal monthly “flash reports” of each of Clopay Holding Co.
and its Subsidiaries (prior to the Acquisition) and of ATT and its Subsidiaries
as of the end of and for each subsequent calendar month.


 


“Holdings” has the meaning assigned to such term in the preamble
hereto.


 


“Immaterial Subsidiary” means, as of any date, any Subsidiary
with consolidated total assets of less than $2,500,000, provided that
the aggregate consolidated assets of all Immaterial Subsidiaries may not exceed
$10,000,000, collectively, at any time (and the Borrower will designate in
writing to the Administrative Agent from time to time the Subsidiaries which
will cease to be treated as “Immaterial Subsidiaries” in order to comply with
the foregoing limitation).


 


“Indebtedness” of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
under conditional sale or other title retention agreements relating to


 


24

















 


property
acquired by such Person, (d) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding trade payables,
accrued expenses and current accounts payable in each case incurred in the
ordinary course of business), (e) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Indebtedness secured thereby has been assumed, (f) all
Guarantees by such Person of Indebtedness of others, (g) all Capital Lease
Obligations of such Person which are required to be classified as liabilities
under GAAP, (h) all obligations, contingent or otherwise, of such Person as an
account party in respect of letters of credit and letters of guaranty, (i) all
obligations, contingent or otherwise, of such Person in respect of bankers’
acceptances and (j) Disqualified Equity Interests.  The Indebtedness of any Person shall include
the Indebtedness of any other entity (including any partnership in which such
Person is a general partner) to the extent such Person is liable therefor as a
result of such Person’s ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide that such
Person is not liable therefor.


 


“Indemnified Taxes” means Taxes other than Excluded Taxes.


 


“Insolvent” with respect to any Multiemployer Plan, means
insolvent within the meaning of Section 4245 of ERISA.


 


“Insurance/Condemnation
Event”  means any casualty or
other insured damage to, or any taking under power of eminent domain or by
condemnation or similar proceeding of, or any disposition under a threat of
such taking, of all or any part of any assets of Borrower or any Subsidiary
other than any of the foregoing resulting in aggregate Net
Insurance/Condemnation Proceeds not exceeding $2,000,000 from a single event or
a series of related events and not exceeding $5,000,000 when aggregated with
the Net Insurance/Condemnation Proceeds from all other such events during any
fiscal year of Holdings.


 


“Intellectual Property” has the meaning assigned to such term in
the Security Agreement.


 


“Intellectual Property Security Agreements” has the meaning
assigned to such term in the Security Agreement.


 


“Intercreditor Agreement” means that certain Intercreditor
Agreement, dated as of the date hereof, between the Loan Parties, the
Administrative Agent and the Term Loan Administrative Agent, substantially in
the form attached hereto as Exhibit F.


 


“Interest Election Request” means a request by the Borrower to
convert or continue a Revolving Borrowing in accordance with Section 2.07.


 


“Interest Expense” means, with reference to any period, total
cash interest expense (including that attributable to Capital Lease
Obligations) of the Group Members for such period with respect to all
outstanding Indebtedness of the Group Members (including all commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers’ acceptance financing and net costs under Swap Agreements in respect of
interest rates to the extent such net costs are allocable to such period in
accordance with GAAP), calculated on a consolidated basis for the Group Members
for such period in accordance with GAAP.


 


25

















 


“Interest Payment Date” means (a) with respect to any ABR Loan,
the first day of each April, July, October and January to occur while such Loan
is outstanding and the Maturity Date, and (b) with respect to any Eurodollar
Loan, the last day of the Interest Period applicable to the Borrowing of which
such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest
Period of more than three months’ duration, each day prior to the last day of
such Interest Period that occurs at intervals of three months’ duration after
the first day of such Interest Period and the Maturity Date.


 


“Interest Period” means with respect to any Eurodollar
Borrowing, the period commencing on the date of such Borrowing and ending on
the numerically corresponding day in the calendar month that is one, two, three
or six months (or, if available to all Lenders, nine or twelve months)
thereafter, as the Borrower may elect; provided, that (i) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless, in the
case of a Eurodollar Borrowing only, such next succeeding Business Day would
fall in the next calendar month, in which case such Interest Period shall end
on the next preceding Business Day and (ii) any Interest Period pertaining to a
Eurodollar Borrowing that commences on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
last calendar month of such Interest Period) shall end on the last Business Day
of the last calendar month of such Interest Period.  For purposes hereof, the date of a Borrowing
initially shall be the date on which such Borrowing is made and, in the case of
a Revolving Borrowing, thereafter shall be the effective date of the most
recent conversion or continuation of such Borrowing.


 


“Interest Rate
Agreement” means any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedging agreement or other similar agreement or arrangement.


 


“Inventory” has the meaning assigned to such term in the
Security Agreement.


 


“Investment” means, by any Person, (a) the amount paid or
committed to be paid, or the value of property or services contributed or
committed to be contributed, by such person for or in connection with the
direct or indirect redemption, purchase or other acquisition by such Person of
any stock, bonds, notes, debentures, partnership or other ownership interests
or other securities of any other Person or any capital contribution to any
other Person, (b) the amount of any direct or indirect redemption, purchase or
other advance, loan or extension of credit by such Person, to any other Person,
or Guarantee or other similar obligation of such Person with respect to any
Indebtedness or other obligation of such other Person (other than trade
payables in the ordinary course of business), and (without duplication) any
amount committed to be advanced, loans, or extended by such Person to any other
Person, or any amount the payment of which is committed to be assured by a
Guarantee or similar obligation by such Person for the benefit of, such other
Person and (c) all investments consisting of any exchange traded or over the
counter derivative transaction, including any Swap Agreement, whether entered
into for hedging or speculative purposes or otherwise.  The amount of any Investment of the type
described in clauses (a), (b) and (c) shall be the original cost of the
Investment plus the cost of all additions thereto, without any adjustments for
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investments, and any Investment in the form of a Guarantee
shall be determined in accordance with the definition of the term “Guarantee”.


 


“Issuing Bank” means JPMorgan or Bank of America, N.A., each
with respect to Letters of Credit issued by it, and in each case its successors
in such capacity as provided in Section 2.06(i).  An Issuing Bank may, in its discretion,
arrange for one or more Letters of Credit to be


 


26

















 


issued
by Affiliates of such Issuing Bank, in which case the term “Issuing Bank” shall
include any such Affiliate with respect to Letters of Credit issued by such
Affiliate.


 


“Joinder Agreement” means a Joinder Agreement substantially in
the form of Exhibit D.


 


“JPMorgan” means JPMorgan Chase Bank, N.A., a national banking
association, in its individual capacity, and its successors.


 


“LC Collateral Account” has the meaning assigned to such term in
Section 2.06(j).


 


“LC Disbursement” means a payment made by the applicable Issuing
Bank pursuant to a Letter of Credit.


 


“LC Exposure” means, at any time, the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit at such time plus (b) the
aggregate amount of all LC Disbursements that have not yet been reimbursed by
or on behalf of the Borrower at such time. 
The LC Exposure of any Lender at any time shall be its Applicable
Percentage of the total LC Exposure at such time.


 


“Lenders” means the Persons listed on the Commitment Schedule
and any other Person that shall have become a party hereto pursuant to an
Assignment and Assumption, other than any such Person that ceases to be a party
hereto pursuant to an Assignment and Assumption.  Unless the context otherwise requires, the
term “Lenders” includes the Swingline Lender.


 


“Letter of Credit” means any letter of credit issued pursuant to
this Agreement.


 


“LIBO Rate” means, with respect to any Eurodollar Borrowing for
any Interest Period, the rate appearing on Reuters Screen LIBOR01 Page (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to eurodollar deposits in dollars in the London
interbank market) at approximately 11:00 a.m., London time, two Business Days
prior to the commencement of such Interest Period, as the rate for eurodollar
deposits in dollars with a maturity comparable to such Interest Period.  In the event that such rate is not available
at such time for any reason, then the “LIBO Rate” with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period
are offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.


 


“Lien” means, with respect to any asset, (a) any mortgage, deed
of trust, lien, pledge, hypothecation, encumbrance, charge or security interest
in, on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.


 


“Loan Documents” means this Agreement, any promissory notes
issued pursuant to this Agreement, any Letter of Credit applications, the
Collateral Documents, the Guaranty, the Intercreditor Agreement, and all other
agreements, instruments, documents and certificates


 


27

















 


executed
and delivered to, or in favor of, the Administrative Agent or any Lenders
whether heretofore, now or hereafter executed by or on behalf of any Loan
Party, or any employee of any Loan Party, and delivered to the Administrative
Agent or any Lender in connection with the Agreement or the transactions
contemplated thereby.  Any reference in
the Agreement or any other Loan Document to a Loan Document shall include all
appendices, exhibits or schedules thereto, and all amendments, restatements,
supplements or other modifications thereto, and shall refer to the Agreement or
such Loan Document as the same may be in effect at any and all times such
reference becomes operative.


 


“Loan Parties” means the Borrower and the Guarantors.


 


“Loans” means the loans and advances made by the Lenders
pursuant to this Agreement, including Swingline Loans, Overadvances and
Protective Advances.


 


“Management Agreement” means that certain Management Agreement,
dated as of July 8, 1986, between Griffon and the Parent.


 


“Margin Stock” means “margin stock” within the meaning of
Regulations T, U and X of the Board.


 


“Material Adverse Effect” means a material adverse effect on (a)
the business, assets, operations or condition, financial or otherwise, of the
Borrower and its Subsidiaries taken as a whole, (b)  the Collateral, or the Administrative Agent’s
Liens (on behalf of the Secured Parties) on the Collateral or the priority of
such Liens, in each case, taken as a whole, or (c) the validity and
enforceability of the material provisions of the Loan Documents or the material
rights of or benefits available to the Administrative Agent, the Issuing Banks
or the Lenders thereunder.


 


“Material Indebtedness” means Indebtedness (other than the Loans
and Letters of Credit), or obligations in respect of one or more Swap
Agreements, of one or more Group Members, in an aggregate principal amount
exceeding $15,000,000.  For purposes of
determining Material Indebtedness, the “obligations” of any one or more Group
Members in respect of any Swap Agreement at any time shall be the maximum aggregate
amount (giving effect to any netting agreements) that any Group Member would be
required to pay if such Swap Agreement were terminated at such time.


 


“Maturity Date” means September 30, 2015 or any earlier date on
which the Commitments are reduced to zero or otherwise terminated pursuant to
the terms hereof.


 


“Maximum Liability” has the meaning assigned to such term in
Section 10.09.


 


“Moody’s” means Moody’s Investors Service, Inc.


 


“Mortgaged Properties” means any fee-owned Real Estate Asset
having a fair market value in excess of $100,000 as of the date of the
acquisition thereof (which properties, in each case as of the Effective Date,
are specified as “Mortgaged Properties” on Schedule 3.05).


 


“Mortgages” means any mortgage, deed
of trust or other agreement which conveys or evidences a Lien in favor of the Administrative Agent, for the benefit of the
Secured Parties, on owned real property in the United States of America of a
Loan Party, including any amendment, modification or supplement thereto.


 


28
















 


“Multiemployer Plan” means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.


 


“Narrative Report” means with respect to the financial
statements for which such narrative report is required, a narrative report
describing the operations of Holdings and its Subsidiaries (providing a summary
of such operations consistent with disclosure that would be made by a public
company registered with the SEC) for the applicable fiscal quarter or fiscal
year and for the period from the beginning of the then current fiscal year to
the end of such period to which such financial statements relate.


 


“Net Asset Sale
Proceeds” means, with respect to any
Asset Sale, an amount equal to: (i) cash (which term, for the purposes of this
definition, shall include Permitted Investments) payments (including any cash
received by way of deferred payment pursuant to, or by monetization of, a note
receivable or otherwise, but only as and when so received) received by Holdings
or any of its Subsidiaries from such Asset Sale, minus (ii) any bona
fide costs, fees and expenses incurred in connection with such Asset Sale,
including (a) income or gains taxes payable (or reasonably and good faith
estimated to be payable) by the seller as a result of any gain recognized in
connection with such Asset Sale, (b) attorneys fees, accounting fees,
investment banking fees and consulting fees incurred in connection with such
Asset Sale, (c) payment of the outstanding principal amount of, premium or
penalty, if any, and interest on any Indebtedness (other than the Loans or the
Term Loans) that is secured by a Lien on the stock or assets in question and
that is required to be repaid under the terms thereof as a result of such Asset
Sale and (d) a reasonable escrow or reserve for any indemnification payments
(fixed or contingent) attributable to seller’s indemnities and representations
and warranties to purchaser in respect of such Asset Sale undertaken by
Holdings or any of its Subsidiaries in connection with such Asset Sale; provided
that upon release of any such reserve, the amount released shall be considered
Net Asset Sale Proceeds.


 


“Net Income” means, for any period, the consolidated net income
(or loss) of Holdings and its Subsidiaries, determined on a consolidated basis
in accordance with GAAP; provided that there shall be excluded (a) the
income (or deficit) of any Person accrued prior to the date it becomes a
Subsidiary or is merged into or consolidated with any Group Member, (b) the
income (or deficit) of any Person (other than a Subsidiary of Holdings) in
which any Group Member has an ownership interest, except the income of such
Person shall be included to the extent that any such income is actually
received by such Group Member in the form of dividends or similar
distributions, (c) the income of any Subsidiary of Holdings to the extent that
the declaration of dividends or similar distributions by that Subsidiary of
that income is not at the time permitted by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary and (d) (to the extent
not included in clauses (a) through (c) above) any extraordinary gains or
losses in accordance with GAAP.


 


“Net
Insurance/Condemnation Proceeds”
means, with respect to any Insurance/Condemnation Event, an amount equal to:
(i) any cash (which term, for the purposes of this definition, shall include
Permitted Investments) payments or proceeds received by Holdings or any of its
Subsidiaries (a) under any casualty insurance policy in respect of a covered
loss thereunder or (b) as a result of the taking of any assets of Holdings or
any of its Subsidiaries by any Person pursuant to the power of eminent domain,
condemnation or otherwise, or pursuant to a sale of any such assets to a
purchaser with such power under threat of such a taking, minus (ii) (a) any
actual and reasonable costs, fees and expenses incurred by Holdings or any of
its Subsidiaries in connection with the adjustment or settlement of any claims


 


29

















 


of Holdings or such Subsidiary in respect thereof, and
(b) any bona fide costs, fees and expenses incurred in connection with any sale
of such assets as referred to in clause (i)(b) of this definition, including,
without limitation, income taxes payable (or reasonably and good faith
estimated to be payable) as a result of any gain recognized in connection
therewith and any attorneys fees incurred in connection with such
Insurance/Condemnation Event.


 


“Net Orderly Liquidation Value” means, with respect to Inventory
of any Person, the orderly liquidation value thereof as determined in a manner
reasonably acceptable to the Administrative Agent by an appraiser reasonably
acceptable to the Administrative Agent, net of all costs of liquidation
thereof.


 


“Non-Consenting Lender” has the meaning
assigned to such term in Section 9.02(d).


 


“Non-Paying Guarantor” has the meaning
assigned to such term in Section 10.10.


 


“Obligated Party” has the meaning
assigned to such term in Section 10.02.


 


“Obligations” means all unpaid principal of and accrued and
unpaid interest on the Loans, all LC Exposure, all accrued and unpaid fees and
all expenses, reimbursements, indemnities and other obligations of the Loan
Parties to the Lenders or to any Lender, the Administrative Agent, the Issuing
Banks or any indemnified party arising under the Loan Documents (other than any
of the Term Loan Secured Parties (as defined in the Intercreditor Agreement),
in their capacities as such).


 


“Other Taxes” means any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement or any other
Loan Document, including any interest, additions to tax or penalties applicable
thereto.


 


“Overadvance” has the meaning assigned to such term in Section 2.05(b).


 


“Overadvance Exposure” means, with respect to any Lender at any
time, an amount equal to such Lender’s Applicable Percentage of the aggregate
principal amount of Overadvances at such time.


 


“Parent” means Clopay Corporation, a Delaware corporation.


 


“Parent Entity” means, with respect to any Lender, any Person as
to which such Lender is, directly or indirectly, a subsidiary.


 


“Participant” has the meaning set forth in Section 9.04(b)(v)(1).


 


“Paying Guarantor” has the meaning
assigned to such term in Section 10.10.


 


“PBGC” means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA and any successor entity performing similar functions.


 


“Perfection Certificate” means a certificate in form and
substance reasonably satisfactory to the Administrative Agent that provides
information with respect to Holdings, the Borrower and each Domestic Subsidiary
and their respective assets.


 


30

















 


“Permitted
Acquisition” means any acquisition (other than the Acquisition) by any Loan
Party, whether by purchase, merger or otherwise, of all or substantially all of
the assets of, at least 51% of the Equity Interests of, or a business line or
unit or a division of, any Person; provided, that:


 


(a)           such acquisition shall be consummated in accordance with
all applicable laws and in conformity with all applicable governmental
authorizations, except where the failure to so comply would not reasonably be
expected to have a Material Adverse Effect;


 


(b)           in the case of the acquisition of Equity Interests, (i) at
least 51% of the Equity Interests acquired or otherwise issued by such Person
or any newly formed Subsidiary of any Loan Party in connection with such
acquisition shall be directly and beneficially owned by a Loan Party and (ii) the
Person whose Equity Interests are acquired shall become a Subsidiary and,
unless such a Subsidiary is an Immaterial Subsidiary, a Guarantor and shall
otherwise comply with the requirements of Section 5.13;


 


(c)           in the case of any acquisition of $10,000,000 or more
(whether paid in cash, securities, the assumption of debt or otherwise), the
Borrower shall have delivered to Administrative Agent at least five Business
Days prior to such proposed acquisition, a certificate evidencing compliance
with Section 6.06(e), together with a reasonably detailed description of such
acquisition, including the aggregate Acquisition Consideration for such
acquisition, and any other information reasonably required to demonstrate such
compliance;


 


(d)           such acquisition shall be consensual; and


 


(e)           if the assets acquired are to be included in the Borrowing
Base, the Borrower shall have delivered all information reasonably requested by
the Administrative Agent in its Permitted Discretion and the Administrative
Agent shall have received acceptable field examinations and Inventory
appraisals to include the acquired assets within the Borrowing Base.


 


“Permitted Change of Control Transaction” means a “spin-off” transaction whereby all
the Equity Interests in Holdings are “spun-off” from Parent to Griffon, and
from Griffon ratably to the holders of all the Equity Interests in Griffon,
pursuant to which Holdings ceases to be an indirect Subsidiary of Griffon and
becomes a public company; provided that (i) any Indebtedness and
liabilities of Griffon, Parent or their respective Affiliates (other than the
Group Members) assumed by any Group Member in connection with such transaction
must be expressly permitted to be assumed under Section 6.01 and Section 6.02,
(ii) prior to and immediately after giving effect to such transaction, no Default
shall have occurred and be continuing, (iii)
any potential Tax liability incurred or assumed by any Group Member
(either as a primary obligor or as a member of Griffon’s or the Parent’s
consolidated group) as a result of such spin-off transaction and/or related
transactions could not reasonably be expected to have more than an immaterial
adverse effect on the Group Members taken as a whole and (iv) any expenses related to or resulting from the accelerated
vesting of any equity-based compensation program, time-vested management
incentive program or management bonus program of Griffon, Holdings or its
Affiliates in connection with such “spin-off” transaction shall be paid solely
by Griffon or its Affiliates (other than the Group Members) .


 


“Permitted Discretion” means a determination made in good faith
and in the exercise of reasonable (from the perspective of a secured
asset-based lender) business judgment.


 


“Permitted
Encumbrances” means:


 


31

















 


(a)           Liens imposed by law for taxes, assessments and
governmental charges or claims that are not yet due and payable or are being
contested in compliance with Section 5.04;


 


(b)           landlords’, carriers’, warehousemen’s, mechanics’,
materialmen’s, repairmen’s and other like Liens imposed by law, arising in the
ordinary course of business and securing obligations that are not material and
not overdue by more than 30 days or are being contested in compliance with
Section 5.04;


 


(c)           pledges, deposits and statutory trusts made in the
ordinary course of business in compliance with workers’ compensation,
unemployment insurance and other social security laws or regulations;


 


(d)           deposits to secure the performance of bids, trade
contracts, governmental contracts, leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature, in each
case in the ordinary course of business;


 


(e)           judgment liens in respect of judgments that do not
constitute an Event of Default under clause (k) of Article VII;


 


(f)            easements, zoning restrictions, rights-of-way, licenses,
covenants or other imperfections of title and similar encumbrances on or other
matters affecting real property that do not materially detract from the value
of the affected property or materially interfere with the ordinary conduct of
business of Holdings or any Subsidiary of Holdings;


 


(g)           with respect to any leasehold property, Liens placed upon
or suffered by the landlord with respect to the underlying fee estate; and


 


(h)           other Liens or matters approved by the Administrative
Agent in any policy of title insurance issued in connection with any Mortgage
for a Mortgaged Property;


 


provided that the term “Permitted
Encumbrances” shall not include any Lien securing Indebtedness.


 


“Permitted
Investments” means:


 


(a)           direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed by
the full faith and credit of the United States of America), in each case
maturing within one year from the date of acquisition thereof;


 


(b)           investments in commercial paper maturing within 270 days
from the date of acquisition thereof and having, at such date of acquisition,
the highest credit rating obtainable from S&P or from Moody’s;


 


(c)           investments in certificates of deposit, banker’s
acceptances and time deposits maturing within 180 days from the date of
acquisition thereof issued or guaranteed by or placed with, and money market
deposit accounts issued or offered by, any domestic office of any commercial
bank organized under the laws of the United States of America or any State
thereof which has a combined capital and surplus and undivided profits of not
less than $500,000,000; and


 


32

















 


(d)           money market funds that (i) comply with the criteria set
forth in Securities and Exchange Commission Rule 2a-7 under the Investment
Company Act of 1940, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii)
have portfolio assets of at least $5,000,000,000.


 


“Permitted Refinancing” means any modification, refinancing,
refunding, renewal or extension of the Term Loan Facility; provided that (a) the
principal amount thereof does not exceed the principal amount of the Term Loan
Facility except by an amount equal to unpaid accrued interest and premium
thereon plus other reasonable amounts paid, and fees and expenses reasonably
incurred, in connection with such modification, refinancing, refunding, renewal
or extension , (b) such modification, refinancing, refunding, renewal or
extension has a final maturity date equal to or later than the final maturity
date of, and has a weighted average life to maturity equal to or greater than
the weighted average life to maturity of the Term Loan Facility, (c) no Default
or Event of Default shall have occurred and be continuing, (d) such
modification, refinancing, refunding, renewal or extension is incurred by the
Borrower, (e) such Permitted Refinancing is secured only by all or any portion
of the Collateral (but not by any other assets) pursuant to one or more
security agreements subject to the Intercreditor Agreement, (f) prior to the
Maturity Date, such Permitted Refinancing shall not have any scheduled
amortization payments greater than 5.00% per annum of the initial aggregate
principal amount thereof, (g) such Permitted Refinancing shall not have
financial covenants that are more restrictive than the Term Loan Credit
Agreement, (h) such Permitted Refinancing shall not have a “Change of Control”
(or any defined term having a similar purpose) that is materially more
restrictive than the definition of Change of Control set forth herein, (i) such
Permitted Refinancing is not guaranteed by any Group Member which is not a
Guarantor and (j) any mandatory prepayments pursuant to such Permitted
Refinancing shall be subject to (i) the payment of any mandatory prepayments
required hereunder and (ii) the Intercreditor Agreement.


 


“Permitted Subordinated Debt” means unsecured Indebtedness of
the Borrower for borrowed money which (a) matures no earlier than, and does not
require any scheduled principal payments prior to, six months after the
Maturity Date, (b) is not subject to any mandatory prepayment, redemption, repurchase,
sinking fund or other similar obligation prior to six months after the Maturity
Date, in each case that could require any payment on account of principal in
respect thereof prior to six months after the Maturity Date, (c) is not
guaranteed by any Group Member which is not a Guarantor, (d) is subordinated to
the Obligations on terms and conditions reasonably satisfactory to the
Administrative Agent in its Permitted Discretion, (e) has terms and conditions
(other than interest rate, redemption premiums and subordination terms), taken
as a whole, that are not materially less favorable or more restrictive to the
Borrower than the terms and conditions customary at the time for high-yield
subordinated debt securities issued in a public offering (except to the extent
otherwise approved by the Administrative Agent) and (f) has terms and
conditions (other than interest rate, redemption premiums and subordination
terms), taken as a whole, that are not materially less favorable or more
restrictive to the Borrower than the terms and conditions contained in this
Agreement; provided that prior to and immediately after giving effect to
such transaction, no Default shall have occurred and be continuing.


 


“Person” means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.


 


“Plan” means any employee pension benefit plan, as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan), subject to the
provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of
ERISA, and in respect of which Holdings or any ERISA Affiliate


 


33

















 


is
(or, if such plan were terminated, would under Section 4069 of ERISA be deemed
to be) an “employer” as defined in Section 3(5) of ERISA.


 


“Pledged Collateral” has the meaning assigned to such term in
the Security Agreement.


 


“Prime Rate” means the rate of interest per annum publicly
announced from time to time by JPMorgan as its prime rate at its offices at 270
Park Avenue in New York City; each change in the Prime Rate shall be effective
from and including the date such change is publicly announced as being
effective.


 


“Pro Forma Financial
Statements”  means the pro
forma financial statements referred to in Section 4.01(b)(ii).


 


“Prohibited Transaction” has the meaning assigned to such term
in Section 406 of ERISA and Section 4975(f)(3) of the Code.


 


“Projections” has the meaning assigned to such term in Section 3.04(d).


 


“Protective Advance” has the meaning
assigned to such term in Section 2.04.


 


“Protective Advance Exposure” means, with respect to any Lender
at any time, an amount equal to such Lender’s Applicable Percentage of the
aggregate principal amount of Protective Advances at such time.


 


“Real Estate Asset” means, at any time of determination, any interest (fee, leasehold or
otherwise) then owned by any Loan Party in any real property.


 


“Register” has the meaning set forth in Section 9.04.


 


“Related Agreements”
means, collectively, the Acquisition Agreement and the equity commitment
letter, dated July 19, 2010, between Griffon and Acquisition Sub.


 


“Related Parties” means, with respect to any specified Person,
such Person’s Affiliates and the respective directors, officers, employees,
agents and advisors of such Person and such Person’s Affiliates.


 


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


 


“Rent Reserve” means, with respect to any leased location or
storage facility not owned by any Loan Party where any Inventory equal to or in
excess of $1,000,000 is located, a reserve equal to three months’ rent (or, in
the absence of rent, storage fees, if applicable) applicable to location or
such storage facility.


 


“Reorganization”
means, with respect to a Multiemployer Plan, the condition that such plan is in
reorganization within the meaning of Section 4241 of ERISA.


 


34

















 


“Report” means reports prepared by the Administrative Agent or
another Person showing the results of appraisals, field examinations or audits
pertaining to the Loan Parties’ assets from information furnished by or on
behalf of the Borrower, after the Administrative Agent has exercised its rights
of inspection pursuant to this Agreement, which Reports may be distributed to
the Lenders by the Administrative Agent.


 


“Reportable Event” means any “reportable event,” as defined in
Section 4043 (c) of ERISA or the regulations issued thereunder, other than
those events as to which the 30-day notice period referred to in Section 4043(c)
of ERISA has been waived, with respect to a Plan (other than a Plan maintained
by an ERISA Affiliate that is considered an ERISA Affiliate only pursuant to
subsection (m) or (o) of Section 414 of the Code).


 


“Required Lenders” means, at any time, Lenders having Credit
Exposure and unused Commitments representing more than 50% of the sum of the
total Credit Exposure and unused Commitments at such time.


 


“Requirement of Law” means, as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person
or any of its property is subject.


 


“Reserves” means any and all reserves which the Administrative
Agent deems necessary, in its Permitted Discretion, to maintain (including,
without limitation, reserves for accrued and unpaid interest on the Secured
Obligations, Banking Services Reserves, Rent Reserves, Dilution Reserves, reserves
for consignee’s, warehousemen’s and bailee’s charges, reserves for Inventory
shrinkage, reserves for customs charges and shipping charges related to any
Inventory in transit, reserves for Swap Obligations, reserves for contingent
liabilities of any Loan Party, reserves for uninsured losses of any Loan Party,
reserves for uninsured, underinsured, un-indemnified or under-indemnified
liabilities or potential liabilities with respect to any litigation and
reserves for taxes, fees, assessments, and other governmental charges) with
respect to the Collateral or any Loan Party.


 


“Restricted Payment” means (a) any dividend or other
distribution, direct or indirect (whether in cash, securities or other
property), with respect to any Equity Interests in any Group Member or (b) any
payment, direct or indirect (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of, or any
other return of capital with respect to, any such Equity Interests in any Group
Member, or, prior to a Permitted Change of Control Transaction, Griffon or any
of its Subsidiaries, or any option, warrant or other right to acquire any such
Equity Interests in any Group Member, or, prior to a Permitted Change of Control
Transaction, Griffon or any of its Subsidiaries or (c) any payments to Griffon
or any of its Affiliates (other than Group Members) in respect of fees or in
respect of any Indebtedness owing to Griffon or any of its Affiliates (other
than Group Members).


 


“Revolving Commitment” means, with respect to each Lender, the
commitment, if any, of such Lender to make Revolving Loans and to acquire
participations in Letters of Credit, Overadvances and Swingline Loans
hereunder, expressed as an amount representing the maximum possible aggregate
amount of such Lender’s Revolving Exposure hereunder, as such commitment may be
reduced or increased from time to time pursuant to (a) Section 2.09 and (b) assignments
by or to such Lender pursuant to Section 9.04. 
The initial amount of each Lender’s


 


35

















 


Revolving
Commitment is set forth on the Commitment Schedule, or in the Assignment
and Assumption pursuant to which such Lender shall have assumed its Revolving
Commitment, as applicable.  The initial
aggregate amount of the Lenders’ Revolving Commitments is $125,000,000.


 


“Revolving Exposure” means, with respect to any Lender at any
time, the sum (without duplication) of (a) the outstanding principal amount of
such Lender’s Revolving Loans and its LC Exposure, plus (b) an amount equal to its
Applicable Percentage of the aggregate principal amount of Swingline Loans at
such time, plus (c) an amount equal to
its Applicable Percentage of the aggregate principal amount of Overadvances
outstanding at such time.


 


“Revolving Loan” means a Loan made pursuant to Section 2.01(a).


 


“S&P” means Standard & Poor’s Financial Services LLC.


 


“SEC” means the Securities and Exchange Commission, or any
regulatory body that succeeds to the functions thereof.


 


“Second Priority” means, with respect to any Lien purported to be created in any
Collateral pursuant to any Collateral Document, that such Lien is perfected and
has priority over all other Liens to which such Collateral is subject, other
than (a) First Priority Liens to which such Collateral is subject that are
permitted hereby and are subject to the Intercreditor Agreement and (b) any
Permitted Encumbrances.


 


“Secured Obligations” has the meaning assigned to such term in
the Security Agreement.


 


“Secured Parties” has the meaning assigned to such term in the
Security Agreement.


 


“Security Agreement” means that certain Amended and Restated
Pledge and Security Agreement, dated as of the date hereof, between the Loan
Parties and the Administrative Agent, for the benefit of the Secured Parties,
substantially in the form attached hereto as Exhibit E, and any other
pledge or security agreement entered into, after the date of this Agreement by
any other Loan Party (as required by this Agreement or any other Loan
Document), or any other Person, for the benefit of the Secured Parties, as the
same may be amended, restated or otherwise modified from time to time.


 


“Settlement” has the meaning assigned to such term in Section 2.05(d).


 


“Settlement Date” has the meaning assigned to such term in
Section 2.05(d).


 


“Senior Notes” means the 10% Senior Subordinated Notes due 2012,
issued by Ames, and the Floating Rate Notes, in each case pursuant to the
applicable Senior Notes Indentures.


 


“Senior Notes Indentures” means (a) the
Indenture for 10% Senior Subordinated Notes due 2012, dated June 28, 2004, by
and among Ames, as Issuer, ATT, as Guarantor, and The Bank of New York, as
Trustee, and the Supplemental Indenture, to the Indenture dated June 28, 2004,
dated as of December 17, 2007, among Ames U.S. Holding Corp, Ames Holdings, Inc.,
Ames True Temper Properties, Inc., Ames, ATT and The Bank of New York, as
Trustee, and (b) the Floating Rate Notes Indenture.


 


36

















 


“Solvent” means, with respect to any Person, that as of the date of determination,
(a) the sum of such Person’s debt and other liabilities (including contingent
liabilities) does not exceed the present fair saleable value of such Person’s
present assets, (b) such Person’s capital is not unreasonably small in relation
to its business as contemplated on the Effective Date and reflected in the
Projections or with respect to any transaction contemplated to be undertaken
after the Effective Date, (c) such Person has not incurred and does not intend
to incur, or believe (nor should it reasonably believe) that it will incur,
debts and liabilities (including contingent liabilities) beyond its ability to
pay such debts and liabilities as they become due (whether at maturity or
otherwise), and (d) such Person is “solvent” within the meaning given that term
and similar terms under the Bankruptcy Code and applicable laws relating to
fraudulent transfers and conveyances. 
For purposes of this definition, the amount of any contingent liability
at any time shall be computed as the amount that, in light of all of the facts
and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability (irrespective
of whether such contingent liabilities meet the criteria for accrual under
GAAP).


 


“Specified Representations” means the
representations made by or with respect to the Target and its subsidiaries in
the Acquisition Agreement as are material to the interests of the Lenders, but
only to the extent that Acquisition Sub has the right to terminate its
obligations under the Acquisition Agreement as a result of the breach of such
representations in the Acquisition Agreement.


 


“Statutory Reserve Rate” means a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board to which the Administrative Agent is
subject with respect to the Adjusted LIBO Rate, for eurocurrency funding
(currently referred to as “Eurocurrency Liabilities” in Regulation D of the
Board).  Such reserve percentages shall
include those imposed pursuant to such Regulation D.  Eurodollar Loans shall be deemed to
constitute eurocurrency funding and to be subject to such reserve requirements
without benefit of or credit for proration, exemptions or offsets that may be
available from time to time to any Lender under such Regulation D or any
comparable regulation.  The Statutory
Reserve Rate shall be adjusted automatically on and as of the effective date of
any change in any reserve percentage.


 


“Subordinated Indebtedness” of a Person means any Indebtedness
of such Person the payment of which is subordinated in writing to payment of
the Secured Obligations to the reasonable satisfaction of the Administrative
Agent.


 


“subsidiary” means, with respect to any Person (the “parent”)
at any date, any corporation, limited liability company, partnership,
association or other entity the accounts of which would be consolidated with
those of the parent in the parent’s consolidated financial statements if such
financial statements were prepared in accordance with GAAP as of such date, as
well as any other corporation, limited liability company, partnership,
association or other entity (a) of which securities or other ownership
interests representing more than 50% of the equity or more than 50% of the
ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests are, as of such date, owned, controlled or held,
or (b) that is, as of such date, otherwise Controlled, by the parent or one or
more subsidiaries of the parent or by the parent and one or more subsidiaries
of the parent.


 


37

















 


“Subsidiary” means any direct or indirect subsidiary of the
Borrower or any other Group Member, as applicable.


 


“Supermajority Lenders” means, at any time, Lenders having
Credit Exposure and unused Commitments representing more than 66 2/3% of the
sum of the total Credit Exposure and unused Commitments at such time.


 


“Swap Agreement” means any agreement with respect to any swap, forward, future or
derivative transaction or option or similar agreement involving, or settled by
reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing
indices or measures of economic,
financial or pricing risk or value or any similar transaction or any
combination of these transactions (including any Interest Rate Agreements); provided
that no phantom stock or similar plan providing for payments only on
account of services provided by current or former directors, officers,
employees or consultants of the Borrower or its Subsidiaries shall be a Swap
Agreement.


 


“Swap Obligations” of a Person means any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (a) any and all Swap
Agreements, and (b) any and all cancellations, buy backs, reversals,
terminations or assignments of any Swap Agreement transaction.


 


“Swingline Exposure” means, with respect to any Lender at any
time, an amount equal to such Lender’s Applicable Percentage of the aggregate
principal amount of Swingline Loans at such time.


 


“Swingline Lender” means JPMorgan Chase Bank, N.A., in its
capacity as lender of Swingline Loans hereunder.


 


“Swingline Loan” has the meaning assigned to such term in
Section 2.05(a).


 


“Target” has the meaning assigned to such term in the recitals
hereto.


 


“Target Management Agreement” means the Management Agreement,
dated as of June 28, 2004, among Castle Harlan, Inc., ATT, Ames and the Target.


 


“Taxes” means any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any
Governmental Authority.


 


“Term Collateral” has the meaning assigned to such term in the
Intercreditor Agreement.


 


“Term Loan Administrative Agent” means Goldman Sachs Lending
Partners LLC, as administrative agent under the Term Loan Credit Agreement,
and, after any Permitted Refinancing of the Term Loan Facility, the
administrative agent or similar representative with respect to such Permitted
Refinancing.


 


“Term Loan Credit Agreement” means that certain Credit and
Guarantee Agreement, dated as of the date hereof, between the Loan Parties, the
Term Loan Administrative Agent and the lenders and other parties party thereto
from time to time.


 


38
















 


“Term Loan Documents” has the meaning assigned to such term in
the Intercreditor Agreement.


 


“Term Loan Facility” means the commitments to make loans under
the Term Loan Credit Agreement and the loans thereunder.


 


“Transactions” means (a) the execution, delivery and performance
by each Loan Party of the Loan Documents to which it is to be a party, the
creation of the Liens provided for in the Collateral Documents and, in the case
of the Borrower, the borrowing of Loans and the issuance of Letters of Credit
hereunder and the use of proceeds thereof in accordance with the terms hereof,
(b) the Acquisition and the other transactions contemplated by the Acquisition
Agreement, (c) the execution, delivery and performance by each Loan Party of
the Term Loan Credit Agreement and the related Term Loan Documents and the
borrowing of term loans under the Term Loan Credit Agreement, (d) the repayment
in full of all obligations under the Existing Debt Agreements, the termination
of all commitments thereunder and the releases of all Guarantees and Liens in
respect thereof, (e) the repayment in full of all obligations outstanding under
the Existing Credit Agreement as of the Effective Date and (f) the payment of
the fees, costs and expenses payable by Holdings or any of its Subsidiaries in
connection with the Transactions.


 


“Type”, when used in reference to any Loan or Borrowing, refers
to whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the
Alternate Base Rate.


 


“UCC” means the Uniform Commercial Code as in effect from time
to time in the State of New York or any other state the laws of which are
required to be applied in connection with the issue of perfection of security
interests.


 


“Unliquidated Obligations” means, at any time, any Secured
Obligations (or portion thereof) that are contingent in nature or unliquidated
at such time, including any Secured Obligation that is: (i) an obligation to
reimburse a bank for drawings not yet made under a letter of credit issued by
it; (ii) any other obligation (including any guarantee) that is contingent in
nature at such time; or (iii) an obligation to provide collateral to secure any
of the foregoing types of obligations.


 


“Unrestricted Cash” means cash or cash equivalents of the
Borrower or any of its Subsidiaries that would not appear as “restricted” on a
consolidated balance sheet of the Borrower or any of its Subsidiaries.


 


“Withdrawal Liability” means liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan,
as such terms are defined in Part I of Subtitle E of Title IV of ERISA.


 


“Withholding Agent” means any Loan Party and the Administrative
Agent.


 


Section 1.02.          Classification of Loans and
Borrowings.  For purposes of this
Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving
Loan”) or by Type (e.g., a “Eurodollar Loan”) or by Class and Type (e.g., a “Eurodollar
Revolving Loan”).  Borrowings also may be
classified and referred to by Class (e.g., a “Revolving Borrowing”) or by Type
(e.g., a “Eurodollar Borrowing”) or by Class and Type (e.g., a “Eurodollar
Revolving Borrowing”).


 


39

















 


Section 1.03.          Terms Generally.  The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have
the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document
herein shall be construed as referring to such agreement, instrument or other
document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (b) any reference herein to any Person shall be construed to
include such Person’s successors and assigns, (c) the words “herein”, “hereof”
and “hereunder”, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.


 


Section 1.04.          Accounting Terms; GAAP.  Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if the
Borrower notifies the Administrative Agent that the Borrower requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have
been withdrawn or such provision amended in accordance herewith.  Notwithstanding any other provision contained
herein, all terms of an accounting or financial nature used herein shall be
construed, and all computations of amounts and ratios referred to herein shall
be made, without giving effect to any election under Statement of Financial
Accounting Standards 159 (or any other Financial Accounting Standard having a
similar result or effect) to value any Indebtedness or other liabilities of
Holdings, the Borrower or any Subsidiary at “fair value”, as defined therein.


 


ARTICLE II


 


The Credits


 


Section 2.01.          Commitments.  (a)  Subject
to the terms and conditions set forth herein, each Lender severally agrees to
make Revolving Loans, denominated in dollars, to the Borrower from time to time
during the Availability Period in an aggregate principal amount that will not
result in (i) such Lender’s Revolving Exposure exceeding such Lender’s
Revolving Commitment or (ii) the total Revolving Exposures exceeding the lesser
of (x) the aggregate Revolving Commitments, or (y) the Borrowing Base, subject to the
Administrative Agent’s authority, in its sole discretion, to make Protective
Advances and Overadvances pursuant to the terms of Section 2.04 and Section
2.05.


 


(b)           Within the foregoing limits and
subject to the terms and conditions set forth herein, the Borrower may borrow,
prepay and reborrow Revolving Loans.


 


Section 2.02.          Loans and Borrowings.  (a)  Each Loan (other than a Swingline Loan) shall
be made as part of a Borrowing consisting of Loans of the same Class and Type
made by the


 


40

















 


Lenders ratably in accordance with their respective
Commitments of the applicable Class.  Any
Protective Advance, any Overadvance and any Swingline Loan shall be made in
accordance with the procedures set forth in Section 2.04 and Section 2.05.


 


(b)           Subject to Section 2.14, each
Revolving Borrowing shall be comprised entirely of ABR Loans or Eurodollar
Loans as the Borrower may request in accordance herewith, provided that
all Borrowings made on the Effective Date must be made as ABR Borrowings but
may be converted into Eurodollar Borrowings in accordance with Section 2.08.  Each Swingline Loan shall be an ABR
Loan.  Each Lender at its option may make
any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of
such Lender to make such Loan; provided that any exercise of such option
shall not affect the obligation of the Borrower to repay such Loan in
accordance with the terms of this Agreement.


 


(c)           At the commencement of each Interest
Period for any Eurodollar Revolving Borrowing, such Borrowing shall be in an
aggregate amount that is an integral multiple of $100,000 and not less than
$500,000.  ABR Revolving Borrowings may
be in any amount.  Borrowings of more
than one Type and Class may be outstanding at the same time; provided
that there shall not at any time be more than a total of ten Eurodollar
Borrowings outstanding.


 


(d)           Notwithstanding any other provision
of this Agreement, the Borrower shall not be entitled to request, or to elect
to convert or continue, any Borrowing if the Interest Period requested with
respect thereto would end after the Maturity Date.


 


Section 2.03.          Requests for Revolving Borrowings.  To request a Revolving Borrowing, the
Borrower shall notify the Administrative Agent of such request either in
writing (delivered by hand or facsimile) in a form approved by the
Administrative Agent in its reasonable discretion and signed by the Borrower or
by telephone (a) in the case of a Eurodollar Borrowing, not later than 10:00 a.m.,
Chicago time, three Business Days before the date of the proposed Borrowing or
(b) in the case of an ABR Borrowing, not later than noon, Chicago time, on the
date of the proposed Borrowing; provided that any such notice of an ABR
Revolving Borrowing to finance the reimbursement of an LC Disbursement as
contemplated by Section 2.06(e) may be given not later than 9:00 a.m., Chicago
time, on the date of the proposed Borrowing. 
Each such telephonic Borrowing Request shall be irrevocable and shall be
confirmed promptly by hand delivery or facsimile to the Administrative Agent of
a written Borrowing Request in a form approved by the Administrative Agent and
signed by the Borrower.  Each such
telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.01:


 


(i)            the aggregate amount of the
requested Borrowing and a breakdown of the separate wires comprising such
Borrowing;


 


(ii)           the date of such Borrowing, which
shall be a Business Day;


 


(iii)          whether such Borrowing is to be an ABR
Borrowing or a Eurodollar Borrowing; and


 


(iv)          in the case of a Eurodollar Borrowing,
the initial Interest Period to be applicable thereto, which shall be a period
contemplated by the definition of the term “Interest Period.”


 


If
no election as to the Type of Revolving Borrowing is specified, then the requested
Revolving Borrowing shall be an ABR Borrowing. 
If no Interest Period is specified with respect to any requested
Eurodollar Revolving Borrowing, then the Borrower shall be deemed to have
selected an Interest Period


 


41

















 


of
one month’s duration.  Promptly following
receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender, as applicable, of the details
thereof and of the amount of such Lender’s Loan to be made as part of the
requested Borrowing.


 


Section 2.04.          Protective Advances.  (a)  Subject to the limitations set forth below,
the Administrative Agent is authorized by the Borrower and the Lenders, from
time to time in the Administrative Agent’s sole discretion (but shall have
absolutely no obligation to), to make Loans to the Borrower, on behalf of all
Lenders, which the Administrative Agent, in its Permitted Discretion, deems
necessary or desirable (i) to preserve or protect the Collateral, or any
portion thereof, (ii) to enhance the likelihood of, or maximize the amount of,
repayment of the Loans and other Obligations, or (iii) to pay any other amount
chargeable to or required to be paid by the Borrower pursuant to the terms of
this Agreement, including payments of reimbursable expenses (including costs,
fees, and expenses as described in Section 9.03) and other sums payable under
the Loan Documents (any of such Loans are herein referred to as “Protective
Advances”); provided that, (i) the aggregate amount of
Protective Advances outstanding at any time shall not at any time exceed 10% of
the Revolving Commitments, (ii) the aggregate amount of Protective Advances
outstanding at any time together with the aggregate amount of Overadvances
outstanding at any time shall not at any time exceed $15,000,000 and (iii) the
aggregate amount of outstanding Protective Advances plus the aggregate
Revolving Exposure shall not exceed the aggregate Revolving Commitments.  Protective Advances may be made even if the conditions
precedent set forth in Section 4.02 have not been satisfied.  The Protective Advances shall be secured by
the Liens in favor of the Administrative Agent in and to the Collateral and
shall constitute Obligations hereunder. 
All Protective Advances shall be ABR Borrowings.  The Administrative Agent’s authorization to
make Protective Advances may be revoked at any time by the Required
Lenders.  Any such revocation must be in
writing and shall become effective prospectively upon the Administrative Agent’s
receipt thereof.  At any time that there
is sufficient Availability and the conditions precedent set forth in Section 4.02
have been satisfied, the Administrative Agent may request the Lenders to make a
Loan to repay a Protective Advance.  At
any other time the Administrative Agent may require the Lenders to fund their
risk participations described in Section 2.04(b).


 


(b)           Upon the making of a Protective
Advance by the Administrative Agent  (whether before or after the occurrence of a Default), each
Lender shall be deemed, without further action by any party hereto, to have
unconditionally and irrevocably purchased from the Administrative Agent without
recourse or warranty, an undivided interest and participation in such
Protective Advance in proportion to its Applicable Percentage.  From and after the date, if any, on which any
Lender is required to fund its participation in any Protective Advance
purchased hereunder, the Administrative Agent shall promptly distribute to such
Lender, such Lender’s Applicable Percentage of all payments of principal and
interest and all proceeds of Collateral received by the Administrative Agent in
respect of such Protective Advance.


 


Section 2.05.          Swingline Loans and Overadvances.  (a)  The Administrative Agent, the Swingline Lender
and the Lenders agree that in order to facilitate the administration of this
Agreement and the other Loan Documents, promptly after the Borrower requests an
ABR Borrowing, the Swingline Lender may elect to have the terms of this Section
2.05(a) apply to such Borrowing Request by advancing, on behalf of the Lenders
and in the amount requested, same day funds to the Borrower, on the applicable
Borrowing date to the Funding Account(s) (each such Loan made solely by the
Swingline Lender pursuant to this Section 2.05(a) is referred to in this
Agreement as a “Swingline Loan”), with settlement among them as to the
Swingline Loans to take place on a periodic basis as set forth in Section 2.05(d).  Each Swingline Loan shall be subject to all
the terms and conditions applicable to other ABR Loans funded by the Lenders,
except that all payments thereon shall be payable to the Swingline Lender
solely for its own account.  In addition,
the Borrower hereby authorizes the Swingline Lender to, and the Swingline Lender
shall, subject to the terms and conditions set forth herein (but without any
further


 


42

















 


written notice required), not later than 1:00 p.m.,
Chicago time, on each Business Day, make available to the Borrower by means of
a credit to the Funding Account(s), the proceeds of a Swingline Loan.  The Administrative Agent shall, upon request
of the Borrower, notify the Borrower of the aggregate amount of Swingline Loans
outstanding as of end of the immediately preceding day.  The
aggregate amount of Swingline Loans outstanding at any time shall not exceed
$12,500,000.  The Swingline Lender
shall not make any Swingline Loan if the requested Swingline Loan exceeds the
Availability (before giving effect to such Swingline Loan).  All Swingline Loans shall be ABR Borrowings.


 


(b)           Any provision of this Agreement to
the contrary notwithstanding, at the request of the Borrower, the
Administrative Agent may in its sole discretion (but with absolutely no
obligation), make Revolving Loans to the Borrower, on behalf of the Lenders, in
amounts that exceed the Availability (any such excess Revolving Loans are
herein referred to collectively as “Overadvances”); provided that, no Overadvance shall result in a Default due to the Borrower’s
failure to comply with Section 2.01 for so long as such Overadvance remains
outstanding in accordance with the terms of this paragraph, but solely with
respect to the amount of such Overadvance. 
In addition, Overadvances may be made even if the condition precedent
set forth in Section 4.02(c) has not been satisfied.  All Overadvances shall constitute ABR
Borrowings.  The authority of the
Administrative Agent to make Overadvances is limited to an aggregate amount not
to exceed 10% of the Revolving Commitments at any time, no Overadvance may
remain outstanding for more than thirty days and no Overadvance shall cause any
Lender’s Revolving Exposure to exceed its Revolving Commitment; provided that the aggregate amount of Overadvances outstanding at any time
together with the aggregate amount of Protective Advances outstanding at any
time shall not at any time exceed $15,000,000; provided  further
that the Required Lenders may at any time revoke the Administrative
Agent’s authorization to make Overadvances. 
Any such revocation must be in writing and shall become effective
prospectively upon the Administrative Agent’s receipt thereof.


 


(c)           Upon the making of a Swingline Loan
or an Overadvance  (whether before or after the occurrence of a Default and
regardless of whether a Settlement has been requested with respect to such
Swingline Loan or Overadvance), each Lender shall be deemed, without further
action by any party hereto, to have unconditionally and irrevocably purchased
from the Swingline Lender or the Administrative Agent, as the case may be,
without recourse or warranty, an undivided interest and participation in such
Swingline Loan or Overadvance in proportion to its Applicable Percentage of the
Revolving Commitment.  The Swingline
Lender or the Administrative Agent may, at any time, require the Lenders to
fund their participations.  From and
after the date, if any, on which any Lender is required to fund its
participation in any Swingline Loan or Overadvance purchased hereunder, the
Administrative Agent shall promptly distribute to such Lender, such Lender’s
Applicable Percentage of all payments of principal and interest and all
proceeds of Collateral received by the Administrative Agent in respect of such
Loan.


 


(d)           The Administrative Agent, on behalf
of the Swingline Lender, shall request settlement (a “Settlement”) with
the Lenders on at least a weekly basis or on any date that the Administrative
Agent elects, by notifying the Lenders of such requested Settlement by
facsimile, telephone, or e-mail no later than 12:00 noon, Chicago time, on the
date of such requested Settlement (the “Settlement Date”).  Each Lender (other than the Swingline Lender,
in the case of the Swingline Loans) shall transfer the amount of such Lender’s
Applicable Percentage of the outstanding principal amount of the applicable
Loan with respect to which Settlement is requested to the Administrative Agent,
to such account of the Administrative Agent as the Administrative Agent may
designate, not later than 2:00 p.m., Chicago time, on such Settlement
Date.  Settlements may occur during the
existence of a Default and whether or not the applicable conditions precedent
set forth in Section 4.02 have then been satisfied.  Such amounts transferred to the
Administrative Agent shall be applied against the amounts of the Swingline
Lender’s Swingline Loans and, together with Swingline Lender’s Applicable
Percentage


 


43

















 


of such Swingline Loan, shall
constitute Revolving Loans of such Lenders, respectively.  If any such amount is not transferred to the
Administrative Agent by any Lender on such Settlement Date, the Swingline
Lender shall be entitled to recover such amount on demand from such Lender
together with interest thereon as specified in Section 2.07.


 


Section 2.06.          Letters of Credit.  (a)  General.  Subject to the terms and conditions set forth
herein, the Borrower may request the issuance of Letters of Credit for its own
account or for the account of a Loan Party, in a form reasonably acceptable to
the Administrative Agent and the applicable Issuing Bank, at any time and from
time to time during the Availability Period. 
In the event of any inconsistency between the terms and conditions of
this Agreement and the terms and conditions of any form of letter of credit
application or other agreement submitted by the Borrower to, or entered into by
the Borrower with, the applicable Issuing Bank relating to any Letter of
Credit, the terms and conditions of this Agreement shall control.  The Griffon Letters of Credit outstanding on
the Effective Date, and any extensions or renewals thereof, shall be deemed
Letters of Credit issued under this Agreement for all purposes of this
Agreement with such Letters of Credit being deemed issued (i) as of the Effective
Date with respect to the Griffon Letters of Credit and (ii) as of the date of
extension or renewal with respect to any extension or renewal of the Griffon
Letters of Credit.


 


(b)           Notice of Issuance, Amendment,
Renewal, Extension; Certain Conditions. 
To request the issuance of a Letter of Credit (or the amendment, renewal
or extension of an outstanding Letter of Credit), the Borrower shall hand
deliver or facsimile (or transmit by electronic communication, if arrangements
for doing so have been approved by the applicable Issuing Bank) to the
applicable Issuing Bank and the Administrative Agent (prior to 9:00 am, Chicago
time, at least three Business Days prior to the requested date of issuance,
amendment, renewal or extension) a notice requesting the issuance of a Letter
of Credit, or identifying the Letter of Credit to be amended, renewed or
extended, and specifying the date of issuance, amendment, renewal or extension
(which shall be a Business Day), the date on which such Letter of Credit is to expire
(which shall comply with paragraph (c) of this Section), the amount of such
Letter of Credit, the name and address of the beneficiary thereof and such
other information as shall be necessary to prepare, amend, renew or extend such
Letter of Credit.  If requested by the
applicable Issuing Bank, the Borrower also shall submit a letter of credit
application on such Issuing Bank’s standard form in connection with any request
for a Letter of Credit.  A Letter of
Credit shall be issued, amended, renewed or extended only if (and upon
issuance, amendment, renewal or extension of each Letter of Credit the Borrower
shall be deemed to represent and warrant that), after giving effect to such
issuance, amendment, renewal or extension (i) the LC Exposure shall not exceed
$25,000,000 and (ii) the total Revolving Exposures shall not exceed the lesser
of the total Revolving Commitments and the Borrowing Base.


 


(c)           Expiration Date.  Each Letter of Credit shall expire at or
prior to the close of business on the earlier of (i) the date one year after
the date of the issuance of such Letter of Credit (or, in the case of any
renewal or extension thereof, one year after such renewal or extension) and
(ii) the date that is five Business Days prior to the Maturity Date.


 


(d)           Participations.  By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the applicable Issuing Bank or the Lenders, the
applicable Issuing Bank hereby grants to each Lender, and each Lender hereby
acquires from such Issuing Bank, a participation in such Letter of Credit equal
to such Lender’s Applicable Percentage of the aggregate amount available to be
drawn under such Letter of Credit.  In
consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for
the account of the applicable Issuing Bank, such Lender’s Applicable Percentage
of each LC Disbursement made by such Issuing Bank and not reimbursed by the
Borrower on the date due as provided in paragraph (e) of this Section, or of
any


 


44

















 


reimbursement payment required
to be refunded to the Borrower for any reason. 
Each Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph in respect of Letters of Credit is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including any amendment, renewal or extension of any Letter of
Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made
without any offset, abatement, withholding or reduction whatsoever.


 


(e)           Reimbursement.  If any Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit, the Borrower shall reimburse
such LC Disbursement by paying to the Administrative Agent an amount equal to
such LC Disbursement not later than 11:00 a.m., Chicago time, on the Business
Day that such LC Disbursement is made, if the Borrower shall have received
notice of such LC Disbursement prior to 9:00 a.m., Chicago time, on such date,
or, if such notice has not been received by the Borrower prior to such time on
such date, then not later than 11:00 a.m., Chicago time, on the Business Day
immediately following the day that the Borrower receives such notice; provided
that, if such LC Disbursement is not less than $500,000, the Borrower may,
subject to the conditions to borrowing set forth herein, request in accordance
with Section 2.03 that such payment be financed with an ABR Revolving Borrowing
in an equivalent amount and, to the extent so financed, the Borrower’s
obligation to make such payment shall be discharged and replaced by the
resulting ABR Revolving Borrowing.  If
the Borrower fails to make such payment when due, the Administrative Agent
shall notify each Lender of the applicable LC Disbursement, the payment then
due from the Borrower in respect thereof and such Lender’s Applicable
Percentage thereof.  Promptly following
receipt of such notice, each Lender shall pay to the Administrative Agent its
Applicable Percentage of the payment then due from the Borrower, in the same
manner as provided in Section 2.07 with respect to Loans made by such Lender
(and Section 2.07 shall apply, mutatis  mutandis, to the payment
obligations of the Lenders), and the Administrative Agent shall promptly pay to
such Issuing Bank the amounts so received by it from the Lenders.  Promptly following receipt by the
Administrative Agent of any payment from the Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the
applicable Issuing Bank or, to the extent that Lenders have made payments
pursuant to this paragraph to reimburse such Issuing Bank, then to such Lenders
and such Issuing Bank as their interests may appear.  Any payment made by a Lender pursuant to this
paragraph to reimburse an Issuing Bank for any LC Disbursement (other than the
funding of ABR Revolving Loans or a Swingline Loan as contemplated above) shall
not constitute a Loan and shall not relieve the Borrower of its obligation to
reimburse such LC Disbursement.


 


(f)            Obligations Absolute.  The Borrower’s obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the applicable Issuing Bank under a
Letter of Credit against presentation of a draft or other document that does
not comply with the terms of such Letter of Credit, or (iv) any other event or
circumstance whatsoever, whether or not similar to any of the foregoing, that
might, but for the provisions of this Section, constitute a legal or equitable
discharge of, or provide a right of setoff against, the Borrower’s obligations
hereunder.  Neither the Administrative
Agent, the Lenders nor the Issuing Banks, nor any of their Related Parties,
shall have any liability or responsibility by reason of or in connection with
the issuance or transfer of any Letter of Credit or any payment or failure to
make any payment thereunder (irrespective of any of the circumstances referred
to in the preceding sentence), or any error, omission, interruption, loss or
delay in transmission or delivery of any draft, notice or other communication
under or relating to any Letter of Credit (including any document required to
make a drawing thereunder), any error in interpretation of


 


45

















 


technical terms or any
consequence arising from causes beyond the control of the applicable Issuing Bank;
provided that the foregoing shall not be construed to excuse such
Issuing Bank from liability to the Borrower to the extent of any direct damages
(as opposed to consequential damages, claims in respect of which are hereby
waived by the Borrower to the extent permitted by applicable law) suffered by
the Borrower that are caused by such Issuing Bank’s failure to exercise care
when determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. 
The parties hereto expressly agree that, in the absence of gross
negligence or willful misconduct on the part of an Issuing Bank (as finally
determined by a court of competent jurisdiction), such Issuing Bank shall be
deemed to have exercised care in each such determination.  In furtherance of the foregoing and without
limiting the generality thereof, the parties agree that, with respect to
documents presented which appear on their face to be in substantial compliance
with the terms of a Letter of Credit, an Issuing Bank may, in its sole
discretion, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.


 


(g)           Disbursement Procedures.  The applicable Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. 
Such Issuing Bank shall promptly notify the Administrative Agent and the
Borrower by telephone (confirmed by facsimile) of such demand for payment and
whether such Issuing Bank has made or will make an LC Disbursement thereunder; provided
that any failure to give or delay in giving such notice shall not relieve the
Borrower of its obligation to reimburse such Issuing Bank and the Lenders with
respect to any such LC Disbursement.


 


(h)           Interim Interest.  If an Issuing Bank shall make any LC
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to, ABR Revolving Loans; provided
that, if the Borrower fails to reimburse such LC Disbursement when due pursuant
to paragraph (e) of this Section, then Section 2.13(d)) shall apply.  Interest accrued pursuant to this paragraph
shall be for the account of the applicable Issuing Bank, except that interest
accrued on and after the date of payment by any Lender pursuant to paragraph
(e) of this Section to reimburse such Issuing Bank shall be for the account of
such Lender to the extent of such payment.


 


(i)            Replacement of the Issuing Bank.  Any Issuing Bank may be replaced at any time
by written agreement among the Borrower, the Administrative Agent, the replaced
Issuing Bank and the successor Issuing Bank. 
The Administrative Agent shall notify the Lenders of any such
replacement of such Issuing Bank.  At the
time any such replacement shall become effective, the Borrower shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank pursuant to
Section 2.12(b).  From and after the
effective date of any such replacement, (i) the successor Issuing Bank shall
have all the rights and obligations of such Issuing Bank under this Agreement
with respect to Letters of Credit to be issued thereafter and (ii) references
herein to the term “Issuing Bank” shall be deemed to refer to such successor or
to any previous Issuing Bank, or to such successor and all previous Issuing
Banks, as the context shall require. 
After the replacement of an Issuing Bank hereunder, the replaced Issuing
Bank shall remain a party hereto and shall continue to have all the rights and
obligations of an Issuing Bank under this Agreement with respect to Letters of
Credit issued by it prior to such replacement, but shall not be required to
issue additional Letters of Credit.


 


(j)            Cash Collateralization.   If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required


 


46

















 


Lenders (or, if the maturity
of the Loans has been accelerated, Lenders with LC Exposure representing
greater than 50% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, the Borrower shall deposit in an account with the
Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Lenders (the “LC Collateral Account”), an amount in cash
equal to 103% of the LC Exposure as of such date plus accrued and unpaid
interest thereon; provided that the obligation to deposit such cash
collateral shall become effective immediately, and such deposit shall become
immediately due and payable, without demand or other notice of any kind, upon
the occurrence of any Event of Default with respect to the Borrower described
in clause (h) or (i) of Article VII. 
Such deposit shall be held by the Administrative Agent as collateral for
the payment and performance of the applicable Secured Obligations.  The Administrative Agent shall have exclusive
dominion and control, including the exclusive right of withdrawal, over such
account and the Borrower hereby grants the Administrative Agent a security
interest in the LC Collateral Account. 
Other than any interest earned on the investment of such deposits, which
investments shall be made at the option and sole discretion of the
Administrative Agent and at the Borrower’s risk and expense, such deposits
shall not bear interest.  Interest or profits,
if any, on such investments shall accumulate in such account.  Moneys in such account shall be applied by
the Administrative Agent to reimburse the applicable Issuing Bank for LC
Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of
the Borrower for the LC Exposure at such time or, if the maturity of the Loans
has been accelerated (but subject to the consent of Lenders with LC Exposure
representing greater than 50% of the total LC Exposure), be applied to satisfy
other applicable Secured Obligations.  If
the Borrower is required to provide an amount of cash collateral hereunder as a
result of the occurrence of an Event of Default, such amount (to the extent not
applied as aforesaid) shall be returned to the Borrower within three Business
Days after such Event of Default has been cured or waived.


 


Section 2.07.          Funding of Borrowings.  (a)  Each Lender shall make each Loan to be made by
it hereunder on the proposed date thereof by wire transfer of immediately
available funds by 1:00 p.m., Chicago time, to the account of the
Administrative Agent most recently designated by it for such purpose by notice
to the Lenders in an amount equal to such Lender’s Applicable Percentage; provided
that Swingline Loans shall be made as provided in Section 2.05.  The Administrative Agent will make such Loans
available to the Borrower by promptly crediting the amounts so received, in
like funds, to the Funding Account(s); provided, further, that
ABR Revolving Loans made to finance the reimbursement of (i) an LC Disbursement
as provided in Section 2.06(e) shall be remitted by the Administrative Agent to
the applicable Issuing Bank and (ii) a Protective Advance or an Overadvance
shall be retained by the Administrative Agent.


 


(b)           Unless the Administrative Agent shall
have received notice from a Lender prior to the proposed date of any Borrowing
that such Lender will not make available to the Administrative Agent such
Lender’s share of such Borrowing, the Administrative Agent may assume that such
Lender has made such share available on such date in accordance with paragraph
(a) of this Section and may, in reliance upon such assumption, make available
to the Borrower a corresponding amount. 
In such event, if a Lender has not in fact made its share of the
applicable Borrowing available to the Administrative Agent, then the applicable
Lender and the Borrower severally agree to pay to the Administrative Agent
forthwith on demand such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to the Borrower
to but excluding the date of payment to the Administrative Agent, at (i) in the
case of such Lender, the greater of the Federal Funds Effective Rate and a rate
reasonably determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation and (ii) in the case of the Borrower,
the interest rate applicable to ABR Loans. 
If such Lender pays such amount to the Administrative Agent, then such
amount shall constitute such Lender’s Loan included in such Borrowing.


 


47

















 


Section 2.08.          Interest Elections.  (a)  Each Revolving Borrowing initially shall be of
the Type specified in the applicable Borrowing Request and, in the case of a
Eurodollar Revolving Borrowing, shall have an initial Interest Period as
specified in such Borrowing Request. 
Thereafter, the Borrower may elect to convert such Borrowing to a
different Type or to continue such Borrowing and, in the case of a Eurodollar
Revolving Borrowing, may elect Interest Periods therefor, all as provided in
this Section.  The Borrower may elect
different options with respect to different portions of the affected Borrowing,
in which case each such portion shall be allocated ratably among the Lenders
holding the Loans comprising such Borrowing, and the Loans comprising each such
portion shall be considered a separate Borrowing.  This Section shall not apply to Swingline
Borrowings, Overadvances or Protective Advances, which may not be converted or
continued.


 


(b)           To make an election pursuant to this
Section, the Borrower shall notify the Administrative Agent of such election by
telephone by the time that a Borrowing Request would be required under Section 2.03
if the Borrower were requesting a Revolving Borrowing of the Type resulting
from such election to be made on the effective date of such election.  Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery
or facsimile to the Administrative Agent of a written Interest Election Request
in a form approved by the Administrative Agent and signed by the Borrower.


 


(c)           Each telephonic and written Interest
Election Request shall specify the following information in compliance with
Section 2.03:


 


(i)            the Borrowing to which such Interest
Election Request applies and, if different options are being elected with
respect to different portions thereof, the portions thereof to be allocated to
each resulting Borrowing (in which case the information to be specified
pursuant to clauses (iii) and (iv) below shall be specified for each resulting
Borrowing);


 


(ii)           the effective date of the election
made pursuant to such Interest Election Request, which shall be a Business Day;


 


(iii)          whether the resulting Borrowing is to
be an ABR Borrowing or a Eurodollar Borrowing; and


 


(iv)          if the resulting Borrowing is a
Eurodollar Borrowing, the Interest Period to be applicable thereto after giving
effect to such election, which shall be a period contemplated by the definition
of the term “Interest Period”.


 


(d)           If any such Interest Election Request
requests a Eurodollar Borrowing but does not specify an Interest Period, then
the Borrower shall be deemed to have selected an Interest Period of one month’s
duration.


 


(e)           Promptly following receipt of an
Interest Election Request, the Administrative Agent shall advise each Lender of
the details thereof and of such Lender’s portion of each resulting Borrowing.


 


(f)            If the Borrower fails to deliver a
timely Interest Election Request with respect to a Eurodollar Revolving
Borrowing prior to the end of the Interest Period applicable thereto, then,
unless such Borrowing is repaid as provided herein, at the end of such Interest
Period such Borrowing shall be converted to an ABR Borrowing.  Notwithstanding any contrary provision
hereof, if an Event of Default has occurred and is continuing and the Administrative
Agent, at the request of the Required Lenders, so


 


48

















 


notifies the Borrower, then,
so long as an Event of Default is continuing (i) no outstanding Revolving
Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless
repaid, each Eurodollar Revolving Borrowing shall be converted to an ABR
Borrowing and, at the end of the Interest Period applicable thereto.


 


Section 2.09.          Termination and Reduction of
Commitments; Increase in Revolving Commitments; Canadian Facility.  (a)  Unless previously terminated, the Commitments
shall terminate on the Maturity Date.


 


(b)           The Borrower may at any time
terminate the Commitments upon (i) the payment in full of all outstanding
Loans, together with accrued and unpaid interest thereon and on any Letters of
Credit, (ii) the cancellation and return of all outstanding Letters of Credit
(or alternatively, with respect to each such Letter of Credit, the furnishing
to the Administrative Agent of a cash deposit (or at the discretion of the Administrative
Agent a back up standby letter of credit satisfactory to the Administrative
Agent) equal to 103% of the LC Exposure as of such date), (iii) the payment in
full of the accrued and unpaid fees, and (iv) the payment in full of all
reimbursable expenses and other Obligations (other than any Unliquidated
Obligation) together with accrued and unpaid interest thereon.


 


(c)           The Borrower may from time to time
reduce the Revolving Commitments; provided that (i) each reduction of
the Revolving Commitments shall be in an amount that is an integral multiple of
$1,000,000 and not less than $5,000,000 and (ii) the Borrower shall not reduce
the Revolving Commitments if, after giving effect to any concurrent prepayment
of the Revolving Loans in accordance with Section 2.10, the sum of the
Revolving Exposures would exceed the lesser of the total Revolving Commitments
and the Borrowing Base.


 


(d)           The Borrower shall notify the
Administrative Agent of any election to terminate or reduce the Commitments
under paragraph (b) or (c) of this Section at least three Business Days prior
to the effective date of such termination or reduction, specifying such
election and the effective date thereof. 
Promptly following receipt of any notice, the Administrative Agent shall
advise the Lenders of the contents thereof. 
Each notice delivered by the Borrower pursuant to this Section shall be
irrevocable; provided that a notice of termination of the Commitments
delivered by the Borrower may state that such notice is conditioned upon the
effectiveness of other credit facilities, in which case such notice may be
revoked by the Borrower (by notice to the Administrative Agent on or prior to
the specified effective date) if such condition is not satisfied.  Any termination or reduction of the
Commitments shall be permanent.  Each
reduction of the Commitments shall be made ratably among the Lenders in
accordance with their respective Commitments.


 


(e)           The Borrower shall have the right to
increase the Revolving Commitment up to an aggregate amount of $25,000,000 by
obtaining additional Revolving Commitments, either from one or more of the
Lenders or other lending institutions provided that (i) any such request for an
increase shall be in a minimum amount of $10,000,000, (ii) the Borrower may make
a maximum of two such requests, (iii) the Administrative Agent has approved the
identity of any such new Lender, such approval not to be unreasonably withheld,
(iv) any such new Lender assumes all of the rights and obligations of a “Lender”
hereunder, and (v) the procedure described in Section 2.09(f) have been
satisfied.


 


(f)            Any amendment hereto for such an
increase or addition to the Revolving Commitments shall be in form and
substance reasonably satisfactory to the Administrative Agent and shall only
require the written signatures of the Administrative Agent, the Borrower and
the Lender(s) being added or increasing their Commitment, subject only to the
approval of all Lenders (other than any Canadian Lenders, in their capacities
as such) if any such increase would cause the Revolving Commitment to exceed
$150,000,000.  As a condition precedent
to such an increase, the Borrower shall


 


49

















 


deliver to the Administrative
Agent a certificate of each Loan Party (in sufficient copies for each Lender)
signed by an authorized officer of such Loan Party (i) certifying and attaching
the resolutions adopted by such Loan Party approving or consenting to such
increase, and (ii) in the case of the Borrower, certifying that, as of the
effective date of such increase, before and after giving effect to such
increase, (A) the representations and warranties contained in Article III and
the other Loan Documents are true and correct in all material respects, except
to the extent that such representations and warranties specifically refer to an
earlier date, in which case they are true and correct in all material respects
as of such earlier date, provided that any representation and warranty
that is qualified as to “materiality,” “Material Adverse Effect” or similar
language shall be true and correct in all respects on such date, and (B) no
Default exists.


 


(g)           Within a reasonable time after the
effective date of any increase, the Administrative Agent shall, and is hereby
authorized and directed to, revise the Commitment Schedule to reflect such
increase and shall distribute such revised Commitment Schedule to each of the
Lenders and the Borrower, whereupon such revised Commitment Schedule shall
replace the old Commitment Schedule and become part of this Agreement.  On the Business Day following any such
increase, all outstanding ABR Loans shall be reallocated among the Lenders
(including any newly added Lenders) in accordance with the Lenders’ respective
revised Applicable Percentages. 
Eurodollar Loans shall not be reallocated among the Lenders prior to the
expiration of the applicable Interest Period in effect at the time of any such
increase.


 


(h)           The Borrower shall have the right to
add a Canadian Borrower and to obtain Canadian Commitments, up to an aggregate
amount of $20,000,000, either from one or more of the Lenders or other lending
institutions; provided that (i) any such request for an increase shall
be in a minimum amount of $10,000,000, (ii) the Administrative Agent has approved
the identity of any such new lending institution, such approval not to be
unreasonably withheld, (iii) any such new lending institution assumes all of
the rights and obligations of a “Lender” under this Agreement (as amended
pursuant to Section 2.09(i)), (iv) the Canadian Facility is not guaranteed by,
or secured by any assets of, Holdings or any Domestic Subsidiary, (v) the
Canadian Facility has a final maturity date equal to or later than the Maturity
Date, (vi) the Canadian Facility shall not have representations and warranties
that are materially more restrictive in the aggregate than the representations
and warranties contained in this Agreement, unless otherwise agreed by the
Administrative Agent in its Permitted Discretion, (vii)  the Canadian Facility shall not have covenants
or events of default that are materially more restrictive than the covenants
and events of default contained in this Agreement, (viii) the Canadian Facility
shall otherwise have terms and conditions reasonably acceptable to the
Administrative Agent, as set forth in an amendment hereto in accordance with
Section 2.09(i) and (ix) no Default or Event of Default shall have occurred and
be continuing.


 


(i)            Any amendment hereto for such an
increase in, or addition of, Canadian Commitments shall be in form and
substance reasonably satisfactory to the Administrative Agent and shall only
require the written signatures of the Administrative Agent, the Borrower and
the Lender(s) providing Canadian Commitments pursuant to such amendment (any
such Lender, a “Canadian Lender”), subject only to the approval of all
Canadian Lenders if any such increase would cause the Canadian Commitments to
exceed $20,000,000.  As a condition
precedent to such an increase, the Borrower shall deliver to the Administrative
Agent a certificate of each Loan Party (in sufficient copies for each Lender)
signed by an authorized officer of such Loan Party (i) certifying and attaching
the resolutions adopted by such Loan Party approving or consenting to the
Canadian Facility or an increase in the Canadian Facility, and (ii) in the case
of the Borrower, certifying that, as of the effective date of such increase,
before and after giving effect to such increase, (A) the representations and
warranties contained in Article III and the other Loan Documents are true and
correct in all material respects, except to the extent that such
representations and warranties specifically refer to an earlier date, in which


 


50

















 


case they are true and correct
in all material respects as of such earlier date, provided that any
representation and warranty that is qualified as to “materiality,” “Material
Adverse Effect” or similar language shall be true and correct in all respects
on such date, and (B) no Default exists. 
The Administrative Agent, the Borrower and the Canadian Lenders may,
without the consent of any other Lenders, effect such amendments to this
Agreement and the other Loan Documents as may be necessary or appropriate, in
the opinion of the Administrative Agent, to effect the provisions of Section 2.09(h).


 


Section 2.10.          Repayment and Amortization of
Loans; Evidence of Debt.  (a) The Borrower hereby unconditionally promises to
pay (i) to the Administrative Agent for the account of each Lender (or
Swingline Lender) the then unpaid principal amount of each Revolving Loan (and
Swingline Loans) on the Maturity Date, (ii) to the Administrative Agent the
then unpaid amount of each Protective Advance on the earlier of the Maturity
Date and demand by the Administrative Agent, and (iii) to the Administrative
Agent the then unpaid principal amount of each Overadvance on the earlier of
the Maturity Date and the 30th day after such Overadvance is made.


 


(b)           At all times during a Cash Dominion Period,
on each Business Day, the Administrative Agent shall apply all funds credited
to the Collection Account the previous Business Day (whether or not immediately
available) first to prepay any Protective Advances and Overadvances that
may be outstanding, pro rata, second to prepay the Revolving Loans
(including Swingline Loans) with any such prepayment of the Revolving Loans
being ratable, and third to cash collateralize outstanding LC Exposure.


 


(c)           Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Loan made by
such Lender, including the amounts of principal and interest payable and paid
to such Lender from time to time hereunder.


 


(d)           The Administrative Agent shall
maintain accounts in which it shall record (i) the amount of each Loan made
hereunder, the Class and Type thereof and the Interest Period applicable
thereto, (ii) the amount of any principal or interest due and payable or to become
due and payable from the Borrower to each Lender hereunder and (iii) the amount
of any sum received by the Administrative Agent hereunder for the account of
the Lenders and each Lender’s share thereof.


 


(e)           The entries made in the accounts
maintained pursuant to paragraph (c) or (d) of this Section shall be prima
facie evidence of the existence and amounts of the obligations recorded
therein; provided that the failure of any Lender or the Administrative
Agent to maintain such accounts or any error therein shall not in any manner
affect the obligation of the Borrower to repay the Loans in accordance with the
terms of this Agreement.


 


(f)            Any Lender may request that Loans
made by it be evidenced by a promissory note. 
In such event, the Borrower shall prepare, execute and deliver to such
Lender a promissory note payable to the order of such Lender (or, if requested
by such Lender, to such Lender and its registered assigns) and in a form
reasonably satisfactory to the Administrative Agent.  Thereafter, the Loans evidenced by such
promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered
assigns).


 


Section 2.11.          Prepayment of Loans.  (a)  The Borrower shall have the right at any time
and from time to time to prepay any Borrowing in whole or in part, subject to
prior notice in accordance with paragraph (f) of this Section.


 


51
















 


(b)                                 Except for Overadvances permitted under Section 2.05, in the event
and on such occasion that the total Revolving Exposure exceeds the lesser of
(A) the aggregate Revolving Commitments, or (B) the Borrowing Base,
the Borrower shall prepay the Revolving Loans, LC Exposure and/or Swingline
Loans in an aggregate amount equal to such excess.


 


(c)                                  If any Asset Sale includes assets constituting ABL Collateral or any Net
Insurance/Condemnation Proceeds are received in respect of assets subject to an
Insurance/Condemnation Event including assets constituting ABL Collateral, then
a portion of the Net Asset Sale Proceeds or Net Insurance/Condemnation
Proceeds, as applicable, shall be applied to prepay the Revolving Loans, LC
Exposure and/or Swingline Loans in an aggregate amount equal to the net book
value of the assets constituting ABL Collateral that were sold in the Asset
Sale or in respect of which Net Insurance/Condemnation Proceeds were received.


 


(d)                                 If a Loan is prepaid pursuant to Section 2.11(a), (b) or (c) on
any day other than the last day of the Interest Period applicable thereto, the
Borrower shall also pay any amounts owing pursuant to Section 2.16.


 


(e)                                  All such amounts pursuant to Section 2.11(b) or (c) shall
be applied, first to prepay any Protective Advances and Overadvances
that may be outstanding, pro rata, second to prepay the Revolving Loans
(including Swingline Loans) without a corresponding reduction in the Revolving
Commitment and third to cash collateralize outstanding LC Exposure.


 


(f)                                    The Borrower shall notify the Administrative Agent (and, in the case of
prepayment of a Swingline Loan, the Swingline Lender) by telephone (confirmed
by facsimile) of any prepayment hereunder (i) in the case of prepayment of
a Eurodollar Revolving Borrowing, not later than 10:00 a.m., Chicago time,
three Business Days before the date of prepayment, or (ii) in the case of
prepayment of an ABR Revolving Borrowing, not later than 10:00 a.m.,
Chicago time, on the date of prepayment. 
Each such notice shall be irrevocable and shall specify the prepayment
date and the principal amount of each Borrowing or portion thereof to be
prepaid; provided that, if a notice of prepayment is given in connection
with a conditional notice of termination of the Commitments as contemplated by
Section 2.09, then such notice of prepayment may be revoked if such notice
of termination is revoked in accordance with Section 2.09.  Promptly following receipt of any such notice
relating to a Revolving Borrowing, the Administrative Agent shall advise the
Lenders of the contents thereof.   Each
partial prepayment of any Revolving Borrowing shall be in an amount that would
be permitted in the case of an advance of a Revolving Borrowing of the same
Type as provided in Section 2.02. 
Each prepayment of a Revolving Borrowing shall be applied ratably to the
Revolving Loans included in the prepaid Borrowing.  Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.13.


 


Section 2.12.                             Fees.  (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee, which
shall accrue at a rate equal to the Commitment Fee Rate on the average daily
amount of the Available Revolving Commitment of such Lender during the period
from and including the Effective Date to but excluding the date on which the
Lenders’ Revolving Commitments terminate. 
Accrued commitment fees shall be payable in arrears on each Fee Payment
Date and on the date on which the Revolving Commitments terminate, commencing
on the first such date to occur after the date hereof.  All commitment fees shall be computed on the
basis of a year of 360 days and shall be payable for the actual number of days
elapsed.


 


(b)                                 The Borrower agrees to pay (i) to the Administrative Agent for the
account of each Lender a participation fee with respect to its participations
in Letters of Credit, which shall accrue at the same Applicable Rate used to
determine the interest rate applicable to Eurodollar Revolving Loans


 


52

















 


on the average daily amount of
such Lender’s LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the
Effective Date to but excluding the later of the date on which such Lender’s
Revolving Commitment terminates and the date on which such Lender ceases to
have any LC Exposure, and (ii) to the applicable Issuing Banks a fronting
fee, which shall accrue at the rate of 0.125% per annum on the average daily
amount of the LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the
Effective Date to but excluding the later of the date of termination of the
Revolving Commitments and the date on which there ceases to be any LC Exposure,
as well as the Issuing Banks’ standard fees with respect to the issuance,
amendment, renewal or extension of any Letter of Credit or processing of
drawings thereunder.  Participation fees
and fronting fees accrued through and including the last day of each calendar
quarter shall be payable on each Fee Payment Date following such last day,
commencing on the first such date to occur after the Effective Date; provided
that all such fees shall be payable on the date on which the Revolving
Commitments terminate and any such fees accruing after the date on which the
Commitments terminate shall be payable on demand.  Any other fees payable to the Issuing Banks
pursuant to this paragraph shall be payable within 10 days after demand.  All participation fees and fronting fees
shall be computed on the basis of a year of 360 days and shall be payable for
the actual number of days elapsed.


 


(c)                                  The Borrower agrees to pay to the Administrative Agent, for its own
account, fees payable in the amounts and at the times set forth in the Fee
Letters.


 


(d)                                 All fees payable hereunder shall be paid on the dates due, in immediately
available funds, to the Administrative Agent (or to an Issuing Bank, in the
case of fees payable to it) for distribution, in the case of commitment fees
and participation fees, to the Lenders. 
Fees paid shall not be refundable under any circumstances.


 


Section 2.13.                             Interest.  (a) The Loans comprising each
ABR Borrowing (including each Swingline Loan) shall bear interest at the
Alternate Base Rate plus the Applicable Rate.


 


(b)                                 The Loans comprising each Eurodollar Borrowing shall bear interest at the
Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus
the Applicable Rate.


 


(c)                                  Each Protective Advance and each Overadvance shall bear interest at the
Alternate Base Rate plus the Applicable Rate for Revolving Loans plus 2%.


 


(d)                                 Notwithstanding the foregoing, during the occurrence and continuance of
an Event of Default, (i) all Loans shall bear interest at 2% plus the rate
otherwise applicable to such Loans as provided in the preceding paragraphs of
this Section or (ii) in the case of any other amount outstanding
hereunder, such amount shall bear interest at 2% plus the rate applicable to
ABR Loans, as provided in paragraph (a) of this Section.


 


(e)                                  Accrued interest on each Loan (for ABR Loans, accrued through the last
day of the prior quarter) shall be payable in arrears on each Interest Payment
Date for such Loan and upon termination of the Commitments; provided
that (i) interest accrued pursuant to paragraph (d) of this
Section shall be payable on demand, (ii) in the event of any
repayment or prepayment of any Loan (other than a prepayment of an ABR
Revolving Loan prior to the end of the Availability Period), accrued interest
on the principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar Loan prior to the end of the current Interest Period therefor, accrued
interest on such Loan shall be payable on the effective date of such
conversion.


 


53

















 


(f)                                    All interest hereunder shall be computed on the basis of a year of 360
days, except that interest computed by reference to the Alternate Base Rate at
times when the Alternate Base Rate is based on the Prime Rate shall be computed
on the basis of a year of 365 days (or 366 days in a leap year), and in each
case shall be payable for the actual number of days elapsed.  The applicable Alternate Base Rate, Adjusted
LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and
such determination shall be conclusive absent manifest error.


 


(g)                                 In the event that any Borrowing Base Certificate or related information
delivered pursuant to Section 5.01 is inaccurate (regardless of whether
this Agreement or the Revolving Commitments are in effect when such inaccuracy
is discovered), and such inaccuracy, if corrected, would have led to the
application of a higher Applicable Rate for any period than the Applicable Rate
actually used to determine interest rates for such period, then (a) the
Borrower shall promptly deliver to the Administrative Agent a corrected
Borrowing Base Certificate for such period, (b) the Applicable Rate for
such period shall be retroactively determined based on the average Availability
as set forth in the corrected Borrowing Base Certificate and (c) the
Borrower shall promptly pay to the Administrative Agent (for the account of the
Lenders during such period or their successors and assigns) the accrued
additional interest owing as a result of such increased Applicable Rate for
such period.  This
Section 2.13(g) shall not limit the rights of the Administrative
Agent under this Section 2.13 or Article VII, and shall survive the
termination of this Agreement.


 


Section 2.14.                             Alternate Rate
of Interest.  If prior to
the commencement of any Interest Period for a Eurodollar Borrowing:


 


(a)                                  the Administrative Agent determines (which determination shall be conclusive
absent manifest error) that adequate and reasonable means do not exist for
ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such
Interest Period; or


 


(b)                                 the Administrative Agent is advised by the Required Lenders that the
Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period
will not adequately and fairly reflect the cost to such Lenders (or Lender) of
making or maintaining their Loans (or its Loan) included in such Borrowing for
such Interest Period;


 


then
the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or facsimile as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Revolving Borrowing to, or
continuation of any Revolving Borrowing as, a Eurodollar Borrowing shall be
ineffective, and (ii) if any Borrowing Request requests a Eurodollar
Revolving Borrowing, such Borrowing shall be made as an ABR Borrowing.


 


Section 2.15.                             Increased Costs (a)  If
any Change in Law shall:


 


(i)                                     impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Lender (except any such reserve requirement reflected in the
Adjusted LIBO Rate) or any Issuing Bank;


 


(ii)                                  impose on any Lender or any Issuing Bank or the London interbank market
any other condition affecting this Agreement or Eurodollar Loans made by such
Lender or any Letter of Credit or participation therein; or


 


54

















 


(iii)                               subject any Lender or any Issuing Bank to any Tax of any kind whatsoever
with respect to this Agreement, any Letter of Credit, any Letter of Credit
application or notice requesting the issuance of a Letter of Credit, or any
Eurodollar Loan made by it, or change the basis of taxation of payments to such
Lender or Issuing Bank in respect thereof (except for Indemnified Taxes covered
by Section 2.17 and changes in the rate of tax on the overall net income
of such Lender or Issuing Bank);


 


and
the result of any of the foregoing shall be to increase the cost to such Lender
(or, in the case of (iii), to such Lender or Issuing Bank) of making or
maintaining any Eurodollar Loan (or, in the case of (iii), any Loans), or of
maintaining its obligation to make any such Loan, or to increase the cost to
such Lender or Issuing Bank of participating in, issuing or maintaining any
Letter of Credit or to reduce the amount of any sum received or receivable by
such Lender or Issuing Bank hereunder (whether of principal, interest or
otherwise), then the Borrower will pay to such Lender or Issuing Bank, as the
case may be, such additional amount or amounts as will compensate such Lender
or Issuing Bank, as the case may be, for such additional costs incurred or
reduction suffered.


 


(b)                                 If any Lender or Issuing Bank determines that any Change in Law regarding
capital requirements has or would have the effect of reducing the rate of
return on such Lender’s or Issuing Bank’s capital or on the capital of such
Lender’s or Issuing Bank’s holding company, if any, as a consequence of this
Agreement or the Loans made by, or participations in Letters of Credit held by,
such Lender, or the Letters of Credit issued by such Issuing Bank, to a level
below that which such Lender or Issuing Bank or such Lender’s or Issuing Bank’s
holding company could have achieved but for such Change in Law (taking into
consideration such Lender’s or Issuing Bank’s policies and the policies of such
Lender’s or Issuing Bank’s holding company with respect to capital adequacy),
then from time to time the Borrower will pay to such Lender or Issuing Bank, as
the case may be, such additional amount or amounts as will compensate such
Lender or Issuing Bank or such Lender’s or Issuing Bank’s holding company for
any such reduction suffered.


 


(c)                                  A certificate of a Lender or an Issuing Bank setting forth the amount or
amounts necessary to compensate such Lender or Issuing Bank or its holding
company, as the case may be, as specified in paragraph (a) or
(b) of this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error.  The
Borrower shall pay such Lender or Issuing Bank, as the case may be, the amount
shown as due on any such certificate within 10 days after receipt thereof.


 


(d)                                 Failure or delay on the part of any Lender or any Issuing Bank to demand
compensation pursuant to this Section shall not constitute a waiver of
such Lender’s or Issuing Bank’s right to demand such compensation; provided
that the Borrower shall not be required to compensate a Lender or Issuing Bank
pursuant to this Section for any increased costs or reductions incurred
more than 270 days prior to the date that such Lender or Issuing Bank, as the
case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender’s or Issuing Bank’s intention
to claim compensation therefor; provided  further that, if the
Change in Law giving rise to such increased costs or reductions is retroactive,
then the 270-day period referred to above shall be extended to include the
period of retroactive effect thereof.


 


Section 2.16.                             Break Funding
Payments.  In the
event of (a) the payment of any principal of any Eurodollar Loan other
than on the last day of an Interest Period applicable thereto (including as a
result of an Event of Default), (b) the conversion of any Eurodollar Loan
other than on the last day of the Interest Period applicable thereto,
(c) the failure to borrow, convert, continue or prepay any Eurodollar Loan
on the date specified in any notice delivered pursuant hereto (regardless of whether
such notice may be revoked under Section 2.09(d) and is revoked in
accordance therewith), or (d) the assignment of any Eurodollar Loan other
than on the last day of the Interest Period applicable


 


55

















 


thereto as a result of a request by the Borrower
pursuant to Section 2.19, then, in any such event, the Borrower shall
compensate each Lender for the loss, cost and expense attributable to such
event.  In the case of a Eurodollar Loan,
such loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the Adjusted LIBO Rate that would have been applicable
to such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period
for such Loan), over (ii) the amount of interest which would accrue on
such principal amount for such period at the interest rate which such Lender
would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the eurodollar
market.  A certificate of any Lender
setting forth any amount or amounts that such Lender is entitled to receive
pursuant to this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error.  The
Borrower shall pay such Lender the amount shown as due on any such certificate
within 10 days after receipt thereof.


 


Section 2.17.                             Taxes.  (a)  Any and all payments by or on
account of any obligation of any Loan Party hereunder or under any other Loan
Document shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if any Indemnified Taxes
or Other Taxes are required to be withheld from such payments, as determined in
good faith by the applicable Withholding Agent, then (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Administrative Agent, Lender or Issuing Bank (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been
made, (ii)  such deductions shall be made and such amounts shall be paid
to the relevant Governmental Authority in accordance with applicable law.


 


(b)                                 In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.


 


(c)                                  The Borrower shall indemnify the Administrative Agent, each Lender and any Issuing
Bank, within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender
or such Issuing Bank, as the case may be, on or with respect to any payment by
or on account of any obligation of the Borrower hereunder (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such Indemnified
Taxes or Other Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority.  A
certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender or an Issuing Bank, or by the Administrative Agent on its
own behalf or on behalf of a Lender or an Issuing Bank, shall be conclusive
absent manifest error.  In addition, as
soon as practicable after any payment of Indemnified Taxes or Other Taxes by
the applicable Loan Party to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy
of the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.


 


(d)                                 Each Lender and Issuing Bank shall indemnify the Administrative Agent for
the full amount of any Taxes that are attributable to such Lender or Issuing
Bank, as applicable, and that are payable or paid by the Administrative Agent,
together with all interest, penalties, reasonable costs and expenses arising
therefrom or with respect thereto, as determined by the Administrative Agent in
good faith. A certificate as to the amount of such payment or liability delivered
to any Lender or Issuing Bank by the Administrative Agent shall be conclusive
absent manifest error.


 


56

















 


(e)                                  Any Foreign Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by the Borrower, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding or at a
reduced rate. Without limiting the generality of the foregoing, in the event
that the Borrower is resident for tax purposes in the United States, any
Foreign Lender shall deliver to the Borrower and the Administrative Agent (in
such number of copies as shall be requested by the recipient) on or prior to
the date on which such Foreign Lender becomes a Lender under this Agreement or
under an Assignment and Assumption (and from time to time thereafter upon the
request of the Borrower or the Administrative Agent, but only if such Foreign
Lender is legally entitled to do so), whichever of the following is applicable
(together with any applicable underlying Internal Revenue Service forms):


 


(i)                                     duly completed copies of Internal Revenue Service Form W-8BEN claiming
eligibility for benefits of an income tax treaty to which the United States is
a party,


 


(ii)                                  duly completed copies of Internal Revenue Service Form W-8ECI,


 


(iii)                               in the case of a Foreign Lender claiming the benefits of the exemption
for portfolio interest under section 881(c) of the Code, (x) a
certificate to the effect that such Foreign Lender is not (A) a “bank”
within the meaning of section 881(c)(3)(A) of the Code, (B) a “10
percent shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of
the Code, or (C) a “controlled foreign corporation” described in section
881(c)(3)(C) of the Code and (y) duly completed copies of the
applicable Internal Revenue Service Form W-8, or


 


(iv)                              any other form prescribed by applicable law as a basis for claiming
exemption from or a reduction in United States Federal withholding tax duly
completed together with such supplementary documentation as may be prescribed
by applicable law to permit the Borrower and the Administrative Agent to
determine the withholding or deduction required to be made.


 


Any
Lender that is not a Foreign Lender shall deliver to the Borrower and the
Administrative Agent copies of Internal Revenue Service Form W-9 (in such
number of copies as shall be requested by the recipient) on or prior to the
date on which such Lender becomes a Lender under this Agreement or under an
Assignment and Assumption (and from time to time thereafter upon the request of
the Borrower or the Administrative Agent). 
Notwithstanding any other provision of this paragraph (e), a Lender
shall not be required to deliver any form pursuant to this paragraph that such
Lender is not legally able to deliver.


 


(f)                                    If the Administrative
Agent or a Lender determines, in its sole discretion, that it has received a refund
of any Taxes or Other Taxes as to which it has been indemnified by a Loan Party
or with respect to which a Loan Party has paid additional amounts pursuant to
this Section 2.17, it shall pay over such refund to the applicable Loan
Party (but only to the extent of indemnity payments made, or additional amounts
paid, by the applicable Loan Party under this Section 2.17 with respect to
the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Administrative Agent or such Lender and without interest (other
than any interest paid by the relevant Governmental Authority with respect to
such refund); provided, that the Loan Parties, upon the request of the
Administrative Agent or such Lender, agree to repay the amount paid over to the
Borrower (plus any


 


57

















 


penalties, interest or other
charges imposed by the relevant Governmental Authority) to the Administrative
Agent or such Lender in the event the Administrative Agent or such Lender is
required to repay such refund to such Governmental Authority. This paragraph
(f) shall not be construed to require the Administrative Agent or any
Lender to make available its tax returns (or any other information relating to
its taxes which it deems confidential) to any Loan Party or any other Person.


 


Section 2.18.                             Payments
Generally; Allocation of Proceeds; Sharing of Set-offs.  (a)  The Borrower shall make each
payment required to be made by them hereunder (whether of principal, interest,
fees or reimbursement of LC Disbursements, or of amounts payable under
Section 2.15, Section 2.16 or Section 2.17, or otherwise) prior
to 2:00 p.m., Chicago time, on the date when due, in immediately available
funds, without set-off or counterclaim. 
Any amounts received after such time on any date may, in the discretion
of the Administrative Agent, be deemed to have been received on the next
succeeding Business Day for purposes of calculating interest thereon.  All such payments shall be made to the
Administrative Agent at its offices at 120 South LaSalle Street,
Chicago, Illinois, except payments to be made directly to an Issuing Bank
or the Swingline Lender as expressly provided herein and except that payments
pursuant to Section 2.15, Section 2.16, Section 2.17 and 9.03
shall be made directly to the Persons entitled thereto.  The Administrative Agent shall distribute any
such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof.  If any payment hereunder shall be due on a
day that is not a Business Day, the date for payment shall be extended to the
next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such extension.  All payments hereunder shall be made in
dollars.  At all times during a Cash
Dominion Period, solely for purposes of determining the amount of Loans
available for borrowing purposes, checks (in addition to immediately available
funds applied pursuant to Section 2.10(b)) from collections of items of
payment and proceeds of any Collateral shall be applied in whole or in part
against the Obligations, on the Business Day after receipt, subject to actual
collection.


 


(b)                                 Any proceeds of Collateral received by the Administrative Agent
(i) not constituting either (A) a specific payment of principal,
interest, fees or other sum payable under the Loan Documents (which shall be
applied as specified by the Borrower), (B) a mandatory prepayment (which
shall be applied in accordance with Section 2.11) or (C) amounts to
be applied from the Collection Account during a Cash Dominion Period (which
shall be applied in accordance with Section 2.10(b)) or (ii) after an
Event of Default has occurred and is continuing and the Administrative Agent so
elects or the Required Lenders so direct, such funds shall be applied ratably first, to pay any
fees, indemnities, or expense reimbursements including amounts then due to the
Administrative Agent and the Issuing Banks from the Borrower (other than
Banking Services Obligations or Swap Obligations), second, to pay any fees or
expense reimbursements then due to the Lenders from the Borrower (other than
Banking Services Obligations or Swap Obligations), third, to pay interest due
in respect of the Overadvances and Protective Advances, fourth, to pay the
principal of the Overadvances and Protective Advances, fifth, to pay interest
then due and payable on the Loans (other than the Overadvances and Protective
Advances) ratably, sixth, to prepay principal on the Loans (other than the
Overadvances and Protective Advances) and unreimbursed LC Disbursements
ratably, seventh, to pay an amount to the Administrative Agent equal to one
hundred three percent (103%) of the aggregate undrawn face amount of all
outstanding Letters of Credit and the aggregate amount of any unpaid LC
Disbursements, to be held as cash collateral for such Obligations, eighth, to
payment of any amounts owing with respect to Secured Obligations that are
Banking Services Obligations and Swap Obligations, and ninth, to the payment of
any other Secured Obligation due to the Administrative Agent or any Lender by
the Borrower.  Notwithstanding anything to the contrary contained
in this Agreement, unless so directed by the Borrower, or unless a Default is
in existence, neither the Administrative Agent nor any Lender shall apply any
payment which it receives to any Eurodollar Loan of a Class, except (a) on
the expiration date of the Interest Period applicable to any such Eurodollar Loan
or (b) in the event, and only to the extent,


 


58

















 


that there are no outstanding ABR Loans of the same
Class and, in any such event, the Borrower shall pay the break funding
payment required in accordance with Section 2.16. The Administrative Agent
and the Lenders shall have the continuing and exclusive right to apply and
reverse and reapply any and all such proceeds and payments to any portion of
the Secured Obligations.


 


(c)                                  At the election of the Administrative Agent, all payments of principal,
interest, LC Disbursements, fees, premiums, reimbursable expenses (including,
without limitation, all reimbursement for fees and expenses pursuant to
Section 9.03), and other sums payable under the Loan Documents, may be
paid from the proceeds of Borrowings made hereunder whether made following a
request by the Borrower pursuant to Section 2.03 or a deemed request as
provided in this Section or may be deducted from any deposit account of
the Borrower maintained with the Administrative Agent.  The Borrower hereby irrevocably authorizes
(i) the Administrative Agent to make a Borrowing for the purpose of paying
each payment of principal, interest and fees as it becomes due hereunder or any
other amount due under the Loan Documents and agrees that all such amounts
charged shall constitute Loans (including Swingline Loans and Overadvances, but
such a Borrowing may only constitute a Protective Advance if it is to reimburse
costs, fees and expenses as described in Section 9.03) and that all such
Borrowings shall be deemed to have been requested pursuant to
Section 2.03, Section 2.04 or Section 2.05, as applicable and
(ii) the Administrative Agent to charge any deposit account of the
Borrower maintained with the Administrative Agent for each payment of
principal, interest and fees as it becomes due hereunder or any other amount
due under the Loan Documents.


 


(d)                                 If any Lender shall, by exercising any right of set-off or counterclaim
or otherwise, obtain payment in respect of any principal of or interest on any
of its Loans or participations in LC Disbursements resulting in such Lender
receiving payment of a greater proportion of the aggregate amount of its Loans
and participations in LC Disbursements and accrued interest thereon than the
proportion received by any other Lender, then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in the Loans
and participations in LC Disbursements of other Lenders to the extent necessary
so that the benefit of all such payments shall be shared by the Lenders ratably
in accordance with the aggregate amount of principal of and accrued interest on
their respective Loans and participations in LC Disbursements; provided
that (i) if any such participations are purchased and all or any portion
of the payment giving rise thereto is recovered, such participations shall be
rescinded and the purchase price restored to the extent of such recovery,
without interest, and (ii) the provisions of this paragraph shall not be
construed to apply to any payment made by the Borrower pursuant to and in
accordance with the express terms of this Agreement or any payment obtained by
a Lender as consideration for the assignment of or sale of a participation in
any of its Loans or participations in LC Disbursements to any assignee or
participant, other than to the Borrower or any Subsidiary or Affiliate thereof
(as to which the provisions of this paragraph shall apply).  The Borrower consents to the foregoing and
agrees, to the extent it may effectively do so under applicable law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against the Borrower rights of set-off and counterclaim with respect
to such participation as fully as if such Lender were a direct creditor of the
Borrower in the amount of such participation.


 


(e)                                  Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or an Issuing Bank hereunder that the
Borrower will not make such payment, the Administrative Agent may assume that
the Borrower has made such payment on such date in accordance herewith and may,
in reliance upon such assumption, distribute to the Lenders or such Issuing
Bank, as the case may be, the amount due. 
In such event, if the Borrower has not in fact made such payment, then
each of the Lenders or such Issuing Bank, as the case may be, severally agrees
to repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender or Issuing Bank with interest thereon, for each day
from and including the date such amount is distributed to it to but excluding
the date of


 


59

















 


payment to the Administrative
Agent, at the greater of the Federal Funds Effective Rate and a rate determined
by the Administrative Agent in accordance with banking industry rules on
interbank compensation.


 


(f)                                    If any Lender shall fail to make any payment required to be made by it
hereunder, then the Administrative Agent may, in its discretion
(notwithstanding any contrary provision hereof), apply any amounts thereafter
received by the Administrative Agent for the account of such Lender to satisfy such
Lender’s obligations hereunder until all such unsatisfied obligations are fully
paid.


 


Section 2.19.                             Mitigation
Obligations; Replacement of Lenders.  If any Lender requests compensation under
Section 2.15, or if the Borrower is required to pay any additional amount
to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 2.17, then:


 


(a)                                  such Lender shall use reasonable efforts to designate a different lending
office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 2.15 or Section 2.17,
as the case may be, in the future and (ii) would not subject such Lender
to any unreimbursed cost or expense and would not otherwise be disadvantageous
to such Lender (and the Borrower hereby agrees to pay all reasonable costs and
expenses incurred by any Lender in connection with any such designation or
assignment);


 


(b)                                 the Borrower may, at its sole expense and effort, require such Lender or
any Defaulting Lender (herein, a “Departing Lender”), upon notice to the
Departing Lender and the Administrative Agent, to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this
Agreement to an assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment); provided that
(i) the Borrower shall have received the prior written consent of the
Administrative Agent (and if a Revolving Commitment is being assigned, the
Issuing Banks), which consent shall not unreasonably be withheld, (ii) the
Departing Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and participations in LC Disbursements and
Swingline Loans, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder, from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Borrower (in the case of all
other amounts) and (iii) in the case of any such assignment resulting from
a claim for compensation under Section 2.15 or payments required to be
made pursuant to Section 2.17, such assignment will result in a reduction
in such compensation or payments.  A
Departing Lender shall not be required to make any such assignment and
delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Borrower to require such assignment
and delegation cease to apply.


 


Section 2.20.                             Defaulting
Lenders.  Notwithstanding any provision
of this Agreement to the contrary, if any Lender becomes a Defaulting Lender,
then the following provisions shall apply for so long as such Lender is a
Defaulting Lender:


 


(a)                                  fees shall
cease to accrue on the unfunded portion of the Commitment of such Defaulting
Lender pursuant to Section 2.12(a);


 


(b)                                 the Commitment and Credit Exposure of such Defaulting Lender shall not be
included in determining whether the Required Lenders have taken or may take any
action hereunder (including any consent to any amendment, waiver or other
modification pursuant to


 


60

















 


Section 9.02);
provided, that this clause (b) shall not apply to the vote of a
Defaulting Lender in the case of an amendment, waiver or other modification
requiring the consent of such Lender or each Lender affected thereby;


 


(c)                                  if any Swingline Loans, Protective Advances or Overadvances are
outstanding or LC Exposure exists at the time such Lender becomes a Defaulting
Lender then:


 


(i)                                     all or any part of the Swingline Exposure, Protective Advance Exposure,
Overadvance Exposure and LC Exposure of such Defaulting Lender shall be
reallocated among the non-Defaulting Lenders in accordance with their
respective Applicable Percentages but only to the extent the sum of all
non-Defaulting Lenders’ Credit Exposures does not exceed the total of all
non-Defaulting Lenders’ Commitments,


 


(ii)                                  if the reallocation described in clause (i) above cannot, or can
only partially, be effected, the Borrower shall within one Business Day
following notice by the Administrative Agent (x) first, prepay such
Overadvance Exposure and Protective Advance Exposure, (y) second, prepay
such Swingline Exposure and (z) third, cash collateralize for the benefit
of the Issuing Banks only the Borrower’s obligations corresponding to such
Defaulting Lender’s LC Exposure (after giving effect to any partial
reallocation pursuant to clause (i) above) in accordance with the
procedures set forth in Section 2.06(j) for so long as such LC
Exposure is outstanding;


 


(iii)                               if the Borrower cash collateralizes any portion of such Defaulting Lender’s
LC Exposure pursuant to clause (ii) above, the Borrower shall not be
required to pay any fees to such Defaulting Lender pursuant to
Section 2.12(b) with respect to such Defaulting Lender’s LC Exposure during
the period such Defaulting Lender’s LC Exposure is cash collateralized;


 


(iv)                              if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant
to clause (i) above, then the fees payable to the Lenders pursuant to
Section 2.12(a) and Section 2.12(b) shall be adjusted in
accordance with such non-Defaulting Lenders’ Applicable Percentages; and


 


(v)                                 if all or any portion of such Defaulting Lender’s LC Exposure is neither
reallocated nor cash collateralized pursuant to clause (i) or
(ii) above, then, without prejudice to any rights or remedies of any
Issuing Bank or any other Lender hereunder, all letter of credit fees payable
under Section 2.12(b) with respect to such Defaulting Lender’s LC
Exposure shall be payable to the applicable Issuing Bank until and to the
extent that such LC Exposure is reallocated and/or cash collateralized; and


 


(d)                                 so long as such Lender is a Defaulting Lender, the Swingline Lender shall
not be required to fund any Swingline Loan and the Issuing Banks shall not be
required to issue, amend or increase any Letter of Credit, unless it is
satisfied that the related exposure and the Defaulting Lender’s then
outstanding LC Exposure will be 100% covered by the Commitments of the
non-Defaulting Lenders and/or cash collateral will be provided by the Borrower
in accordance with Section 2.20(c), and participating interests in any
newly made Swingline Loan or any newly issued or increased Letter of Credit
shall be allocated among non-Defaulting Lenders in a manner consistent with
Section 2.20(c)(i) (and such Defaulting Lender shall not participate
therein).


 


61

















 


If
(i) a Bankruptcy Event with respect to a Parent Entity of any Lender shall
occur following the date hereof and for so long as such event shall continue or
(ii) the Swingline Lender or an Issuing Bank has a reasonable belief that
any Lender has defaulted in fulfilling its material obligations under one or
more other agreements in which such Lender commits to extend credit, the Swingline
Lender shall not be required to fund any Swingline Loan and such Issuing Bank
shall not be required to issue, amend or increase any Letter of Credit, unless
the Swingline Lender or such Issuing Bank, as the case may be, shall have
entered into arrangements with the Borrower or such Lender, reasonably
satisfactory to the Swingline Lender or such Issuing Bank, as the case may be,
to defease any risk to it in respect of such Lender hereunder.


 


In
the event that the Administrative Agent, the Borrower, the Swingline Lender and
the Issuing Banks each agrees that a Defaulting Lender has adequately remedied
all matters that caused such Lender to be a Defaulting Lender, then the
Swingline Exposure, Protective Advance Exposure, Overadvance Exposure and LC Exposure
of the Lenders shall be readjusted to reflect the inclusion of such Lender’s
Commitment and on such date such Lender shall purchase at par such of the Loans
of the other Lenders (other than Swingline Loans) as the Administrative Agent
shall determine may be necessary in order for such Lender to hold such Loans in
accordance with its Applicable Percentage.


 


Section 2.21.                             Returned
Payments.  If after
receipt of any payment which is applied to the payment of all or any part of
the Obligations, the Administrative Agent or any Lender is for any reason
compelled to surrender such payment or proceeds to any Person because such
payment or application of proceeds is invalidated, declared fraudulent, set
aside, determined to be void or voidable as a preference, impermissible setoff,
or a diversion of trust funds, or for any other reason, then the Obligations or
part thereof intended to be satisfied shall be revived and continued and this
Agreement shall continue in full force as if such payment or proceeds had not
been received by the Administrative Agent or such Lender.  The provisions of this Section 2.21
shall be and remain effective notwithstanding any contrary action which may
have been taken by the Administrative Agent or any Lender in reliance upon such
payment or application of proceeds.  The
provisions of this Section 2.21 shall survive the termination of this
Agreement.


 


ARTICLE III




Representations and Warranties


 


Each
Loan Party represents and warrants to the Lenders that:


 


Section 3.01.                             Organization;
Powers.  Each of the Loan Parties and
each of its Subsidiaries is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, has all
requisite power and authority to carry on its business as now conducted and,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, is qualified to
do business in, and is in good standing in, every jurisdiction where such
qualification is required.


 


Section 3.02.                             Authorization;
Enforceability.  The
Transactions are within each Loan Party’s corporate powers and have been duly
authorized by all necessary corporate and, if required, by all necessary
shareholder action.  This Agreement and
each of the other Loan Documents have been duly executed and delivered by each
Loan Party party thereto and constitutes, or when executed and delivered by
such Loan Party will constitute, a legal, valid and binding obligation of such
Loan Party, enforceable against such Loan Party in accordance with its terms,
except as such enforceability may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or similar laws of general applicability
affecting the


 


62

















 


enforcement of creditors’ rights and (b) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).


 


Section 3.03.                             Governmental
Approvals; No Conflicts.  The
Transactions (a) do not require any consent or approval of, registration
or filing with, or any other action by, any Governmental Authority, except for
(i) such as have been obtained or made and are in full force and effect
and (ii) filings and recordings in respect of the Liens created pursuant
to the Loan Documents and the Term Loan Documents, (b) will not violate in
any material respect any Requirement of Law, (c) will not violate in any
material respect or result in a material default under any Contractual Obligation
upon any Loan Party or any of its Subsidiaries or their assets, or give rise to
a right thereunder to require any payment to be made by any such Person and
(d) except for the Liens created pursuant to the Loan Documents and the
Term Loan Documents, will not result in the creation or imposition of any Lien
on any asset of any Loan Party or any of its Subsidiaries.


 


Section 3.04.                             Financial
Condition; No Material Adverse Effect; Projections.


 


(a)                                  The Historical Financial Statements were prepared in conformity with GAAP
and fairly present, in all material respects, the financial position, on a
consolidated basis, of the Persons described in such financial statements as of
the respective dates thereof and the results of operations and cash flows, on a
consolidated basis, of the Persons described in such financial statements for
each of the periods then ended, subject, in the case of any such unaudited
financial statements, to changes resulting from audit and normal year-end
adjustments and the absence of footnotes. 
As of the Effective Date, neither Holdings nor any of its Subsidiaries
has any contingent liability or liability for Taxes, any long-term lease or any
unusual forward or long-term commitment that is not reflected in the Historical
Financial Statements or the notes thereto and that in any such case is material
in relation to the business, operations, properties, assets or financial
condition of Holdings and any of its Subsidiaries taken as a whole.


 


(b)                                 The Pro Forma Financial Statements (i) have been prepared by
Borrower in good faith, based on assumptions believed by Borrower on the date
hereof to be reasonable, (ii) accurately reflect in all material respects
all adjustments necessary to give effect to the Transactions and
(iii) present fairly, in all material respects, the pro forma financial
position, results of operations and cash flows of Holdings and its Subsidiaries
as of the date and for the period specified therein as if the Transactions had
occurred on such date or at the beginning of such period, as the case may be.


 


(c)                                  Since September 30, 2009, there has not occurred any event,
development or circumstance that has had or could reasonably be expected to
have a Material Adverse Effect.


 


(d)                                 The projections of Holdings and its Subsidiaries for the period of fiscal
year 2010 through and including fiscal year 2015 (the “Projections”)
were prepared in good faith based upon assumptions that were believed by the
Loan Parties to be reasonable on and as of the Effective Date (it being
understood that (a) such Projections are subject to significant
uncertainties and contingencies, many of which are beyond the control of the
Loan Parties, (b) no assurances can be given that such Projections will be
realized and (c) the actual results may vary from the results projected
therein and such variances may be material).


 


Section 3.05.                             Properties.


 


(a)                                  As of the date of this Agreement, Schedule 3.05 sets forth the
address of each parcel of real property that is located in the United States
and is owned or leased by the Loan Parties. 
Each of such leases and subleases is valid and enforceable in all
material respects in accordance with its


 


63

















 


terms and is in full force and
effect in all material respects (except to the extent enforcement may be
affected by laws relating to bankruptcy, reorganization, insolvency and
creditor’s rights and by the availability of injunctive relief, specific
performance and other equitable remedies), and to the Loan Parties’ knowledge,
no default by any party to any such lease or sublease exists.  Each of the Loan Parties and its Subsidiaries
has good title to, or valid leasehold interests in, all its real and personal
property material to its business, subject only to Liens permitted by Section 6.02
and except for minor defects in title that do not materially interfere with its
ability to conduct its business as currently conducted.


 


(b)                                 Each Loan Party and its Subsidiaries has valid title to all Intellectual
Property owned by such party which is material to its business (“Company
Intellectual Property”).  All
agreements under which a Loan Party or its Subsidiaries are licensed or
otherwise authorized to use any Intellectual Property owned by a third party
and all agreements under which a third party is licensed or otherwise
authorized to use the Company Intellectual Property are valid and in full force
and effect in all material respects.  Schedule
3.05 sets forth a correct and complete list of all registrations and
applications to register such Company Intellectual Property, as of the date of
this Agreement, and, to the Loan Parties’ knowledge, the use of the Company
Intellectual Property by the Loan Parties and their Subsidiaries and the
conduct of their businesses does not infringe upon the Intellectual Property
rights of any other Person except for any such infringements that, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect.


 


Section 3.06.                             Litigation and
Environmental Matters.


 


(a)                                  There are no actions, suits or proceedings by or before any arbitrator or
Governmental Authority now pending against or, to the knowledge of such Loan
Party, threatened against or affecting any Loan Parties or any of their
Subsidiaries that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect (other
than the Disclosed Matters) or that involve this Agreement or the Transactions.


 


(b)                                 Except for the Disclosed Matters and except with respect to any other
matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, no Loan Party nor any of its
Subsidiaries (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received written notice of any claim with respect to
any Environmental Liability or (iv) has actual knowledge of any event or
circumstance which is reasonably expected to give rise to any Environmental
Liability.


 


(c)                                  Since the date of this Agreement, there has been no change in the status
of the Disclosed Matters that, individually or in the aggregate, has resulted
in, or materially increased the likelihood of, a Material Adverse Effect.  No Default has occurred or is continuing.


 


Section 3.07.                             Compliance with
Laws and Contractual Obligations.  Each Loan Party and its Subsidiaries is in
compliance with all Requirements of Law applicable to it or its property and
all Contractual Obligations binding upon it or its property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.


 


Section 3.08.                             Investment
Company Status.  No Loan
Party nor any of its Subsidiaries is an “investment company” as defined in, or
subject to regulation under, the Investment Company Act of 1940.


 


64
















 


Section 3.09.                             Taxes.  Each Loan Party and its Subsidiaries has
timely filed or caused to be filed all tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which such Person has set aside on its books
adequate reserves or (b) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.


 


Section 3.10.                             ERISA; Employee
Benefit Plans.


 


(a)                                  No ERISA Event has occurred or is reasonably expected to occur that, when
taken together with all other such ERISA Events for which liability is
reasonably expected to occur, could reasonably be expected to result in a
Material Adverse Effect.  The present value of all accumulated
benefit obligations under each Plan did not, as of the date of the most recent
actuarial valuation report required to be prepared under the Code and ERISA
reflecting such amounts, exceed by more than $50,000,000 (calculated on an
actuarial valuation basis) the fair market value of the assets of such Plan,
and the present value of all accumulated benefit obligations of all underfunded
Plans did not, as of the date of the most recent actuarial valuation report
required to be prepared under the Code and ERISA reflecting such amounts,
exceed by more than $50,000,000 (calculated on an actuarial valuation basis)
the fair market value of the assets of all such underfunded Plans.


 


(b)                                 Except as could not reasonably be expected to have a Material Adverse
Effect, the accrued benefit obligations of each Foreign Plan (based on those
assumptions used to fund such Foreign Plan) with respect to all current and
former participants do not exceed the assets of such Foreign Plan.


 


Section 3.11.                             Disclosure.  Each Loan Party has disclosed to the Lenders
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.  None of the
reports, financial statements, certificates or other information furnished by
or on behalf of any Loan Party to the Administrative Agent or any Lender in
connection with the negotiation of this Agreement and the other Loan Documents
or delivered hereunder or thereunder (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.  Any projections and pro forma financial
information contained in such materials are based upon good faith estimates and
assumptions believed by the Borrower to be reasonable at the time made, it
being understood that (a) any projected financial information is subject
to significant uncertainties and contingencies, many of which are beyond the
control of the Loan Parties, (b) no assurances can be given that such
projected financial information will be realized and (c) the actual
results may vary from the results projected therein and such variances may be
material.


 


Section 3.12.                             Use of Credit.  No Loan Party nor any of its Subsidiaries is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose, whether immediate, incidental or ultimate, of
buying or carrying Margin Stock, and no part of the proceeds of any extension
of credit hereunder will be used to buy or carry any Margin Stock.


 


Section 3.13.                             Burdensome
Agreements.  Except as
set forth on Schedule 3.13, to such Loan Party’s knowledge, no Loan
Party nor any of its Subsidiaries is a party to or bound by, nor are any of the
properties or assets owned by any Group Member used in the conduct of their
respective businesses affected by, any agreement, ordinance, resolution,
decree, bond, note, indenture, order or


 


65

















 


judgment, including, without limitation, any of the
foregoing relating to any Environmental Liability, that could reasonably be
expected to result in a Material Adverse Effect.


 


Section 3.14.                             Insurance.  Schedule 3.14 sets forth a
description of all insurance maintained by or on behalf of the Loan Parties and
their Subsidiaries as of the Effective Date. 
As of the Effective Date, all premiums in respect of such insurance have
been paid.  The Borrower believes that
the insurance maintained by or on behalf of the Borrower and its Subsidiaries
is reasonably adequate.


 


Section 3.15.                             Capitalization
and Subsidiaries.  Schedule
3.15 sets forth (a) a correct and complete (in all material respects)
list of the name and relationship to Holdings of each and all of Holdings’ Subsidiaries,
(b) a true and complete (in all material respects) listing of each class
of each of the Borrower’s authorized Equity Interests, of which all of such
issued shares are validly issued, outstanding, fully paid and non-assessable,
and owned beneficially and of record by the Persons identified on Schedule
3.15, and (c) the type of entity of Holdings and each of its
Subsidiaries.  All of the issued and
outstanding Equity Interests owned by any Loan Party have been (to the extent
such concepts are relevant with respect to such ownership interests) duly
authorized and issued and are fully paid and non-assessable.


 


Section 3.16.                             Labor Matters.  Except as set forth on Schedule 3.16,
(a) no collective bargaining agreement or other labor contract to which any
Loan Party or any of its Subsidiaries is a signatory will expire during the
term of this Agreement, (b) to such Loan Party’s knowledge, no union or
other labor organization is seeking to organize, or to be recognized as
bargaining representative for, a bargaining unit of employees of any Loan Party
or any of its Subsidiaries, (c) there is no pending or, to such Loan
Party’s knowledge, threatened strike, work stoppage, material unfair labor
practice claim or charge, arbitration or other material dispute with any union
or other labor organization affecting any Loan Party or any of its Subsidiaries
or its union-represented employees, in each case the consequences of which
could reasonably be expected to affect aggregate business (regardless of
division or entity) of the Loan Parties and their Subsidiaries which business
generated gross revenues in excess of $50,000,000 individually or in the
aggregate in the prior fiscal year, (d) there are no actions, suits,
charges, demands, claims, counterclaims or proceedings pending or, to the best
of such Loan Party’s knowledge, threatened against any Loan Party or any of its
Subsidiaries, by or on behalf of, or with, its employees, other than any such
actions, suits charges, demands, claims, counterclaims or proceedings arising
in the ordinary course of business that could not reasonably be expected to
result in a Material Adverse Effect.


 


Section 3.17.                             Security
Interest in Collateral. 
(a) The Security Agreement is effective to create in favor of the
Administrative Agent, for the benefit of the Secured Parties, a legal, valid
and enforceable security interest under the laws of the United States in the
Collateral as further described therein and proceeds thereof.  In the case of: (i) the Pledged
Collateral constituting Equity Interests, which are securities for the purposes
of the UCC and are evidenced by certificates, when certificates representing
such Pledged Collateral constituting Equity Interests are delivered to the
Administrative Agent, (ii) other Collateral as further described in the
Security Agreement, when financing statements and other filings specified on Schedule
3.17 in appropriate form are filed in the offices specified on Schedule
3.17, (iii) property acquired after the date hereof any other action
required pursuant to Section 5.13, the security interest created pursuant
to the Security Agreement shall constitute valid perfected security interests
under the laws of the United States in such Collateral and the proceeds thereof
(to the extent a security interest in such Collateral can be perfected through
the filing of such financing statements, the delivery of such Pledged
Collateral constituting Equity Interests, the taking of such actions required
pursuant to Section 5.13, as security for the Secured Obligations, in each
case prior and superior in right to any other Person (except Liens permitted by
Section 6.02).


 


66

















 


(b)                                 Each of the Mortgages is effective to create in favor of the
Administrative Agent, for the benefit of the Secured Parties, a legal, valid
and enforceable Lien on the Mortgaged Properties described therein and proceeds
thereof, and when the Mortgages are filed in the offices specified on Schedule
3.17, each such Mortgage shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the Loan Parties in the
Mortgaged Properties and the proceeds thereof, as security for the Secured
Obligations, in each case prior and superior in right to any other Person (other
than the Term Loan Administrative Agent).


 


Section 3.18.                             Holdings.  Holdings is a newly formed special purpose
wholly-owned Subsidiary of the Parent whose business and assets consist
exclusively of ownership of Equity Interests of the Borrower.


 


Section 3.19.                             Solvency.  Each Loan Party is on the Effective Date,
before and after the consummation of the Transactions to occur on the Effective
Date, Solvent.


 


Section 3.20.                             No Restricted
Payments.  Since
September 30, 2009, neither Holdings nor any of its Subsidiaries has
directly or indirectly declared, ordered, paid or made, or set apart any sum or
property for, any Restricted Payment or agreed to do so except as permitted
pursuant to the Existing Credit Agreement.


 


Section 3.21.                             Related
Agreements.  (a) Holdings
and the Borrower have delivered to Administrative Agent complete and correct
copies of each Related Agreement and of all exhibits and schedules thereto as
of the date hereof.


 


(b)                                 On the Effective Date, (i) all of the conditions to effecting or
consummating the Acquisition set forth in the Related Agreements have been duly
satisfied or, with the consent of Administrative Agent (if required hereunder),
waived, and (ii) the Acquisition has been consummated in accordance in all
material respects with the Related Agreements and all applicable laws.


 


Section 3.22.                             Patriot Act
Compliance.  To the
extent applicable, each Loan Party is in compliance, in all material respects,
with (i) the Trading with the Enemy Act, as amended, and each of the
foreign assets control regulations of the United States Treasury Department (31
CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or
executive order relating thereto, and (ii) the Act.  No part of the proceeds of the Loans will be
used, directly or indirectly, for any payments to any governmental official or
employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in
violation of the United States Foreign Corrupt Practices Act of 1977, as
amended.


 


ARTICLE IV




Conditions


 


Section 4.01.                             Closing.  The obligations of the Lenders to make Loans
and of the Issuing Banks to issue Letters of Credit shall not become effective
until the date on which each of the following conditions is satisfied (or
waived in accordance with Section 9.02):


 


(a)                                  Credit Agreement and Loan Documents.  The Administrative Agent (or its counsel)
shall have received (i) (A) from each party hereto either (1) a
counterpart of this Agreement signed on behalf of such party or
(2) written evidence reasonably satisfactory to the Administrative Agent
(which may include facsimile or electronic mail transmission of a signed


 


67

















 


signature
page of this Agreement) that such party has signed a counterpart of this
Agreement and (B) from the Required Lenders (as defined in the Existing
Credit Agreement) either (1) a counterpart of this Agreement signed on
behalf of such party or (2) written evidence reasonably satisfactory to
the Administrative Agent (which may include facsimile or electronic mail
transmission of a signed consent) that such party has consented to the
amendment and restatement of the Existing Credit Agreement in the form of this
Agreement and (ii) duly executed copies of the Loan Documents and such
other certificates, documents, instruments and agreements as the Administrative
Agent shall reasonably request in connection with the transactions contemplated
by this Agreement and the other Loan Documents, including any promissory notes
requested by a Lender pursuant to Section 2.10 payable to the order of
each such requesting Lender.


 


(b)                                 Financial Statements and Projections.  The Administrative Agent shall have received
from Holdings (i) the Historical Financial Statements, each certified by a
Financial Officer of the Borrower as presenting fairly in all material respects
the financial condition and results of operations of Holdings and its
Subsidiaries or ATT and its subsidiaries, as applicable, in each case on a
consolidated basis in accordance with GAAP, subject to normal year-end audit
adjustments and the absence of footnotes and which (x) in the case of the
financial statements referred to in clause (a) of the definition of
“Historical Financial Statements”, shall have been delivered not fewer than 30
Business Days prior to the Effective Date and (y) in the case of the
financial statements referred to in clause (b) of the definition of
“Historical Financial Statements”, shall have been delivered not fewer than 30
days after the last day of the relevant period, and (ii) the pro forma
consolidated balance sheet and related consolidated statement of operations of
Holdings and its Subsidiaries as of the end of or for the period of twelve
consecutive months ending on the last day of the most recently ended fiscal
quarter or calendar month for which financial statements or “flash reports”
have been delivered pursuant to clause (i) above, prepared after giving
effect to the Transactions, which pro forma financial statements shall be in
form and substance satisfactory to Administrative Agent and which shall have
been delivered concurrently with the financial statements or “flash reports” delivered
pursuant to clause (i) above.


 


(c)                                  Closing Certificates; Certified Certificate of Incorporation; Good
Standing Certificates.  The Administrative Agent shall have received
(i) a certificate of each Loan Party, dated the Effective Date and
executed by its Secretary, Assistant Secretary or Financial Officer, which
shall (A) certify the resolutions of its Board of Directors, members or
other body authorizing the execution, delivery and performance of the Loan
Documents to which it is a party, (B) identify by name and title and bear
the signatures of the Financial Officers and any other officers of such Loan
Party authorized to sign the Loan Documents to which it is a party, and
(C) contain appropriate attachments, including the certificate or articles
of incorporation or organization of each Loan Party certified by the relevant
authority of the jurisdiction of organization of such Loan Party and a true and
correct copy of its by-laws or operating, management or partnership agreement,
and (ii) a long form good standing certificate for each Loan Party from
its jurisdiction of organization.


 


(d)                                 Effective Date Certificate.  The Administrative Agent shall have received
an Effective Date Certificate, duly executed by Holdings and the Borrower,
together with all attachments thereto.


 


(e)                                  Fees.  (i) The Borrower shall have
(i) paid to the Administrative Agent, the Arrangers and the Lenders all
costs, fees, expenses and amounts (including, without limitation, legal fees
and expenses) due and payable on or before the Effective Date pursuant to the


 


68

















 


Commitment
Letter or the Loan Documents, (ii) prepaid all Loans outstanding under
(and as defined in) the Existing Credit Agreement (and all accrued and unpaid
interest thereon) and (iii) paid all accrued and unpaid commitment fees
and letter of credit fees under the Existing Credit Agreement, accrued to (but
not including) the Effective Date.


 


(f)                                    Lien Searches.  The Administrative Agent shall have received
the results of a recent lien search in each of the jurisdictions of
organization of each of the Loan Parties and where any of the Mortgaged
Properties is located, and such search results shall reveal no liens on any of
the assets of the Loan Parties except for liens permitted by Section 6.02
or discharged on or prior to the Effective Date pursuant to a pay-off letter or
other documentation satisfactory to the Administrative Agent.


 


(g)                                 Acquisition.  (i) All conditions to the Acquisition
set forth in the Acquisition Agreement shall have been satisfied or the
fulfillment of any such conditions shall have been waived and (ii) the
Acquisition shall have been, or substantially simultaneously with the
effectiveness of this Agreement, shall be, consummated in accordance with the terms
of the Acquisition Agreement, in each case without giving effect to any
amendment, supplement, modification or waiver of any term or condition of the
Acquisition Agreement, or any consent under the Acquisition Agreement, that in
the reasonable judgment of the Administrative Agent is adverse in any material
respect to the Lenders or any Arranger in their capacities as such, unless
approved by the Administrative Agent.


 


(h)                                 Existing Indebtedness.  On the Effective Date, the Administrative
Agent shall have received evidence reasonably satisfactory to it that
(i) to the extent the Senior Notes are not purchased and retired on or
before the Effective Date pursuant to tender offers for the Senior Notes,
(A) irrevocable notices of redemption for the Senior Notes not tendered
shall have been, or substantially simultaneously with the effectiveness of this
Agreement will be, given to the holders of such Senior Notes to redeem the
Senior Notes on or about 30 days following the Effective Date (the “Senior
Notes Redemption Date”) and (B) the conditions to achieve a Covenant
Defeasance of the Senior Notes pursuant to the Senior Notes Indentures have
been, or substantially simultaneously with the effectiveness of this Agreement
will be, satisfied; provided that, with respect to the Floating
Rate Notes, a Covenant Defeasance shall not be required if, prior to or
substantially simultaneously with the effectiveness of this Agreement,
(1) the Floating Rate Supplemental Indenture shall have become effective
and (2) cash in dollars shall have been deposited with the trustee under
the Floating Rate Indenture in an amount, reasonably estimated by the Borrower
(and reasonably approved by the Administrative Agent), sufficient to satisfy
the requirements of Section 8.04(a)(i) of the Floating Rate
Indenture; and (ii) all principal, premium, if any,
interest, fees and other amounts due or outstanding under the Existing Debt
Agreements (other than under the Senior Notes Indentures and other than with
respect to any outstanding letters of credit collateralized in a manner
satisfactory to the Administrative Agent) shall have been paid in full, the
commitments to lend or make other extensions of credit thereunder terminated
and all guarantees and security in support thereof discharged and released.  The Administrative Agent shall have received
evidence reasonably satisfactory to it (i) that, immediately after giving
effect to the Transactions, none of Holdings or any of its Subsidiaries shall
have any Indebtedness other than the Indebtedness created under this Agreement,
the Indebtedness created under the Term Loan Credit Agreement and the
Indebtedness set forth on Schedule 6.01(a) and (ii) that,
immediately after giving effect to the Transactions, there will not be exist
any default or any event of default under any of the documents governing the
Indebtedness set forth on Schedule 6.01(a).


 


69

















 


(i)                                     Material Adverse Effect.  Since September 30, 2009 (with respect
to Holdings and its Subsidiaries immediately prior to the Acquisition) and
since October 3, 2009 (with respect to the Target and its Subsidiaries),
there shall not have occurred any Combined Material Adverse Effect.  Since October 3, 2009, there shall not
have occurred any Company Material Adverse Effect.


 


(j)                                     Funding Accounts.  The Administrative Agent shall have received
a notice setting forth the deposit account(s) of the Borrower (the “Funding
Accounts”) to which the Lender is authorized by the Borrower to transfer
the proceeds of any Borrowings requested or authorized pursuant to this
Agreement.


 


(k)                                  Customer List.  The Administrative Agent shall have received
a true and complete list of customers of each Loan Party (other than with
respect to any customer whose accounts shall not exceed $25,000 in the
aggregate during the twelve months preceding the date hereof).


 


(l)                                     Specified Representations.  The Specified Representations shall be true
and correct on and as of the Effective Date in all material respects; provided
that, any representation and warranty that is qualified as to “materiality,”
“Material Adverse Effect” or similar language shall be true and correct in all
respects on such date.


 


(m)                               Solvency.  The Administrative Agent shall have received
a satisfactory solvency certificate signed by a Financial Officer of the
Borrower and each Guarantor, in form, scope and substance reasonably
satisfactory to the Administrative Agent and certifying that after giving
effect to the consummation of the Acquisition and the other Transactions and
any rights of contribution, such Loan Party will be Solvent.


 


(n)                                 Borrowing Base Certificate.  The Administrative Agent shall have received
a Borrowing Base Certificate which calculates the Borrowing Base as of the end of the month immediately preceding the
Effective Date.


 


(o)                                 Closing Availability.  After giving effect to the Transactions, and
with all of the Loan Parties’ indebtedness, liabilities, and obligations
current (other than in the ordinary course of business), the Borrower’s
Availability plus (without duplication)
Unrestricted Cash of the Borrower and its domestic Subsidiaries shall not be
less than $50,000,000.


 


(p)                                 Collateral and Guarantee Requirement.  The Collateral and Guarantee Requirement
shall have been satisfied; provided that if, notwithstanding the use by
the Loan Parties of commercially reasonable efforts to cause the Collateral and
Guarantee Requirement to be satisfied on the Effective Date, the requirements
thereof (other than (i) the execution and delivery of this Agreement and
the Security Agreement by the Loan Parties, (ii) the creation, pledge and
perfection of security interests in (x) the Equity Interests of the
Borrower and the Domestic Subsidiaries of Holdings (to the extent required by
paragraph (d) of the definition of “Collateral and Guarantee Requirement”)
and (y) the certificated securities representing debt (to the extent
required by paragraph (e) of the definition of “Collateral and Guarantee
Requirement”), (iii) the execution and delivery of “short form”
intellectual property security agreements with respect to the Intellectual
Property of the Loan Parties that is to be perfected by filing such agreements
with the United States Patent and Trademark Office or the United States
Copyright Office and (iv) the delivery of UCC financing statements with
respect to perfection of security interests in other assets of the Loan Parties
that may be perfected by the filing of a financing statement under the UCC) are
not satisfied as of the Effective Date, the satisfaction of


 


70

















 


such
requirements shall not be a condition to the effectiveness of this Agreement or
the availability of the Loans (but shall be required to be satisfied as
promptly as practicable after the Effective Date and in any event within the
period specified therefor in Schedule 4.01(p) or such later date as
the Administrative Agent may agree in its reasonable discretion). The
Administrative Agent shall have received a completed Perfection Certificate,
dated the Effective Date and executed by an authorized officer of the Borrower,
together with all attachments contemplated thereby.


 


(q)                                 Opinions of Counsel to Loan Parties.  The Administrative Agent shall have received
executed copies of the favorable written opinions of Dechert LLP, counsel for
the Loan Parties, addressed to the Administrative Agent and the Lenders,
covering such other matters as the Administrative Agent may reasonably request,
dated as of the Effective Date and in form and substance reasonably satisfactory
to the Administrative Agent (and each Loan Party hereby instructs such counsel
to deliver such opinions to the Administrative Agent).


 


(r)                                    Ratings.  Holdings shall have been assigned a public
corporate family rating from Moody’s and a public corporate rating from S&P
and the Revolving Loans shall have been assigned a public rating from each of
Moody’s and S&P.


 


(s)                                  Insurance.  The Administrative Agent shall have received
evidence of insurance coverage in form, scope, and substance reasonably
satisfactory to the Administrative Agent and otherwise in compliance in all
material respects with the terms of Section 5.06 and Section 4.12 of
the Security Agreement.


 


(t)                                    [Reserved]


 


(u)                                 Approvals.  All domestic and foreign governmental and
third party approvals reasonably necessary in connection with the Transactions
and the continuing operations of the Borrower and its Subsidiaries (including
shareholder approvals, if any) shall have been obtained on terms reasonably
satisfactory to the Administrative Agent. 
Such governmental and third party approvals shall be in full force and
effect in all material respects.  All
applicable waiting periods shall have expired without any action being taken or
threatened by any Governmental Authority of competent jurisdiction that would
restrain, prevent or otherwise impose materially adverse conditions on the
Acquisition or the financing contemplated hereby and by the Term Loan Credit
Agreement and no action, request for stay, petition for review, or rehearing,
reconsideration or appeal with respect to any of the foregoing shall be
pending, and the time for any applicable agency to take action to set aside its
consent on its own motion shall have expired.


 


(v)                                 No Litigation. There shall not exist any
action, suit, investigation, litigation, proceeding, hearing or other legal or
regulatory developments, pending or, to the knowledge of the Borrower,
threatened in any court or before any arbitrator or Governmental Authority
that, individually or in the aggregate, materially impairs the Acquisition or
the other Transactions, the financing thereof or any of the other transactions
contemplated by the Loan Documents or the Related Agreements.


 


(w)                               Collateral Reports.  The Administrative Agent shall have received
asset appraisals of Inventory and field examinations of the
Accounts, Inventory and related working capital matters and financial
information of the Loan Parties and of the related data processing and other
systems (which is reasonably satisfactory to the Administrative Agent) performed
by


 


71

















 


the
Administrative Agent or from firms and appraisers selected by the
Administrative Agent in its Permitted Discretion.


 


(x)                                   Cash Management.  The Administrative Agent shall be reasonably
satisfied with the cash management arrangements of Holdings, the Target and
their respective subsidiaries.


 


(y)                                 Patriot Act Information.  At least 10 days prior to the Effective Date,
the Lenders shall have received all documentation and other information
required by bank regulatory authorities under applicable “know-your-customer”
and anti-money laundering rules and regulations, including the Act.


 


(z)                                   Capitalization.  On or before the Effective Date, Holdings
shall have received, substantially simultaneously with the effectiveness of
this Agreement, the Equity Contribution and shall have contributed the proceeds
thereof to the Borrower in the form of cash common equity.


 


(aa)                            Existing Credit Agreement.  Immediately prior to, or substantially
simultaneously with, the effectiveness of this Agreement, there shall be no
Indebtedness outstanding under the Existing Credit Agreement.


 


(bb)                          Effectiveness of Term Loan Credit Agreement. The Administrative Agent shall have received evidence reasonably
satisfactory to it that (i) the Term Loan Credit Agreement has been
executed and delivered by the parties thereto, (ii) the Term Loan Credit
Agreement shall become effective (with aggregate commitments not less than
$375,000,000 on the Effective Date) and (iii) the Administrative Agent
shall have received sufficient copies of each Term Loan Document as the
Administrative Agent shall reasonably request, executed and delivered by each
other party thereto.


 


The
Administrative Agent shall notify the Borrower and the Lenders of the Effective
Date, and such notice shall be conclusive and binding.  Notwithstanding the foregoing, the
obligations of the Lenders to make Loans and of the Issuing Banks to issue
Letters of Credit hereunder shall not become effective unless each of the
foregoing conditions is satisfied (or waived pursuant to Section 9.02) at
or prior to 5:00 p.m., New York time, on October 4, 2010 (and, in the
event such conditions are not so satisfied or waived, the Commitments shall
terminate at such time).


 


Section 4.02.                             Each Credit
Event.  The obligation of each Lender
to make a Loan on the occasion of any Borrowing and of the Issuing Banks to
issue, amend, renew or extend any Letter of Credit is subject to the
satisfaction of the following conditions:


 


(a)                                  The representations and warranties of the Loan Parties set forth in this
Agreement shall be true and correct in all material respects on and as of the
date of such Borrowing or the date of issuance, amendment, renewal or extension
of such Letter of Credit, as applicable; provided that, any
representation and warranty that is qualified as to “materiality,” “Material
Adverse Effect” or similar language shall be true and correct in all respects
on such date; provided  further that, on the Effective Date, the
only representations and warranties made by, or with respect to, the Target and
its subsidiaries the accuracy of which shall be a condition to the
effectiveness of this Agreement shall be those set forth in
(i) Section 3.01, Section 3.02, Section 3.03, Section 3.08,
Section 3.12, Section 3.17, Section 3.19 and Section 3.22
and (ii) Article III of the Security Agreement.


 


72

















 


(b)                                 At the time of and immediately after giving effect to such Borrowing or
the issuance, amendment, renewal or extension of such Letter of Credit (in each
case, other than on the Effective Date), as applicable, no Default shall have
occurred and be continuing.


 


(c)                                  After giving effect to any Borrowing or the issuance of any Letter of
Credit, Availability is not less than zero.


 


Each
Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrower on the date thereof as to the matters specified in paragraphs (a),
(b) and (c) of this Section.


 


ARTICLE V


 


AFFIRMATIVE COVENANTS


 


Until
the Commitments have expired or been terminated and the principal of and
interest on each Loan and all fees, expenses and other amounts payable
hereunder shall have been paid in full and all Letters of Credit shall have
expired or terminated and all LC Disbursements shall have been reimbursed, each
Loan Party, jointly and severally with all of the Loan Parties, covenants and
agrees with the Lenders that:


 


Section 5.01.                             Financial
Statements, Borrowing Base and Other Information.  The Borrower will furnish to the
Administrative Agent and each Lender:


 


(a)                                  on the date that is the earliest of (i) the date on which Holdings’
(or, prior to a Permitted Change of Control Transaction, Griffon’s or Holdings’)
financial statements shall have been filed with the SEC, (ii) the date
Holdings’ (or, prior to a Permitted Change of Control Transaction, Griffon’s or
Holdings’) financial statements are required to be filed with the SEC (without
regard to any extension of the SEC’s filing requirements) and (iii) the
day which is 120 days after the end of each fiscal year of Holdings, the
audited consolidated balance sheet and related statements of income,
stockholders’ equity and cash flows of Holdings and its Subsidiaries as of the
end of and for such year, together with consolidating balance sheets and
statements of income, stockholders’ equity and cash flows by business unit
consistent with past practice and, within each business unit, a further
breakdown of consolidating financial information between Subsidiaries which are
Loan Parties within such business unit and Subsidiaries which are not Loan
Parties within such business unit (which consolidating financial information
shall not be subject to the audit procedures applied in the audit but shall be
certified by a Financial Officer of the Borrower as presenting fairly in all
material respects the financial condition and results of operations of the
Holdings and its Subsidiaries on a consolidating basis in accordance with
GAAP), setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on, in the case of the consolidated
financial statements, by Grant Thornton LLP or other independent public
accountants of recognized national standing (without a “going concern” or like
qualification or exception and without any qualification or exception as to the
scope of such audit) to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and results of
operations of Holdings and its Subsidiaries on a consolidated basis in
accordance with GAAP together with a Narrative Report with respect thereto;


 


(b)                                 on the date that is the earliest of (i) the date on which Holdings’
(or, prior to a Permitted Change of Control Transaction, Griffon’s or
Holdings’) financial statements shall have been filed with the SEC,
(ii) the date Holdings’ (or, prior to a Permitted Change of Control


 


73

















 


Transaction,
Griffon’s or Holdings’) financial statements are required to be filed with the
SEC (without regard to any extension of the SEC’s filing requirements) and
(iii) the day which is 60 days after the end of each of the first three
quarterly periods of each fiscal year of Holdings, commencing with respect to
the fiscal quarter ending December 31, 2010, the consolidated balance
sheet and related statements of income, stockholders’ equity and cash flows of
Holdings and its Subsidiaries as of the end of and for such year, together with
consolidating balance sheets and statements of income, stockholders’ equity and
cash flows by business unit consistent with past practice and, within each
business unit, a further breakdown of consolidating financial information
between Subsidiaries which are Loan Parties within such business unit and
Subsidiaries which are not Loan Parties within such business unit as of the end
of and for such fiscal quarter and the then elapsed portion of the fiscal year,
setting forth in each case in comparative form the figures for (or, in the case
of the balance sheet, as of the end of) the corresponding period or periods of
the previous fiscal year all certified by a Financial Officer of the Borrower
as presenting fairly in all material respects the financial condition and
results of operations of Holdings and its Subsidiaries on a consolidated and
consolidating basis in accordance with GAAP, subject to normal year end audit
adjustments and the absence of footnotes, together with a Narrative Report with
respect thereto;


 


(c)                                  within 30 days after the end of each fiscal month of Holdings (or, in the
case of a fiscal month which is the last fiscal month of a fiscal quarter of
Holdings, by the date on which the quarterly financial statements of Holdings
are due pursuant to Section 5.01(b)) or (ii) in the case of the first
six fiscal months ending after the closing date, 45 days after such end of
Holdings, commencing with respect to the fiscal month ended October 31,
2010, the consolidated balance sheet and related consolidated statements of
operations, stockholders’ equity and cash flows of Holdings and its
Subsidiaries as of the end of and for such fiscal month and the then elapsed
portion of the fiscal year, setting forth in each case in comparative form the
figures for the corresponding period or periods of (or, in the case of the
balance sheet, as of the end of) the previous fiscal year, all certified by a
Financial Officer of the Borrower as presenting fairly in all material respects
the financial condition and results of operations of Holdings and its
Subsidiaries on a consolidated basis in accordance with GAAP, subject to normal
year-end audit adjustments and the absence of footnotes;


 


(d)                                 concurrently with any delivery of financial
statements under paragraph (a), (b) or (c) of this Section, a
certificate of a Financial Officer of the Borrower in substantially the form of
Exhibit C (i) certifying as to whether a Default has occurred
and, if a Default has occurred, specifying the details thereof and any action
taken or proposed to be taken with respect thereto, (ii) commencing with
the certificate for the period ending September 30, 2010, setting forth
reasonably detailed calculations of the Fixed Charge Coverage Ratio and, if
applicable, demonstrating compliance with Section 6.11, and
(iii) stating whether any change in GAAP or in the application thereof has
occurred since the date of the Historical Financial Statements referred to in
Section 3.04 or since the date of any such notice and, if any such change
has occurred, specifying the effect of such change on the financial statements
accompanying such certificate and delivering one or more statements of
reconciliation for all such prior financial statements in form and substance
reasonably satisfactory to the Administrative Agent;


 


(e)                                  concurrently with any delivery of financial statements under paragraph
(a) of this Section, a certificate of the accounting firm that reported on
such financial statements stating whether they obtained knowledge during the
course of their examination of such financial statements of any Default arising
as a result of non-compliance with Article VI, including
Section 6.11, if applicable (which certificate may be limited to the
extent required by accounting rules or guidelines);


 


74

















 


(f)                                    promptly upon receipt thereof, copies of all other reports submitted to
Holdings and its Subsidiaries by its independent certified public accountants
in connection with any annual or interim audit or review of the books of
Holdings and its Subsidiaries made by such accountants;


 


(g)                                 annually, as soon as available, but in any event within 45 days after the
last day of each fiscal year of Holdings, consolidated and consolidating
projections of Holdings and its Subsidiaries and for the Loan Parties for the
following three fiscal years thereafter (with such projections to be provided
on a quarterly basis for the first year and on an annual basis for the next two
years);


 


(h)                                 promptly following receipt thereof, copies of any documents described in
Sections 101(k) or 101(l) of ERISA that Holdings or any ERISA
Affiliate may request with respect to any Multiemployer Plan; provided,
that if Holdings or any of its ERISA Affiliates have not requested such
documents or notices from the administrator or sponsor of the applicable
Multiemployer Plan, then, upon reasonable request of the Administrative Agent,
Holdings and/or their ERISA Affiliates shall promptly make a request for such
documents or notices from such administrator or sponsor and Holdings shall
provide copies of such documents and notices promptly after receipt thereof;


 


(i)                                     annually, at the time of delivery of annual financial statements with
respect to the preceding fiscal year pursuant to paragraph (a) of this
Section, a certificate of an authorized officer of the Borrower (i) either
confirming that there has been no change in such information since the date of
the Perfection Certificate delivered on the Effective Date or the date of the
most recent certificate delivered pursuant to this Section and/or
identifying such changes and (ii) certifying that all UCC financing
statements (including fixtures filings, as applicable) and all supplemental
intellectual property security agreements or other appropriate filings,
recordings or registrations, have been filed of record in each governmental,
municipal or other appropriate office in each jurisdiction identified pursuant
to clause (i) above (or in such Perfection Certificate) to the extent necessary
to effect, protect and perfect the security interests under the Collateral
Documents for a period of not less than 18 months after the date of such
certificate (except as noted therein with respect to any continuation
statements to be filed within such period);


 


(j)                                     if applicable, promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other materials filed
by any Group Member with the SEC, or any Governmental Authority succeeding to
any or all of the functions of said Commission, or with any national securities
exchange, or distributed by any Group Member to its shareholders generally, as
the case may be;


 


(k)                                  as soon as available and in any event by the
last day of each fiscal year of Holdings, a certificate from the Borrower’s
insurance broker(s) in form and substance satisfactory to the
Administrative Agent outlining all material insurance coverage maintained as of
the date of such certificate by Holdings and its Subsidiaries;


 


(l)                                     as soon as available but in any event within 20 days of the end of each calendar month (or, if an Event of Default
shall have occurred and be continuing or Availability is less than 15%
of the Revolving Commitments, within 3 days (but in no event earlier than two
Business Days) after the end of each week),
as of the period then ended, a
Borrowing Base Certificate and supporting information in connection therewith,
together with any additional reports with respect to Borrowing Base as the
Administrative Agent may reasonably request;


 


75
















 


(m)                               as soon as available but in any event within 20
days of the end of each calendar month (or, with respect to clause
(iii) below, if an Event of Default shall have occurred and be continuing
or Availability is less than 15% of Revolving Commitments, within 3 days
(but in no event earlier than two Business Days) after the end of each week) and at such other times as may be requested
by the Administrative Agent, as of the period then ended, all delivered
electronically in a text formatted file acceptable to the Administrative Agent:


 


(i)                                     a detailed aging of the Loan Parties’ Accounts (1) including all
invoices aged by invoice date and due date (with an explanation of the terms
offered) and (2) reconciled to the Borrowing Base Certificate delivered as
of such date prepared in a manner reasonably acceptable to the Administrative
Agent, together with a summary specifying the name, address, and balance due
for each Account Debtor;


 


(ii)                                  a schedule detailing the Loan Parties’ Inventory, in form reasonably
satisfactory to the Administrative Agent, (1) by location (showing
Inventory in transit, any Inventory located with a third party under any
consignment, bailee arrangement, or warehouse agreement), by class (raw
material, work-in-process and finished goods), by product type, and by volume
on hand, which Inventory shall be valued at the lower of cost (determined on a
first-in, first-out basis) or market and adjusted for Reserves as the
Administrative Agent has previously indicated to the Borrower in writing are deemed
by the Administrative Agent to be reasonably appropriate, (2) including a
report of any variances or other results of Inventory counts performed by the
Loan Parties since the last Inventory schedule (including information regarding
sales or other reductions, additions, returns, credits issued by the Loan
Parties and complaints and claims made against the Loan Parties), and
(3) reconciled to the Borrowing Base Certificate delivered as of such
date;


 


(iii)                               a worksheet of calculations prepared by the Borrower to determine
Eligible Accounts and Eligible Inventory, such worksheets detailing the
Accounts and Inventory excluded from Eligible Accounts and Eligible Inventory
and the reason for such exclusion;


 


(iv)                              a reconciliation of the Loan Parties’ Accounts and Inventory between the
amounts shown in the Loan Parties’ general ledger and financial statements and
the reports delivered pursuant to clauses (i) and (ii) above; and


 


(v)                                 a reconciliation of the loan balance per the Borrower’s general ledger to
the loan balance under this Agreement;


 


(n)                                 as soon as available but in any event within 20 days of the end of each
calendar month, as of the month then ended, a schedule and aging of the Loan
Parties’ accounts payable, delivered
electronically in a text formatted file acceptable to the Administrative Agent;


 


(o)                                 as soon as available but in any event within 20 days of the end of each
March 31 and September 30, an updated customer list (other than with
respect to any customer whose accounts shall not exceed $25,000 in the
aggregate during the twelve months preceding such date) for each Loan Party,
which list shall state the customer’s name, mailing address and phone number
and shall be certified as true and correct by a Financial Officer of the
Borrower, delivered electronically in a
text formatted file acceptable to the Administrative Agent;


 


(p)                                 promptly upon the Administrative Agent’s reasonable request:


 


76

















 


(i)                                     copies of invoices issued by the Loan Parties in connection with any
Accounts, credit memos, shipping and delivery documents, and other information
related thereto;


 


(ii)                                  copies of purchase orders, invoices, and shipping and delivery documents
in connection with any Inventory purchased by the Loan Parties; and


 


(iii)                               a schedule detailing the balance of all intercompany accounts of the Loan
Parties;


 


(q)                                 as soon as reasonably practicable but in any
event within 20 days of the end of each calendar month (or, if an Event of Default shall have
occurred and be continuing or Availability is less than 15% of Revolving
Commitments, within 3 days (but in no event earlier than two Business Days)
after the end of each week) and
at such other times as may be requested by the Administrative Agent, as of the
period then ended, the Loan Parties’ sales journal, cash receipts journal
(identifying trade and non-trade cash receipts) and debit memo/credit memo
journal;


 


(r)                                    as soon as reasonably practicable and in any event within ten Business
Days after the end of each calendar month, a detailed listing of all
intercompany loans made by the Loan Parties during such calendar month; and


 


(s)                                  promptly following any request therefor, such other information regarding
the operations, business affairs and financial condition of Holdings or any of
its Subsidiaries, or compliance with the terms of this Agreement and the other
Loan Documents, as the Administrative Agent or any Lender may reasonably
request.


 


Documents
required to be delivered pursuant to Section 5.01(a), (b), (c) or, if
applicable (j) (to the extent any such documents are included in materials
otherwise filed with the SEC) shall be deemed to have been delivered on the
date (i) on which any of Griffon, the Parent, Holdings or the Borrower
posts such documents or provides a link thereto on Griffon’s, the Parent’s,
Holdings’ or the Borrower’s website or (ii) on which such documents are
posted on Griffon’s, Holdings’ or the Borrower’s behalf on
Intralinks/IntraAgency or another relevant website, if any, to which each
Lender and the Administrative Agent have access (whether a commercial,
third-party website or whether sponsored by the Administrative Agent); provided
that the Borrower shall notify the Administrative Agent (by telecopier or
electronic mail) of the posting of any such documents and provide the
Administrative Agent with electronic mail versions of such documents.


 


Section 5.02.                             Notices of
Material Events.  The
Borrower and Holdings will furnish to the Administrative Agent and each Lender
prompt written notice of the following:


 


(a)                                  the occurrence of any Default;


 


(b)                                 the filing or commencement of any action, suit or proceeding by or before
any arbitrator or Governmental Authority against or affecting Holdings or any
of its Affiliates, other than disputes in the ordinary course of business or,
whether or not in the ordinary course of business, disputes involving amounts
exceeding $10,000,000 (excluding, however, any actions relating to workers’
compensation claims or negligence claims relating to use of motor vehicles, if
fully covered by insurance, subject to deductibles);


 


77

















 


(c)                                  the occurrence of any ERISA Event, or any fact or circumstances that
gives rise to a reasonable expectation that any ERISA Event will occur, that,
alone or together with any other ERISA Events that have occurred, could
reasonably be expected to result in liability of Holdings and any of its ERISA
Affiliates in an aggregate amount exceeding $50,000,000;


 


(d)                                 any Lien (other than Permitted Encumbrances) or claim made or asserted
against any of the Collateral;


 


(e)                                  any loss, damage, or destruction to the Collateral in the amount of
$5,000,000 or more, whether or not covered by insurance;


 


(f)                                    any and all default notices received under or with respect to any leased
location or public warehouse where Collateral with a value in excess of
$1,000,000 is located (which shall be delivered within three Business Days
after receipt thereof);


 


(g)                                 [Reserved];


 


(h)                                 the fact that a Loan Party has entered into a Swap Agreement or an
amendment to a Swap Agreement, together with copies of all agreements
evidencing such Swap Agreement or amendments thereto (which shall be delivered
within three Business Days following execution and delivery thereof);


 


(i)                                     any fact, condition, event or occurrence governed by Environmental Law or
any Hazardous Materials Activity that, in any such case, could reasonably be
expected to form the basis of any environmental claim, or the assertion in
writing of any environmental claim, by any Person against, or with respect to
the activities of, any Group Member and any alleged violation of or non
compliance with any Environmental Laws or any permits, licenses or
authorizations, other than any environmental claim or alleged violation that,
alone or together with any other such matters that have occurred, could
reasonably be expected to result in liability of the Group Members in an
aggregate amount exceeding $10,000,000;


 


(j)                                     any change (i) in any Loan Party’s corporate name, (ii) in any
Loan Party’s corporate structure, (iii) in any Loan Party’s jurisdiction
of organization or (iv) the organization identification number, if any,
or, with respect to any Loan Party organized under the laws of a jurisdiction
that requires such information to be set forth on the face of a UCC financing
statement, the Federal Taxpayer Identification Number of such Loan Party (and
Holdings and the Borrower agree not to effect or permit any of the Loan Parties
to effect any change referred to in this Section 5.02(j) unless all
filings have been made under the UCC or otherwise that are required in order
for the Administrative Agent to continue at all times following such change to
have a valid, legal and perfected security interest in all the Collateral as
contemplated in the Collateral Documents); and


 


(k)                                  any other development that results in, or could reasonably be expected to
result in, a Material Adverse Effect.


 


Each
notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth
the details of the event or development requiring such notice and any action
taken or proposed to be taken with respect thereto.


 


Section 5.03.                             Existence;
Conduct of Business.  Each Loan
Party will, and will cause each of its Subsidiaries to, do or cause to be done
all things necessary to preserve, renew and keep in full


 


78

















 


force and effect its legal existence and the rights,
licenses, permits, privileges and franchises material to the conduct of its
business; provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 6.03.


 


Section 5.04.                             Payment of
Obligations.  Each Loan
Party will, and will cause each of its Subsidiaries to, pay its obligations,
including tax liabilities, that, if not paid, could result in a Material
Adverse Effect before the same shall become delinquent or in default, except
where (a) the validity or amount thereof is being contested in good faith
by appropriate proceedings where a claim has been made against the relevant
Loan Party, (b) such Loan Party has set aside on its books adequate
reserves with respect thereto in accordance with GAAP and (c) the failure
to make payment pending such contest could not reasonably be expected to result
in a Material Adverse Effect.


 


Section 5.05.                             Maintenance of
Properties. Each Loan Party will, and will cause each of its
Subsidiaries to, keep and maintain all property material to the conduct of its
business in good working order and condition, ordinary wear and tear excepted,
and taking into account the prevailing industry standards and the locations of
such property.


 


Section 5.06.                             Maintenance of
Insurance.  Each Loan
Party will, and will cause each of its Subsidiaries to, maintain, with
financially sound and reputable insurance companies, insurance in such amounts
and against such risks as are customarily maintained by companies engaged in
the same or similar businesses operating in the same or similar locations; provided
that the Borrower may maintain self-insurance consistent with its past
practices and policies.


 


Section 5.07.                             Books and
Records.  Each Loan Party will, and will
cause each of its Subsidiaries to, keep proper books of record and account in
which full, true and correct entries in all material respects are made of all
dealings and transactions in relation to its business and activities.


 


Section 5.08.                             Inspection
Rights; Collateral Reports.  (a)  Each Loan Party will, and will cause
each of its Subsidiaries to, permit any representatives designated by the
Administrative Agent or any Lender (including any consultants, lawyers and
appraisers retained by the Administrative Agent), upon reasonable prior notice,
to visit and inspect its properties (including field examinations to ensure the
adequacy of the Collateral to support the Borrowing Base and related reporting
and control systems), to examine and make extracts from its books and records,
including environmental assessment reports, and to discuss its affairs,
finances and condition with its officers and independent accountants, all at
the sole expense of such Loan Party and at such reasonable time as requested
and as often as reasonably requested (it being understood that the Administrative
Agent shall conduct at least one field examination per calendar year); provided
that the Loan Parties shall not be required to reimburse the Administrative
Agent for the reasonable costs of more than one field examination per calendar
year unless the Administrative Agent, in its Permitted Discretion, decides to
perform a second field examination in any calendar year (in which case the Loan
Parties shall also be required to reimburse the Administrative Agent for the
reasonable costs of such second field examination); provided, however,
that there shall be no limitation on the Loan Parties’ obligation to reimburse
for, or the number or frequency of, such field examinations if an Event of
Default shall have occurred and be continuing or if the Availability is less
than 15% of the Revolving Commitments at the time such field examination is
scheduled or commenced.


 


(b)                                 At any time that the Administrative Agent reasonably requests, each Loan
Party will, at its sole expense, provide the Administrative Agent and, to the
extent requested by any Lender, such Lender, with appraisals or updates thereof
of their Inventory from an appraiser selected and engaged by the Administrative
Agent, and prepared on a basis reasonably satisfactory to the Administrative Agent,
such appraisals and updates to include, without limitation, information
required by applicable law and regulations; provided that the Loan
Parties shall not be required to reimburse the


 


79

















 


Administrative Agent for the
reasonable costs of more than one appraisal of each Inventory per calendar
year; provided, however, that there shall be no limitation on the
Loan Parties’ obligation to reimburse for, or the number or frequency of, such
appraisals if an Event of Default shall have occurred and be continuing or if
the Availability is less than 15% of the Revolving Commitments at the time such
appraisal process is scheduled or commenced.


 


Section 5.09.                             Compliance with
Laws and Contractual Obligations.  Each Loan Party will, and will cause each of
its Subsidiaries to, comply with all Requirements of Law (including any
Environmental Laws) applicable to it or its property, and all Contractual
Obligations binding upon it or its property, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.


 


Section 5.10.                             Use of Proceeds.  The proceeds of the Loans, and the Letters of
Credit issued hereunder, will only be used by the Borrower to finance the
working capital needs and for general corporate purposes of, including
Permitted Acquisitions by, the Borrower and its Subsidiaries.  No part of the proceeds of any Loan or any
Letter of Credit issued hereunder will be used, whether directly or indirectly,
for any purpose that entails a violation of any of the Regulations of the
Board, including Regulations U and X.


 


Section 5.11.                             Casualty and
Condemnation.  The
Borrower (a) will furnish to the Administrative Agent and the Lenders
prompt written notice of any casualty or other insured damage to any material
portion of the Collateral or the commencement of any action or proceeding for
the taking of any material portion of the Collateral or interest therein under
power of eminent domain or by condemnation or similar proceeding and
(b) will ensure that the Net Insurance/Condemnation Proceeds of any such
event (whether in the form of insurance proceeds, condemnation awards or
otherwise) are collected and applied in accordance with the applicable provisions
of this Agreement and the Loan Documents.


 


Section 5.12.                             Depository
Banks.  On and after the date which is
90 days after the Effective Date, with respect to the Target and its
subsidiaries, and with respect to the other Loan Parties, on and after the
Effective Date, the Loan Parties will maintain the Administrative Agent (or any
Lender reasonably satisfactory to the Administrative Agent) as their principal
depository bank, including for the maintenance of operating, administrative,
cash management, collection activity, and other deposit accounts for the
conduct of its business.


 


Section 5.13.                             Collateral;
Further Assurances.  Each Loan
Party will execute any and all further documents, financing statements,
agreements and instruments, and take all such further actions (including the
filing and recording of financing statements, fixture filings, mortgages, deeds
of trust and other documents) that may be required under any applicable law, or
that Administrative Agent or may reasonably request, to cause the Collateral
and Guarantee Requirement to be and remain satisfied at all times and otherwise
to effectuate the provisions of the Loan Documents, all at the expense of the
Loan Parties.  The Borrower will provide
to the Administrative Agent, from time to time upon request, evidence
reasonably satisfactory to the Administrative Agent as to the perfection and
priority of the Liens created or intended to be created by the Collateral
Documents.


 


Section 5.14.                             Post-Closing
Deliverables. 
(a) Within 90 days after the Effective Date, the Loan Parties will
use commercially reasonable efforts to deliver to the Administrative Agent each
(i) Collateral Access Agreement required to be provided pursuant to
Section 4.13 of the Security Agreement and (ii) Control Agreement required
to be provided pursuant to Section 7.1 of the Security Agreement.


 


80

















 


(b)                                 Within 15
Business Days after the Effective Date, the Borrower shall have
(i) executed JPMorgan’s master agreement for the issuance of commercial
Letters of Credit in form and substance reasonably satisfactory to JPMorgan and
the Borrower and (ii) entered into assignment documentation in form and
substance reasonably acceptable to JPMorgan with respect to the Griffon Letters
of Credit issued by JPMorgan.


 


Section 5.15.                             Ratings.  Unless otherwise consented to by the
Administrative Agent or the Required Lenders, the Loan Parties shall use
commercially reasonable efforts to maintain a public corporate family rating
from Moody’s with respect to Holdings, a public corporate credit rating from
S&P with respect to Holdings and a public credit rating from each of Moody’s
and S&P with respect to the Revolving Loans.


 


Section 5.16.                             Interest Rate
Protection.  No later
than sixty (60) days following the Effective Date and at all times thereafter
until the  third  anniversary
of the Effective Date, the Borrower shall obtain and cause to be maintained
protection against fluctuations in interest rates pursuant to one or more
Interest Rate Agreements in form and substance reasonably satisfactory to the
Administrative Agent, in order to ensure that no less than  50%
of the aggregate principal amount of the total Indebtedness for borrowed money
of Holdings and its Subsidiaries outstanding as of the Effective Date is either
(i) subject to such Interest Rate Agreements or (ii) Indebtedness
that bears interest at a fixed rate.


 


ARTICLE VI


 


NEGATIVE COVENANTS


 


Until
the Commitments have expired or terminated and the principal of and interest on
each Loan and all fees, expenses and other amounts payable hereunder have been
paid in full and all Letters of Credit have expired or terminated and all LC
Disbursements shall have been reimbursed, the Loan Parties, jointly and
severally, covenant and agree with the Lenders that:


 


Section 6.01.                             Indebtedness;
Guarantees. 
(a) The Loan Parties will not, and will not permit any of their
Subsidiaries to, create, incur, assume or permit to exist any Indebtedness,
except:


 


(i)                                     Indebtedness of any Loan Party pursuant to any Loan Document (other than
the Intercreditor Agreement), including, without limitation, any additional
Indebtedness incurred pursuant to any increase of Commitments, and Secured
Obligations;


 


(ii)                                  Indebtedness of any Loan Party pursuant to any Term Loan Document (or any
Permitted Refinancing thereof) in an aggregate outstanding principal amount not
to exceed $375,000,000;


 


(iii)                               Indebtedness of the Borrower to any other Group Member and of any
Subsidiary of the Borrower to any other Group Member; provided that (A) such
Indebtedness shall be evidenced by the Global Intercompany Note, and, if owing
to a Loan Party, shall be subject to a Lien pursuant to the Security Agreement,
(B) such Indebtedness shall be unsecured and, if owed by a Loan Party,
subordinated in right of payment to the payment in full of the Obligations
pursuant to the terms of the Global Intercompany Note, (C) any payment by
any Guarantor under the Guarantee of the Obligations shall result in a pro
tanto reduction of the amount of any Indebtedness owing by such Guarantor to
the Borrower or any other Subsidiary for whose benefit


 


81

















 


such
payment is made and (D) Indebtedness of Group Members which are not Loan
Parties to Group Members which are Loan Parties must also be expressly
permitted by Section 6.06(c) or (p);


 


(iv)                              Indebtedness outstanding on the date hereof and listed on Schedule
6.01(a) and, other than with respect to the Senior Notes, any
refinancings, refundings, renewals, replacement, waivers, amendments,
amendments and restatements or extensions thereof (without increasing, or
shortening the maturity of, the principal amount thereof);


 


(v)                                 Indebtedness (including, without limitation, Capital Lease Obligations)
secured by Liens expressly permitted by Section 6.02(f) in an
aggregate principal amount (including any Indebtedness that is permitted by
Section 6.01(a)(iv) that constitutes Indebtedness of a type permitted
by this Section 6.01(a)(v)) not to exceed $75,000,000 at any time
outstanding;


 


(vi)                              Guarantees expressly permitted by Section 6.01(b);


 


(vii)                           Indebtedness arising from the endorsement of instruments, the honoring by
a bank or other financial institution of a check, draft or similar instrument
inadvertently drawn in the ordinary course of business against insufficient
funds, or in respect of netting services, overdraft protections or otherwise in
connection with the operation of customary deposit accounts in the ordinary
course of business;


 


(viii)                        Indebtedness arising from agreements providing for indemnification or
similar obligations in each case incurred in connection with an acquisition or
other Investment expressly permitted by Section 6.06 or any disposition
expressly permitted by Section 6.04;


 


(ix)                                Indebtedness in the form of customary obligations under indemnification,
incentive, non-compete, consulting, deferred compensation, earn-out (based on
the income of the assets acquired after the acquisition thereof) or other
customary similar arrangements otherwise permitted hereunder;


 


(x)                                   Indebtedness resulting from judgments not resulting in an Event of
Default under paragraph (k) of Article VII;


 


(xi)                                Indebtedness resulting from unfunded pension fund and other employee
benefit plan obligations and liabilities to the extent that they are permitted
to remain unfunded under applicable law;


 


(xii)                             Indebtedness resulting from Swap Agreements permitted hereunder;


 


(xiii)                          (I) Indebtedness incurred by the Loan Parties that is unsecured so
long as, prior to and immediately after giving effect to the incurrence of such
Indebtedness on a pro forma basis, (A) the Fixed Charge Coverage Ratio
shall be at least 1.20 to 1.0 as of the end of the most recent fiscal month for
which financial statements have been delivered, (B) no Default or Event of
Default shall have occurred and be continuing and (C) the aggregate amount
of all unsecured Indebtedness (other than Permitted Subordinated Debt) incurred
under this clause (xiii) shall not exceed $300,000,000 at any time
outstanding, and, (II) without limiting any of the forgoing, any
refinancings,


 


82

















 


refundings,
renewals, replacement, waivers, amendments, amendments and restatements or
extensions thereof (without increasing, or shortening the maturity or weighted
average life of, the principal amount thereof), provided that
(x) after giving effect to any such refinancings, refundings, renewals,
replacement, waivers, amendments, amendments and restatements or extensions of
Permitted Subordinated Debt, the resulting Indebtedness shall constitute
Permitted Subordinated Debt and (y) Indebtedness incurred in reliance on
(II) shall be unsecured obligations of the Loan Parties and subject to the
limitations of clause (C) above; provided  further that,
prior to a Permitted Change of Control Transaction, Indebtedness incurred
in reliance on this Section 6.01(a)(xiii) cannot be Indebtedness owed
to Griffon or any of its Subsidiaries other than Permitted Subordinated Debt
owed to Griffon in an aggregate principal amount not exceeding $50,000,000;


 


(xiv)                         unsecured or secured Indebtedness of Subsidiaries that are not Loan
Parties in an aggregate amount (including any Indebtedness that is permitted by
Section 6.01(a)(iv) that constitutes Indebtedness of a type permitted
by this Section 6.01(a)(xiv)) not to exceed $50,000,000 at any time
outstanding;


 


(xv)                            any Indebtedness arising as a result of sale and leaseback transactions
specified on Schedule 6.15;


 


(xvi)                         any Indebtedness of any Person that becomes a Subsidiary (including in
connection with an acquisition explicitly permitted by Section 6.06 but
excluding the Acquisition) after the date hereof or Indebtedness of any Person
that is assumed by any Subsidiary in connection with an acquisition of assets
by such Subsidiary; provided that (A) such Indebtedness exists at the time
such Person becomes a Subsidiary or such assets are acquired and is not created
in contemplation of or in connection with such Person becoming a Subsidiary or
such acquisition, as the case may be, (B) any extensions, renewals and
replacements of such Indebtedness shall not increase the original outstanding
principal amount thereof, (C) the aggregate principal amount of all such
Indebtedness shall not exceed $100,000,000 at any time outstanding and (D) no
Group Member (other than such Person that becomes a Subsidiary or the
Subsidiary that so assumes such Person’s Indebtedness) shall Guarantee or
otherwise become liable for the payment of such Indebtedness;


 


(xvii)                      Indebtedness of any Subsidiaries of Holdings organized under the laws of
Canada pursuant to an asset based lending facility; provided that the
sum of (a) the aggregate principal amount of Indebtedness incurred
pursuant to this Section 6.01(a)(xvii) and (b) the aggregate
outstanding Canadian Commitments shall not exceed $20,000,000 at any time
outstanding; and


 


(xviii)                   in addition to Indebtedness otherwise expressly permitted by this
Section, Indebtedness of the Group Members in an aggregate principal
amount not to exceed $30,000,000 at any time outstanding.


 


Notwithstanding
anything to the contrary, none of the Indebtedness incurred in reliance on this
Section 6.01(a) may be Indebtedness owed to Griffon or any of its
Subsidiaries (other than Group Members), except for Permitted Subordinated Debt
in an aggregate principal amount not exceeding $50,000,000 permitted under
Section 6.01(a)(xiii).  For purposes
of determining compliance with this Section 6.01, the Dollar Equivalent of
the aggregate amount of any Indebtedness denominated in an Alternative Currency
as of the date such Indebtedness is incurred shall be deemed to be the
aggregate amount of


 


83

















 


such
Indebtedness, and any fluctuation in the applicable Exchange Rate thereafter
shall not affect compliance with this Section 6.01; provided that
if any such Indebtedness is refinanced then, to the extent such refinancing is
denominated in the same Alternative Currency and in the same principal amount
and incurred by the same borrower, the Dollar Equivalent of such refinanced
Indebtedness shall be determined using the applicable Exchange Rate as of the
date such Indebtedness so refinanced was incurred.


 


(b)                                 The Borrower will not, and will not permit any of its Subsidiaries to,
assume, endorse, be or become liable for, or Guarantee, the obligations of any
other Person (except by the endorsement of negotiable instruments for deposit
or collection in the ordinary course of business), except for:


 


(i)                                     Guarantees existing on the date hereof and set forth on Schedule
6.01(b);


 


(ii)                                  Guarantees by any Group Member of obligations of any Loan Party
(including, without limitation, all Indebtedness of a Loan Party expressly
permitted under Section 6.01(a));


 


(iii)                               Guarantees by any Subsidiary that is not a Loan Party of obligations
incurred pursuant to Section 6.01(a)(xiv);


 


(iv)                              Indebtedness consisting of Guarantees of loans made to officers,
directors or employees of any Group Member in an aggregate amount which shall
not exceed $4,000,000 at any time outstanding; and


 


(v)                                 in addition to Guarantees otherwise expressly permitted by this Section,
Guarantees of the Group Members; provided that the aggregate amount of
obligations subject to such Guarantees shall not exceed $30,000,000 at any
time.


 


Notwithstanding
the foregoing, any Guarantees made by any Loan Party or any Subsidiaries off
any Loan Party in reliance on Section 6.01(b)(iv) or (v) must
also be expressly permitted by Section 6.06(c) or (p).


 


Section 6.02.                             Liens.  The Borrower will not, and will not permit
any of its Subsidiaries to, create, incur, assume or permit to exist any Lien
on any property or asset now owned or hereafter acquired by it, or assign or
sell any income or revenues (including accounts receivable) or rights in
respect of any thereof, except:


 


(a)                                  Liens created pursuant to the Loan Documents;


 


(b)                                 Permitted Encumbrances;


 


(c)                                  Liens pursuant to any Term Loan Document, including any Liens on any
deposit account established for the sole purpose of depositing the net cash
proceeds of any Loan Party with respect to any asset sale, incurrence of
Indebtedness or casualty event pending the application of such proceeds to the
prepayment of loans under the Term Loan Documents in accordance with the
mandatory prepayment provisions thereof; provided that such Liens shall
at all times be subject to the Intercreditor Agreement;


 


84

















 


(d)                                 any Lien on any property or asset of any Group Member existing on the
date hereof and set forth on Schedule 6.02 (excluding, however,
following the making of the initial Loans hereunder as of the Effective Date,
Liens securing Indebtedness and other obligations under the Existing Debt
Agreements); provided that (i) no such Lien shall extend to any
other property or asset of any Group Member and (ii) any such Lien shall
secure only those obligations which it secures on the date hereof and
extensions, renewals, replacements and combinations thereof that do not
increase the outstanding principal amount thereof or commitment therefor, in each
case, as in effect on the date hereof;


 


(e)                                  any Lien existing on any property or asset (other than Accounts and
Inventory) prior to the acquisition thereof by any Group Member or existing on
any property or asset (other than Accounts and Inventory) of any Person that
becomes a Subsidiary after the date hereof prior to the time such Person
becomes a Subsidiary (including in connection with an acquisition explicitly
permitted by Section 6.04 but excluding the Acquisition); provided
that (i) such Lien is not created in contemplation of or in connection
with such acquisition or such Person becoming a Subsidiary, as the case may be,
(ii) such Lien shall not apply to any other property or assets of any
Group Member and (iii) such Lien shall secure only those obligations which
it secures on the date of such acquisition or the date such Person becomes a
Subsidiary, as the case may be and extensions, renewals and replacements
thereof that do not increase the original outstanding principal amount thereof;


 


(f)                                    Liens on fixed or capital assets acquired, constructed or improved by any
Group Member (including any Liens permitted by paragraph (d) above that
are of a type permitted by this clause (f)); provided that (i) such
security interests secure Indebtedness expressly permitted by Section 6.01
incurred to finance such acquisition, construction or improvement,
(ii) such security interests and the Indebtedness secured thereby are
incurred prior to or within six months after such acquisition or the completion
of such construction or improvement, (iii) the Indebtedness secured
thereby does not exceed 100% of the cost of acquiring, constructing or
improving such fixed or capital assets and (iv) such security interests
shall not apply to any other property or assets of any Group Member;


 


(g)                                 Liens of a collecting bank arising in the ordinary course of business
under Section 4-208 of the UCC in effect in the relevant jurisdiction
covering only the items being collected upon;


 


(h)                                 Liens granted by a Subsidiary that is not a Loan Party in favor of the
Borrower or another Loan Party in respect of Indebtedness owed by such
Subsidiary;


 


(i)                                     Liens granted by any Subsidiary that is not a Loan Party on its assets to
secure (i) its Indebtedness (other than Guarantees) or (ii) the Indebtedness
of any other Subsidiary organized under the same jurisdiction (provided
that no Subsidiary may Guarantee Indebtedness under this clause (ii) of
Persons organized under a different jurisdiction), in each case incurred
pursuant to Section 6.01(a)(xiv);


 


(j)                                     any interest or title of a lessor under any lease entered into by the
Borrower or any of its Subsidiaries in the ordinary course of its business and
covering only the assets so leased, and any financing statement filed in
connection with any such lease;


 


(k)                                  Liens held by third parties on consigned goods incurred in the ordinary
course of business;


 


85

















 


(l)                                     bankers’ liens and rights to setoff with respect to deposit accounts, in
each case, incurred in the ordinary course of business;


 


(m)                               Liens on insurance policies and the proceeds thereof securing the
financing of the insurance premiums with the providers of such insurance or
their Affiliates in respect thereof;


 


(n)                                 Liens on any assets that are the subject of an agreement for a
disposition thereof expressly permitted under Section 6.04 that arise due
to the existence of such agreement;


 


(o)                                 Liens on assets subject to the sale and leaseback transactions specified
on Schedule 6.15;


 


(p)                                 Liens securing Indebtedness permitted by Section 6.01(a)(xvii);
provided that such Liens only apply to assets of Subsidiaries of Holdings
organized under the laws of Canada that are obligors in respect of such
Indebtedness; and


 


(q)                                 additional Liens not otherwise expressly permitted by this
Section on any property or asset of any Group Member securing obligations
in an aggregate amount not exceeding $22,500,000 at any time outstanding.


 


Notwithstanding
the foregoing, none of the Liens permitted pursuant to this Section 6.02
may at any time attach to any Loan Party’s (1) Accounts, other than those
permitted under clause (a) and (e) of the definition of Permitted
Encumbrance and clause (a) above and (2) Inventory, other than those
permitted under clauses (a), (b) and (e) of the definition of
Permitted Encumbrance and clause (a) above.


 


Section 6.03.                             Mergers,
Consolidations, Etc.  No
Loan Party will, nor will it permit any of its Subsidiaries to, enter into any
transaction of merger or consolidation or amalgamation, or liquidate, wind up
or dissolve itself (or suffer any liquidation or dissolution), except that
(i) any Subsidiary of the Borrower may be merged or consolidated with or
into the Borrower (provided that the Borrower shall be the continuing or
surviving corporation) or with or into any Subsidiary which is a Loan Party (provided
that a Loan Party shall be the continuing or surviving corporation),
(ii) any other Subsidiary of the Borrower which is not a Loan Party may be
merged or consolidated with or into any other Subsidiary of the Borrower which
is not a Loan Party, and (iii) any Loan Party may make Permitted
Acquisitions in compliance with Section 6.06(e).


 


Section 6.04.                             Dispositions.  No Loan Party will, nor will it permit any of
its Subsidiaries to, convey, sell, lease, transfer or otherwise dispose of, in
one transaction or a series of transactions, any part of its business or
property, whether now owned or hereafter acquired (including receivables and
leasehold interests) (it being understood that the foregoing does not include
the issuance by any issuer of Equity Interests), except:


 


(a)                                  obsolete or worn out property, tools or equipment no longer used or
useful in its business;


 


(b)                                 any inventory or other property sold or disposed of in the ordinary
course of business and for fair consideration;


 


(c)                                  any Subsidiary of the Borrower may sell, lease, transfer or otherwise
dispose of any or all of its property (upon voluntary liquidation or otherwise)
to any Group Member


 


86

















 


(provided
that, in the case of any such transfer by a Subsidiary that is a Loan Party,
the transferee must also be a Loan Party);


 


(d)                                 any Equity Interests of any Subsidiary of the Borrower may be sold,
transferred or otherwise disposed of to the Borrower or any other Subsidiary of
the Borrower (provided that, in the case of any such transfer by a Loan
Party, the transferee must also be a Loan Party);


 


(e)                                  any Group Member may sell, lease, transfer or otherwise dispose of
(i) its property and assets the fair market value of which does not
exceed, together with the aggregate fair market value of all other such
dispositions by Group Members consummated after the Effective Date in reliance
on this Section 6.04(e), $250,000,000; provided that (i) any
disposition of Equity Interests of any Subsidiary of the Borrower must include
all Equity Interests of and other Investments in such Subsidiary owned by the
Group Members and (ii) prior to and after giving effect to the
consummation of such disposition, no Default or Event of Default shall have
occurred and be continuing;


 


(f)                                    the cross-licensing or licensing of intellectual property, in the
ordinary course of business;


 


(g)                                 the dispositions expressly permitted by Section 6.03;


 


(h)                                 the leasing, occupancy or sub-leasing of real property in the ordinary
course of business that would not materially interfere with the required use of
such real property by any Group Member;


 


(i)                                     the sale or discount, in the ordinary course of business, of overdue or
otherwise ineligible accounts receivable arising in the ordinary course of
business, in connection with the compromise or collection thereof;


 


(j)                                     transfers of condemned property as a result of the exercise of “eminent
domain” or other similar policies to the respective Governmental Authority or
agency that has condemned the same (whether by deed in lieu of condemnation or
otherwise), and transfers of properties that have been subject to a casualty to
the respective insurer of such property as part of an insurance settlement;


 


(k)                                  Liens expressly permitted by Section 6.02;


 


(l)                                     Restricted Payments expressly permitted by Section 6.07; and


 


(m)                               sales necessary to effect sale and leaseback transactions specified on Schedule
6.15;


 


provided that all
sales, transfers, leases and other dispositions permitted hereby (other than
those permitted by paragraphs (a), (c), (d), (f), (g), (i), (j),
(k) and (l) above) shall be made for fair value and for at least 75%
cash consideration.


 


Section 6.05.                             Lines of
Business.  No Loan
Party will, nor will it permit any of its Subsidiaries to, engage to any
material extent in any business other than businesses of the type conducted by
the Group Members on the Effective Date (after giving effect to the
Acquisition) and businesses reasonably related thereto.


 


87

















 


Section 6.06.                             Investments and
Acquisitions.  No Loan
Party will, nor will it permit any of its Subsidiaries to, make or suffer to
exist any Investment in any Person or purchase or otherwise acquire (in one
transaction or a series of transactions) any assets of any other Person
constituting a business unit, except:


 


(a)                                  Permitted Investments, subject to Control Agreements in favor of the
Administrative Agent for the benefit of the Secured Parties or otherwise
subject to a perfected security interest in favor of the Administrative Agent
for the benefit of the Secured Parties to the extent required under the Loan
Documents;


 


(b)                                 Investments (other than Investments expressly permitted under paragraph
(a) of this Section) existing on the date hereof and set forth on Schedule
6.06;


 


(c)                                  Investments by (i) the Borrower in any Subsidiary which is a Loan
Party or by any Subsidiary of the Borrower in any Subsidiary which is a Loan
Party or in the Borrower; (ii) Holdings in the Borrower, (iii) any
Subsidiary that is not a Loan Party in any Subsidiary that is not a Loan Party
and (iv) any Loan Party (other than Holdings) in a Subsidiary that is not
a Loan Party not exceeding $10,000,000 in the aggregate for all Investments by
Loan Parties in Subsidiaries that are not Loan Parties;


 


(d)                                 the Acquisition;


 


(e)                                  any Permitted Acquisition if, prior to and after giving pro forma effect
thereto, (i) no Default or Event of Default shall have occurred and be
continuing, (ii) the Fixed Charge Coverage Ratio shall be at least 1.20 to
1.0 as of the end of the most recent fiscal month for which financial
statements have been delivered and (iii) Availability shall be at least
25% of the Revolving Commitments; provided that (x) the Acquisition
Consideration (excluding consideration consisting of (1) Equity Interests
(other than Disqualified Equity Interests of Holdings) in Griffon, or, after a
Permitted Change of Control Transaction, Holdings) and (2) a direct or
indirect cash equity contribution from Griffon to Holdings for the purpose of
funding (in whole or in part) such Permitted Acquisition) for such Permitted
Acquisition (or a series of related Permitted Acquisitions) does not exceed
$100,000,000, (y) the aggregate Acquisition Consideration (excluding
consideration consisting of (1) Equity Interests (other than Disqualified
Equity Interests of Holdings) in Griffon, or, after a Permitted Change of
Control Transaction, Holdings and (2) a direct or indirect cash equity
contribution from Griffon to Holdings for the purpose of funding (in whole or
in part) such Permitted Acquisition) for all Permitted Acquisitions consummated
after the Effective Date in reliance on this Section 6.06(e) does not
exceed $300,000,000 and (z) the aggregate Acquisition Consideration
(excluding consideration consisting of Equity Interests (other than
Disqualified Equity Interests) in Griffon, or, after a Permitted Change of
Control Transaction, Holdings) that is attributable to Investments in such
Persons that are not wholly-owned Domestic Subsidiaries that become Guarantors
at the time of such Permitted Acquisition may not exceed $50,000,000 in the
aggregate since the Effective Date, except to the extent such Investments are
treated, at the time of such Permitted Acquisition, as Investments in such
Person pursuant to Section 6.06 and such Investments are permitted to be
made thereunder (other than pursuant to this clause (e) and
Section 6.06(l)) at such time;


 


(f)                                    purchases of inventory and other property to be sold or used in the
ordinary course of business;


 


(g)                                 any Restricted Payments expressly permitted by Section 6.07;


 


88
















 


(h)                                 extensions of
trade credit in the ordinary course of business;


 


(i)                                     Investments
arising in connection with the incurrence of Indebtedness expressly permitted
by Section 6.01(a);


 


(j)                                     Investments
(including debt obligations) received in the ordinary course of business by any
Group Member in connection with the bankruptcy or reorganization of suppliers
and customers and in settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising out of the ordinary course of
business;


 


(k)                                  Investments of
any Group Member under Swap Agreements expressly permitted hereunder;


 


(l)                                     Investments of
any Person in existence at the time such Person becomes a Subsidiary pursuant
to a transaction expressly permitted by any other paragraph of this
Section (other than the Acquisition); provided that such Investment
was not made in connection with or anticipation of such Person becoming a
Subsidiary;


 


(m)                               Investments
resulting from pledges and deposits referred to in paragraphs (c) and
(d) of the definition of “Permitted Encumbrances”;


 


(n)                                 the forgiveness
or conversion to equity of any Indebtedness expressly permitted by
Section 6.01(a)(ii) subject to the limitations of
Section 6.06(c);


 


(o)                                 negotiable
instruments and deposits held in the ordinary course of business; and


 


(p)                                 in addition to
Investments otherwise expressly permitted by this Section, Investments not
exceeding in the aggregate $25,000,000.


 


Section 6.07.                             Restricted
Payments.  (a) 
No Loan Party will, nor will it permit any of its Subsidiaries to, declare or
make, or agree to pay or make, directly or indirectly, any Restricted Payment,
except:


 


(i)                                     each of
Holdings and the Borrower may declare and pay dividends with respect to its
common stock payable solely in additional shares of its common stock;


 


(ii)                                  the Borrower
may declare and pay to Holdings (including, without limitation, for
distribution, prior to a Permitted Change of Control Transaction, to the Parent
and ultimately to Griffon) (x) dividends, or make other payments, to pay the
Borrower’s allocated share of overhead and expenses (other than interest
expense) (provided that any expenses related to or resulting from the
accelerated vesting of any equity-based compensation program, time-vested
management incentive program or management bonus program of Griffon, Holdings
or its Affiliates in connection with a Permitted Change of Control Transaction
(such expenses, “Acceleration Expenses”) paid by the Borrower to
Holdings shall not exceed $20,000,000 in the aggregate) incurred by Holdings in
accordance with the exercise of the reasonable business judgment of Holdings,
so long as such amounts are used for such purposes within 60 days after such
amounts are paid; provided that the payments made pursuant to this
Section 6.07(a)(ii)(x) shall be limited to (A) payments by the
Borrower to pay its allocated share of (I) audit and accounting fees and
expenses, including costs of internal audit, paid or payable to any third-party
provider (other than Holdings, Parent, Griffon


 


89

















 


or
any of their respective affiliates); (II) insurance premiums, fees and
expenses, including brokerage and other related fees and expenses, paid or
payable to any third-party provider (other than Holdings, Parent, Griffon or
any of their respective affiliates) and amounts paid or payable in connection
with the settlement of any insurance claim to any third party (other than
Holdings, Parent, Griffon or any of their respective affiliates);
(III) environmental fees and expenses paid or payable to any third-party
provider (other than Holdings, Parent, Griffon or any of their respective
affiliates); (IV) administration, consulting and other fees and expenses
paid or payable to any third-party provider (other than Holdings, Parent,
Griffon or any of their respective affiliates) relating to welfare benefits,
plans and arrangements, and relating to Griffon’s 401(k) plan; and
(V) legal, professional and consulting fees and expenses paid or payable
to any third-party provider (other than Holdings, Parent, Griffon or any of
their respective affiliates) (it being understood that payments by the Borrower
to pay its allocated share of the items listed in the foregoing clauses
(I) through (V), other than with respect to Acceleration Expenses, shall
be permitted under this Section 6.07(a)(ii)(x) regardless of amount)
and (B) other payments not exceeding $7,500,000 in any fiscal year of
Holdings and its Subsidiaries, (y) dividends or other payments that are
used to reimburse Griffon for the fair market value, as reasonably determined
by the Borrower in good faith, of any grants made to employees of any Group
Member pursuant to an equity-based compensation program, time-vested management
incentive program or management bonus program of Griffon, Holdings or its
Affiliates; provided that any such payments made pursuant to this
Section 6.07(a)(ii)(y) shall not exceed $5,000,000 in any fiscal year
of Holdings and (z) payments to Griffon, Parent or their respective
Affiliates of management fees pursuant to and to the extent expressly
contemplated by the Management Agreement as in effect as of the Closing Date,
so long as prior to and immediately after giving effect to any such payments,
no Default shall have occurred and be continuing; provided that payments
made pursuant to this Section 6.07(a)(ii)(z) in any fiscal year of
Holdings and its Subsidiaries shall not exceed the greater of (i) $250,000
and (ii) 7.50% of pre-tax consolidated net income for such fiscal year
(which, for purposes of this Section 6.07(a)(ii)(z) shall be calculated, for
any fiscal year of Holdings and its Subsidiaries, as the net income of the
Group Members for such fiscal year plus foreign, Federal, state and local
income taxes deducted in determining net income for such fiscal year); provided
that any such payments made pursuant to this Section 6.07(a)(ii) must
be deducted (to the extent not already so deducted) from the Net Income of
Holdings and its Subsidiaries;


 


(iii)                               the Borrower
may declare and pay dividends, distributions or otherwise make payments with
respect to its Equity Interests to any Person of which the Borrower is a direct
or indirect Subsidiary and with whom the Borrower files a consolidated,
combined, unitary or affiliated income tax return at such time (“Consolidated
Return”) and in such amounts as shall be required by such Person to pay the tax
liability in respect of such return to the extent such liability is directly
attributable to the income of the Borrower and any Subsidiaries (the “Borrower
Consolidated Group”) that file with such Person a Consolidated Return; provided
that the total amount of any dividends, distributions or payments made pursuant
to this clause for any taxable period shall not exceed the amount that the
Borrower Consolidated Group would be required to pay in respect of Federal,
state and local income Taxes for such period, determined taking into account
any available net operating loss carryovers or other tax attributes of the
Borrower Consolidated Group as if the Borrower Consolidated Group filed a
separate Consolidated Return, less the amount of any such Taxes paid directly
by the Borrower Consolidated Group;


 


90

















 


(iv)                              the Loan
Parties may make payments of regularly scheduled interest and principal
payments as and when due in respect of any Permitted Subordinated Debt
permitted by Section 6.01(a)(xiii) owing to Griffon or its
Subsidiaries (other than Group Members); and


 


(v)                                 the Borrower
may declare and pay to Holdings (for distribution, prior to a Permitted Change
of Control Transaction, to the Parent and ultimately to Griffon, if applicable)
dividends, or make other payments, not otherwise permitted hereunder in any
fiscal year so long as, after giving pro forma effect to such payment,
(i) no Default or Event of Default shall have occurred and be continuing,
and (ii) Availability shall be at least 25% of the Revolving Commitment
for each of the most recent 30 days (or, if less, the number of days elapsed
since the Effective Date) and, after giving effect thereto;


 


provided that nothing
herein shall be deemed to prohibit the payment of dividends by any Subsidiary
of the Borrower to the Borrower, any other Subsidiary of the Borrower or, if
applicable, any minority shareholder of such Subsidiary (in accordance with the
percentage of the Equity Interests of such Subsidiary owned by such minority
shareholder); provided  further than no Restricted Payments may be
made to Griffon, the Parent or their respective Affiliates (other than Holdings
and its Subsidiaries) following a Permitted Change of Control Transaction.


 


(b)                                 No Loan Party
will, nor will it permit any Subsidiary to, make or agree to pay or make,
directly or indirectly, any payment or other distribution (whether in cash,
securities or other property) of or in respect of principal of or interest on
any Indebtedness, or any payment or other distribution (whether in cash,
securities or other property), including any sinking fund or similar deposit,
on account of the purchase, redemption, retirement, acquisition, cancellation
or termination of any Indebtedness, except:


 


(i)                                     payment of
Indebtedness created under the Loan Documents or payments on Indebtedness owed
by a Subsidiary of a Loan Party to a Loan Party or by a Loan Party to any other
Loan Party;


 


(ii)                                  (A) mandatory
prepayment of Indebtedness under the Term Loan Credit Agreement under
Section 2.11 of the Term Loan Credit Agreement (as in effect on the date
hereof); provided that the Loan Parties have complied with the
requirements of Section 2.11(c) and (B) so long as immediately
before and immediately after giving pro forma effect thereto (i) no
Default or Event of Default shall have occurred and be continuing,
(ii) the Fixed Charge Coverage Ratio shall be at least 1.20 to 1.0 as of
the end of the most recent fiscal month for which financial statements have
been delivered, and (iii) Availability shall be not less than $25,000,000
for each of the most recent 30 days (or, if less, the number of days elapsed
since the Effective Date) and after giving effect thereto, optional prepayments
of Indebtedness under the Term Loan Documents (including, without limitation,
repurchases under Section 2.10(c) of the Term Loan Credit Agreement);


 


(iii)                               payments in
respect of any Swap Agreement permitted under this Agreement and payment of
regularly scheduled interest and principal payments as and when due in respect
of any Indebtedness, other than payments in respect of the Subordinated
Indebtedness prohibited by the subordination provisions thereof, provided
that principal payments (including, without limitation, any payment due at
maturity or any partial or full repayment upon demand or otherwise) in respect
of Indebtedness


 


91

















 


owed
to Griffon or any subsidiary of Griffon that is not a Group Member shall only
be permitted so long as, after giving pro forma effect to such payment,
(A) no Default or Event of Default shall have occurred and be continuing
and (B) Availability shall be at least 25% of the Revolving Commitments
for each of the most recent 30 days (or, if less, the number of days elapsed
since the Effective Date) and, after giving effect thereto;


 


(iv)                              refinancings of
Indebtedness to the extent expressly permitted by Section 6.01; and


 


(v)                                 payment of
secured Indebtedness that becomes due as a result of the voluntary sale or
transfer of the property or assets securing such Indebtedness.


 


Section 6.08.                             Transactions
with Affiliates.  No Loan
Party will, nor will it permit any of its Subsidiaries to, sell, lease or
otherwise transfer any property or assets to, or purchase, lease or otherwise
acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except:


 


(a)                                  transactions in
the ordinary course of business at prices and on terms and conditions not less
favorable to such Group Member than could be obtained on an arm’s length basis
from a Person that is not an Affiliate;


 


(b)                                 transactions
(i) between or among the Borrower and its wholly-owned Subsidiaries that
are Loan Parties and not involving any other Affiliate or (ii) between or
among wholly-owned Foreign Subsidiaries and not involving any other Affiliate;


 


(c)                                  any Investments
expressly permitted by Section 6.06; provided that this
Section 6.08(c) (i) shall not permit Investments in Equity
Interests of Griffon or any of its Subsidiaries (other than Group Members) and
(ii) any loans, advances or other Investments made by any Group Member to
Griffon or any of its Subsidiaries (other than Group Members) shall be made at
prices and on terms and conditions not less favorable to such Group Member than
could be obtained on an arm’s-length basis from a Person that is not an
Affiliate;


 


(d)                                 any Restricted
Payment expressly permitted by Section 6.07; and


 


(e)                                  any Affiliate
who is a natural person may serve as an employee or director of any Loan Party
and receive reasonable compensation for his services in such capacity.


 


Section 6.09.                             Restrictive
Agreements.  No Loan
Party will, nor will it permit any of its Subsidiaries to, directly or
indirectly, enter into, incur or permit to exist any agreement or other
arrangement that prohibits, restricts or imposes any condition upon
(i) the ability of any Group Member to create, incur or permit to exist
any Lien upon any of its property or assets, or (ii) the ability of any
Subsidiary to pay dividends or other distributions with respect to any shares
of its Equity Interests or to make or repay loans or advances to any Group
Member or to Guarantee Indebtedness of any Group Member, except:


 


(a)                                  restrictions
and conditions imposed by (i) law, (ii) this Agreement,
(iii) the Term Loan Credit Agreement or (iv) any other Term Loan
Document, provided that the restrictions and conditions contained in any
such other Term Loan Document are not less favorable to the Lenders than the
restrictions and conditions imposed by the Term Loan Credit Agreement;


 


92

















 


(b)                                 restrictions
and conditions existing on the date hereof identified on Schedule 6.09
(but shall apply to any extension or renewal of, or any amendment or
modification expanding the scope of, any such restriction or condition);


 


(c)                                  customary
restrictions and conditions contained in agreements relating to the sale of a
Subsidiary pending such sale, provided that such restrictions and
conditions apply only to the Subsidiary that is to be sold and such sale is
permitted hereunder;


 


(d)                                 (solely with
respect to clause (i) above) (i) restrictions or conditions imposed
by any agreement (other than any Term Loan Document) relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Indebtedness and
(ii) customary provisions in leases and other contracts restricting the
assignment thereof; and


 


(e)                                  (solely with
respect to clause (ii) above) (i) restrictions or conditions imposed
by any agreement relating to secured Indebtedness of any Foreign Subsidiary
permitted by this Agreement if such restrictions or conditions apply only to
the applicable Foreign Subsidiary securing such Indebtedness and
(ii) customary provisions in leases and other contracts restricting the
assignment thereof.


 


Section 6.10.                             Swap Agreements.  No Loan Party will, nor will it permit any of
its Subsidiaries to, enter into any Swap Agreement, other than Swap Agreements
entered into (a) pursuant to Section 5.16 or any Term Loan Document
or (b) in the ordinary course of business to hedge or mitigate risks to
which any Group Member is exposed in the conduct of its business or the
management of its liabilities.


 


Section 6.11.                             Fixed Charge
Coverage Ratio.  In the
event that Availability is at any time less than (a) 12.5% of the lesser
of (i) the Borrowing Base and (ii) Revolving Commitments or
(b) $15,625,000, the Borrower will not permit the Fixed Charge Coverage
Ratio for the most-recently ended twelve fiscal months of the Borrower as of
the end of the most recent fiscal month for which financial statements have
been delivered and each fiscal month thereafter to be less than 1.0 to 1.0, provided
that this covenant shall cease to apply (until any subsequent time, if any, at
which Availability is less than (a) or (b) above, as so determined)
if Availability exceeds the greater of (i) 17.5% of the Revolving
Commitments and (ii) $18,750,000 for 90 consecutive calendar days.


 


Section 6.12.                             Stock Issuance.  No Loan Party will, nor will it permit any of
its Subsidiaries to, issue any additional shares, or any right or option to
acquire any shares or any security convertible into any shares, of the Equity
Interests of any Subsidiary, except (a) the Equity Interests of any
Subsidiary, in connection with dividends in Equity Interests expressly
permitted by Section 6.07, (b) the Equity Interests of any Subsidiary
to the Borrower or any of its Subsidiaries, (c) the Equity Interests of
Holdings (other than Disqualified Equity Interests) issued to Griffon or the
Parent in consideration of the Equity Contribution, (d) (i) prior to
a Permitted Change of Control Transaction, the Equity Interests (other than
Disqualified Equity Interests) of Holdings to Griffon and its Subsidiaries
(other than any Group Member) and (ii) after a Permitted Change of Control
Transaction, the Equity Interests (other than Disqualified Equity Interests) of
Holdings to any Person so long as no Default shall have occurred and be
continuing; provided that no Equity Interests of a Loan Party shall be
owned by a Subsidiary that is not a Loan Party.


 


Section 6.13.                             Modifications
of Certain Documents.  No Loan
Party will, nor will it permit any of its Subsidiaries to, consent to any
modification, amendment, supplement or waiver of any of the provisions of
(a) its charter, by-laws or other organizational documents or any other
agreement or


 


93

















 


instrument to which any
Group Member is a party or is bound, in each case that could reasonably be
expected to have a Material Adverse Effect or (b) except as permitted by
Section 6.01(a)(xiii)(II), any Permitted Subordinated Debt, in each case,
without the prior consent of the Administrative Agent (with the approval of the
Required Lenders) or (c) the Management Agreement.


 


Section 6.14.                             Passive Holding
Company Status.  Holdings
will not (i) conduct, transact or otherwise engage in, or commit to
conduct, transact or otherwise engage in, any business or operations other than
those incidental to its ownership of the Equity Interests of the Borrower,
(ii) incur, create, assume or suffer to exist any Indebtedness or other
liabilities or financial obligations, except (x) nonconsensual obligations
imposed by operation of law, (y) obligations pursuant to the Loan
Documents or the Term Loan Documents to which it is a party and
(z) obligations with respect to its Equity Interests, or (iii) own,
lease, manage or otherwise operate any properties or assets (other than cash,
cash equivalents or other than the ownership of shares of Equity Interests of
the Borrower).


 


Section 6.15.                             Sale and
Leaseback Transactions.  No
Loan Party will, nor will it permit any Subsidiary to, enter into any
arrangement, directly or indirectly, whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned
or hereafter acquired, and thereafter rent or lease such property or other
property that it intends to use for substantially the same purpose or purposes
as the property sold or transferred, except for any such sale of any fixed or
capital assets by any Group Member that is made for cash consideration in an amount
not less than the fair value of such fixed or capital asset and is consummated
within 90 days after such Group Member acquires or completes the
construction of such fixed or capital asset. 
Notwithstanding the foregoing, no transaction or arrangement shall be
restricted under this Section 6.15 if, in connection with such transaction
or arrangement, any Indebtedness or Lien incurred is permitted to be incurred
under Section 6.01 and Section 6.02 and any sale or transfer is
treated as a sale under Section 6.04(e) and permitted thereunder.


 


Section 6.16.                             Fiscal Year.  Holdings shall not permit its fiscal year or
the fiscal year of any of its Subsidiaries to end on a day other than on (or,
in the case of certain Subsidiaries, about) September 30.


 


ARTICLE VII



EVENTS OF DEFAULT


 


If any of the following
events (“Events of Default”) shall occur:


 


(a)                                  the Borrower
shall fail to pay any principal of any Loan when and as the same shall become
due and payable in accordance with the terms hereof, whether at the due date
thereof or at a date fixed for prepayment thereof or otherwise;


 


(b)                                 the Borrower
shall fail to pay any reimbursement obligation in respect of any LC
Disbursement or any interest on any Loan or any fee or any other amount (other
than an amount referred to in paragraph (a) of this Article) payable under
this Agreement or under any other Loan Document, when and as the same shall
become due and payable in accordance with the terms hereof, and such failure
shall continue unremedied for a period of five or more Business Days;


 


(c)                                  any
representation or warranty made or deemed made by or on behalf of any Loan
Party in or in connection with this Agreement or any other Loan Document or any
amendment or modification hereof or thereof, or in any report, certificate,
financial statement or other document furnished pursuant to or in connection
with this Agreement or any other Loan


 


94

















 


Document
or any amendment or modification hereof or thereof, shall prove to have been
false or misleading when made or deemed made in any material respect;


 


(d)                                 any Loan Party
shall fail to observe or perform any covenant, condition or agreement contained
in (i) Section 5.01(a) or Section 5.01(b) and such
failure shall continue unremedied for a period of 15 or more days or
(ii) Section 5.02 or Section 5.03 (with respect to a Loan Party’s
existence) or in Article VI or any Loan Party shall default in the
performance of any of its obligations contained in Sections 4.1(d), (e) or
(f), 4.7(a) or (b), 4.11 or 4.14 of the Security Agreement or
Article VII of the Security Agreement;


 


(e)                                  any Loan Party
shall fail to observe or perform any covenant, condition or agreement contained
in this Agreement (other than those specified in paragraph (a), (b) or
(d) of this Article) or any other Loan Document and such failure shall
continue unremedied for a period of 30 or more days after notice thereof from
the Administrative Agent (given at the request of any Lender);


 


(f)                                    any Group
Member shall fail to make any payment (whether of principal or interest and
regardless of amount and including any payment in settlement of a Swap
Agreement) in respect of any Material Indebtedness, when and as the same shall
become due and payable, and such failure shall continue unremedied beyond any
applicable grace period;


 


(g)                                 any event or
condition occurs that results in any Material Indebtedness becoming due prior
to its scheduled maturity or that enables or permits (with or without the
giving of notice, the lapse of time or both) the holder or holders of any
Material Indebtedness or any trustee or agent on its or their behalf to cause
any Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided
that this paragraph (g) shall not apply to secured Indebtedness that
becomes due as a result of the voluntary sale or transfer of the property or
assets securing such Indebtedness;


 


(h)                                 an involuntary
proceeding shall be commenced or an involuntary petition shall be filed seeking
(i) liquidation, reorganization or other relief in respect of any Group
Member (and, prior to a Permitted Change of Control Transaction, Griffon or the
Parent) or its debts, or of a substantial part of its assets, under any
Federal, state or foreign bankruptcy, insolvency, receivership or similar law
now or hereafter in effect or (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for any Group Member
(and, prior to a Permitted Change of Control Transaction, Griffon or the
Parent) or for a substantial part of its assets, and, in any such case, such
proceeding or petition shall continue undismissed or undischarged for a period
of 60 or more days or an order or decree approving or ordering any of the
foregoing shall be entered;


 


(i)                                     any Group
Member (and, prior to a Permitted Change of Control Transaction, Griffon or the
Parent) shall (i) voluntarily commence any proceeding or file any petition
seeking liquidation, reorganization or other relief under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or hereafter in
effect, (ii) consent to the institution of, or fail to contest in a timely
and appropriate manner, any proceeding or petition described in paragraph
(h) of this Article, (iii) apply for or consent to the appointment of
a receiver, trustee, custodian, sequestrator, conservator or similar official
for it or for a substantial part of its assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors or
(vi) take any action for the purpose of effecting any of the foregoing;


 


95

















 


(j)                                     any Group
Member (and, prior to a Permitted Change of Control Transaction, Griffon or the
Parent) shall become unable, admit in writing its inability or fail generally
to pay its debts as they become due;


 


(k)                                  one or more
judgments for the payment of money in an aggregate amount in excess of
$15,000,000 shall be rendered against any Group Member or any combination
thereof and the same shall remain undischarged for a period of 30 consecutive
days during which execution shall not be effectively stayed or vacated or, in
respect with such judgment, any action shall be legally taken by a judgment
creditor to attach or levy upon any assets of any Group Member to enforce any
such judgment;


 


(l)                                     an ERISA Event
shall have occurred that, when taken together with all other ERISA Events that
have occurred, could reasonably be expected to result in a Material Adverse
Effect;


 


(m)                               a Change of
Control shall occur;


 


(n)                                 any material
provision of any Loan Document for any reason ceases to be valid, binding and enforceable
in accordance with its terms (or any Loan Party shall challenge the
enforceability of any Loan Document or shall assert in writing, or engage in
any action based on any such written assertion, that any provision of any of
the Loan Documents has ceased to be or otherwise is not valid, binding and
enforceable in accordance with its terms)


 


(o)                                 the Guaranty
contained in Article X shall for whatever reason cease to be in full force
and effect or any Loan Party or any Affiliate of any Loan Party shall so
assert; or


 


(p)                                 the Liens
created by the Collateral Documents shall at any time not constitute a valid
and perfected Lien on the Collateral intended to be covered thereby (to the
extent perfection by filing, registration, recordation or possession is required
herein or therein), free and clear of all other Liens (other than Liens
expressly permitted under Section 6.02 or under the Collateral Documents),
or, except for expiration in accordance with its terms, any of the Collateral
Documents shall for whatever reason be terminated or cease to be in full force
and effect, or any Loan Party or any Affiliate of any Loan Party shall so
assert, or the enforceability thereof shall be contested by any Loan Party or
any Affiliate of any Loan Party;


 


then, and in every such
event (other than any event described in paragraphs (h) or (i) of
this Article), and at any time thereafter during the continuance of such event,
the Administrative Agent may, and at the request of the Required Lenders shall,
by notice to the Borrower, take either or both of the following actions, at the
same or different times: (i) terminate the Commitments, and thereupon the
Commitments shall terminate immediately, and (ii) declare the Loans then
outstanding to be due and payable in whole (or in part, in which case any
principal not so declared to be due and payable may thereafter be declared to
be due and payable), and thereupon the principal of the Loans so declared to be
due and payable, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower; and in case of any event
described in paragraph (h) or (i) of this Article, the Commitments
shall automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of
the Borrower accrued hereunder, shall automatically become due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower.


 


96
















 


ARTICLE VIII


 


The Administrative Agent


 


Each
of the Lenders and the Issuing Banks hereby irrevocably appoints the
Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf, including execution of the other Loan
Documents, and to exercise such powers as are delegated to the Administrative
Agent by the terms of the Loan Documents, together with such actions and powers
as are reasonably incidental thereto.


 


The
bank serving as the Administrative Agent hereunder shall have the same rights
and powers in its capacity as a Lender as any other Lender and may exercise the
same as though it were not the Administrative Agent, and such bank and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Loan Parties or any Subsidiary of a Loan Party or
other Affiliate thereof as if it were not the Administrative Agent hereunder.


 


The
Administrative Agent shall not have any duties or obligations except those
expressly set forth in the Loan Documents. 
Without limiting the generality of the foregoing, (a) the
Administrative Agent shall not be subject to any fiduciary or other implied
duties, regardless of whether a Default has occurred and is continuing,
(b) the Administrative Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated by the Loan Documents that the
Administrative Agent is required to exercise in writing as directed by the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 9.02), and
(c) except as expressly set forth in the Loan Documents, the
Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to any Loan Party
or any of its Subsidiaries that is communicated to or obtained by the bank
serving as Administrative Agent or any of its Affiliates in any capacity.  The Administrative Agent shall not be liable
for any action taken or not taken by it with the consent or at the request of
the Required Lenders (or such other number or percentage of the Lenders as shall
be necessary under the circumstances as provided in Section 9.02) or in
the absence of its own gross negligence or willful misconduct.  The Administrative Agent shall be deemed not
to have knowledge of any Default unless and until written notice thereof is
given to the Administrative Agent by the Borrower or a Lender, and the
Administrative Agent shall not be responsible for or have any duty to ascertain
or inquire into (i) any statement, warranty or representation made in or
in connection with any Loan Document, (ii) the contents of any certificate,
report or other document delivered hereunder or in connection with any Loan
Document, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth in any Loan Document,
(iv) the validity, enforceability, effectiveness or genuineness of any
Loan Document or any other agreement, instrument or document, (v) the
creation, perfection or priority of Liens on the Collateral or the existence of
the Collateral, or (vi) the satisfaction of any condition set forth in
Article IV or elsewhere in any Loan Document, other than to confirm
receipt of items expressly required to be delivered to the Administrative
Agent.


 


The
Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person.  The Administrative Agent also may rely upon
any statement made to it orally or by telephone and believed by it to be made
by the proper Person, and shall not incur any liability for relying
thereon.  The Administrative Agent may
consult with legal counsel (who may be counsel for the Borrower), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.


 


97

















 


The
Administrative Agent may perform any and all its duties and exercise its rights
and powers by or through any one or more sub-agents appointed by the
Administrative Agent.  The Administrative
Agent and any such sub-agent may perform any and all its duties and exercise
its rights and powers through their respective Related Parties.  The exculpatory provisions of the preceding
paragraphs shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their
respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.


 


Subject
to the appointment and acceptance of a successor Administrative Agent as
provided in this paragraph, the Administrative Agent may resign at any time by
notifying the Lenders, the Issuing Banks and the Borrower.  Upon any such resignation, the Required
Lenders shall have the right, in consultation with the Borrower, to appoint a
successor.  If no successor shall have
been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives
notice of its resignation, then the retiring Administrative Agent may, on
behalf of the Lenders and the Issuing Banks, appoint a successor Administrative
Agent which shall be a commercial bank or an Affiliate of any such commercial
bank.  Upon the acceptance of its
appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder.  The fees payable by the Borrower to a
successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrower and such
successor.  After the Administrative
Agent’s resignation hereunder, the provisions of this Article and
Section 9.03 shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while it was
acting as Administrative Agent.


 


Each
Lender acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. 
Each Lender also acknowledges that it will, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or
based upon this Agreement, any other Loan Document or related agreement or any
document furnished hereunder or thereunder.


 


To
the extent requested, the Administrative Agent shall promptly upon receipt
thereof forward to each Lender a copy of each Report.  Each Lender hereby agrees that (a) it
has requested a copy of each Report prepared by or on behalf of the
Administrative Agent; (b) the Administrative Agent (i) makes no representation
or warranty, express or implied, as to the completeness or accuracy of any
Report or any of the information contained therein or any inaccuracy or
omission contained in or relating to a Report and (ii) shall not be liable
for any information contained in any Report; (c) the Reports are not comprehensive
audits or examinations, and that any Person performing any field examination
will inspect only specific information regarding the Loan Parties and will rely
significantly upon the Loan Parties’ books and records, as well as on
representations of the Loan Parties’ personnel and that the Administrative
Agent undertakes no obligation to update, correct or supplement the Reports;
(d) it will keep all Reports confidential and strictly for its internal
use, not share the Report with any Loan Party or any other Person except as
otherwise permitted pursuant to this Agreement; and (e) without limiting
the generality of any other indemnification provision contained in this
Agreement, it will pay and protect, and indemnify, defend, and hold the
Administrative Agent and any such other Person preparing a Report harmless from
and against, the claims, actions, proceedings, damages, costs, expenses, and
other


 


98

















 


amounts
(including reasonable attorney fees) incurred by as the direct or indirect
result of any third parties who might obtain all or part of any Report through
the indemnifying Lender.


 


ARTICLE IX




Miscellaneous


 


Section 9.01.                             Notices.  (a)  Except in the case of notices and
other communications expressly permitted to be given by telephone (and subject
to paragraph (b) below), all notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by facsimile, as
follows:


 


(i)                                     if to any Loan Party, to the Borrower at:


 


Clopay Ames True Temper
Holding Corp.


8585 Duke Blvd.


Mason, Ohio 45040


Attention:  Treasurer


Fax:  513-770-6544


 


with a copy, prior to a
Permitted Change of Control Transaction, to:


 


Griffon Corporation


712 Fifth Avenue, 18th Floor


New York, New York 10019


Attention:  Chief Financial Officer


Fax:  516-932-1169


 


(ii)                                  if to the Administrative Agent, the Swingline Lender or JPMorgan, as
Issuing Bank, to JPMorgan Chase Bank, N.A. at:


 


270 Park Avenue, 44th Floor


Mailcode:  NY1-K855


New York, NY 10017


Attention:  Donna DiForio


Fax:  646-534-2274


 


(iii)                               if to Bank of America, N.A., as Issuing Bank, to:


 


Bank
of America, N.A.


225 Franklin Street — MA1-225-02-05


Boston, MA 02110


Attention:
Christopher M. O’Halloran


Fax:
312-453-6319


 


(iv)                              if to any other Lender, to it at its address or facsimile number set
forth in its Administrative Questionnaire.


 


All
such notices and other communications (i) sent by hand or overnight
courier service, or mailed by certified or registered mail, shall be deemed to
have been given when received or (ii) sent by facsimile


 


99

















 


shall
be deemed to have been given when sent, provided that if not given
during normal business hours for the recipient, shall be deemed to have been
given at the opening of business on the next Business Day for the recipient.


 


(b)                                 Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications (including e-mail and
internet or intranet websites) pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to
notices pursuant to Article II unless otherwise agreed by the
Administrative Agent and the applicable Lender. 
The Administrative Agent or the Borrower (on behalf of the Loan Parties)
may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it; provided
that approval of such procedures may be limited to particular notices or
communications. All such notices and other communications (i) sent to an
e-mail address shall be deemed received upon the sender’s receipt of an
acknowledgement from the intended recipient (such as by the “return receipt
requested” function, as available, return e-mail or other written
acknowledgement), provided that if not given during the normal
business hours of the recipient, such notice or communication shall be deemed
to have been given at the opening of business on the next Business Day for the
recipient, and (ii) posted to an Internet or intranet website shall be
deemed received upon the deemed receipt by the intended recipient at its e-mail
address as described in the foregoing clause (b)(i) of notification that
such notice or communication is available and identifying the website address
therefor.


 


(c)                                  Any party hereto may change its address or facsimile number for notices
and other communications hereunder by notice to the other parties hereto.


 


Section 9.02.                             Waivers;
Amendments.  (a) 
No failure or delay by the Administrative Agent, any Issuing Bank or any Lender
in exercising any right or power hereunder or under any other Loan Document
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof
or the exercise of any other right or power. 
The rights and remedies of the Administrative Agent, the Issuing Banks
and the Lenders hereunder and under any other Loan Document are cumulative and
are not exclusive of any rights or remedies that they would otherwise
have.  No waiver of any provision of any
Loan Document or consent to any departure by any Loan Party therefrom shall in
any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall
be effective only in the specific instance and for the purpose for which
given.  Without limiting the generality
of the foregoing, the making of a Loan or issuance of a Letter of Credit shall
not be construed as a waiver of any Default, regardless of whether the
Administrative Agent, any Lender or any Issuing Bank may have had notice or
knowledge of such Default at the time.


 


(b)                                 Subject to Section 2.09(h), neither this Agreement nor any other
Loan Document nor any provision hereof or thereof may be waived, amended or
modified except (i) in the case of this Agreement, pursuant to an
agreement or agreements in writing entered into by the Borrower and the
Required Lenders or, (ii) in the case of any other Loan Document, pursuant
to an agreement or agreements in writing entered into by the Administrative
Agent and the Loan Party or Loan Parties that are parties thereto, with the
consent of the Required Lenders; provided that no such agreement shall
(i) (A) increase the Commitment of any Lender without the written
consent of such Lender (provided that the Administrative Agent may make
Protective Advances as set forth in Section 2.04) or (B) change
Section 2.09(f) or otherwise increase the aggregate Revolving
Commitments such that, in either case, the aggregate Revolving Commitments
would exceed $150,000,000, without the written consent of each Lender
(ii) reduce or forgive the principal amount of any Loan or LC Disbursement
or reduce the rate of interest thereon, or reduce or forgive any interest, fees
or other Obligations payable hereunder, without


 


100

















 


the written consent of each
Lender directly affected thereby, (iii) postpone any scheduled date of
payment of the principal amount of any Loan or LC Disbursement, or any date for
the payment of any interest, fees or other Obligations payable hereunder, or
reduce the amount of, waive or excuse any such payment, or postpone the
scheduled date of expiration of any Commitment, without the written consent of
each Lender directly affected thereby, (iv) amend Section 2.09(h)(iv) without
the written consent of the Supermajority Lenders, (v) change
Section 2.18(b) or (d) in a manner that would alter the manner
in which payments are shared, without the written consent of each Lender,
(vi) increase the advance rates set forth in the definition of Borrowing
Base (or change the constituent definitional provisions thereof in a manner
having the effect of increasing the advance rates) without the written consent
of the Supermajority Lenders, (vii) add new categories of eligible assets
or otherwise change the definition of the Borrowing Base or any eligibility
criteria incorporated therein that, in each case, has the effect of increasing
Availability, without the written consent of the Supermajority Lenders,
(viii) change any of the provisions of this Section or the definition
of “Required Lenders” or any other provision of any Loan Document specifying
the number or percentage of Lenders (or Lenders of any Class) required to
waive, amend or modify any rights thereunder or make any determination or grant
any consent thereunder, without the written consent of each Lender,
(ix) release any Guarantor from its obligation under its Guaranty (except
as otherwise permitted herein or in the other Loan Documents), without the
written consent of each Lender, (x) except as provided in clauses
(c) and (d) of this Section or in any Collateral Document,
release all or substantially all of the Collateral, without the written consent
of each Lender or (xi) subordinate the Obligations to any other obligation
without the written consent of each Lender; provided  further that
no such agreement shall amend, modify or otherwise affect the rights or duties
of the Administrative Agent, the Issuing Banks or the Swingline Lender
hereunder without the prior written consent of the Administrative Agent, the
Issuing Banks or the Swingline Lender, as the case may be.  The Administrative Agent may also amend the Commitment
Schedule to reflect assignments entered into pursuant to Section 9.04.


 


(c)                                  The Lenders hereby irrevocably authorize the Administrative Agent, at its
option and in its Permitted Discretion, to release any Liens granted to the
Administrative Agent by the Loan Parties on any Collateral (i) upon the
termination of all Commitments, payment and satisfaction in full of all Secured
Obligations (other than Unliquidated Obligations), and the cash
collateralization of all Unliquidated Obligations in a manner satisfactory to
each affected Lender, (ii) constituting property being sold or disposed of
if the Loan Party disposing of such property certifies to the Administrative
Agent that the sale or disposition is made in compliance with the terms of this
Agreement (and the Administrative Agent may rely conclusively on any such
certificate, without further inquiry), (iii) constituting property leased
to a Loan Party under a lease which has expired or been terminated in a
transaction permitted under this Agreement, or (iv) as required to effect
any sale or other disposition of such Collateral in connection with any
exercise of remedies of the Administrative Agent and the Lenders pursuant to
Article VII.  Except as provided in
the preceding sentence, the Administrative Agent will not release any Liens on
Collateral without the prior written authorization of the Required Lenders; provided that, the Administrative Agent may in its Permitted Discretion,
release its Liens on Collateral valued in the aggregate not in excess of
$7,500,000 during any calendar year without the prior written authorization of
the Required Lenders.  Any such release
shall not in any manner discharge, affect, or impair the Secured Obligations or
any Liens (other than those expressly being released) upon (or obligations of
the Loan Parties in respect of) all interests retained by the Loan Parties,
including the proceeds of any sale, all of which shall continue to constitute
part of the Collateral.


 


(d)                                 If, in connection with any proposed amendment, waiver or consent
requiring the consent of “each Lender”
or “each Lender affected thereby,” the consent of the Required Lenders
is obtained, but the consent of other necessary Lenders is not obtained (any
such Lender whose consent is necessary but not obtained being referred to
herein as a “Non-Consenting Lender”), then the Borrower may elect to
replace a Non-Consenting Lender as a Lender party to this Agreement, provided that,


 


101

















 


concurrently with such
replacement, (i) another bank or other entity which is reasonably
satisfactory to the Borrower and the Administrative Agent shall agree, as of
such date, to purchase for cash the Loans and other Obligations due to the
Non-Consenting Lender pursuant to an Assignment and Assumption and to become a
Lender for all purposes under this Agreement and to assume all obligations of
the Non-Consenting Lender to be terminated as of such date and to comply with
the requirements of clause (b) of Section 9.04, and (ii) the
Borrower shall pay to such Non-Consenting Lender in same day funds on the day
of such replacement (1) all interest, fees and other amounts then accrued
but unpaid to such Non-Consenting Lender by the Borrower hereunder to and
including the date of termination, including without limitation payments due to
such Non-Consenting Lender under Section 2.14 and Section 2.16, and
(2) an amount, if any, equal to the payment which would have been due to
such Lender on the day of such replacement under Section 2.16 had the
Loans of such Non-Consenting Lender been prepaid on such date rather than sold
to the replacement Lender.  Any such replaced
Non-Consenting Lender shall not be responsible for any assignment fee.


 


Section 9.03.                             Expenses;
Indemnity; Damage Waiver. 
(a)  The Borrower shall pay (i) all reasonable documented
out-of-pocket expenses incurred by the Administrative Agent and its Affiliates,
including the reasonable fees, charges and disbursements of one counsel for the
Administrative Agent and, if necessary, one local counsel in any applicable
jurisdiction, in connection with the syndication and distribution (including,
without limitation, via the internet or through a service such as Intralinks)
of the credit facilities provided for herein, the preparation and
administration of the Loan Documents or any amendments, modifications or
waivers of the provisions of the Loan Documents (whether or not the
transactions contemplated hereby or thereby shall be consummated),
(ii) all reasonable documented out-of-pocket expenses incurred by the
Issuing Banks in connection with the issuance, amendment, renewal or extension
of any Letter of Credit or any demand for payment thereunder and (iii) all
out-of-pocket expenses incurred by the Administrative Agent, the Issuing Banks
or any Lender, including the reasonable fees, charges and disbursements of any
counsel for the Administrative Agent, the Issuing Banks or any Lender, in
connection with the enforcement, collection or protection of its rights in
connection with the Loan Documents, including its rights under this Section, or
in connection with the Loans made or Letters of Credit issued hereunder,
including all such out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans or Letters of Credit, it
being agreed that the Borrower shall not be responsible for the fees and
expenses of more than one counsel for both the Administrative Agent and the
Lenders and, if necessary, one local counsel in any applicable jurisdiction
(and, in the case of a conflict of interest, one additional counsel per group
of similarly affected parties and one additional local counsel in any
applicable jurisdiction, if reasonably necessary).  Expenses being reimbursed by the Borrower
under this Section include, without limiting the generality of the
foregoing, costs and expenses incurred in connection with:


 


(i)                                     appraisals and insurance reviews;


 


(ii)                                  field examinations and the preparation of Reports based on the fees
charged by a third party retained by the Administrative Agent or the internally
allocated fees for each Person employed by the Administrative Agent with
respect to each field examination;


 


(iii)                               taxes, fees and other charges for (A) lien and title searches and
title insurance and (B) recording the Mortgages, filing financing
statements and continuations, and other actions to perfect, protect, and
continue the Administrative Agent’s Liens;


 


(iv)                              sums paid or incurred to take any action required of any Loan Party under
the Loan Documents that such Loan Party fails to pay or take; and


 


102

















 


(v)                                 forwarding loan proceeds, collecting checks and other items of payment,
and establishing and maintaining the accounts and lock boxes, and costs and
expenses of preserving and protecting the Collateral.


 


(vi)                              All of the foregoing costs and expenses may be charged to the Borrower as
Revolving Loans or to another deposit account, all as described in
Section 2.18(c).


 


(b)                                 The Borrower shall indemnify the Administrative Agent, each Issuing Bank
and each Lender, and each Related Party of any of the foregoing Persons (each
such Person being called an “Indemnitee”) against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, penalties,
liabilities and related expenses, including the fees, charges and disbursements
of any counsel for any Indemnitee, incurred by or asserted against any
Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of the Loan Documents or any agreement or instrument
contemplated thereby, the performance by the parties hereto of their respective
obligations thereunder or the consummation of the Transactions or any other
transactions contemplated hereby, (ii) any Loan or Letter of Credit or the
use of the proceeds therefrom (including any refusal by any Issuing Bank to
honor a demand for payment under a Letter of Credit if the documents presented
in connection with such demand do not strictly comply with the terms of such
Letter of Credit), (iii) any actual or alleged presence or release of
Hazardous Materials on or from any property owned or operated by any Group
Member, or any Environmental Liability related in any way to any Group Member,
or (iv) any actual or prospective claim, litigation, investigation or
proceeding relating to any of the foregoing, whether based on contract, tort or
any other theory and regardless of whether any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, penalties, liabilities or related expenses
are determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee.


 


(c)                                  To the extent that the Borrower fails to pay any amount required to be
paid by it to the Administrative Agent, any Issuing Bank or the Swingline
Lender under paragraph (a) or (b) of this Section, each Lender
severally agrees to pay to the Administrative Agent, such Issuing Bank or the
Swingline Lender, as the case may be, such Lender’s Applicable Percentage
(determined as of the time that the applicable unreimbursed expense or
indemnity payment is sought) of such unpaid amount; provided that the
unreimbursed expense or indemnified loss, claim, damage, penalty, liability or
related expense, as the case may be, was incurred by or asserted against the
Administrative Agent, such Issuing Bank or the Swingline Lender in its capacity
as such.


 


(d)                                 To the extent permitted by applicable law, no Loan Party shall assert,
and each hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any agreement or instrument contemplated hereby, the Transactions,
any Loan or Letter of Credit or the use of the proceeds thereof.


 


(e)                                  All amounts due under this Section shall be payable promptly after
written demand therefor.


 


Section 9.04.                             Successors and
Assigns.  (a)  The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns permitted hereby (including
any Affiliate of an Issuing Bank that issues any Letter of Credit), except that
(i) the Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender (and any
attempted assignment or transfer by the Borrower without such consent shall be
null and void) and (ii) no Lender may assign or otherwise transfer its
rights


 


103

















 


or obligations hereunder except in accordance with
this Section.  Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby
(including any Affiliate of an Issuing Bank that issues any Letter of Credit),
Participants (to the extent provided in paragraph (c) of this Section)
and, to the extent expressly contemplated hereby, the Related Parties of each
of the Administrative Agent, the Issuing Banks and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.


 


(b)                                 (i)  Subject to the conditions set forth in paragraph
(b)(ii) below, any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it) with the prior
written consent (such consent not to be unreasonably withheld or delayed) of:


 


(A)  the
Borrower, provided that no consent of the Borrower shall be required for
an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if an
Event of Default has occurred and is continuing, any other assignee;


 


(B)  the
Administrative Agent, provided that no consent of the Administrative
Agent shall be required for an assignment to a Lender, an Affiliate of a Lender
or an Approved Fund; and


 


(C)  the
Issuing Banks.


 


(ii)                                  Assignments shall be subject to the following additional conditions:


 


(A)  except
in the case of an assignment to a Lender or an Affiliate of a Lender or an
assignment of the entire remaining amount of the assigning Lender’s Commitment
or Loans of any Class, the amount of the Commitment or Loans of the assigning
Lender subject to each such assignment (determined as of the date the
Assignment and Assumption with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $1,000,000 unless each of the Borrower
and the Administrative Agent otherwise consent, provided that no such
consent of the Borrower shall be required if an Event of Default has occurred
and is continuing;


 


(B)  each
partial assignment shall be made as an assignment of a proportionate part of
all the assigning Lender’s rights and obligations under this Agreement;


 


(C)  the
parties to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Assumption, together with a processing and recordation
fee of $3,500;


 


(D)  the
assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent an Administrative Questionnaire in which the assignee designates one or
more Credit Contacts to whom all syndicate-level information (which may contain
material non-public information about Griffon, the Parent, any Group Member and
their Related Parties or their respective securities) will be made available
and who may receive such information in accordance with the assignee’s
compliance procedures and applicable laws, including Federal and state
securities laws; and


 


104

















 


(E)  without
the prior written consent of each of the Administrative Agent and the Borrower,
no assignment shall be made to a prospective assignee that bears a relationship
to the Borrower described in Section 108(e)(4) of the Code.


 


For
the purposes of this Section 9.04(b), the term “Approved Fund” has
the following meaning:


 


“Approved
Fund” means any Person (other than a natural person) that is engaged in
making, purchasing, holding or investing in bank loans and similar extensions
of credit in the ordinary course of its business and that is administered or
managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an
entity or an Affiliate of an entity that administers or manages a Lender.


 


(iii)                               Subject to acceptance and recording thereof pursuant to
paragraph (b)(iv) of this Section, from and after the effective date
specified in each Assignment and Assumption the assignee thereunder shall be a
party hereto and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption covering
all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to
the benefits of Section 2.15, Section 2.16, Section 2.17 and
Section 9.03).  Any assignment or
transfer by a Lender of rights or obligations under this Agreement that does
not comply with this Section 9.04 shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (c) of this Section.


 


(iv)                              The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitment of, and principal amount of the
Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof
from time to time (the “Register”). 
The entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent, the Issuing Banks and the Lenders shall treat each Person
whose name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary.  The Register shall be
available for inspection by the Borrower, any Issuing Bank and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.


 


(v)                                 Upon its receipt of a duly completed Assignment and Assumption executed
by an assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this
Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment
and Assumption and record the information contained therein in the Register; provided
that if either the assigning Lender or the assignee shall have failed to make
any payment required to be made by it pursuant to Section 2.05,
Section 2.06(d) or (e), Section 2.07(b), Section 2.18(d) or
Section 9.03(c), the Administrative Agent shall have no obligation to
accept such Assignment and Assumption and record the information therein in the
Register unless and until such payment shall have been made in full, together
with all accrued interest thereon.  No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.


 


105

















 


(1)                                  Any Lender may, without the consent of the Borrower, the Administrative
Agent, any Issuing Bank or the Swingline Lender, sell participations to one or
more banks or other entities (a “Participant”) in all or a portion of
such Lender’s rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans owing to it); provided that
(A) such Lender’s obligations under this Agreement shall remain unchanged,
(B) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (C) the Borrower, the
Administrative Agent, the Issuing Banks and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender’s
rights and obligations under this Agreement and (D) without the prior written
consent of each of the Administrative Agent and the Borrower, no participation
shall be sold to a prospective Participant that bears a relationship to the
Borrower described in Section 108(e)(4) of the Code.  Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that
such agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects such
Participant.  Subject to paragraph
(c)(ii) of this Section, the Borrower agrees that each Participant shall
be entitled to the benefits of, and subject to the limitations of,
Section 2.15, Section 2.16 and Section 2.17 to the same extent
as if it were a Lender and had acquired its interest by assignment pursuant to
paragraph (b) of this Section.  To
the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 9.08 as though it were a Lender, provided such
Participant agrees to be subject to Section 2.18(d) as though it were
a Lender.  Each Lender that sells a
participation, acting solely for this purpose as an agent of the Borrower,
shall maintain a register on which it enters the name and address of each
Participant and the principal amounts (and stated interest) of each Participant’s
interest in the Loans or other obligations under this Agreement (the “Participant
Register”); provided that no Lender shall have any obligation to disclose all
or any portion of the Participant Register to any Person (including the
identity of any Participant or any information relating to a Participant’s
interest in any Commitments, Loans, Letters of Credit or its other obligations
under this Agreement or any other Loan Document) except to the extent that such
disclosure is necessary to establish that such Commitment, Loan, Letter of
Credit or other obligation is in registered form under
Section 5f.103-1(c) of the United States Treasury Regulations. The
entries in the Participant Register shall be conclusive, and such Lender, each
Loan Party and the Administrative Agent shall treat each person whose name is
recorded in the Participant Register pursuant to the terms hereof as the owner
of such participation for all purposes of this Agreement, notwithstanding
notice to the contrary.


 


(2)                                  A Participant shall not be entitled to receive any greater payment under
Section 2.15 or Section 2.17 than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made
with the Borrower’s prior written consent. 
No Participant shall be entitled to the benefits of Section 2.17
unless such Participant complies with Section 2.17(e) as though it
were a Lender.


 


(c)                                  Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Lender, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section


 


106

















 


shall not apply to any such
pledge or assignment of a security interest; provided that no such
pledge or assignment of a security interest shall release a Lender from any of
its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.


 


Section 9.05.                             Survival.  All covenants, agreements, representations
and warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative Agent, any Issuing
Bank or any Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and
so long as the Commitments have not expired or terminated.  The provisions of Section 2.15,
Section 2.16, Section 2.17 and Section 9.03 and
Article VIII shall survive and remain in full force and effect regardless
of the consummation of the transactions contemplated hereby, the repayment of
the Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.


 


Section 9.06.                             Counterparts;
Integration; Effectiveness.  This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract.  This
Agreement, the other Loan Documents and any separate letter agreements with
respect to fees payable to the Administrative Agent constitute the entire
contract among the parties relating to the subject matter hereof and supersede
any and all previous agreements and understandings, oral or written, relating
to the subject matter hereof.  Except as
provided in Section 4.01, this Agreement shall become effective when it
shall have been executed by the Administrative Agent and when the
Administrative Agent shall have received counterparts hereof which, when taken
together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. 
Delivery of an executed counterpart of a signature page of this
Agreement by facsimile shall be effective as delivery of a manually executed
counterpart of this Agreement.


 


Section 9.07.                             Severability.  Any provision of any Loan Document held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions thereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.


 


Section 9.08.                             Right of Setoff.  If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at any time owing by
such Lender or Affiliate to or for the credit or the account of the Borrower or
such Guarantor against any of and all the Secured Obligations held by such
Lender, irrespective of whether or not such Lender shall have made any demand
under the Loan Documents and although such obligations may be unmatured.  The applicable Lender shall notify the
Borrower and the Administrative Agent of such set-off or application, provided
that any failure to give or any delay in giving such notice shall not affect
the validity of any such set-off or application under this Section.  The rights of each Lender under this
Section are in addition to other rights and remedies (including other
rights of setoff) which such Lender may have.


 


107
















 


Section 9.09.                             Release of
Collateral. 
Notwithstanding anything to the contrary contained herein or any other
Loan Document, when all Obligations (other than contingent indemnification
obligations) have been paid in full and all Commitments have terminated or
expired, upon the reasonable request of the Borrower, the Administrative Agent
shall (without notice to, or vote or consent of, any Lender) take such actions
as shall be required to release its security interest in all Collateral, and to
release all guarantee obligations provided for in any Loan Document.  Any such release of guarantee obligations
shall be deemed subject to the provision that such guarantee obligations shall
be reinstated if after such release any portion of any payment in respect of the
Obligations guaranteed thereby shall be rescinded or must otherwise be restored
or returned upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Borrower or any Guarantor, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, the Borrower or any Guarantor or any substantial part of its
property, or otherwise, all as though such payment had not been made.  Notwithstanding the foregoing, upon the
reasonable request of the Borrower in connection with any disposition of assets
or property of Holdings or any of its Subsidiaries permitted hereunder, the
Administrative Agent shall (without notice to, or vote or consent of, any
Lender) take such actions as shall be required to release its security interest
in all Collateral being disposed of in such disposition, and to release any
guarantee obligations provided for in any Loan Document of any Person being
disposed of in such disposition, to the extent necessary to permit consummation
of such disposition in accordance with the Loan Documents.


 


Section 9.10.                             Governing Law;
Jurisdiction; Consent to Service of Process.  (a)  The Loan Documents (other than
those containing a contrary express choice of law provision) shall be governed
by and construed in accordance with the laws of the State of New York, but
giving effect to federal laws applicable to national banks.


 


(b)                                 Each Loan Party
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any U.S. Federal or New York State court
sitting in New York, New York in any action or proceeding arising out of or
relating to any Loan Documents, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court.  Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. 
Nothing in this Agreement or any other Loan Document shall affect any
right that the Administrative Agent, any Issuing Bank or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement or
any other Loan Document against any Loan Party or its properties in the courts
of any jurisdiction.


 


(c)                                  Each Loan Party hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or any other Loan Document in any
court referred to in paragraph (b) of this Section.  Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.


 


(d)                                 Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 9.01.  Nothing in this Agreement or any other Loan
Document will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.


 


108

















 


Section 9.11.                             WAIVER OF JURY
TRIAL.  EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY).  EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.


 


Section 9.12.                             Headings.  Article and Section headings and
the Table of Contents used herein are for convenience of reference only, are
not part of this Agreement and shall not affect the construction of, or be
taken into consideration in interpreting, this Agreement.


 


Section 9.13.                             Confidentiality.  Each of the Administrative Agent, the Issuing
Banks and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to its
and its Affiliates’ directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority,
(c) to the extent required by Requirement of Laws or by any subpoena or
similar legal process, (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an
agreement containing provisions substantially the same as those of this
Section, to (i) any assignee of or Participant in, or any prospective assignee
of or Participant in, any of its rights or obligations under this Agreement or
(ii)  any actual or prospective counterparty (or its advisors) to any swap
or derivative transaction relating to the Loan Parties and their obligations,
(g) with the consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a
breach of this Section or (ii) becomes available to the
Administrative Agent, any Issuing Bank or any Lender on a non-confidential
basis from a source other than the Borrower. 
For the purposes of this Section, “Information” means all information
received from the Borrower relating to the Borrower or its business, other than
any such information that is available to the Administrative Agent, any Issuing
Bank or any Lender on a non-confidential basis prior to disclosure by the
Borrower.  Any Person required to
maintain the confidentiality of Information as provided in this
Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.


 


EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN
SECTION 9.13 FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE
MATERIAL NON-PUBLIC INFORMATION CONCERNING GRIFFON AND ITS AFFILIATES AND THEIR
RELATED PARTIES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS
DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION
AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH
THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE
SECURITIES LAWS.


 


109

















 


ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS,
FURNISHED BY THE BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE
COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION,
WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE COMPANY, THE
LOAN PARTIES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES.  ACCORDINGLY, EACH LENDER REPRESENTS TO THE
BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS
ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION
THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS
COMPLIANCE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE
SECURITIES LAWS.


 


Section 9.14.                             Several
Obligations; Nonreliance; Violation of Law.  The respective obligations of the Lenders
hereunder are several and not joint and the failure of any Lender to make any
Loan or perform any of its obligations hereunder shall not relieve any other
Lender from any of its obligations hereunder. Each Lender hereby represents
that it is not relying on or looking to any margin stock for the repayment of
the Borrowings provided for herein. 
Anything contained in this Agreement to the contrary notwithstanding, no
Issuing Bank or Lender shall be obligated to extend credit to the Borrower in
violation of any Requirement of Law.


 


Section 9.15.                             USA PATRIOT Act.  Each Lender that is subject to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the “Act”) hereby notifies the Borrower
that pursuant to the requirements of the Act, it is required to obtain, verify
and record information that identifies the Borrower, which information includes
the names and addresses of the Borrower and other information that will allow
such Lender to identify the Borrower in accordance with the Act.


 


Section 9.16.                             Disclosure.  Each Loan Party and each Lender hereby
acknowledges and agrees that the Administrative Agent and/or its Affiliates
from time to time may hold investments in, make other loans to or have other
relationships with any of the Loan Parties and their respective Affiliates.


 


Section 9.17.                             Appointment for
Perfection.  Each Lender
hereby appoints each other Lender as its agent for the purpose of perfecting
Liens, for the benefit of the Administrative Agent and the Secured Parties, in
assets which, in accordance with Article 9 of the UCC or any other
applicable law can be perfected only by possession.  Should any Lender (other than the
Administrative Agent) obtain possession of any such Collateral, such Lender
shall notify the Administrative Agent thereof, and, promptly upon the
Administrative Agent’s request therefor shall deliver such Collateral to the
Administrative Agent or otherwise deal with such Collateral in accordance with
the Administrative Agent’s instructions.


 


Section 9.18.                             Interest Rate
Limitation. 
Notwithstanding anything herein to the contrary, if at any time the
interest rate applicable to any Loan, together with all fees, charges and other
amounts which are treated as interest on such Loan under applicable law
(collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum
Rate”) which may be contracted for, charged, taken, received or reserved by the
Lender holding such Loan in accordance with applicable law, the rate of
interest payable in respect of such Loan hereunder, together with all Charges
payable in respect thereof, shall be limited to the Maximum Rate and, to the
extent lawful, the interest and Charges that would have been payable in respect
of such Loan but were not payable as a result of the operation of this
Section shall be cumulated and the interest and Charges payable to such
Lender in respect of other Loans or periods shall be increased (but not above
the Maximum Rate therefor) until such cumulated amount,


 


110

















 


together with interest thereon at the Federal Funds
Effective Rate to the date of repayment, shall have been received by such
Lender.


 


Section 9.19.                             Effect of
Agreement.  (a) On
the Effective Date, the Existing Credit Agreement shall be amended, restated
and superseded in its entirety.  The
parties hereto acknowledge and agree that (i) this Agreement and the other
Loan Documents, whether executed and delivered in connection herewith or
otherwise, do not constitute a novation, payment and reborrowing, or
termination of the “Obligations” (as defined in the Existing Credit Agreement)
under the Existing Credit Agreement as in effect prior to the Effective Date
and (ii) such “Obligations” are in all respects continuing (as amended and
restated hereby) with only the terms thereof being modified as provided in this
Agreement.


 


(b)                                 On the
Effective Date, (i) any Lender (as defined in the Existing Credit
Agreement) that is not a Lender under this Agreement shall have no Commitments
or obligations hereunder and (ii) participations in the Griffon Letters of
Credit shall be allocated among the Lenders in accordance with their respective
Applicable Percentages of the related LC Exposure.


 


ARTICLE X



Guaranty


 


Section 10.01.                       Guaranty.  Each Guarantor hereby agrees that it is
jointly and severally liable for, and, as primary obligor and not merely as
surety, absolutely and unconditionally guarantees to the Secured Parties the
prompt payment when due, whether at stated maturity, upon acceleration or
otherwise, and at all times thereafter, of the Secured Obligations and all
costs and expenses including, without limitation, all court costs and attorneys’
and paralegals’ fees (including allocated costs of in-house counsel and
paralegals) and expenses paid or incurred by the Administrative Agent, the
Issuing Banks and the Secured Parties in endeavoring to collect all or any part
of the Secured Obligations from, or in prosecuting any action against, the
Borrower, any Guarantor or any other guarantor of all or any part of the
Secured Obligations (such costs and expenses, together with the Secured
Obligations, collectively the “Guaranteed Obligations”). Each Guarantor
further agrees that the Guaranteed Obligations may, to the extent permitted by
the terms of this Agreement or any other Loan Document, be extended or renewed
in whole or in part without notice to or further assent from it, and that it
remains bound upon its guarantee notwithstanding any such extension or renewal.
All terms of this Guaranty apply to and may be enforced by or on behalf of any
domestic or foreign branch or Affiliate of any Lender that extended any portion
of the Guaranteed Obligations.


 


Section 10.02.                       Guaranty of
Payment.  This Guaranty is a guaranty of
payment and not of collection. Each Guarantor waives any right to require the
Administrative Agent, any Issuing Bank or any Lender to sue the Borrower, any
Guarantor, any other guarantor, or any other person obligated for all or any
part of the Guaranteed Obligations (each, an “Obligated Party”), or otherwise
to enforce its payment against any collateral securing all or any part of the
Guaranteed Obligations.


 


Section 10.03.                       No Discharge or
Diminishment of Guaranty. 
(a)  Except as otherwise provided for herein or in any other Loan
Document, the obligations of each Guarantor hereunder are unconditional and
absolute and not subject to any reduction, limitation, impairment or
termination for any reason (other than the indefeasible payment in full in cash
of the Guaranteed Obligations), including: 
(i) any claim of waiver, release, extension, renewal, settlement,
surrender, alteration, or compromise of any of the Guaranteed Obligations, by
operation of law or otherwise; (ii) any change in the corporate existence,
structure or ownership of the Borrower or any other guarantor of or other
person liable for any of the Guaranteed Obligations; (iii) any insolvency,
bankruptcy, reorganization or other similar proceeding affecting any Obligated
Party, or their assets or any resulting release or discharge of any


 


111

















 


obligation of any Obligated Party; or (iv) the
existence of any claim, setoff or other rights which any Guarantor may have at
any time against any Obligated Party, the Administrative Agent, any Issuing
Bank, any Lender, or any other person, whether in connection herewith or in any
unrelated transactions.


 


(b)                                 The obligations of each Guarantor hereunder are not subject to any
defense or setoff, counterclaim, recoupment, or termination whatsoever by
reason of the invalidity, illegality, or unenforceability of any of the
Guaranteed Obligations or otherwise, or any provision of applicable law or
regulation purporting to prohibit payment by any Obligated Party, of the
Guaranteed Obligations or any part thereof.


 


(c)                                  Further, the obligations of any Guarantor hereunder are not discharged or
impaired or otherwise affected by: (i) the failure of the Administrative
Agent, any Issuing Bank or any Lender to assert any claim or demand or to
enforce any remedy with respect to all or any part of the Guaranteed
Obligations; (ii) any waiver or modification of or supplement to any
provision of any agreement relating to the Guaranteed Obligations;
(iii) any release, non-perfection, or invalidity of any indirect or direct
security for the obligations of the Borrower for all or any part of the
Guaranteed Obligations or any obligations of any other guarantor of or other
person liable for any of the Guaranteed Obligations; (iv) any action or
failure to act by the Administrative Agent, any Issuing Bank or any Lender with
respect to any collateral securing any part of the Guaranteed Obligations; or
(v) any default, failure or delay, willful or otherwise, in the payment or
performance of any of the Guaranteed Obligations, or any other circumstance,
act, omission or delay that might in any manner or to any extent vary the risk
of such Guarantor or that would otherwise operate as a discharge of any
Guarantor as a matter of law or equity (other than the indefeasible payment in
full in cash of the Guaranteed Obligations).


 


Section 10.04.                       Defenses Waived.  To the fullest extent permitted by applicable
law, each Guarantor hereby waives any defense based on or arising out of any
defense of the Borrower or any Guarantor or the unenforceability of all or any
part of the Guaranteed Obligations from any cause, or the cessation from any
cause of the liability of the Borrower or any Guarantor, other than the
indefeasible payment in full in cash of the Guaranteed Obligations. Without
limiting the generality of the foregoing, each Guarantor irrevocably waives
acceptance hereof, presentment, demand, protest and, to the fullest extent
permitted by law, any notice not provided for herein, as well as any requirement
that at any time any action be taken by any person against any Obligated Party,
or any other person.  The Administrative
Agent may, at its election, foreclose on any Collateral held by it by one or
more judicial or non-judicial sales, accept an assignment of any such
Collateral in lieu of foreclosure or otherwise act or fail to act with respect
to any collateral securing all or a part of the Guaranteed Obligations,
compromise or adjust any part of the Guaranteed Obligations, make any other
accommodation with any Obligated Party or exercise any other right or remedy
available to it against any Obligated Party, without affecting or impairing in
any way the liability of such Guarantor under this Guaranty except to the
extent the Guaranteed Obligations have been fully and indefeasibly paid in
cash.  To the fullest extent permitted by
applicable law, each Guarantor waives any defense arising out of any such
election even though that election may operate, pursuant to applicable law, to
impair or extinguish any right of reimbursement or subrogation or other right
or remedy of any Guarantor against any Obligated Party or any security.


 


Section 10.05.                       Rights of
Subrogation.  No
Guarantor will assert any right, claim or cause of action, including, without
limitation, a claim of subrogation, contribution or indemnification that it has
against any Obligated Party, or any collateral, until the Loan Parties and the
Guarantors have fully performed all their obligations to the Administrative
Agent, the Issuing Banks and the Secured Parties.


 


112

















 


Section 10.06.                       Reinstatement;
Stay of Acceleration.  If at any
time any payment of any portion of the Guaranteed Obligations is rescinded or
must otherwise be restored or returned upon the insolvency, bankruptcy, or
reorganization of the Borrower or otherwise, each Guarantor’s obligations under
this Guaranty with respect to that payment shall be reinstated at such time as
though the payment had not been made and whether or not the Administrative
Agent, the Issuing Banks and the Secured Parties are in possession of this
Guaranty. If acceleration of the time for payment of any of the Guaranteed
Obligations is stayed upon the insolvency, bankruptcy or reorganization of the
Borrower, all such amounts otherwise subject to acceleration under the terms of
any agreement relating to the Guaranteed Obligations shall nonetheless be
payable by the Guarantors forthwith on demand by the Lender.


 


Section 10.07.                       Information.  Each Guarantor assumes all responsibility for
being and keeping itself informed of the Borrower’s financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Guaranteed Obligations and the nature, scope and extent of the risks that
each Guarantor assumes and incurs under this Guaranty, and agrees that neither
the Administrative Agent, any Issuing Bank nor any Lender shall have any duty
to advise any Guarantor of information known to it regarding those
circumstances or risks.


 


Section 10.08.                       [Reserved].


 


Section 10.09.                       Maximum
Liability.  The
provisions of this Guaranty are severable, and in any action or proceeding
involving any state corporate law, or any state, federal or foreign bankruptcy,
insolvency, reorganization or other law affecting the rights of creditors
generally, if the obligations of any Guarantor under this Guaranty would
otherwise be held or determined to be avoidable, invalid or unenforceable on
account of the amount of such Guarantor’s liability under this Guaranty, then,
notwithstanding any other provision of this Guaranty to the contrary, the
amount of such liability shall, without any further action by the Guarantors or
the Secured Parties, be automatically limited and reduced to the highest amount
that is valid and enforceable as determined in such action or proceeding (such
highest amount determined hereunder being the relevant Guarantor’s “Maximum
Liability”).  This Section with
respect to the Maximum Liability of each Guarantor is intended solely to
preserve the rights of the Secured Parties to the maximum extent not subject to
avoidance under applicable law, and no Guarantor nor any other person or entity
shall have any right or claim under this Section with respect to such
Maximum Liability, except to the extent necessary so that the obligations of
any Guarantor hereunder shall not be rendered voidable under applicable law.
Each Guarantor agrees that the Guaranteed Obligations may at any time and from
time to time exceed the Maximum Liability of each Guarantor without impairing
this Guaranty or affecting the rights and remedies of the Secured Parties
hereunder, provided that, nothing in this sentence shall
be construed to increase any Guarantor’s obligations hereunder beyond its
Maximum Liability.


 


Section 10.10.                       Contribution.  In the event any Guarantor (a “Paying
Guarantor”) shall make any payment or payments under this Guaranty or shall
suffer any loss as a result of any realization upon any collateral granted by
it to secure its obligations under this Guaranty, each other Guarantor (each a “Non-Paying
Guarantor”) shall contribute to such Paying Guarantor an amount equal to such
Non-Paying Guarantor’s “Applicable Percentage” of such payment or payments
made, or losses suffered, by such Paying Guarantor.  For purposes of this Article X, each
Non-Paying Guarantor’s “Applicable Percentage” with respect to any such payment
or loss by a Paying Guarantor shall be determined as of the date on which such
payment or loss was made by reference to the ratio of (i) such Non-Paying Guarantor’s
Maximum Liability as of such date (without giving effect to any right to
receive, or obligation to make, any contribution hereunder) or, if such
Non-Paying Guarantor’s Maximum Liability has not been determined, the aggregate
amount of all monies received by such Non-Paying Guarantor from the Borrower
after the date hereof (whether by loan, capital infusion or by other means) to
(ii) the aggregate Maximum Liability of all Guarantors hereunder
(including such Paying


 


113

















 


Guarantor) as of such date (without giving effect to
any right to receive, or obligation to make, any contribution hereunder), or to
the extent that a Maximum Liability has not been determined for any Guarantor,
the aggregate amount of all monies received by such Guarantors from the
Borrower after the date hereof (whether by loan, capital infusion or by other
means).  Nothing in this provision shall
affect any Guarantor’s several liability for the entire amount of the
Guaranteed Obligations (up to such Guarantor’s Maximum Liability).  Each of the Guarantors covenants and agrees
that its right to receive any contribution under this Guaranty from a
Non-Paying Guarantor shall be subordinate and junior in right of payment to the
payment in full in cash of the Guaranteed Obligations.  This provision is for the benefit of the
Administrative Agent, the Issuing Banks, the Secured Parties and the Guarantors
and may be enforced by any one, or more, or all of them in accordance with the
terms hereof.


 


Section 10.11.                       Liability
Cumulative.  The
liability of each Loan Party as a Guarantor under this Article X is in
addition to and shall be cumulative with all liabilities of each Loan Party to
the Administrative Agent, the Issuing Banks and the Secured Parties under this
Agreement and the other Loan Documents to which such Loan Party is a party or
in respect of any obligations or liabilities of the other Loan Parties, without
any limitation as to amount, unless the instrument or agreement evidencing or creating
such other liability specifically provides to the contrary.


 


114

















 


IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.


 


 


	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  CLOPAY
  AMES TRUE TEMPER HOLDING CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Tom Gibbons

  
	
   

  	
   

  	
  Name:
  Tom Gibbons

  
	
   

  	
   

  	
  Title:
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HOLDINGS:

  
	
   

  	
   

  
	
   

  	
  CLOPAY
  AMES TRUE TEMPER LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Seth L. Kaplan

  
	
   

  	
   

  	
  Name:
  Seth K. Kaplan

  
	
   

  	
   

  	
  Title:
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  OTHER LOAN PARTIES:

  
	
   

  	
   

  
	
   

  	
  CLOPAY
  PLASTIC PRODUCTS COMPANY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Tom Gibbons

  
	
   

  	
   

  	
  Name:
  Tom Gibbons

  
	
   

  	
   

  	
  Title:
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CLOPAY
  BUILDING PRODUCTS COMPANY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Tom Gibbons

  
	
   

  	
   

  	
  Name:
  Tom Gibbons

  
	
   

  	
   

  	
  Title:
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CLOPAY
  BUILDING PRODUCTS INTERNATIONAL SALES CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Tom Gibbons

  
	
   

  	
   

  	
  Name:
  Tom Gibbons

  
	
   

  	
   

  	
  Title:
  Vice President and Treasurer

  



 


115

















 


	
   

  	
  CLOPAY
  TRANSPORTATION COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Tom Gibbons

  
	
   

  	
   

  	
  Name:
  Tom Gibbons

  
	
   

  	
   

  	
  Title:
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CLOPAY
  ACQUISITION CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Seth L. Kaplan

  
	
   

  	
   

  	
  Name:
  Seth K. Kaplan

  
	
   

  	
   

  	
  Title:
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CHATT
  HOLDINGS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  David Nuti

  
	
   

  	
   

  	
  Name:
  David Nuti

  
	
   

  	
   

  	
  Title:
  Vice President of Finance and CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ATT
  HOLDING CO.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  David Nuti

  
	
   

  	
   

  	
  Name:
  David Nuti

  
	
   

  	
   

  	
  Title:
  Vice President of Finance and CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AMES
  TRUE TEMPER, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  David Nuti

  
	
   

  	
   

  	
  Name:
  David Nuti

  
	
   

  	
   

  	
  Title:
  Vice President of Finance and CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AMES
  U.S. HOLDING CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  David Nuti

  
	
   

  	
   

  	
  Name:
  David Nuti

  
	
   

  	
   

  	
  Title:
  Vice President, Treasurer and Secretary

  



 

















 


	
   

  	
  AMES
  TRUE TEMPER PROPERTIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  David Nuti

  
	
   

  	
   

  	
  Name:
  David Nuti

  
	
   

  	
   

  	
  Title:
  CFO and Assistant Secretary

  



 

















 


	
   

  	
  JPMORGAN
  CHASE BANK, N.A., individually, as Administrative Agent, an Issuing Bank,
  Swingline Lender and as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kathleen C. Maggi

  
	
   

  	
   

  	
  Name: Kathleen C. Maggi

  
	
   

  	
   

  	
  Title:
  Senior Vice President

  



 

















 


	
   

  	
  BANK
  OF AMERICA, N.A., as an Issuing Bank and as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Nancy E. Donohue

  
	
   

  	
   

  	
  Name:
  Nancy E. Donohue

  
	
   

  	
   

  	
  Title:
  Vice President

  



 

















 


	
   

  	
  Manufacturers
  and Traders Trust Company, as Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  William Terragho

  
	
   

  	
   

  	
  Name:
  William Terragho

  
	
   

  	
   

  	
  Title:
  Vice President

  



 

















 


	
   

  	
  U.S.
  Bank National Association, as Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Aaron Sceva

  
	
   

  	
   

  	
  Name:
  Aaron Sceva

  
	
   

  	
   

  	
  Title:
  Officer

  



 

















 


	
   

  	
  DEUTCHE
  BANK TRUST COMPANY AMERICAS, as Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Stephen R. Lapidus

  
	
   

  	
   

  	
  Name:
  Stephen R. Lapidus

  
	
   

  	
   

  	
  Title:
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Phillip Salibe

  
	
   

  	
   

  	
  Name:
  Phillip Salibe

  
	
   

  	
   

  	
  Title:
  Director

  



 

















 


	
   

  	
  HSBC
  Business Credit (USA) Inc., as Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Kysha A. Pierre-Louis

  
	
   

  	
   

  	
  Name: Kysha A. Pierre-Louis

  
	
   

  	
   

  	
  Title:
  Vice President

  



 

















 


	
   

  	
  Wells
  Fargo Capital Finance, LLC, as Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Mark Bradford

  
	
   

  	
   

  	
  Name:
  Mark Bradford

  
	
   

  	
   

  	
  Title:
  SVP