**Exhibit 4.(d)**

 

 

 

SECOND AMENDED ANDRESTATED CREDIT AGREEMENT

 

Dated as of December 4,2009

 

among

 

BLOUNT, INC.,

GEAR PRODUCTS,INC, OMARK PROPERTIES, INC. and

WINDSOR FORESTRYTOOLS LLC,

 

as Borrowers,

 

THE OTHER CREDITPARTIES SIGNATORY HERETO,

 

as Credit Parties,

 

THE LENDERSSIGNATORY HERETO

 

FROM TIME TO TIME,

 

as Lenders,

 

GENERAL ELECTRICCAPITAL CORPORATION,

 

as AdministrativeAgent and Lender,

 

and

 

GE CAPITALMARKETS, INC.,

 

as Lead Arrangerand Bookrunner

 

 

 

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TABLE OF CONTENTS

 
| ** ** | ** **                      | ** **                                                                 | **Page** |
|------------|---------------------------------|----------------------------------------------------------------------------|----------|
|       |                            |                                                                       |     |
| 1.         | AMOUNT AND TERMS OF  CREDIT     | 2                                                                          |
|       | 1.1                             | Credit Facilities                                                          | 2        |
|       | 1.2                             | Letters of Credit                                                          | 7        |
|       | 1.3                             | Prepayments                                                                | 9        |
|       | 1.4                             | Use of Proceeds                                                            | 11       |
|       | 1.5                             | Interest and Applicable  Margins                                           | 11       |
|       | 1.6                             | Intentionally Omitted                                                      | 14       |
|       | 1.7                             | Intentionally Omitted                                                      | 14       |
|       | 1.8                             | Cash Management Systems                                                    | 14       |
|       | 1.9                             | Fees                                                                       | 14       |
|       | 1.10                            | Receipt of Payments                                                        | 14       |
|       | 1.11                            | Application and  Allocation of Payments                                    | 15       |
|       | 1.12                            | Loan Account and  Accounting                                               | 16       |
|       | 1.13                            | Indemnity                                                                  | 17       |
|       | 1.14                            | Access                                                                     | 18       |
|       | 1.15                            | Taxes                                                                      | 19       |
|       | 1.16                            | Capital Adequacy;  Increased Costs; Illegality                             | 20       |
|       | 1.17                            | Single Loan                                                                | 21       |
| 2.         | CONDITIONS PRECEDENT            | 21                                                                         |
|       | 2.1                             | Conditions to the  Initial Loans                                           | 21       |
|       | 2.2                             | Further Conditions to  Each Loan                                           | 22       |
| 3.         | REPRESENTATIONS AND  WARRANTIES | 23                                                                         |
|       | 3.1                             | Corporate Existence;  Compliance with Law                                  | 23       |
|       | 3.2                             | Executive Offices,  Collateral Locations, FEIN                             | 23       |
|       | 3.3                             | Corporate Power,  Authorization, Enforceable Obligations                   | 24       |
|       | 3.4                             | Financial Statements  and Projections                                      | 24       |
|       | 3.5                             | Material Adverse Effect                                                    | 25       |
|       | 3.6                             | Ownership of Property;  Liens                                              | 25       |
|       | 3.7                             | Labor Matters                                                              | 26       |
|       | 3.8                             | Ventures, Subsidiaries and Affiliates; Outstanding  Stock and Indebtedness | 26       |

 

i

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TABLE OF CONTENTS

(continued)

 
| ** ** | ** **                            | ** **                                         | **Page** |
|------------|---------------------------------------|----------------------------------------------------|----------|
|       |                                  |                                               |     |
|       | 3.9                                   | Government Regulation                              | 26       |
|       | 3.10                                  | Margin Regulations                                 | 27       |
|       | 3.11                                  | Taxes                                              | 27       |
|       | 3.12                                  | ERISA and Benefit Plans                            | 28       |
|       | 3.13                                  | No Litigation                                      | 28       |
|       | 3.14                                  | Brokers                                            | 29       |
|       | 3.15                                  | Intellectual Property                              | 29       |
|       | 3.16                                  | Full Disclosure                                    | 29       |
|       | 3.17                                  | Environmental Matters                              | 29       |
|       | 3.18                                  | Insurance                                          | 30       |
|       | 3.19                                  | Deposit and  Disbursement Accounts                 | 30       |
|       | 3.20                                  | Government Contracts                               | 30       |
|       | 3.21                                  | Customer and Trade  Relations                      | 30       |
|       | 3.22                                  | Agreements and Other  Documents                    | 31       |
|       | 3.23                                  | Solvency                                           | 31       |
|       | 3.24                                  | Status of Holdings                                 | 31       |
|       | 3.25                                  | Subordinated Debt                                  | 31       |
|       | 3.26                                  | Senior Debt                                        | 31       |
| 4.         | FINANCIAL STATEMENTS  AND INFORMATION | 32                                                 |
|       | 4.1                                   | Reports and Notices                                | 32       |
|       | 4.2                                   | Communication with  Accountants                    | 32       |
| 5.         | AFFIRMATIVE COVENANTS                 | 32                                                 |
|       | 5.1                                   | Maintenance of  Existence and Conduct of Business  | 32       |
|       | 5.2                                   | Payment of Charges                                 | 33       |
|       | 5.3                                   | Books and Records                                  | 33       |
|       | 5.4                                   | Insurance; Damage to or  Destruction of Collateral | 33       |
|       | 5.5                                   | Compliance with Laws                               | 35       |
|       | 5.6                                   | Supplemental Disclosure                            | 35       |
|       | 5.7                                   | Intellectual Property                              | 35       |
|       | 5.8                                   | Environmental Matters                              | 35       |

 

ii

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TABLE OF CONTENTS

(continued)

 
| ** ** | ** **                              | ** **                                                                                  | **Page** |
|------------|-----------------------------------------|---------------------------------------------------------------------------------------------|----------|
|       |                                    |                                                                                        |     |
|       | 5.9                                     | Landlords’ Agreements,  Mortgagee Agreements, Bailee Letters and Real Estate Purchases | 36       |
|       | 5.10                                    | Further Assurances                                                                          | 37       |
|       | 5.11                                    | Credit Rating                                                                               | 37       |
|       | 5.12                                    | Intentionally Omitted                                                                       | 37       |
|       | 5.13                                    | New Subsidiaries                                                                            | 37       |
| 6.         | NEGATIVE COVENANTS                      | 38                                                                                          |
|       | 6.1                                     | Mergers, Subsidiaries,  Etc.                                                                | 38       |
|       | 6.2                                     | Investments; Loans and  Advances                                                            | 41       |
|       | 6.3                                     | Indebtedness                                                                                | 43       |
|       | 6.4                                     | Employee Loans and  Affiliate Transactions                                                  | 45       |
|       | 6.5                                     | Capital Structure and  Business                                                             | 45       |
|       | 6.6                                     | Guaranteed Indebtedness                                                                     | 46       |
|       | 6.7                                     | Liens                                                                                       | 46       |
|       | 6.8                                     | Sale of Stock and  Assets                                                                   | 47       |
|       | 6.9                                     | ERISA and Benefit Plans                                                                     | 47       |
|       | 6.10                                    | Financial Covenants                                                                         | 47       |
|       | 6.11                                    | Hazardous Materials                                                                         | 47       |
|       | 6.12                                    | Sale-Leasebacks                                                                             | 48       |
|       | 6.13                                    | Cancellation of  Indebtedness                                                               | 48       |
|       | 6.14                                    | Restricted Payments                                                                         | 48       |
|       | 6.15                                    | Change of Corporate  Name or Location; Change of Fiscal Year                                | 48       |
|       | 6.16                                    | No Impairment of  Intercompany Transfers                                                    | 49       |
|       | 6.17                                    | No Speculative  Transactions                                                                | 49       |
|       | 6.18                                    | Changes Relating to  Subordinated Debt; Material Contracts                                  | 49       |
| 7.         | TERM                                    | 49                                                                                          |
|       | 7.1                                     | Termination                                                                                 | 49       |
|       | 7.2                                     | Survival of Obligations  Upon Termination of Financing Arrangements                         | 49       |
| 8.         | EVENTS OF DEFAULT;  RIGHTS AND REMEDIES | 50                                                                                          |
|       | 8.1                                     | Events of Default                                                                           | 50       |

 

iii

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TABLE OF CONTENTS

(continued)

 
| ** ** | ** **                                           | ** **                                                                | **Page** |
|------------|------------------------------------------------------|---------------------------------------------------------------------------|----------|
|       |                                                 |                                                                      |     |
|       | 8.2                                                  | Remedies                                                                  | 52       |
|       | 8.3                                                  | Waivers by Credit  Parties                                                | 52       |
| 9.         | ASSIGNMENT AND  PARTICIPATIONS; APPOINTMENT OF AGENT | 53                                                                        |
|       | 9.1                                                  | Assignments and  Participations                                           | 53       |
|       | 9.2                                                  | Appointment of Agent                                                      | 56       |
|       | 9.3                                                  | Agent’s Reliance, Etc.                                               | 56       |
|       | 9.4                                                  | GE Capital and  Affiliates                                                | 57       |
|       | 9.5                                                  | Lender Credit Decision                                                    | 57       |
|       | 9.6                                                  | Indemnification                                                           | 58       |
|       | 9.7                                                  | Successor Agent                                                           | 58       |
|       | 9.8                                                  | Setoff and Sharing of  Payments                                           | 59       |
|       | 9.9                                                  | Advances; Payments;  Non-Funding Lenders; Information; Actions in Concert | 59       |
|       | 9.10                                                 | Collateral Matters                                                        | 62       |
|       | 9.11                                                 | Additional Agents                                                         | 63       |
|       | 9.12                                                 | Distribution of  Materials to Lenders and L/C Issuers                     | 63       |
| 10.        | SUCCESSORS AND ASSIGNS                               | 65                                                                        |
|       | 10.1                                                 | Successors and Assigns                                                    | 65       |
| 11.        | MISCELLANEOUS                                        | 65                                                                        |
|       | 11.1                                                 | Complete Agreement;  Modification of Agreement                            | 65       |
|       | 11.2                                                 | Amendments and Waivers                                                    | 65       |
|       | 11.3                                                 | Fees and Expenses                                                         | 67       |
|       | 11.4                                                 | No Waiver                                                                 | 68       |
|       | 11.5                                                 | Remedies                                                                  | 68       |
|       | 11.6                                                 | Severability                                                              | 68       |
|       | 11.7                                                 | Conflict of Terms                                                         | 69       |
|       | 11.8                                                 | Confidentiality                                                           | 69       |
|       | 11.9                                                 | GOVERNING LAW                                                             | 69       |
|       | 11.10                                                | Notices                                                                   | 70       |
|       | 11.11                                                | Section Titles                                                       | 71       |

 

iv

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TABLE OF CONTENTS

(continued)

 
| ** ** | ** **     | ** **                                         | **Page** |
|------------|----------------|----------------------------------------------------|----------|
|       |           |                                               |     |
|       | 11.12          | Counterparts                                       | 71       |
|       | 11.13          | WAIVER OF JURY TRIAL                               | 71       |
|       | 11.14          | Press Releases and  Related Matters                | 71       |
|       | 11.15          | Reinstatement                                      | 71       |
|       | 11.16          | Advice of Counsel                                  | 72       |
|       | 11.17          | No Strict Construction                             | 72       |
|       | 11.18          | Currency Equivalent  Generally                     | 72       |
|       | 11.19          | Judgment Currency                                  | 72       |
|       | 11.20          | Intentionally Omitted                              | 73       |
|       | 11.21          | Amendment and  Restatement                         | 73       |
| 12.        | CROSS-GUARANTY | 73                                                 |
|       | 12.1           | Cross-Guaranty                                     | 73       |
|       | 12.2           | Waivers by Borrowers                               | 74       |
|       | 12.3           | Benefit of Guaranty                                | 74       |
|       | 12.4           | Subordination of  Subrogation, Etc.                | 74       |
|       | 12.5           | Election of Remedies                               | 75       |
|       | 12.6           | Limitation                                         | 75       |
|       | 12.7           | Contribution with  Respect to Guaranty Obligations | 76       |
|       | 12.8           | Liability Cumulative                               | 76       |
|       | 12.9           | USA Patriot Act Notice                             | 76       |

 

v

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INDEX OF APPENDICES

 
| Annex A (Recitals)                               |   | -      |   | Definitions                                                                          |
|--------------------------------------------------|--------|--------|--------|--------------------------------------------------------------------------------------|
| Annex B (Section 1.2)                       |   | -      |   | Letters of Credit                                                                    |
| Annex C (Section 1.8)                       |   | -      |   | Cash Management System                                                               |
| Annex D (Section 2.1(a))                    |   | -      |   | Closing Checklist                                                                    |
| Annex E (Section 4.1(a))                    |   | -      |   | Financial Statements  and Projections — Reporting                               |
| Annex F (Section 4.1(b))                    |   | -      |   | Collateral Reports                                                                   |
| Annex G (Section 6.10)                      |   | -      |   | Financial Covenants                                                                  |
| Annex H (Section 9.9(a))                    |   | -      |   | Lenders’ Wire Transfer  Information                                             |
| Annex I (Section 11.10)                     |   | -      |   | Notice Addresses                                                                     |
| Annex  J (from Annex A - Commitments definition) |   |   |   | Commitments as of  Closing Date                                                      |
|                                             |   |   |   |                                                                                 |
| Exhibit 1.1(a)(i)                           |   | -      |   | Form of Notice of  Revolving Credit Advance                                     |
| Exhibit 1.1(a)(ii)                          |   | -      |   | Form of Revolving  Note                                                         |
| Exhibit 1.1(b)(i)                           |   | -      |   | Form of Existing  Term Loan Note                                                |
| Exhibit 1.1(b)(ii)                          |   | -      |   | Form of Extending  Term Loan Note                                               |
| Exhibit 1.1(c)(ii)                          |   | -      |   | Form of Swing Line  Note                                                        |
| Exhibit 1.5(f)(i)                           |   | -      |   | Form of Notice of  Conversion/Continuation-LIBOR                                |
| Exhibit 5.13                                |   | -      |   | Form of Credit  Agreement Joinder Agreement                                     |
| Exhibit 9.1(c)                              |   | -      |   | Form of Assignment  Agreement                                                   |
| Exhibit B-1                                 |   | -      |   | Application for Standby  Letter of Credit                                            |
| Exhibit B-2                                 |   | -      |   | Application for  Documentary Letter of Credit                                        |
| Schedule 1.1                                     |   | -      |   | Agent’s Representatives                                                         |
| Disclosure Schedule 1.4                          |   | -      |   | Sources and Uses; Funds  Flow Memorandum                                             |
| Disclosure Schedule 3.1                          |   | -      |   | Type of Entity; State  of Organization                                               |
| Disclosure Schedule 3.2                          |   | -      |   | Executive Offices,  Collateral Locations, FEIN, Organizational Identification Number |
| Disclosure Schedule  3.3(e)                      |   | -      |   | Conflicts                                                                            |
| Disclosure Schedule  3.4(A)                      |   | -      |   | Financial Statements                                                                 |
| Disclosure Schedule  3.4(B)                      |   | -      |   | Pro Forma                                                                            |
| Disclosure Schedule  3.4(C)                      |   | -      |   | Projections                                                                          |
| Disclosure Schedule 3.6                          |   | -      |   | Real Estate and Leases                                                               |
| Disclosure Schedule 3.7                          |   | -      |   | Labor Matters                                                                        |
| Disclosure Schedule 3.8                          |   | -      |   | Ventures, Subsidiaries  and Affiliates; Outstanding Stock                            |
| Disclosure Schedule  3.11                        |   | -      |   | Tax Matters                                                                          |
| Disclosure Schedule  3.12                        |   | -      |   | ERISA Plans                                                                          |
| Disclosure Schedule  3.13                        |   | -      |   | Litigation                                                                           |
| Disclosure Schedule  3.15                        |   | -      |   | Intellectual Property                                                                |
| Disclosure Schedule  3.17                        |   | -      |   | Hazardous Materials                                                                  |
| Disclosure Schedule  3.18                        |   | -      |   | Insurance                                                                            |
| Disclosure Schedule  3.19                        |   | -      |   | Deposit and  Disbursement Accounts                                                   |
| Disclosure Schedule  3.20                        |   | -      |   | Government Contracts                                                                 |
| Disclosure Schedule  3.21                        |   | -      |   | Customer and Trade  Relations                                                        |
| Disclosure Schedule  3.22                        |   | -      |   | Material Agreements                                                                  |
| Disclosure Schedule 5.1                          |   | -      |   | Trade Names                                                                          |
| Disclosure Schedule 6.3                          |   | -      |   | Indebtedness                                                                         |

 

vi

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| Disclosure Schedule  6.4(a) |   | - |   | Transactions with  Affiliates |
|-----------------------------|--------|---|--------|-------------------------------|
| Disclosure Schedule 6.7     |   | - |   | Existing Liens                |

 

vii

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*Execution Copy*

 

ThisSECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”), datedas of December 4, 2009, by and among BLOUNT, INC., a Delaware corporation(“Blount, Inc.”), GEAR PRODUCTS, INC., an Oklahoma corporation (“Gear”),OMARK PROPERTIES, INC., an Oregon corporation (“Omark”), WINDSORFORESTRY TOOLS LLC, a Tennessee limited liability company (“Windsor”)(Gear, Omark, Windsor and Blount, Inc. are sometimes collectively referredto herein as “Borrowers” and individually as “Borrower”); the otherCredit Parties signatory hereto; GENERAL ELECTRIC CAPITAL CORPORATION, aDelaware corporation (in its individual capacity, “GE Capital”), in itscapacity as Agent for the Lenders (as defined below) (“Agent”); and theother Lenders party hereto.

 

**RECITALS**

 

WHEREAS,Borrowers, Lenders (as defined in the Prior Credit Agreement), and Agent areparties to that certain Amended and Restated Credit Agreement dated as of August 9,2004 (the “Prior Credit Agreement”); and

 

WHEREAS,Lenders (as defined in the Prior Credit Agreement) and Agent are hereinafterreferred to as the “Prior Lender Group”; and

 

WHEREAS,Borrowers desire that the Prior Lender Group amend and restate the Prior CreditAgreement to, among other things, modify the credit facilities to provide for aRevolving Loan Commitment of $60,000,000 and a Term Loan B of $107,465,301.84consisting of an Existing Term Loan in a principal amount equal to$3,937,893.06 and an Extending Term Loan in a principal amount equal to$103,527,408.78, and the Prior Lender Group and the other Lenders party heretoare willing to do so in accordance with, and subject to the terms andconditions set forth in, this Agreement; and

 

WHEREAS,each Borrower acknowledges and agrees that the security interest granted toAgent for the benefit of Prior Lender Group, or any of them, pursuant to theLoan Documents (as defined in the Prior Credit Agreement), shall remainoutstanding and in full force and effect in accordance with the Prior CreditAgreement and the other Loan Documents (as defined in the Prior CreditAgreement), as modified herein and in the other Loan Documents, and shallcontinue to secure the Obligations; and

 

WHEREAS,Borrowers and Lenders acknowledge and confirm that: (i) the Obligationsrepresent, among other things, the amendment, restatement, renewal, extension,consolidation and modification of the Obligations (as defined in the PriorCredit Agreement) arising in connection with the Prior Credit Agreement andother Loan Documents (as defined in the Prior Credit Agreement); (ii) thePrior Credit Agreement and the other Loan Documents (as defined in the PriorCredit Agreement) and the collateral pledged thereunder shall secure, withoutinterruption or impairment of any kind, all existing Obligations (as defined inthe Prior Credit Agreement) under the Prior Credit Agreement and the other LoanDocuments (as defined in the Prior Credit Agreement) as amended, restated,renewed, extended, consolidated or modified hereunder and under the other LoanDocuments, together with all other Obligations 

 

----

 

hereunder; (iii) all Liens evidenced by the LoanDocuments (as defined in the Prior Credit Agreement) are hereby ratified,confirmed and continued as modified, amended or restated under the LoanDocuments; and (iv) this Agreement is intended to restate, renew, extend,consolidate, amend and modify the Prior Credit Agreement in its entirety; and

 

WHEREAS,Borrowers and Lenders intend that: (i) the provisions of the Prior CreditAgreement and the other Loan Documents (as defined in the Prior CreditAgreement), to the extent restated, renewed, extended, consolidated, amended ormodified hereby and by the other Loan Documents, be hereby superseded andreplaced by the provisions hereof and of the other Loan Documents; and (ii) byentering into and performing their respective obligations hereunder, thistransaction shall not constitute a novation and shall in no way adverselyaffect or impair the priority of Liens granted by the Loan Documents (asdefined in the Prior Credit Agreement); and

 

WHEREAS,capitalized terms used in this Agreement shall have the meanings ascribed tothem in Annex A and, for purposes of this Agreement and the other LoanDocuments, the rules of construction set forth in Annex Ashall govern.  All Annexes, DisclosureSchedules, Exhibits and other attachments (collectively, “Appendices”)hereto, or expressly identified in this Agreement, are incorporated herein byreference, and taken together with this Agreement, shall constitute a singleagreement.  These Recitals shall beconstrued as part of the Agreement.

 

NOW,THEREFORE, in consideration of the premises and the mutual covenantshereinafter contained, and for other good and valuable consideration, theparties hereto hereby amend and restate the Prior Loan Agreement in itsentirety and further agree as follows:

 

1.                                       AMOUNT AND TERMS OF CREDIT

 

1.1                                 Credit Facilities.

 

(a)                                  Revolving Credit Facility.

 

(i)                                     Subject to the terms and conditionshereof, each Revolving Lender agrees to make available to Borrowers from timeto time until the Commitment Termination Date its Pro Rata Share of advancesunder the Revolving Loan Commitment (each, a “Revolving Credit Advance”).  All “Revolving Credit Advances” under, and asdefined in, the Prior Credit Agreement that are outstanding on the Closing Dateshall be deemed to be Revolving Credit Advances hereunder.  The Pro Rata Share of the Revolving Loan ofany Lender shall not at any time exceed its separate Revolving Loan Commitment.  The obligations of each Lender hereundershall be several and not joint.  Untilthe Commitment Termination Date, Borrowers may borrow, repay and reborrow underthis Section 1.1(a)(i); provided that the amount of anyRevolving Credit Advance to be made at any time shall not exceed BorrowingAvailability at such time.  EachRevolving Credit Advance shall be made on notice by Borrower Representative onbehalf of the applicable Borrower to one of the representatives of Agentidentified in Schedule 1.1 at the address specified therein.  Any such notice must be given no later than (1) 1:00 p.m.(New York time) on the Business Day of the proposed Revolving Credit Advance,in the case of an Index Rate Loan, or (2) 1:00 p.m. (New York time)on the date which is 3 Business Days prior to the proposed Revolving CreditAdvance, in the case of a LIBOR Loan.  

 

2

----

 

Each such notice (a “Noticeof Revolving Credit Advance”) must be given in writing (by telecopy orovernight courier) substantially in the form of Exhibit 1.1(a)(i),and shall include the information required in such Exhibit and such otherinformation as may be reasonably required by Agent. ** **If any Borrower desires to have theRevolving Credit Advances bear interest by reference to a LIBOR Rate, BorrowerRepresentative must comply with Section 1.5(f).

 

(ii)                                  Upon request by any Revolving Lender,each Borrower shall execute and deliver to such Lender a note to evidence theRevolving Loan Commitment of that Lender. Each note shall be in the principal amount of the Revolving LoanCommitment of the applicable Lender, dated the Closing Date and substantiallyin the form of Exhibit 1.1(a)(ii)  (each a “Revolving Note”and, collectively, the “Revolving Notes”). Each Revolving Note (or, if aRevolving Note is not requested, this Agreement) shall represent the joint andseveral obligation of Borrowers to pay the amount of the applicable Lender’sRevolving Loan Commitment or, if less, such Lender’s Pro Rata Share of theaggregate unpaid principal amount of all Revolving Credit Advances toBorrowers, together with interest thereon as prescribed in Section 1.5.  The entire unpaid balance of the aggregateRevolving Loan and all other non-contingent Obligations shall be immediatelydue and payable in full in immediately available funds on the CommitmentTermination Date.

 

(b)                                 Term Loans.

 

(i)                                     Existing Term Loan.

 

(1)                                  Subject to the terms and conditionshereof, each Lender with an Existing Term Loan Commitment agrees that the loanscomprising the “Term Loan B” under, and as defined in, the Prior CreditAgreement shall remain outstanding on and after the Closing Date as term loans(collectively, the “Existing Term Loan”) made pursuant to thisAgreement, and such loans shall be deemed to be made in satisfaction of itsobligation to make its Pro Rata Share of the Existing Term Loan on the ClosingDate.  Upon request by any Lender with aExisting Term Loan Commitment, each Borrower shall execute and deliver to suchLender a promissory note substantially in the form of Exhibit 1.1(b)(i) (eachan “Existing Term Loan Note” and collectively the “Existing Term LoanNotes”).  Each Existing Term LoanNote (or, if an Existing Term Loan Note is not requested, this Agreement) shallrepresent the joint and several obligation of Borrowers to pay the applicableExisting Term Loan Commitment, together with interest hereon as prescribed in Section 1.5.

 

(2)                                  Borrowers shall repay the principalbalance of the Existing Term Loan in consecutive quarterly installments on thefirst day of January, April, July and October of each year,commencing January 1, 2010, as follows:

 

3

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| **Payment  Dates**    | ** ** | **Installment  Amounts** | ** **   |
|-----------------------|------------|--------------------------|--------------|
| January 1,  2010 |       | $                        | 10,228.29    |   |
| April 1,  2010   |       | $                        | 10,228.29    |   |
| July 1,  2010    |       | $                        | 10,228.29    |   |
| August 9,  2010  |       | $                        | 3,907,208.19 |   |

 

The finalinstallment due August 9, 2010 shall be in the amount of $3,907,208.19 or,if different, the remaining principal balance of the Existing Term Loan,together with accrued interest and all fees, costs, expenses and other chargesdue by Borrowers with respect to the Existing Term Loan.

 

(3)                                  Notwithstanding Section 1.1(b)(i)(2),the aggregate outstanding principal balance of the Existing Term Loan shall bedue and payable in full in immediately available funds on the Commitment TerminationDate applicable to the Existing Term Loan, if not sooner paid in full.  No payment with respect to the Existing TermLoan may be reborrowed.

 

(ii)                                  Extending Term Loan.

 

(1)                                  Subject to the terms and conditionshereof, each Lender with an Extending Term Loan Commitment agrees that theloans comprising the “Term Loan B” under, and as defined in, the Prior CreditAgreement shall remain outstanding on and after the Closing Date as term loans(collectively, the “Extending Term Loan”) made pursuant to thisAgreement, and such loans shall be deemed to be made in satisfaction of itsobligation to make its Pro Rata Share of the Extending Term Loan on the ClosingDate.  Upon request by any Lender with aExtending Term Loan Commitment, each Borrower shall execute and deliver to suchLender a promissory note substantially in the form of Exhibit 1.1(b)(ii) (eachan “Extending Term Loan Note” and collectively the “Extending TermLoan Notes”).  Each Extending TermLoan Note (or, if an Extending Term Loan Note is not requested, this Agreement)shall represent the joint and several obligation of Borrowers to pay theapplicable Extending Term Loan Commitment, together with interest hereon asprescribed in Section 1.5.

 

(2)                                  Borrowers shall repay the Extending TermLoan in quarterly installments on the first day of January, April, July andOctober of each year, commencing January 1, 2010, as follows:

 

4

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| **Payment  Dates**     | ** ** | **Installment  Amounts** | ** **     |
|------------------------|------------|--------------------------|----------------|
| January 1,  2010  |       | $                        | 268,902.36     |   |
| April 1,  2010    |       | $                        | 268,902.36     |   |
| July 1,  2010     |       | $                        | 268,902.36     |   |
| October 1,  2010  |       | $                        | 268,902.36     |   |
| January 1,  2011  |       | $                        | 268,902.36     |   |
| April 1,  2011    |       | $                        | 268,902.36     |   |
| July 1,  2011     |       | $                        | 268,902.36     |   |
| October 1,  2011  |       | $                        | 268,902.36     |   |
| January 1,  2012, |       | $                        | 268,902.36     |   |
| February 9,  2012 |       | $                        | 101,107,287.54 |   |

 

The finalinstallment due February 9, 2012 shall be in the amount of $101,107,287.54or, if different, the remaining principal balance of the Extending Term Loan,together with accrued interest and all fees, costs, expenses and other chargesdue by Borrowers with respect to the Extending Term Loan.

 

(3)                                  Notwithstanding Section 1.1(b)(ii)(2),the aggregate outstanding principal balance of the Extending Term Loan shall bedue and payable in full in immediately available funds on the CommitmentTermination Date applicable to the Extending Term Loan, if not sooner paid infull.  No payment with respect to theExtending Term Loan may be reborrowed.

 

(c)                                  Swing Line Facility.

 

(i)                                     Agent shall notify the Swing Line Lenderupon Agent’s receipt of any Notice of Revolving Credit Advance.  Subject to the terms and conditions hereof,the Swing Line Lender may, in its discretion, make available from time to timeuntil the Commitment Termination Date advances (each, a “Swing Line Advance”)in accordance with any such notice. The provisions of this Section 1.1(c) shallnot relieve the Revolving Lenders of their obligations to make Revolving CreditAdvances under Section 1.1(a); provided that if the SwingLine Lender makes a Swing Line Advance pursuant to any such notice, such SwingLine Advance shall be in lieu of any Revolving Credit Advance that otherwisemay be made by the Revolving Lenders pursuant to such notice.  The aggregate amount of Swing Line Advancesoutstanding shall not exceed at any time the lesser of (A) the Swing LineCommitment and (B) the Maximum Amount, in each case under clauses (A) and(B) of this sentence, less the outstanding balance of the Revolving Loanat such time (“Swing Line Availability”).  Until the Commitment Termination Date,Borrowers may from time to time borrow, repay and reborrow under this Section 1.1(c).  Each Swing Line Advance shall be madepursuant to a Notice of Revolving Credit Advance delivered to Agent by BorrowerRepresentative on behalf of the applicable Borrower in accordance with Section 1.1(a).  Any such notice must be given no later than1:00 p.m. (New York time) on the Business Day of the proposed Swing LineAdvance.  Unless the Swing Line Lenderhas received at least one Business Day’s prior written notice from RequisiteRevolving Lenders instructing it not to make a Swing Line Advance, the SwingLine Lender shall, notwithstanding the failure of any condition precedent setforth in Sections 2.2, be entitled to fund that Swing Line Advance, andto have each Revolving Lender make Revolving Credit 

 

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Advances in accordancewith Section 1.1(c)(iii) or purchase participating interestsin accordance with Section 1.1(c)(iv).  Notwithstanding any other provision of thisAgreement or the other Loan Documents, the Swing Line Loan shall constitute anIndex Rate Loan.  Borrowers shall repaythe aggregate outstanding principal amount of the Swing Line Loan upon demandtherefor by Agent.

 

(ii)                                  Upon request by the Swing Line Lender,Borrowers shall execute and deliver to the Swing Line Lender a promissory noteto evidence the Swing Line Commitment. Such note shall be in the principal amount of the Swing Line Commitmentof the Swing Line Lender, dated the Closing Date and substantially in the formof Exhibit 1.1(c)(ii)  (the “Swing Line Note”).  The Swing Line Note (or, if the Swing LineNote is not requested, this Agreement) shall represent the joint and severalobligation of Borrowers to pay the amount of the Swing Line Commitment or, ifless, the aggregate unpaid principal amount of all Swing Line Advances made toBorrowers, together with interest thereon as prescribed in Section 1.5.  The entire unpaid balance of the Swing LineLoan and all other noncontingent Obligations shall be immediately due andpayable in full in immediately available funds on the Commitment TerminationDate if not sooner paid in full.

 

(iii)                               If no Revolving Lender is a Non-FundingLender, then the Swing Line Lender, at any time and from time to time in itssole and absolute discretion, but not less frequently than weekly, shall onbehalf of Borrowers (and each Borrower hereby irrevocably authorizes the SwingLine Lender to so act on its behalf) request each Revolving Lender (includingthe Swing Line Lender) to make a Revolving Credit Advance to Borrowers (whichshall be an Index Rate Loan) in an amount equal to that Revolving Lender’s ProRata Share of the principal amount of Borrowers’ Swing Line Loan (the “RefundedSwing Line Loan”) outstanding on the date such notice is given.  If any Revolving Lender is a Non-FundingLender, that Non-Funding Lender’s reimbursement obligations with respect to theSwing Line Loans shall be reallocated to and assumed by the other RevolvingLenders pro rata in accordance with their Pro Rata Share of the Revolving Loans(calculated as if the Non-Funding Lender’s Pro Rata Share was reduced to zeroand each other Revolving Lender’s Pro Rata Share had been increasedproportionately).  If any RevolvingLender is a Non-Funding Lender, upon receipt of the demand described above,each Revolving Lender that is not a Non-Funding Lender will be obligated to payto Agent for the account of the Swing Line Lender its Pro Rata Share of theoutstanding Swing Line Loans (increased as described above); provided that noRevolving Lender shall be required to fund any amount in excess of itsRevolving Loan Commitment. Unless any of the events described in Sections8.1(h) or 8.1(i) has occurred (in which event the procedures of Section 1.1(c)(iv) shallapply) and regardless of whether the conditions precedent set forth in thisAgreement to the making of a Revolving Credit Advance are then satisfied, eachRevolving Lender shall disburse directly to Agent, its Pro Rata Share of aRevolving Credit Advance on behalf of the Swing Line Lender prior to 3:00 p.m.(New York time) in immediately available funds on the Business Day nextsucceeding the date that notice is given. The proceeds of those Revolving Credit Advances shall be immediately paidto the Swing Line Lender and applied to repay the Refunded Swing Line Loan ofBorrowers.

 

(iv)                              If, prior to refunding a Swing Line Loanwith a Revolving Credit Advance pursuant to Section 1.1(c)(iii),one of the events described in Sections 8.1(h) or 8.1(i) hasoccurred, then, subject to the provisions of Section 1.1(c)(v) below,each Revolving Lender 

 

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shall, on the date suchRevolving Credit Advance was to have been made for the benefit of the Borrowers,purchase from the Swing Line Lender an undivided participation interest in theSwing Line Loan to Borrowers in an amount equal to its Pro Rata Share of suchSwing Line Loan.  Upon request, eachRevolving Lender shall promptly transfer to the Swing Line Lender, inimmediately available funds, the amount of its participation interest.

 

(v)                                 Each Revolving Lender’s obligation tomake Revolving Credit Advances in accordance with Section 1.1(c)(iii) andto purchase participation interests in accordance with Section 1.1(c)(iv) shallbe absolute and unconditional and shall not be affected by any circumstance,including (A) any setoff, counterclaim, recoupment, defense or other rightthat such Revolving Lender may have against the Swing Line Lender, any Borroweror any other Person for any reason whatsoever; (B) the occurrence orcontinuance of any Default or Event of Default; (C) any inability of anyBorrower to satisfy the conditions precedent to borrowing set forth in thisAgreement at any time or (D) any other circumstance, happening or eventwhatsoever, whether or not similar to any of the foregoing.  If any Revolving Lender does not makeavailable to Agent or the Swing Line Lender, as applicable, the amount requiredpursuant to Sections 1.1(c)(iii) or 1.1(c)(iv), as the casemay be, the Swing Line Lender shall be entitled to recover such amount ondemand from such Revolving Lender, together with interest thereon for each dayfrom the date of non-payment until such amount is paid in full at the FederalFunds Rate for the first two (2) Business Days and at the Index Ratethereafter.

 

(d)                                 Reliance on Notices; Appointment ofBorrower Representative.  Agent shall be entitled torely upon, and shall be fully protected in relying upon, any Notice ofRevolving Credit Advance, Notice of Conversion/Continuation-LIBOR Rate orsimilar notice believed by Agent to be genuine. Agent may assume that each Person executing and delivering any notice inaccordance herewith was duly authorized, unless the responsible individual actingthereon for Agent has actual knowledge to the contrary.  Each Borrower hereby designates Blount, Inc.as its representative and agent on its behalf for the purposes of issuingNotices of Revolving Credit Advances and Notices of Conversion/Continuation-LIBORRate, giving instructions with respect to the disbursement of the proceeds ofthe Loans, selecting interest rate options, requesting Letters of Credit,giving and receiving all other notices and consents hereunder or under any ofthe other Loan Documents and taking all other actions (including in respect ofcompliance with covenants) on behalf of any Borrower or Borrowers under theLoan Documents.  Borrower Representativehereby accepts such appointment.  Agentand each Lender may regard any notice or other communication pursuant to anyLoan Document from Borrower Representative as a notice or communication fromall Borrowers, and may give any notice or communication required or permittedto be given to any Borrower or Borrowers hereunder to Borrower Representativeon behalf of such Borrower or Borrowers. Each Borrower agrees that each notice, election, representation andwarranty, covenant, agreement and undertaking made on its behalf by BorrowerRepresentative shall be deemed for all purposes to have been made by suchBorrower and shall be binding upon and enforceable against such Borrower to thesame extent as if the same had been made directly by such Borrower.

 

1.2                                 Letters of Credit. Subject to and in accordance with the terms and conditions containedherein and in Annex B, Borrower Representative, on behalf of theapplicable Borrower, shall have the right to request, and the Revolving Lendersagree to incur, or purchase participations in, Letter of Credit Obligations inrespect of each Borrower.

 

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1.2A.                    Swap Related Reimbursement Obligations.

 

(a)                                  Borrowers, jointly and severally, agreeto reimburse GE Capital in immediately available funds in the amount of anypayment made by GE Capital under a Swap Related L/C (such reimbursementobligation, whether contingent upon payment by GE Capital under the SwapRelated L/C or otherwise, being herein called a “Swap Related ReimbursementObligation”).  No Swap RelatedReimbursement Obligation for any Swap Related L/C may exceed the amount of thepayment obligations owed by any Borrower under the interest rate protection orhedging agreement or transaction supported by the Swap Related L/C.

 

(b)                                 A Swap Related Reimbursement Obligationshall be due and payable by Borrowers within one (1) Business Day afterthe date on which the related payment is made by GE Capital under the SwapRelated L/C.

 

(c)                                  Any Swap Related Reimbursement Obligationshall, during the period in which it is unpaid, bear interest at the rate perannum equal to the LIBOR Rate applicable to Revolving Loans plus one percent(1%), as if the unpaid amount of the Swap Related Reimbursement Obligation werea LIBOR Loan, and not at any otherwise applicable Default Rate.  Such interest shall be payable upondemand.  The following additionalprovisions apply to the calculation and charging of interest by reference tothe LIBOR Rate applicable to Revolving Loans:

 

(i)                                     The LIBOR Rate applicable to RevolvingLoans shall be determined for each successive one-month LIBOR Period duringwhich the Swap Related Reimbursement Obligation is unpaid, notwithstanding theoccurrence of any Event of Default and even if the LIBOR Period were to extendbeyond the Commitment Termination Date.

 

(ii)                                  If a Swap Related ReimbursementObligation is paid during a monthly period for which the LIBOR Rate applicableto Revolving Loans is determined, interest shall be pro-rated and charged forthe portion of the monthly period during which the Swap Related ReimbursementObligation was unpaid.  Section 1.13(b) shallnot apply to any payment of a Swap Related Reimbursement Obligation during themonthly period.

 

(iii)                               Notwithstanding anything to the contrary in thedefinition of “LIBOR Rate”, if the LIBOR Rate applicable to Revolving Loans isno longer available from Reuters, the LIBOR Rate with respect to Swap RelatedReimbursement Obligations shall be determined by GE Capital from such financialreporting service or other information available to GE Capital as in GE Capital’sreasonable discretion indicates GE Capital’s cost of funds.

 

(d)                                 Except as provided in the foregoingprovisions of this Section 1.2A and in Section 11.3, Borrowersshall not be obligated to pay to GE Capital or any of its Affiliates any Letterof Credit Fee, or any other fees, charges or expenses, in respect of a SwapRelated L/C or arranging for any interest rate protection or hedging agreementor transaction supported by the Swap Related L/C.  GE Capital and its Affiliates shall look tothe beneficiary of a Swap Related L/C for payment of any such letter of creditfees or other fees, charges or expenses and such beneficiary may factor suchfees, charges, or expenses into the pricing of any interest rate protection orhedging arrangement or transaction supported by the Swap Related L/C.

 

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(e)                                  If any Swap Related L/C is revocableprior to its scheduled expiry date, GE Capital agrees not to revoke the SwapRelated L/C unless the earliest of the Commitment Termination Date or an Eventof Default has occurred.

 

(f)                                    GE Capital or any of its Affiliates shallbe permitted to (i) provide confidential or other information furnished toit by any of the Credit Parties (including, without limitation, copies of anydocuments and information in or referred to in the Closing Checklist, FinancialStatements and Compliance Certificates) to a beneficiary or potentialbeneficiary of a Swap Related L/C and (ii) receive confidential or otherinformation from the beneficiary or potential beneficiary relating to anyagreement or transaction supported or to be supported by the Swap RelatedL/C.  However, no confidentialinformation shall be provided to any Person under this paragraph unless thePerson has agreed to comply with the covenant substantially as contained in Section 11.8of this Agreement.

 

1.3                                 Prepayments.

 

(a)                                  Voluntary Prepayments; Reductions inRevolving Loan Commitment.  Borrowers may at any time onat least five (5) days’ prior written notice by Borrower Representative toAgent (i) voluntarily prepay all or part of the Term Loan B and/or (ii) permanentlyreduce (but not terminate) the Revolving Loan Commitment; provided that (A) anysuch prepayments or reductions shall be in a minimum amount of $1,000,000 andintegral multiples of $100,000 in excess of such amount, (B) the RevolvingLoan Commitment shall not be reduced to an amount less than the amount of theRevolving Loan then outstanding and (C) after giving effect to suchreductions in the Revolving Loan Commitment, Borrowers shall comply with Section 1.3(b)(i).  In addition, Borrowers may at any time on atleast five (5) days’ prior written notice by Borrower Representative toAgent terminate the Revolving Loan Commitment; provided that upon suchtermination, all Loans and other Obligations shall be immediately due andpayable in full and all Letter of Credit Obligations shall be cashcollateralized or otherwise satisfied in accordance with Annex Bhereto.  Any voluntary prepayment ofLoans and any reduction or termination of the Revolving Loan Commitment must beaccompanied by payment of any LIBOR Rate breakage costs in accordance with Section 1.13(b).  Upon any such reduction or termination of theRevolving Loan Commitment, each applicable Borrower’s right to request (I) RevolvingCredit Advances, (II) that Letter of Credit Obligations be incurred on itsbehalf, or (III) Swing Line Advances, shall simultaneously be permanentlyreduced or terminated, as the case may be; provided that a permanentreduction of the Revolving Loan Commitment shall not require a reduction in theL/C Sublimit unless the Revolving Loan Commitment is reduced to an amount belowthe L/C Sublimit.  Each notice of partialprepayment shall designate the Loans or other Obligations to which suchprepayment is to be applied; provided that any partial prepayments ofany Term Loan made by or on behalf of any Borrower shall be applied to prepaythe scheduled installments of the applicable Borrowers’ Term Loan on a pro ratabasis.

 

(b)                                 Mandatory Prepayments.

 

(i)                                     If at any time the aggregate outstandingbalances of the Revolving Loan and the Swing Line Loan exceed the MaximumAmount, Borrowers shall immediately repay the aggregate outstanding RevolvingCredit Advances to the extent required to eliminate 

 

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suchexcess.  If any such excess remains afterrepayment in full of the aggregate outstanding Revolving Credit Advances,Borrowers shall provide cash collateral for the Letter of Credit Obligations inthe manner set forth in Annex B to the extent required to eliminate suchexcess.

 

(ii)                                  Immediately upon receipt by any CreditParty of proceeds of any asset disposition or any sale of Stock of anySubsidiary of any Credit Party (excluding Excluded Proceeds), it shall forwardsuch proceeds to the Borrowers and Borrowers shall prepay the Loans in anamount equal to all such proceeds, net of (A) commissions and otherreasonable and customary transaction costs, fees and expenses (includingreasonable attorney’s fees and investment banking fees) properly attributableto such transaction and payable by Credit Parties in connection therewith (ineach case, paid to non-Affiliates), (B) transfer taxes, goods and servicestaxes and sales taxes, as applicable, (C) amounts payable to holders ofsenior Liens (to the extent such Liens constitute Permitted Encumbranceshereunder), if any, (D) an appropriate reserve for income taxes inaccordance with GAAP in connection therewith and (E) cash amounts requiredto be maintained as a reserve or in escrow against any such asset sale or saleof Stock in an amount not to exceed twenty percent (20%) of the purchase priceof such assets or Stock, until such amounts are received by such CreditParty.  Notwithstanding the foregoing,unless an Event of Default shall have occurred and be continuing or wouldresult therefrom, Credit Parties may elect to reinvest such net proceeds fromany asset disposition by delivering a certificate of the BorrowerRepresentative to Agent that (1) states that the Credit Parties intend toreinvest such net proceeds in the business of a Credit Party within 365 days ofthe date of such sale and (2) confirms that such net proceeds have been (x) depositedinto an account that is subject to a Control Letter or a control agreement meetingthe requirements of Annex C, which net proceeds when so deposited (i) shallconstitute Collateral, securing the payment of the Obligations thenoutstanding, (ii) may be withdrawn by the applicable Credit Party solelyto reinvest in other assets of such Credit Party that are useful in thebusiness of such Credit Party and (iii) upon the occurrence and during thecontinuance of an Event of Default, an amount equal to such net proceeds shallbe applied to the repayment of the Obligations as set forth above or (y) usedto repay the Revolving Loan (in whole or in part) on a temporary basis and ifso used to repay the Revolving Loan and notwithstanding anything herein to thecontrary such amount may be reborrowed only for the purpose of funding suchreinvestment or if the Reinvestment Period (as defined below) has expired andsuch amount has not been reinvested pursuant to this Section to make themandatory prepayment required by this Section; provided, that (a) suchreinvestment must be made within 365 days (the “Reinvestment Period”)after the date of such sale, and (b) no Event of Default shall haveoccurred and be continuing at the time of such reinvestment or after givingeffect thereto.  If and to the extentsuch net proceeds are not fully reinvested during the Reinvestment Period, anamount equal to such net proceeds is required to be applied to repay theObligations as set forth above.

 

(iii)                               If Holdings issues Stock (other than Excluded StockIssuances), no later than the Business Day following the date of receipt of theproceeds thereof, Holdings shall contribute such proceeds to Blount, Inc.and Blount, Inc. shall prepay the Loans in an amount equal to all suchproceeds, net of underwriting discounts and commissions and other reasonablecosts (including reasonable attorney’s fees and investment banking fees) paidto non-Affiliates in connection therewith.

 

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(iv)                              Until the Termination Date, Blount, Inc.shall prepay the Obligations on the date that is ten (10) days after theearlier of (A) the date on which Holdings’ and its Subsidiaries’ annualaudited Financial Statements for the immediately preceding Fiscal Year aredelivered pursuant to Annex E or (B) the date on which such annualaudited Financial Statements were required to be delivered pursuant to AnnexE, in an amount equal to fifty percent (50%) of Excess Cash Flow for theimmediately preceding Fiscal Year.  Eachsuch prepayment shall be accompanied by a certificate signed by BorrowerRepresentative’s chief financial officer certifying the manner in which ExcessCash Flow and the resulting prepayment were calculated, which certificate shallbe in form and substance reasonably satisfactory to Agent.

 

(c)                                  Status of Commitments after MandatoryPrepayments.  Neither the Revolving Loan Commitment nor theSwing Line Commitment shall be permanently reduced by the amount of anyprepayments under Section 1.3(b).

 

(d)                                 Status of Commitments after Prepaymentsfrom Insurance and Condemnation Proceeds.  Neither theRevolving Loan Commitment nor the Swing Line Commitment shall be permanentlyreduced by the amount of any prepayments made from insurance or condemnation proceeds.

 

(e)                                  No Implied Consent. Nothing in this Section 1.3 shall be construed to constituteAgent’s or any Lender’s consent to any transaction that is not permitted byother provisions of this Agreement or the other Loan Documents.

 

1.4                                 Use of Proceeds. Borrowers shall utilize the proceeds of the Loans solely for theRefinancing (and to pay any related transaction expenses), to fund Fees andexpenses incurred in connection with the Loans and for the financing of Borrowers’ordinary working capital and general corporate needs, including, withoutlimitation, capital expenditures permitted hereunder.  Disclosure Schedule (1.4) contains adescription of Borrowers’ sources and uses of funds as of the Closing Date,including Loans and Letter of Credit Obligations to be made or incurred on thatdate, and a funds flow memorandum detailing how funds from each source are tobe transferred to particular uses.

 

1.5                                 Interest and Applicable Margins.

 

(a)                                  Borrowers shall pay interest to Agent,for the ratable benefit of Lenders, in accordance with the various Loans beingmade by each Lender, in arrears on each applicable Interest Payment Date, atthe following rates: (i) with respect to the Revolving Credit Advances,the Index Rate plus the Applicable Revolver Index Margin per annum or, at theelection of Borrower Representative, the applicable LIBOR Rate plus theApplicable Revolver LIBOR Margin per annum, based on the aggregate RevolvingCredit Advances outstanding from time to time; (ii) with respect to theSwing Line Loan, the Index Rate plus the Applicable Revolver Index Margin perannum, based on the aggregate Swing Line Loans outstanding from time to time; (iii) withrespect to the Existing Term Loan, the Index Rate plus the Applicable ExistingTerm Loan Index Margin per annum or, at the election of BorrowerRepresentative, the applicable LIBOR Rate plus the Applicable Existing TermLoan LIBOR Margin per annum, based on the aggregate Existing Term Loanoutstanding from time to time; and (iv) with respect 

 

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to the Extending TermLoan, the Index Rate plus the Applicable Extending Term Loan Index Margin perannum or, at the election of Borrower Representative, the applicable LIBOR Rateplus the Applicable Extending Term Loan LIBOR Margin per annum, based on theaggregate Extending Term Loan outstanding from time to time.

 

The ApplicableMargins are as follows:

 
| Applicable  Revolver Index Margin            |   | 3.25 | % |
|----------------------------------------------|--------|------|---|
| Applicable  Revolver LIBOR Margin            |   | 5.00 | % |
| Applicable  Existing Term Loan Index Margin  |   | 0.00 | % |
| Applicable  Existing Term Loan LIBOR Margin  |   | 1.75 | % |
| Applicable  Extending Term Loan Index Margin |   | 2.50 | % |
| Applicable  Extending Term Loan LIBOR Margin |   | 3.50 | % |
| Applicable  Unused Line Fee Margin           |   | 1.00 | % |

 

(b)                                 Intentionally Omitted.

 

(c)                                  If any payment on any Loan becomes dueand payable on a day other than a Business Day, the maturity thereof will beextended to the next succeeding Business Day (except as set forth in thedefinition of LIBOR Period) and, with respect to payments of principal,interest thereon shall be payable at the then applicable rate during suchextension.

 

(d)                                 All computations of Fees calculated on aper annum basis and interest shall be made by Agent on the basis of a 360-dayyear, in each case for the actual number of days occurring in the period forwhich such interest and Fees are payable. The Index Rate is a floating rate determined for each day.  Each determination by Agent of an interestrate and Fees hereunder shall be final, binding and conclusive on Borrowers,absent manifest error.

 

(e)                                  So long as an Event of Default hasoccurred and is continuing under Section 8.1(a), (h) or (i) orso long as any other Event of Default with respect to Annex C, E, F or Ghas occurred and is continuing and at the election of Agent (or upon thewritten request of Requisite Lenders) confirmed by written notice from Agent toBorrower Representative, subject to applicable law, the interest ratesapplicable to the Loans and the Letter of Credit Fees shall be increased by twopercentage points (2.00%) per annum above the rates of interest or the rate ofsuch Fees otherwise applicable hereunder (the “Default Rate”), and alloutstanding Obligations shall bear interest at the Default Rate applicable tosuch Obligations. Interest and Letter of Credit 

 

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Fees at the Default Rateshall accrue from the initial date of such Event of Default until that Event ofDefault is waived and shall be payable upon demand.

 

(f)                                    Borrower Representative shall have theoption to (A) request that any Revolving Credit Advance be made as a LIBORLoan, (B) convert at any time all or any part of outstanding Loans (otherthan the Swing Line Loan) from Index Rate Loans to LIBOR Loans, (C) convertany LIBOR Loan to an Index Rate Loan, subject to payment of LIBOR breakagecosts in accordance with Section 1.13(b) if such conversion ismade prior to the expiration of the LIBOR Period applicable thereto, or (D) continueall or any portion of any Loan (other than the Swing Line Loan) as a LIBOR Loanupon the expiration of the applicable LIBOR Period and the succeeding LIBORPeriod of that continued Loan shall commence on the first day after the lastday of the LIBOR Period of the Loan to be continued; provided, however,that no Loan or group of Loans shall be made as, converted to, or continued atthe end of the LIBOR Period therefor as a LIBOR Loan if any Default or Event ofDefault has occurred and is continuing and no Loan may be made as a LIBOR Loanuntil the earlier of 60 days following the Closing Date or the date theAdministrative Agent has determined that the syndication of the Commitments hasbeen completed.  Any Loan or group ofLoans having the same proposed LIBOR Period to be made or continued as, or convertedinto, a LIBOR Loan must be in a minimum amount of $5,000,000 and integralmultiples of $100,000 in excess of such amount. Any such election must be made by 1:00 p.m. (New York time) on the3rd Business Day prior to (1) the date of any proposed Advance which is tobear interest at the LIBOR Rate, (2) the end of each LIBOR Period withrespect to any LIBOR Loans to be continued as such, or (3) the date onwhich Borrower Representative wishes to convert any Index Rate Loan to a LIBORLoan for a LIBOR Period designated by Borrower Representative in suchelection.  If no election is receivedwith respect to a LIBOR Loan by 1:00 p.m. (New York time) on the 3rdBusiness Day prior to the end of the LIBOR Period with respect thereto (or if aDefault or an Event of Default has occurred and is continuing), that LIBOR Loanshall be converted to an Index Rate Loan at the end of its LIBOR Period.  Borrower Representative must make suchelection by notice to Agent in writing by telecopy or overnight courier.  In the case of any conversion orcontinuation, such election must be made pursuant to a written notice (a “Noticeof Conversion/Continuation-LIBOR Rate”) in the form of Exhibit 1.5(f)(i).

 

(g)                                 Notwithstanding anything to the contraryset forth in this Section 1.5, if a court of competent jurisdictiondetermines in a final order that the rate of interest payable with respect tothe Obligations exceeds the highest rate of interest permissible under law (the“Maximum Lawful Rate”), then so long as the Maximum Lawful Rate would beso exceeded, the rate of interest payable hereunder shall be equal to theMaximum Lawful Rate; provided, however, that if at any time thereafterthe rate of interest payable hereunder is less than the Maximum Lawful Rate,Borrowers shall continue to pay interest hereunder at the Maximum Lawful Rateuntil such time as the total interest received by Agent, on behalf of Lenders,is equal to the total interest that would have been received had the interestrate payable with respect to the Obligations been (but for the operation ofthis paragraph) the interest rate payable since the Closing Date as otherwiseprovided in this Agreement. Thereafter, interest hereunder shall be paid at therate(s) of interest and in the manner provided in Sections 1.5(a) through(f), unless and until the rate of interest again exceeds the MaximumLawful Rate, and at that time this paragraph shall again apply.  In no event shall the total interest receivedby any Lender pursuant to the terms hereof exceed the amount that such Lendercould lawfully have received had the 

 

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interest due hereunderbeen calculated for the full term hereof at the Maximum Lawful Rate.  If the Maximum Lawful Rate is calculatedpursuant to this paragraph, such interest shall be calculated at a daily rateequal to the Maximum Lawful Rate divided by the number of days in the year inwhich such calculation is made.  If,notwithstanding the provisions of this Section 1.5(g), a court ofcompetent jurisdiction shall finally determine that a Lender has receivedinterest hereunder in excess of the Maximum Lawful Rate, Agent shall, to theextent permitted by applicable law, promptly apply such excess in the orderspecified in Section 1.11 and thereafter shall refund any excess toBorrowers or as a court of competent jurisdiction may otherwise order.

 

(h)                                 Intentionally Omitted.

 

(i)                                     Intentionally Omitted.

 

1.6                                 Intentionally Omitted.

 

1.7                                 Intentionally Omitted.

 

1.8                                 Cash Management Systems. On or prior to the Closing Date, Borrowers will establish and willmaintain until the Termination Date, the cash management systems described in AnnexC (the “Cash Management Systems”).

 

1.9                                 Fees.

 

(a)                                  Fee Letter Fees. Blount, Inc. shall pay to GE Capital, individually, the Feesspecified in that certain fee letter dated as of October 30, 2009 amongBlount, Inc. and GE Capital (as amended, restated, supplemented orotherwise modified from time to time, the “GE Capital Fee Letter”), atthe times specified for payment therein.

 

(b)                                 Unused Line Fees. As additional compensation for the Revolving Lenders, Borrowers shallpay to Agent, for the ratable benefit of such Lenders, in arrears, on the firstBusiness Day of each month prior to the Commitment Termination Date and on theCommitment Termination Date, a Fee for Borrowers’ non-use of available funds inan amount equal to the Applicable Unused Line Fee Margin per annum (calculatedon the basis of a 360 day year for actual days elapsed) multiplied by thedifference between (x) the Maximum Amount (as it may be reduced from timeto time) and (y) the average for the period of the daily closing balancesof the aggregate Revolving Loan and the Swing Line Loan outstanding during theperiod for which such Fee is due.

 

(c)                                  Intentionally Omitted.

 

(d)                                 Intentionally Omitted.

 

(e)                                  Borrowers shall pay to Agent, for theratable benefit of the Revolving Lenders, the Letter of Credit Fee as providedin Annex B.

 

1.10                           Receipt of Payments. Borrowers shall make each payment under this Agreement not later than2:00 p.m. (New York time) on the day when due in immediately availablefunds in 

 

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Dollars to the CollectionAccount.  For purposes of computinginterest and Fees and determining Borrowing Availability as of any date, allpayments shall be deemed received on the Business Day on which immediatelyavailable funds therefor are received in the applicable Collection Accountprior to 2:00 p.m. New York time. Payments received after 2:00 p.m. (New York time) on any BusinessDay or on a day that is not a Business Day shall be deemed to have beenreceived on the following Business Day. Unless stated otherwise, all calculations, comparisons, measurements ordeterminations under this Agreement shall be made in Dollars.  For purposes of such calculations,comparisons, measurements or determinations, amounts denominated in othercurrencies shall be converted in the Equivalent Amount of Dollars on the dateof calculation, comparison, measurement or determination.  If Agent receives any payment from or onbehalf of any Credit Party in a currency other than the currency in which suchObligation is denominated, Agent may convert the payment (including themonetary proceeds of realization upon any Collateral and any funds then held ina cash collateral account) into the currency of the relevant Obligation at theexchange rate that Agent would be prepared to sell the currency in which therelevant Obligation is denominated against the currency received on the BusinessDay immediately preceding the date of actual payment.  The Obligations shall be satisfied only tothe extent of the amount actually received by Agent upon such conversion.

 

1.11                           Application and Allocation of Payments.

 

(a)                                  So long as no Event of Default hasoccurred and is continuing, (i) payments consisting of proceeds ofAccounts received in the ordinary course of business shall be applied, in thecase of receipt by or on behalf of any Borrower, first, to the SwingLine Loan and, second, the Revolving Loan; (ii) payments (otherthan mandatory prepayments) matching specific scheduled payments then due shallbe applied to those scheduled payments; (iii) voluntary prepayments shallbe applied as set forth in Section 1.3(a) hereof; and (iv) mandatoryprepayments shall be applied as set forth in Sections 1.11(b) and 1.11(c) hereof.  All payments and prepayments applied to aparticular Loan shall be applied ratably to the portion thereof held by eachLender as determined by its Pro Rata Share. As to any other payment, and as to all payments made when an Event ofDefault has occurred and is continuing or following the Commitment TerminationDate, Borrowers hereby irrevocably waive the right to direct the application ofany and all payments received from or on behalf of Borrowers, and Borrowershereby irrevocably agree that Agent shall have the continuing exclusive rightto apply any and all such payments against the Obligations as Agent may deemadvisable notwithstanding any previous entry by Agent in the Loan Account orany other books and records.  In theabsence of a specific determination by Agent with respect thereto, paymentsshall be applied to amounts then due and payable in the following order: (1) toFees and Agent’s expenses reimbursable hereunder and to all obligations owingto Agent, the Swing Line Lender, any L/C Issuer or any other Lender by anyNon-Funding Lender under the Loan Documents; (2) to interest on the SwingLine Loan; (3) to principal payments on the Swing Line Loan; (4) tointerest on the other Loans and unpaid Swap Related Reimbursement Obligations,ratably in proportion to the interest accrued as to each Loan and unpaid SwapRelated Reimbursement Obligation, as applicable; (5) to principal paymentson the other Loans and unpaid Swap Related Reimbursement Obligations and otherunpaid Obligations under Hedge Agreements permitted under Section 6.3(a)(viii) andto provide cash collateral for Letter of Credit Obligations in the mannerdescribed in Annex B, ratably to the aggregate, combined principalbalance of the other Loans, unpaid Swap Related 

 

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Reimbursement Obligationsand outstanding Letter of Credit Obligations; and (6) to all otherObligations including expenses of Lenders to the extent reimbursable under Section 11.3.

 

(b)                                 Any prepayments made by any Borrowerpursuant to Section 1.3(b)(ii) and any prepayments made by anyBorrower from insurance or condemnation proceeds in accordance with Section 5.4(c) andthe Mortgage(s) shall be applied as follows: (i) proceeds from thesale of Inventory and Accounts and insurance proceeds from casualties or lossesto cash or Inventory shall be applied, first, to the Swing Line Loans;and second, to the Revolving Credit Advances, and (ii) all other proceedsand any proceeds from the sale of Inventory and Accounts or from casualties orlosses to cash or Inventory remaining after application to the Swing Line Loansand the Revolving Credit Advances shall be applied, first, to Fees andreimbursable expenses of Agent then due and payable pursuant to any of the LoanDocuments and to all obligations owing to Agent, the Swing Line Lender, any L/CIssuer or any other Lender by any Non-Funding Lender under the Loan Documents; second,to interest then due and payable on the Term Loan B; third, to prepaythe principal installments of the Term Loan B on a pro rata basis; fourth,to interest then due and payable on Borrowers’ Swing Line Loan; fifth,to the principal balance of the Swing Line Loan outstanding until the same hasbeen repaid in full; sixth, to interest then due and payable onRevolving Credit Advances; seventh, to the principal balance ofRevolving Credit Advances outstanding until the same have been paid in full; eighth,to any Letter of Credit Obligations of Borrower to provide cash collateraltherefor in the manner set forth in Annex B; ninth, to all otherObligations then due and payable.  Notwithstanding the foregoing, if an Event of Default has occurred andis continuing, any such prepayments shall be applied as set forth in Section 1.11(a).

 

(c)                                  Any prepayments made by Blount, Inc.pursuant to Sections 1.3(b)(iii) or (b)(iv) shall be appliedas follows: first, to Fees and reimbursable expenses of Agent then dueand payable pursuant to any of the Loan Documents and to all obligations owingto Agent, the Swing Line Lender, any L/C Issuer or any other Lender by anyNon-Funding Lender under the Loan Documents; second, pro rata tointerest then due and payable on the Term Loan B; third, to prepay the principalinstallments of the Term Loan B on a pro rata basis; fourth, to interestthen due and payable on Borrowers’ Swing Line Loan; fifth, to theprincipal balance of the Swing Line Loan outstanding until the same has beenrepaid in full; sixth, to interest then due and payable on RevolvingCredit Advances; seventh, to the principal balance of Revolving CreditAdvances outstanding until the same have been paid in full; eighth, toany Letter of Credit Obligations of Borrower to provide cash collateral thereforin the manner set forth in Annex B; ninth, to all other Obligations thendue and payable.  Notwithstanding theforegoing, if an Event of Default has occurred and is continuing, any suchprepayments shall be applied as set forth in Section 1.11(a).

 

1.12                           Loan Account and Accounting. Agent shall maintain a loan account (the “Loan Account”) on itsbooks to record:  all Revolving CreditAdvances, Swing Line Advances, Letters of Credit and the Term Loan B, allpayments made by Borrowers, and all other debits and credits as provided inthis Agreement with respect to the Loans or any other Obligations.  All entries in the Loan Account shall be madein accordance with Agent’s customary accounting practices as in effect fromtime to time. The balance in the Loan Account, as recorded on Agent’s mostrecent printout or other written statement, shall, absent manifest error, bepresumptive evidence of the amounts due and owing to Agent and Lenders by eachBorrower; provided that any failure 

 

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to so record or any errorin so recording shall not limit or otherwise affect any Borrower’s duty to paythe Obligations.  Agent shall render toBorrower Representative a monthly accounting of transactions with respect tothe Loans setting forth the balance of the Loan Account and for the immediatelypreceding month.  Unless BorrowerRepresentative notifies Agent in writing of any objection to any suchaccounting (specifically describing the basis for such objection), within thirty(30) days after the date thereof, each and every such accounting shall (absentmanifest error) be deemed final, binding and conclusive on the applicableBorrowers in all respects as to all matters reflected therein.  Only those items expressly objected to insuch notice shall be deemed to be disputed by the applicable Borrowers.  Notwithstanding any provision hereincontained to the contrary, any Lender may elect (which election may be revoked)to dispense with the issuance of Notes to that Lender and may rely on theapplicable Loan Account as evidence of the amount of the applicable Obligationsfrom time to time owing to it. Regardless of whether any Note or Notes are issued, each Borrowerpromises to pay the Obligations as and when due.

 

1.13                           Indemnity.

 

(a)                                  Each Credit Party that is a signatoryhereto shall jointly and severally indemnify and hold harmless each of Agent,Lenders and their respective Affiliates, and each such Person’s respectiveofficers, directors, employees, attorneys, agents and representatives, (each,an “Indemnified Person”), from and against any and all suits, actions,proceedings, claims, damages, losses, liabilities and expenses (includingreasonable attorneys’ fees and disbursements and other costs of investigationor defense, including those incurred upon any appeal) that may be instituted orasserted against or incurred by any such Indemnified Person as the result ofcredit having been extended, suspended or terminated under this Agreement andthe other Loan Documents and the administration of such credit, and inconnection with or arising out of the transactions contemplated hereunder andthereunder and any actions or failures to act in connection therewith,including any and all Environmental Liabilities and legal costs and expensesarising out of or incurred in connection with disputes between or among anyparties to any of the Loan Documents (collectively, “Indemnified Liabilities”);provided, that no such Credit Party shall be liable for anyindemnification to an Indemnified Person to the extent that any such suit,action, proceeding, claim, damage, loss, liability or expense results fromthat  Indemnified Person’s grossnegligence or willful misconduct.  NOINDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANYLOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCHPERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY,FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BEALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATEDUNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATEDHEREUNDER OR THEREUNDER.

 

(b)                                 To induce Lenders to provide the LIBORRate option on the terms provided herein, if (i) any LIBOR Loans arerepaid in whole or in part prior to the last day of any applicable LIBOR Period(whether that repayment is made pursuant to any provision of this Agreement orany other Loan Document or occurs as a result of acceleration, by operation oflaw or otherwise); (ii) any Borrower shall default in payment when due ofthe principal amount of or 

 

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interest on any LIBORLoan; (iii) any Borrower shall refuse to accept any borrowing of, or shallrequest a termination of, any borrowing of, conversion into or continuation of,LIBOR Loans after Borrower Representative has given notice requesting the samein accordance herewith; or (iv) any Borrower shall fail to make anyprepayment of a LIBOR Loan after Borrower Representative has given a noticethereof in accordance herewith, then Borrowers shall indemnify and holdharmless each affected Lender from and against all losses, costs and expensesresulting from or arising from any of the foregoing.  Such indemnification shall include any loss(including loss of margin) or expense arising from the reemployment of fundsobtained by it or from fees payable to terminate deposits from which such fundswere obtained.  For the purpose ofcalculating amounts payable to a Lender under this subsection, each Lendershall be deemed to have actually funded its relevant LIBOR Loan through thepurchase of a deposit bearing interest at the applicable LIBOR Rate in anamount equal to the amount of that LIBOR Loan and having a maturity comparableto the relevant LIBOR Period; provided, that each Lender may fund eachof its LIBOR Loans in any manner it sees fit, and the foregoing assumptionshall be utilized only for the calculation of amounts payable under thissubsection.  This covenant shall survivethe termination of this Agreement and the payment of the Obligations and allother amounts payable hereunder.  Aspromptly as practicable under the circumstances, each Lender shall provideBorrower Representative with its written calculation of all amounts payablepursuant to this Section 1.13(b), and such calculation shall bebinding on the parties hereto unless Borrower Representative shall object inwriting within ten (10) Business Days of receipt thereof, specifying thebasis for such objection in detail.

 

1.14                           Access.  Each CreditParty that is a party hereto shall, during normal business hours, from time totime upon one Business Day’s prior notice as frequently as Agent reasonablydetermines to be appropriate: (a) provide Agent and any of its respectiveofficers, employees and agents access to its properties, facilities, advisorsand employees (including officers) of each Credit Party and to the Collateral, (b) permitAgent and any of its officers, employees and agents, to inspect, audit and makeextracts from any Credit Party’s books and records, and (c) permit Agentand its officers, employees and agents, to inspect, review, evaluate and maketest verifications and counts of the Accounts, Inventory and other Collateralof any Credit Party.  Notwithstanding theforegoing or anything else herein or any other Loan Document to the contrary,if a Default or Event of Default has occurred and is continuing or if access isnecessary to preserve or protect the Collateral as determined by Agent, eachsuch Credit Party shall provide such access to Agent and to each Lender at alltimes and without advance notice. Furthermore, so long as any Event of Default has occurred and iscontinuing, Borrowers shall use reasonable efforts to provide Agent and eachLender with access to their suppliers and customers.  Each Credit Party shall make available toAgent and their counsel, as quickly as is possible under the circumstances,originals or copies of all books and records that Agent may reasonably request.  Each Credit Party shall deliver any documentor instrument necessary for Agent, as may be reasonably requested from time totime, to obtain records from any service bureau or other Person that maintainsrecords for such Credit Party, and shall maintain duplicate records orsupporting documentation on media, including computer tapes and discs owned bysuch Credit Party.  Agent will giveLenders at least five (5) days’ prior written notice of regularlyscheduled audits.  Representatives ofother Lenders may accompany Agent’s representatives on regularly scheduledaudits at no charge to Borrowers.

 

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1.15                           Taxes.

 

(a)                                  All payments by each Credit Partyhereunder or under the Notes or under any other Loan Document will be madewithout setoff, counterclaim or defense. In addition, any and all payments by each Credit Party hereunder(including any payments made pursuant to Section 12) or under theNotes or under any other Loan Document shall be made, in accordance with this Section 1.15,free and clear of and without deduction for any and all present or futureTaxes.  If any Credit Party shall berequired by law to deduct any Taxes from or in respect of any sum payablehereunder (including any sum payable pursuant to Section 12) orunder the Notes, (i) the sum payable shall be increased as much as shallbe necessary so that after making all required withholdings and deductions(including withholdings and deductions applicable to additional sums payableunder this Section 1.15) Agent or Lenders, as applicable, receivean amount equal to the sum they would have received had no such withholdingsand deductions been made, (ii) such Borrower shall make such withholdingsand deductions, and (iii) such Borrower shall pay the full amount deductedto the relevant Governmental Authority in accordance with applicable law.  Within 30 days after the date of any suchpayment of Taxes, Borrower Representative shall furnish to Agent the originalor a certified copy of a receipt evidencing payment thereof.

 

(b)                                 In addition, each Credit Party agrees topay any present or future stamp, recording or documentary taxes or any otherexcise or property taxes, charges or similar levies that arise from any paymentmade under this Agreement or under any other Loan Document or from theexecution, delivery or registration of, or otherwise with respect to, thisAgreement, the other Loan Documents and any other agreements and instrumentscontemplated hereby or thereby (“Other Taxes”).  Each Lender agrees that, as promptly asreasonably practicable after it becomes aware of any circumstances referred toabove which would result in additional payments under this Section 1.15,it shall notify Borrowers thereof.

 

(c)                                  Each Credit Party that is a signatory heretoshall jointly and severally indemnify and, within ten (10) days of demandtherefor, pay Agent and each Lender for the full amount of Taxes and OtherTaxes (including any Taxes imposed by any jurisdiction on amounts payable underthis Section 1.15) paid by Agent or such Lender on or with respectto any payment by or on account of any obligation of the Credit Partieshereunder, as appropriate, and any penalties, interest and expenses arisingtherefrom or with respect thereto, whether or not such Taxes were correctly orlegally asserted.

 

(d)                                 Each Lender, and the successors andassignees of such Lender, organized under the laws of a jurisdiction outside ofthe United States (“Foreign Lender”) to whom payments to be made underthis Agreement or under the Notes may be exempt from, or eligible for a reducedrate of, United States withholding tax (as applicable) under the law of thejurisdiction in which the relevant Borrower is located or under any tax treatyto which such jurisdiction is a party shall, at the time or times prescribed byapplicable law, provide to Borrower Representative (with a copy to Agent) aproperly completed and executed IRS Form W-8ECI or Form W-8BEN orother applicable form, certificate or document prescribed by the IRS or theUnited States.

 

(e)                                  If any of Agent or any Lender, asapplicable, determines, in its sole discretion, that it has received a refundof any Taxes as to which it has been indemnified by the Borrower or withrespect to which the Borrower has paid additional amounts pursuant to this 

 

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Section 1.15, it shall pay over such refund to theBorrower (but only to the extent of indemnity payments made, or additionalamounts paid, by the Borrower under this Section 1.15 with respect to theTaxes giving rise to such refund), net all out-of-pocket expenses of such Agentor Lender and without interest (other than any interest paid by the relevantGovernmental Authority with respect to such refund).

 

1.16                           Capital Adequacy; Increased Costs;Illegality.

 

(a)                                  If any Lender shall have determined thatany law, treaty, governmental (or quasi-governmental) rule, regulation,guideline or order regarding capital adequacy, reserve requirements or similarrequirements or compliance by any Lender with any request or directiveregarding capital adequacy, reserve requirements or similar requirements(whether or not having the force of law), in each case, adopted after theClosing Date, from any central bank or other Governmental Authority increasesor would have the effect of increasing the amount of capital, reserves or otherfunds required to be maintained by such Lender and thereby reducing the rate ofreturn on such Lender’s capital as a consequence of its obligations hereunder,then Borrowers, shall from time to time upon demand by such Lender (with a copyof such demand to Agent) pay to Agent for the account of such Lender,additional amounts sufficient to compensate such Lender for such rate of returnreduction.  A certificate as to the amountof that reduction and showing the basis of the computation thereof submitted bysuch Lender to Borrower Representative and to Agent shall, absent manifesterror, be final, conclusive and binding for all purposes.

 

(b)                                 If, due to either (i) the introductionof or any change in any law or regulation (or any change in the interpretationthereof) or (ii) the compliance with any guideline or request from anycentral bank or other Governmental Authority (whether or not having the forceof law), in each case adopted after the Closing Date, there shall be anyincrease in the cost to any Lender of agreeing to make or making, funding ormaintaining any Loan, then Borrowers shall from time to time, upon demand bysuch Lender (with a copy of such demand to Agent), pay to Agent for the accountof such Lender additional amounts sufficient to compensate such Lender for suchincreased cost.  A certificate as to theamount of such increased cost, submitted to Borrower Representative and toAgent by such Lender, shall be conclusive and binding on Borrowers for allpurposes, absent manifest error.  EachLender agrees that, as promptly as practicable after it becomes aware of anycircumstances referred to above which would result in any such increased cost,the affected Lender shall, to the extent not inconsistent with such Lender’sinternal policies of general application, use reasonable commercial efforts tominimize costs and expenses incurred by it and payable to it by Borrowerspursuant to this Section 1.16(b).

 

(c)                                  Notwithstanding anything to the contrarycontained herein, if the introduction of or any change in any law or regulation(or any change in the interpretation thereof) shall make it unlawful, or anycentral bank or other Governmental Authority shall assert that it is unlawful,for any Lender to agree to make or to make or to continue to fund or maintainany LIBOR Loan, then, unless that Lender is able to make or to continue to fundor to maintain such LIBOR Loan at another branch or office of that Lenderwithout, in that Lender’s opinion, adversely affecting it or its Loans or theincome obtained therefrom, on notice thereof and demand therefor by such Lenderto Borrower Representative through Agent (i) the obligation of such Lenderto agree to make or to make or to continue to fund or maintain LIBOR Loansshall 

 

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terminate and (ii) eachBorrower, in the case of LIBOR Loans that are Loans shall forthwith prepay infull all outstanding LIBOR Loans owing by such Borrowers to such Lender,together with interest accrued thereon, unless Borrower Representative onbehalf of such Borrowers, within five (5) Business Days after the deliveryof such notice and demand, converts all LIBOR Loans into Index Rate Loans.

 

(d)                                 Within 15 days after receipt by BorrowerRepresentative of written notice and demand from any Lender (an “AffectedLender”) for payment of additional amounts or increased costs as providedin Sections 1.15(a), 1.15(c), 1.16(a) or 1.16(b), BorrowerRepresentative may, at its option, notify Agent and such Affected Lender of itsintention to replace the Affected Lender. So long as no Default or Event of Default has occurred and iscontinuing, Borrower Representative, with the consent of Agent, may obtain, atBorrowers’ expense, a replacement Lender (“Replacement Lender”) for theAffected Lender, which Replacement Lender must be reasonably satisfactory toAgent.  If Borrowers obtain a ReplacementLender within 90 days following notice of their intention to do so, theAffected Lender must sell and assign its Loans and Commitments to suchReplacement Lender for an amount equal to the principal balance of all Loansheld by the Affected Lender and all accrued interest and Fees with respectthereto through the date of such sale; provided, that Borrowers shallhave reimbursed such Affected Lender for the additional amounts or increasedcosts that it is entitled to receive under this Agreement through the date ofsuch sale and assignment.  Notwithstandingthe foregoing, Borrowers shall not have the right to obtain a ReplacementLender if the Affected Lender rescinds its demand for increased costs oradditional amounts within 15 days following its receipt of Borrowers’ notice ofintention to replace such Affected Lender. Furthermore, if Borrowers give a notice of intention to replace and donot so replace such Affected Lender within 90 days thereafter, Borrowers’rights under this Section 1.16(d) shall terminate andBorrowers shall promptly pay all increased costs or additional amounts demandedby such Affected Lender pursuant to Sections 1.15(a), 1.16(a) and1.16(b).  Notwithstanding theforegoing, with respect to a Lender that is an Impacted Lender, Borrowers orAgent (in consultation with Borrowers) may (but shall have no obligation to)obtain a Replacement Lender and execute an Assignment Agreement on behalf ofsuch Impacted Lender at any time and without prior notice to such ImpactedLender.

 

1.17                           Single Loan. All Loans to Borrowers and all of the other Obligations of Borrowersarising under this Agreement and the other Loan Documents shall constitute onegeneral obligation of Borrowers secured, until the Termination Date, by all ofthe Collateral.

 

2.                                       CONDITIONS PRECEDENT

 

2.1                                 Conditions to the Initial Loans. No Lender shall be obligated to make any Loan or incur any Letter ofCredit Obligations on the Closing Date, or to take, fulfill, or perform anyother action hereunder, until the following conditions have been satisfied orprovided for in a manner satisfactory to Agent, or waived in writing by Agentand Lenders:

 

(a)                                  Credit Agreement; Loan Documents. This Agreement or counterparts hereof shall have been duly executed by,and delivered to, Borrowers, each other Credit Party, Agent and Lenders; andAgent shall have received such documents, instruments, agreements and legalopinions as Agent shall reasonably request in connection with the transactions 

 

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contemplated by thisAgreement and the other Loan Documents, including all those listed in theClosing Checklist attached hereto as Annex D, each in form and substancereasonably satisfactory to Agent.

 

(b)                                 Intentionally Omitted.

 

(c)                                  Approvals.  Agent shallhave received (i) satisfactory evidence that the Credit Parties haveobtained all required consents and approvals of all Persons including allrequisite Governmental Authorities, to the execution, delivery and performanceof this Agreement and the other Loan Documents and the consummation of theRelated Transactions or (ii) an officer’s certificate in form andsubstance reasonably satisfactory to Agent affirming that no such consents orapprovals are required.

 

(d)                                 Minimum Credit Rating. Agent shall have received satisfactory evidence that the Revolving Loansand Term Loan B are rated BA1/BB or better by Moody’s and S&P,respectively.

 

(e)                                  Payment of Fees. Borrowers shall have paid the Feesrequired to be paid on the Closing Date in the respective amounts specified in Section 1.9(including the Fees specified in the GE Capital Fee Letter), and shall havereimbursed Agent for all fees, costs and expenses of closing presented as ofthe Closing Date in accordance with the GE Capital Fee Letter and thisAgreement.

 

(f)                                    Intentionally Omitted.

 

(g)                                 Intentionally Omitted.

 

(h)                                 Maximum Leverage Ratio. Agent shall have received satisfactory evidence that the Leverage Ratioas of September 30, 2009, after giving pro forma effect to the RelatedTransactions, is not greater than 4.00 to 1.00.

 

(i)                                     Maximum Credit Facility Leverage Ratio. Agent shall have received satisfactory evidence that the Credit FacilityLeverage Ratio as of September 30, 2009, after giving pro forma effect tothe Related Transactions, is not greater than 1.85 to 1.00.

 

2.2                                 Further Conditions to Each Loan. Except as otherwise expressly provided herein, no Lender shall beobligated to fund any Advance or incur any Letter of Credit Obligation, if, asof the date thereof:

 

(a)                                  any representation or warranty by anyCredit Party contained herein or in any other Loan Document is untrue orincorrect (with respect to any representation or warranty that is not otherwisequalified as to materiality, in any material respect) as of such date, exceptto the extent that such representation or warranty expressly relates to an earlierdate and except for changes therein expressly permitted or expresslycontemplated by this Agreement;

 

(b)                                 any event or circumstance having aMaterial Adverse Effect has occurred since the date hereof;

 

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(c)           any Default or Event of Default hasoccurred and is continuing or would result after giving effect to any Advance(or the incurrence of any Letter of Credit Obligation); or

 

(d)           after giving effect to any Advance (orthe incurrence of any Letter of Credit Obligation), the outstanding principalamount of the Revolving Loan would exceed the Maximum Amount less the thenoutstanding principal amount of the Swing Line Loan.

 

The request and acceptance by any Borrower of the proceeds of anyAdvance or the incurrence of any Letter of Credit Obligation shall be deemed toconstitute, as of the date thereof, (i) a representation and warranty byBorrowers that the conditions in this Section 2.2  have been satisfied and (ii) areaffirmation by Borrowers of the provisions set forth in Section 12and of the granting and continuance of Agent’s Liens pursuant to the CollateralDocuments.  The extension of credit byany Lender after the occurrence of any Default or Event of Default shall notresult in a waiver of such Default or Event of Default.

 

3.             REPRESENTATIONS AND WARRANTIES

 

Toinduce Lenders to make the Loans and to incur Letter of Credit Obligations, theCredit Parties executing this Agreement, jointly and severally, make thefollowing representations and warranties to Agent and each Lender with respectto all Credit Parties, each and all of which shall survive the execution anddelivery of this Agreement.

 

3.1          Corporate Existence; Compliance with Law. Each Credit Party (a) is a corporation, limited liability companyor limited partnership duly organized, validly existing and in good standingunder the laws of its respective jurisdiction of incorporation or organizationset forth in Disclosure Schedule (3.1); (b) is duly qualified toconduct business and is in good standing in each other jurisdiction where itsownership or lease of property or the conduct of its business requires suchqualification, except where the failure to be so qualified would not result inexposure to losses, damages or liabilities which could, in the aggregate,reasonably be expected to result in a Material Adverse Effect; (c) has therequisite power and authority and the legal right to own and operate in allmaterial respects its properties, to lease the property it operates under leaseand to conduct its business in all material respects as now, heretofore andproposed to be conducted and has the requisite power and authority and thelegal right to pledge, mortgage, hypothecate or otherwise encumber theCollateral; (d) subject to specific representations regardingEnvironmental Laws, has all material licenses, permits, consents or approvalsfrom or by, and has made all material filings with, and has given all materialnotices to, all Governmental Authorities having jurisdiction, to the extentrequired for such ownership, operation and conduct; (e) is in compliancewith its charter and bylaws or partnership or operating agreement, asapplicable; and (f) subject to specific representations set forth hereinregarding ERISA, Environmental Laws, tax and other laws, is in compliance withall applicable provisions of law, except where the failure to comply,individually or in the aggregate, could not reasonably be expected to have aMaterial Adverse Effect.

 

3.2          Executive Offices, Collateral Locations,FEIN.  As of the Closing Date, the current locationof each Credit Party’s chief executive office, principal place of business andthe warehouses and premises at which any Collateral is located are set forth inDisclosure Schedule (3.2), and, except as set forth on such schedule,none of such locations has changed within the 12 

 

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months preceding theClosing Date.  In addition, DisclosureSchedule (3.2) lists the federal employer identification number andorganizational identification number, if any, of each Credit Party.

 

3.3          Corporate Power, Authorization,Enforceable Obligations.  The execution, delivery andperformance by each Credit Party of the Loan Documents to which it is a partyand the creation of all Liens provided for therein: (a) are within suchPerson’s power; (b) have been duly authorized by all necessary corporate,limited liability company or limited partnership action; (c) do notcontravene any provision of such Person’s charter, bylaws or partnership oroperating agreement as applicable; (d) do not violate any law orregulation, or any order or decree of any court or Governmental Authority; (e) exceptas set forth on Disclosure Schedule (3.3(e)), do not conflict with orresult in the breach or termination of, constitute a default under oraccelerate or permit the acceleration of any performance required by, anyindenture, mortgage, deed of trust, lease, agreement or other instrument towhich such Person is a party or by which such Person or any of its property isbound; (f) do not result in the creation or imposition of any Lien uponany of the property of such Person other than those in favor of Agent pursuantto the Loan Documents; and (g) do not require the consent or approval ofany Governmental Authority or any other Person, except those which will havebeen duly obtained, made or complied with prior to the Closing Date pursuant toSection 2.1(c).  Each of theLoan Documents shall be duly executed and delivered by each Credit Party thatis a party thereto and each such Loan Document shall constitute a legal, validand binding obligation of such Credit Party enforceable against it inaccordance with its terms.

 

3.4          Financial Statements and Projections. Except for the Projections, all Financial Statements concerning Holdingsand its Subsidiaries that are referred to below have been prepared inaccordance with GAAP consistently applied throughout the periods covered(except as disclosed therein and except, with respect to unaudited FinancialStatements, for the absence of footnotes and normal year-end audit adjustments)and present fairly in all material respects the financial position of thePersons covered thereby as at the dates thereof and the results of theiroperations and cash flows for the periods then ended.

 

(a)           Financial Statements. The following Financial Statements attached hereto as DisclosureSchedule (3.4(a)) have been delivered on the date hereof:

 

(i)            The audited consolidated balance sheetsat December 31, 2007 and 2008 and the related statements of income andcash flows of Holdings and its Subsidiaries for the Fiscal Years then ended,certified by Pricewaterhouse Coopers LLP.

 

(ii)           The unaudited balance sheet(s) at September 30,2009 and the related statement(s) of income and cash flows of Holdings andits Subsidiaries for the Fiscal Month then ended.

 

(b)           Pro Forma.  The Pro Formadelivered on the date hereof and attached hereto as Disclosure Schedule(3.4(b)) was prepared by Holdings giving pro forma effect to the RelatedTransactions, was based on the unaudited consolidated balance sheets ofHoldings and its Subsidiaries dated September 30, 2009, and was preparedin accordance with GAAP, with only such adjustments thereto as would berequired in accordance with GAAP.

 

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(c)           Projections. The Projections delivered on the date hereof and attached hereto as DisclosureSchedule (3.4(c)) have been prepared by Holdings in light of the pastoperations of their businesses and reflect projections for the period beginningon October 1, 2009 and continuing through December 31, 2012 on aquarter-by-quarter basis for periods in calendar years 2009 and 2010 and on ayear-by-year basis thereafter.  TheProjections are based upon estimates and assumptions stated therein, all ofwhich Borrowers believe to be reasonable and fair in light of currentconditions and current facts known to Borrowers and, as of the Closing Date,reflect Borrowers’ good faith and reasonable estimates of the future financialperformance of Borrowers and of the other information projected therein for theperiod set forth therein.

 

3.5          Material Adverse Effect. Between December 31, 2008 and the Closing Date: (a) no CreditParty has incurred any obligations, contingent or noncontingent liabilities,liabilities for Charges, long-term leases or unusual forward or long-termcommitments that are not reflected in the Pro Forma and that, alone or in theaggregate, could reasonably be expected to have a Material Adverse Effect, (b) nocontract, lease or other agreement or instrument has been entered into by anyCredit Party or has become binding upon any Credit Party’s assets and no law orregulation applicable to any Credit Party has been adopted that has had orcould reasonably be expected to have a Material Adverse Effect, and (c) noCredit Party is in default and to the best of Borrowers’ knowledge no thirdparty is in default under any material contract, lease or other agreement orinstrument, that alone or in the aggregate could reasonably be expected to havea Material Adverse Effect.  Between December 31,2008 and the Closing Date no event has occurred, that alone or together withother events, could reasonably be expected to have a Material Adverse Effect.

 

3.6          Ownership of Property; Liens. As of the Closing Date, the real estate (“Real Estate”) listed inDisclosure Schedule (3.6) constitutes all of the real property owned,leased, subleased, or used by any Credit Party. Except as set forth in the title insurance policies accepted by Agent,each Credit Party owns good and marketable fee simple title to all of itsmaterial owned Real Estate (including, without limitation, the MortgagedProperties), and valid and marketable leasehold interests in all of itsmaterial leased Real Estate, all as described on Disclosure Schedule (3.6),and copies of all such leases or a summary of terms thereof reasonablysatisfactory to Agent have been delivered to Agent.  Disclosure Schedule (3.6) furtherdescribes any Real Estate with respect to which any Credit Party is a lessor,sublessor or assignor as of the Closing Date. Except as set forth in the title insurance policies accepted by Agentwith respect to each of the Mortgages and immaterial defects in title, eachCredit Party also has good and marketable title to, or valid leaseholdinterests in, all of its material personal property and assets.  As of the Closing Date, none of theproperties and assets of any Credit Party are subject to any Liens other thanPermitted Encumbrances, and there are no facts, circumstances or conditionsknown to any Credit Party that may result in any Liens (including Liens arisingunder Environmental Laws) other than Permitted Encumbrances.  Except as set forth in Disclosure Schedule(3.6) or in the title insurance policies accepted by Agent with respect toeach of the Mortgages, each Credit Party has received all deeds, assignments,waivers, consents, nondisturbance and attornment or similar agreements, billsof sale and other documents, and has duly effected all recordings, filings andother actions necessary to establish, protect and perfect such Credit Party’sright, title and interest in and to all such Real Estate and other propertiesand assets.  Disclosure Schedule (3.6)also describes any purchase options, rights of first refusal or other similarcontractual rights pertaining to any Real Estate.  As of the Closing Date, no portion 

 

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of any Credit Party’sReal Estate has suffered any material damage by fire or other casualty lossthat has not heretofore been repaired and restored in all material respects toits original condition or otherwise remedied. As of the Closing Date, all material permits required to have beenissued or appropriate to enable the Real Estate to be lawfully occupied andused for all of the purposes for which it is currently occupied and used havebeen lawfully issued and are in full force and effect.

 

3.7          Labor Matters. As of the Closing Date (a) no strikes or other material labordisputes against any Credit Party are pending or, to any Credit Party’sknowledge, threatened; (b) hours worked by and payment made to employeesof each Credit Party comply in all material respects with the Fair LaborStandards Act and each other federal, state, provincial, local or foreign lawapplicable to such matters; (c) all payments due from any Credit Party foremployee health and welfare insurance have been paid or accrued as a liabilityon the books of such Credit Party; (d) except as set forth in DisclosureSchedule (3.7), no Credit Party is a party to or bound by any collectivebargaining agreement, management agreement, consulting agreement, employmentagreement, bonus, restricted stock, stock option, or stock appreciation plan oragreement or any similar plan, agreement or arrangement (and true and completecopies of any agreements (or, with respect to employment agreements foremployees who are not executive officers, copies of the templates for suchemployment agreements) described on Disclosure Schedule (3.7) have beendelivered to Agent); (e) there is no organizing activity involving anyCredit Party pending or, to any Credit Party’s knowledge, threatened by anylabor union or group of employees; (f) there are no representationproceedings pending or, to any Credit Party’s knowledge, threatened with theNational Labor Relations Board or any other applicable labor relations board,and no labor organization or group of employees of any Credit Party has made apending demand for recognition; and (g) except as set forth in DisclosureSchedule (3.7), there are no material complaints or charges against anyCredit Party pending or, to the knowledge of any Credit Party, threatened to befiled with any Governmental Authority or arbitrator based on, arising out of,in connection with, or otherwise relating to the employment or termination ofemployment by any Credit Party of any individual.

 

3.8          Ventures, Subsidiaries and Affiliates;Outstanding Stock and Indebtedness.  Except as setforth in Disclosure Schedule (3.8), as of the Closing Date, no CreditParty has any Subsidiaries, is engaged in any joint venture or partnership withany other Person, or is an Affiliate of any other Person.  All of the issued and outstanding Stock ofeach Credit Party is owned by each of the Stockholders and in the amounts setforth in Disclosure Schedule (3.8). Except as set forth in Disclosure Schedule (3.8), there are nooutstanding rights to purchase, options, warrants or similar rights oragreements pursuant to which any Credit Party may be required to issue, sell,repurchase or redeem any of its Stock or other equity securities or any Stockor other equity securities of its Subsidiaries. All outstanding Indebtedness and Guaranteed Indebtedness of each CreditParty as of the Closing Date is permitted by Section 6.3.  None of the Credit Parties other thanBorrowers has any assets (except Stock of their Subsidiaries) or, except as setforth on Disclosure Schedule (6.3), any Indebtedness or GuaranteedIndebtedness (except the Obligations).

 

3.9          Government Regulation. No Credit Party is an “investment company” or an “affiliated person” of,or “promoter” or “principal underwriter” for, an “investment company,” as suchterms are defined in the Investment Company Act of 1940.  No Credit Party is subject to 

 

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regulation under theFederal Power Act, or any other United States or state statute or law thatrestricts or limits its ability to incur Indebtedness or to perform its obligationshereunder. The making of the Loans by Lenders to Borrowers, the incurrence ofthe Letter of Credit Obligations on behalf of Borrowers, the application of theproceeds thereof and repayment thereof and the consummation of the RelatedTransactions will not violate any provision of any such statute or any rule,regulation or order issued by the Securities and Exchange Commission or anyother securities regulation authority or securities exchange.

 

3.10        Margin Regulations. No Credit Party is engaged, nor will it engage, principally or as one ofits important activities, in the business of extending credit for the purposeof “purchasing” or “carrying” any “margin stock” as such terms are defined inRegulation U of the Federal Reserve Board as now and from time to timehereafter in effect (such securities being referred to herein as “MarginStock”).  No Credit Party owns anyMargin Stock, and none of the proceeds of the Loans or other extensions ofcredit under this Agreement will be used, directly or indirectly, for thepurpose of purchasing or carrying any Margin Stock, for the purpose of reducingor retiring any Indebtedness that was originally incurred to purchase or carryany Margin Stock or for any other purpose that might cause any of the Loans or otherextensions of credit under this Agreement to be considered a “purpose credit”within the meaning of Regulations T, U or X of the Federal Reserve Board.  No Credit Party will take or permit to betaken any action that might cause any Loan Document to violate any regulationof the Federal Reserve Board.

 

3.11        Taxes.  All taxreturns, reports and statements, including information returns, required by anyGovernmental Authority to be filed by any Credit Party have been filed with theappropriate Governmental Authority and all Taxes have been paid prior to thedate on which any fine, penalty, interest or late charge may be added theretofor nonpayment thereof (or any such fine, penalty, interest, late charge orloss has been paid), excluding Taxes or other amounts being contested inaccordance with Section 5.2(b). Proper and accurate amounts have been withheld by each Credit Party fromits respective employees for all periods in full and complete compliance withall applicable United States federal, state, local laws and all applicableforeign laws and such withholdings have been timely paid to the respectiveGovernmental Authorities.  DisclosureSchedule (3.11) sets forth as of the Closing Date (i) those taxableyears (A) for which any Credit Party has received notice, in writing, thatsuch Credit Party’s tax returns were to be audited, and (B) for which taxreturns are, as of the Closing Date, being audited by the IRS  or any other applicable GovernmentalAuthority, (ii) any assessments or threatened assessments in connectionwith such audit, and (iii) those taxable years the tax returns for whichare otherwise currently outstanding. Except as described in Disclosure Schedule (3.11), no CreditParty has executed or filed with the IRS or any other domestic or foreignGovernmental Authority any agreement or other document extending, or having theeffect of extending, the period for assessment or collection of any Taxes.  Except as set forth on Disclosure Schedule(3.11), none of the Credit Parties or any of their respective predecessorsare liable for any Taxes: (a) under any agreement (including any taxsharing agreements) or (b) to each Credit Party’s knowledge, as atransferee.  As of the Closing Date, noCredit Party has agreed or been requested to make any adjustment under IRC Section 481(a),by reason of a change in accounting method or otherwise, which would have aMaterial Adverse Effect.

 

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3.12        ERISA and Benefit Plans.

 

(a)           Except with respect to MultiemployerPlans, each Qualified Plan has been determined by the IRS to qualify under Section 401of the IRC, the trusts created thereunder have been determined to be exemptfrom tax under the provisions of Section 501 of the IRC, and nothing hasoccurred that would cause the loss of such qualification or tax-exempt status,except for qualification failures which, in the aggregate, could not reasonablybe expected to result in a Material Adverse Effect.  Each Plan is in compliance with theapplicable provisions of ERISA and the IRC, including the timely filing of allreports required under the IRC or ERISA, including the statement required by 29CFR Section 2520.104-23, except for such failures which, in the aggregate,could not reasonably be likely to result in a Material Adverse Effect.  Neither any Credit Party nor ERISA Affiliatehas failed to make any contribution or pay any amount due as required by eitherSection 412 of the IRC or Section 302 of ERISA or the terms of anysuch Plan, except for contributions and amounts due which, in the aggregate, donot exceed $500,000.  As of the ClosingDate, no Lien has been imposed against any Credit Party or ERISA Affiliateunder Section 412 of the IRC or Section 302 or 4068 of ERISA.  Neither any Credit Party nor ERISA Affiliatehas engaged in a “prohibited transaction,” as defined in Section 406 ofERISA and Section 4975 of the IRC, in connection with any Plan, that wouldsubject any Credit Party to a material tax on prohibited transactions imposedby Section 502(i) of ERISA or Section 4975 of the IRC, except forprohibited transactions or excise taxes which, in the aggregate, could notreasonably be likely to result in a Material Adverse Effect.

 

(b)           Except as set forth in DisclosureSchedule (3.12) or as could not reasonably be likely to result in aMaterial Adverse Effect: (i) no Title IV Plan has any Unfunded PensionLiability; (ii) no ERISA Event or event described in Section 4062(e) ofERISA with respect to any Title IV Plan has occurred or is reasonably expectedto occur; (iii) there are no pending, or to the knowledge of any CreditParty, threatened claims (other than claims for benefits in the normal course),sanctions, actions or lawsuits, asserted or instituted against any Plan or anyPerson as fiduciary or sponsor of any Plan; (iv) no Credit Party or ERISAAffiliate has incurred or reasonably expects to incur any liability as a resultof a complete or partial withdrawal from a Multiemployer Plan; (v) within thelast five years no Title IV Plan of any Credit Party or ERISA Affiliate hasbeen terminated, whether or not in a “standard termination” as that term isused in Section 4041(b)(1) of ERISA, nor has any Title IV Plan of anyCredit Party or any ERISA Affiliate (determined at any time within the lastfive years) with Unfunded Pension Liabilities been transferred outside of the “controlledgroup” (within the meaning of Section 4001(a)(14) of ERISA) of any CreditParty or ERISA Affiliate (determined at such time); (vi) except in thecase of any ESOP, Stock of all Credit Parties and their ERISA Affiliates makesup, in the aggregate, no more than 10% of fair market value of the assets ofany Plan measured on the basis of fair market value as of the latest valuationdate of any Plan; and (vii) no liability under any Title IV Plan has beensatisfied with the purchase of a contract from an insurance company that is notrated AAA by the Standard & Poor’s Corporation or an equivalent ratingby another nationally recognized rating agency.

 

(c)           Intentionally Omitted.

 

3.13        No Litigation. No action, claim, lawsuit, demand, investigation or proceeding is nowpending or, to the knowledge of any Credit Party, threatened against any CreditParty, before any Governmental Authority or before any arbitrator or panel ofarbitrators (collectively, “Litigation”), (a) that challenges anyCredit Party’s right or power to enter into or perform any of 

 

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its obligations under theLoan Documents to which it is a party, or the validity or enforceability of anyLoan Document or any action taken thereunder, or (b) that has a reasonablerisk of being determined adversely to any Credit Party and that, if sodetermined, could reasonably be expected to have a Material AdverseEffect.  Except as set forth on DisclosureSchedule (3.13), as of the Closing Date there is no Litigation pending or,to any Credit Party’s knowledge, threatened, that could reasonably be likely toresult in damages in excess of $2,000,000 (net of insurance coverages for suchdamages) or injunctive relief against, or alleges criminal misconduct of, anyCredit Party.

 

3.14        Brokers.  No broker orfinder brought about the obtaining, making or closing of the Loans or theRelated Transactions, and no Credit Party or Affiliate thereof has anyobligation to any Person in respect of any finder’s or brokerage fees inconnection therewith.

 

3.15        Intellectual Property. As of the Closing Date, each Credit Party owns or has rights to use allIntellectual Property necessary to continue to conduct its business as now orheretofore conducted by it or proposed to be conducted by it, and each Patent,Trademark, Design, Copyright and License is listed, together with applicationor registration numbers, as applicable, in Disclosure Schedule (3.15).  Each Credit Party conducts its business andaffairs without infringement of or interference with any Intellectual Propertyof any other Person in any material respect. Except as set forth in Disclosure Schedule (3.15), no CreditParty is aware of any material infringement claim by any other Person withrespect to any Intellectual Property.

 

3.16        Full Disclosure. No information contained in this Agreement, any of the other LoanDocuments, any Projections, Financial Statements or Collateral Reports or otherwritten reports from time to time delivered hereunder or any written statementfurnished by or on behalf of any Credit Party to Agent or any Lender pursuantto the terms of this Agreement contains or will contain any untrue statement ofa material fact or omits or will omit to state a material fact necessary tomake the statements contained herein or therein not misleading in light of thecircumstances under which they were made. The Liens granted to Agent pursuant to the Collateral Documents will at alltimes be fully perfected first priority Liens in and to the Collateraldescribed therein, subject, as to priority, only to Permitted Encumbrances.

 

3.17        Environmental Matters.

 

(a)           Except as set forth in DisclosureSchedule (3.17), as of the Closing Date: (i) the Real Estate is freeof contamination from any Hazardous Material except for such contamination thatwould not adversely impact the value or marketability of such Real Estate andexcept for such contamination that would not result in EnvironmentalLiabilities that could reasonably be expected to exceed $2,500,000; (ii) noCredit Party has caused to occur any Release of Hazardous Materials on, at, in,under, above, to, from or about any of its Real Estate, except for such Releasethat would not result in Environmental Liabilities that could reasonably beexpected to exceed $2,500,000; (iii) the Credit Parties are and have beenin compliance with all Environmental Laws, except for such noncompliance thatwould not result in Environmental Liabilities which could reasonably beexpected to exceed $2,500,000; (iv) the Credit Parties (A) haveobtained, (B) possess as valid, uncontested and in good standing, and (C) arein compliance with all Environmental Permits required by Environmental Laws forthe operations of their respective businesses as presently conducted or asproposed to be conducted, except where the 

 

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failure to so obtain,possess or comply with such Environmental Permits would not result inEnvironmental Liabilities that could reasonably be expected to exceed$2,500,000; (v) to the knowledge of any Credit Party, no Credit Party isinvolved in operations nor are there any facts, circumstances or conditions,including any Releases of Hazardous Materials, and no Credit Party haspermitted any current or former tenant or occupant of the Real Estate to engagein any such operations, any of which are likely to result in any EnvironmentalLiabilities of such Credit Party which could reasonably be expected to exceed$2,500,000; (vi) there is no Litigation arising under or related to anyEnvironmental Laws or Environmental Permits or otherwise relating to therelease of or exposure to Hazardous Material that seeks damages, penalties,fines, costs or expenses in excess of $2,500,000 or injunctive relief against,or that alleges criminal misconduct by, any Credit Party; (vii) no writtennotice has been received by any Credit Party identifying it as a “potentiallyresponsible party” or requesting information under CERCLA or analogous statestatutes or Canadian federal or provincial statues; and (viii) to theCredit Parties’ knowledge, the Credit Parties have provided to Agent copies ofall existing Phase I or Phase II environmental reports or their equivalent,corrective action work plans or reports, on the most recent environmentalcompliance audits, in each case relating to and in the possession of any CreditParty.

 

(b)           Each Credit Party hereby acknowledges andagrees that none of Agent, any other secured party under the Loan Documents orany of their respective officers, directors, employees, attorneys, agents andrepresentatives (i) is now, or has ever been, in control of any of theReal Estate or any Credit Party’s affairs, and (ii) has the capacity or theauthority through the provisions of the Loan Documents or otherwise to director influence any (A) Credit Party’s conduct with respect to the ownership,operation or management of any of its Real Estate, (B) undertaking, workor task performed by any employee, agent or contractor of any Credit Party orthe manner in which such undertaking, work or task may be carried out orperformed, or (C) compliance with Environmental Laws or EnvironmentalPermits.

 

3.18        Insurance.  DisclosureSchedule (3.18) lists all insurance policies of any nature maintained, asof the Closing Date, for current occurrences by each Credit Party, as well as asummary of the terms of each such policy.

 

3.19        Deposit and Disbursement Accounts.  DisclosureSchedule (3.19) lists all banks and other financial institutions at whichany Credit Party maintains deposit or other accounts as of the Closing Date,including any Disbursement Accounts, and such Schedule correctly identifies thename, address and telephone number of each depository, the name in which theaccount is held, a description of the purpose of the account, and the completeaccount number therefor.

 

3.20        Government Contracts. Except as set forth in Disclosure Schedule (3.20), as of theClosing Date, no Credit Party is a party to any contract or agreement in excessof $250,000 with any Governmental Authority and no Credit Party’s Accounts aresubject to the Federal Assignment of Claims Act (31 U.S.C. Section 3727)or any similar United States state  orlocal law.

 

3.21        Customer and Trade Relations. As of the Closing Date, except as disclosed on Disclosure Schedule(3.21), there exists no actual or, to the actual knowledge of any Credit 

 

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Party, threatenedtermination or cancellation of, or any material adverse modification or changein the business relationship of any Credit Party with any customer or group ofcustomers whose purchases during the preceding 12 months caused them to beranked among the ten largest customers of such Credit Party or the businessrelationship of any Credit Party with any supplier material to its operations.

 

3.22        Agreements and Other Documents. As of the Closing Date, each Credit Party has provided to Agent or itscounsel accurate and complete copies (or summaries) of all of the followingagreements or documents to which it is subject and each of which is listed inDisclosure Schedule (3.22):  (a) supplyagreements and purchase agreements not terminable by such Credit Party within60 days following written notice issued by such Credit Party and involvingtransactions in excess of $5,000,000 per annum; (b) leases of Equipmenthaving a remaining term of one year or longer and requiring aggregate rentaland other payments in excess of $1,000,000 per annum; (c) licenses andpermits held by the Credit Parties, the absence of which could be reasonablylikely to have a Material Adverse Effect; (d) instruments and documentsevidencing any Indebtedness or Guaranteed Indebtedness of such Credit Party andany Lien granted by such Credit Party with respect thereto; and (e) instrumentsand agreements evidencing the issuance of any equity securities, warrants,rights or options to purchase equity securities of such Credit Party.

 

3.23        Solvency.  Both beforeand after giving effect to (a) the Loans and Letter of Credit Obligationsto be made or incurred on the Closing Date or such other date as Loans andLetter of Credit Obligations requested hereunder are made or incurred; (b) thedisbursement of the proceeds of such Loans pursuant to the instructions ofBorrower Representative; (c) the Refinancing and the consummation of theother Related Transactions; and (d) the payment and accrual of alltransaction costs in connection with the foregoing, Holdings and its Subsidiariesare and will be Solvent.

 

3.24        Status of Holdings. Prior to the Closing Date, Holdings will not have engaged in anybusiness other than holding the Stock of Blount, Inc. and the issuance ofsecurities to its shareholders or, except as disclosed on DisclosureSchedule (6.3) incurred any Indebtedness or any other liabilities (exceptin connection with its corporate formation, the Related Transactions Documentsand this Agreement).

 

3.25        Subordinated Debt. Prior to the Closing Date, Borrowers have delivered to Agent a completeand correct copy of the New Subordinated Debt Documents (including allschedules, exhibits, amendments, supplements, modifications, assignments andall other documents delivered pursuant thereto or in connection therewith).  The subordination provisions of the NewSubordinated Debt Documents are enforceable against the holders of the NewSubordinated Notes by Agent and Lenders. All Obligations, including the Letter of Credit Obligations, constitutesenior Indebtedness entitled to the benefits of the subordination provisionscontained in the New Subordinated Debt Documents.  Borrowers acknowledge that Agent and eachLender are entering into this Agreement and are extending the Commitments inreliance upon the subordination provisions of the New Subordinated DebtDocuments and this Section 3.25.

 

3.26        Senior Debt. Credit Parties hereby represent and warrant to Agent and Lenders, andhereby declare that, the Obligations constitute “Senior Debt” and “DesignatedSenior Debt” 

 

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under the NewSubordinated Debt Documents and that this Agreement constitutes the “CreditAgreement” and a “Credit Facility” under the New Subordinated Debt Documents.

 

4.             FINANCIAL STATEMENTS AND INFORMATION

 

4.1          Reports and Notices.

 

(a)           Each Credit Party executing thisAgreement hereby agrees that from and after the Closing Date and until theTermination Date, it shall deliver to Agent or to Agent and Lenders, asrequired, the Financial Statements, notices, Projections and other informationat the times, to the Persons and in the manner set forth in Annex E.

 

(b)           Each Credit Party executing thisAgreement hereby agrees that, from and after the Closing Date and until theTermination Date, it shall deliver to Agent or to Agent and Lenders, asrequired, the various Collateral Reports at the times, to the Persons and inthe manner set forth in Annex F.

 

4.2          Communication with Accountants. Each Credit Party executing this Agreement authorizes (a) Agentand, together with Agent, any Lender and (b) so long as an Event ofDefault has occurred and is continuing, each Lender, to communicate directlywith such Credit Party’s independent certified or chartered public accountants,including Pricewaterhouse Coopers LLP, and authorizes and, at Agent’s request,such Credit Party shall instruct those accountants and advisors to disclose andmake available to Agent and each Lender any and all Financial Statements andother supporting financial documents, schedules and information relating to anyCredit Party (including copies of any issued management letters) with respectto the business, financial condition and other affairs of any Credit Party;provided, however, that Agent will endeavor to notify Borrowers of anycommunication with such accountants at any time that no Default or Event ofDefault exists.

 

5.             AFFIRMATIVE COVENANTS

 

EachCredit Party executing this Agreement jointly and severally agrees as to allCredit Parties that from and after the date hereof and until the TerminationDate:

 

5.1          Maintenance of Existence and Conduct ofBusiness.  Each Credit Party shall:  do or cause to be done all things necessaryto preserve and keep in full force and effect its corporate existence and itsrights and franchises; continue to conduct its business substantially as nowconducted or as otherwise permitted hereunder; at all times maintain, preserveand protect all of its assets and properties used or useful in the conduct ofits business, and keep the same in good repair, working order and condition inall material respects (taking into consideration ordinary wear and tear) andfrom time to time make, or cause to be made, all necessary or appropriaterepairs, replacements and improvements thereto consistent with industrypractices; and transact business only in such corporate and trade names as areset forth in Disclosure Schedule (5.1) or in such other trade names asshall be disclosed to Agent in writing from time to time.

 

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5.2           Payment of Charges.

 

(a)           Subject to Section 5.2(b), each CreditParty shall pay and discharge or cause to be paid and discharged promptly allCharges (other than charges in an aggregate amount not to exceed $500,000 thenon-payment of which could not reasonably be expected to result in a MaterialAdverse Effect) payable by it, including (i) Charges imposed upon it, itsincome and profits, or any of its property (real, personal or mixed) and allCharges with respect to tax, social security, employer contributions andunemployment withholding with respect to its employees, (ii) lawful claimsfor labor, materials, supplies and services or otherwise, and (iii) allstorage or rental charges payable to warehousemen or bailees, in each case,before any thereof shall become past due.

 

(b)           Each Credit Party may in good faith contest, byappropriate proceedings, the validity or amount of any Charges, Taxes or claimsdescribed in Section 5.2(a); provided, that (i) adequatereserves with respect to such contest are maintained on the books of suchCredit Party, in accordance with GAAP; (ii) no Lien shall be imposed tosecure payment of such Charges (other than payments to warehousemen and/orbailees) that is superior to any of the Liens securing the Obligations and suchcontest is maintained and prosecuted continuously and with diligence andoperates to suspend collection or enforcement of such Charges; (iii) noneof the Collateral becomes subject to forfeiture or loss as a result of suchcontest; (iv) such Credit Party shall promptly pay or discharge suchcontested Charges, Taxes or claims and all additional charges, interest,penalties and expenses, if any, and shall deliver to Agent evidence reasonablyacceptable to Agent of such compliance, payment or discharge, if such contestis terminated or discontinued adversely to such Credit Party or the conditionsset forth in this Section 5.2(b) are no longer met; and (v) Agenthave not advised Borrowers in writing that Agent reasonably believe thatnonpayment or nondischarge thereof could have or result in a Material AdverseEffect.

 

5.3           Books and Records.  Each CreditParty shall keep adequate books and records with respect to its businessactivities in which proper entries, reflecting all financial transactions, aremade in accordance with GAAP and on a basis consistent with the FinancialStatements attached as Disclosure Schedule (3.4(a)).

 

5.4           Insurance; Damage to or Destruction of Collateral.

 

(a)           The Credit Parties shall, at their sole cost andexpense, maintain the policies of insurance described on Disclosure Schedule(3.18) as in effect on the date hereof or otherwise in form andamounts and with insurers reasonably acceptable to Agent.  Such policies of insurance (or the losspayable and additional insured endorsements delivered to Agent) shall containprovisions pursuant to which the insurer agrees to provide 30 days priorwritten notice to Agent in the event of any non-renewal, cancellation oramendment of any such insurance policy. If any Credit Party at any time or times hereafter shall fail to obtainor maintain any of the policies of insurance required above, or to pay allpremiums relating thereto, Agent may at any time or times thereafter obtain andmaintain such policies of insurance and pay such premiums and take any otheraction with respect thereto that Agent deems advisable.  Agent shall not have any obligation to obtaininsurance for any Credit Party or pay any premiums therefor.  By doing so, Agent shall not be deemed tohave waived any Default or Event of Default arising from any Credit Party’sfailure to maintain such insurance or pay any premiums therefor.  All sums so disbursed, including reasonableattorneys’ fees, court costs and other charges related thereto, 

 

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shall be payable ondemand by Borrowers to Agent and shall be additional Obligations hereundersecured by the Collateral.

 

(b)           Agent reserves the right at any time upon any changein any Credit Party’s risk profile (including any change in the product mixmaintained by any Credit Party or any laws affecting the potential liability ofsuch Credit Party) to require additional forms and limits of insurance to, inAgent’s opinion, adequately protect Agent’s and Lenders’ interests in all or anyportion of the Collateral and to ensure that each Credit Party is protected byinsurance in amounts and with coverage customary for its industry.  If reasonably requested by Agent, each CreditParty shall deliver to Agent from time to time a report of a reputableinsurance broker, reasonably satisfactory to Agent with respect to itsinsurance policies.

 

(c)           Each Credit Party shall deliver to Agent, in form andsubstance reasonably satisfactory to Agent, endorsements to (i) all “AllRisk” and business interruption insurance naming Agent as loss payee, and (ii) allgeneral liability and other liability policies naming Agent as additionalinsured.  Each Credit Party irrevocablymakes, constitutes and appoints Agent (and all officers, employees or agentsdesignated by Agent), so long as any Default or Event of Default has occurredand is continuing or the anticipated insurance proceeds exceed $5,000,000, assuch Credit Party’s true and lawful agent and attorney-in-fact for the purposeof making, settling and adjusting claims under such “All Risk” policies ofinsurance, endorsing the name of such Credit Party on any check or other itemof payment for the proceeds of such “All Risk” policies of insurance and formaking all determinations and decisions with respect to such “All Risk”policies of insurance.  Agent shall nothave any duty to exercise any rights or powers granted to it pursuant to theforegoing power-of-attorney.  BorrowerRepresentative shall promptly notify Agent of any loss, damage, or destructionto the Collateral in the amount of $2,000,000 or more, whether or not coveredby insurance.  After deducting from suchproceeds the expenses, if any, incurred by Agent in the collection or handlingthereof, Agent may, at its option, apply such proceeds to the reduction of theObligations in accordance with Section 1.3(d) and Section 1.11(b) orpermit or require the applicable Credit Party to use such money, or any partthereof, to replace, repair, restore or rebuild the Collateral in a diligentand expeditious manner with materials and workmanship of substantially the samequality as existed before the loss, damage or destruction.  Notwithstanding the foregoing, so long as noDefault or Event of Default has occurred and is continuing, if the casualtygiving rise to such insurance proceeds could not reasonably be expected to havea Material Adverse Effect and such insurance proceeds do not exceed $10,000,000in the aggregate or, to the extent that the proceeds from a sale of such assetswould have been deemed Excluded Proceeds had such assets been disposed of priorto the loss, Agent shall permit the applicable Credit Party to replace,restore, repair or rebuild the property; provided that if such CreditParty shall not have completed or entered into binding agreements to completesuch replacement, restoration, repair or rebuilding within 365 days of suchcasualty, Agent may apply such insurance proceeds to the Obligations inaccordance with Section 1.3(d) and Section 1.11(b).  All insurance proceeds that are to be madeavailable to Borrowers to replace, repair, restore or rebuild the Collateralshall be applied by Agent to reduce the outstanding principal balance of theRevolving Loan (which application shall not result in a permanent reduction ofthe Revolving Loan Commitment).  Allinsurance proceeds made available to any Credit Party that is not a Borrower toreplace, repair, restore or rebuild Collateral shall be deposited in a cashcollateral account.  Thereafter, suchfunds shall be made available to Borrowers or other Credit Parties, asapplicable, to provide funds to replace, repair, restore or 

 

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rebuild the Collateral asfollows: (i) Borrower Representative shall request a Revolving CreditAdvance to be made to Borrowers or a release from the cash collateral accountto be made to Credit Parties in the amount requested to be released; and (ii) solong as the conditions set forth in Section 2.2 have been met,Revolving Lenders shall make such Revolving Credit Advance or, so long as noDefault or Event of Default has occurred and is continuing, Agent shall releasefunds from the cash collateral account. To the extent not used to replace, repair, restore or rebuild the Collateral,such insurance proceeds shall be applied as agreed among the Lenders.

 

5.5           Compliance with Laws.  Each CreditParty shall comply with all United States federal, state and local laws,regulations and decrees and all foreign laws, regulations and decrees, in eachcase, applicable to it, including those relating to ERISA, employment and labormatters and Environmental Laws and Environmental Permits, except to the extentthat the failure to comply, individually or in the aggregate, could notreasonably be expected to have a Material Adverse Effect.

 

5.6           Supplemental Disclosure.  From time totime as may be reasonably requested by Agent (which request will not be madeprior to the second anniversary of the Closing Date or more than once duringthe term of this Agreement, in each case, absent the occurrence and continuanceof a Default or an Event of Default), the Credit Parties shall supplement eachDisclosure Schedule hereto, or any representation herein or in any other LoanDocument, with respect to any matter hereafter arising that, if existing oroccurring at the date of this Agreement, would have been required to be setforth or described in such Disclosure Schedule or as an exception to suchrepresentation or that is necessary to correct any information in suchDisclosure Schedule or representation which has been rendered inaccuratethereby (and, in the case of any supplements to any Disclosure Schedule, suchDisclosure Schedule shall be appropriately marked to show the changes madetherein); provided that (a) no such supplement to any suchDisclosure Schedule or representation shall amend, supplement or otherwisemodify any Disclosure Schedule or representation, or be or be deemed a waiverof any Default or Event of Default resulting from the matters disclosedtherein, except as consented to by Agent and Requisite Lenders in writing, and (b) nosupplement shall be required or permitted as to representations and warrantiesthat relate solely to the Closing Date.

 

5.7           Intellectual Property.  Each CreditParty will conduct its business and affairs without infringement of orinterference with any Intellectual Property of any other Person in any materialrespect.

 

5.8           Environmental Matters.  Each CreditParty shall and shall cause each Person within its control to: (a) conductits operations and keep and maintain its Real Estate in compliance with allEnvironmental Laws and Environmental Permits other than noncompliance thatcould not reasonably be expected to have a Material Adverse Effect; (b) implementany and all investigation, remediation, removal and response actions that areappropriate or necessary to comply with Environmental Laws and EnvironmentalPermits pertaining to the presence, generation, treatment, storage, use,disposal, transportation or Release of any Hazardous Material on, at, in,under, above, to, from or about any of its Real Estate; provided, thatno Credit Party shall be required to undertake such actions to the extent thatits obligations to do so are being contested in good faith and by properproceedings and adequate reserves therefor have been 

 

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established in accordancewith GAAP; (c) notify Agent promptly after such Credit Party becomes awareof any violation of Environmental Laws or Environmental Permits, or any Releaseon, at, in, under, above, to, from or about any Real Estate, that is reasonablylikely to result in Environmental Liabilities in excess of $250,000; and (d) promptlyforward to Agent a copy of any written order, notice, request for informationor any other written communication or report received by such Credit Party inconnection with any violation or Release which is the subject of subpart 5.8(c) above,in each case whether or not the Environmental Protection Agency or anyGovernmental Authority has taken or threatened any action in connection withany such violation or Release.  If Agentat any time has a reasonable basis to believe that there may be a violation ofany Environmental Laws or Environmental Permits by any Credit Party or anyEnvironmental Liability arising thereunder, or a Release of Hazardous Materialson, at, in, under, above, to, from or about any of its Real Estate, that, ineach case, is in breach of Section 3.17 or this Section 5.8and could reasonably be expected to have a Material Adverse Effect, then (i) therelevant Credit Party shall, upon Agent’s written request, cause theperformance of such environmental audits including reasonable subsurfacesampling of soil and groundwater, and preparation of such environmentalreports, at Borrowers’ expense, as Agent may from time to time reasonablyrequest, which shall be conducted by reputable environmental consulting firmsreasonably acceptable to Agent and shall be in form and substance reasonablyacceptable to Agent and (ii) if, upon Agent’s reasonable request, therelevant Credit Party shall fail to take reasonable steps to commence suchaudits within 30 days of such request the relevant Credit Party shall permitAgent or its representatives to have access to all Real Estate for the purposeof conducting such environmental audits and testing reasonably appropriate,including subsurface sampling of soil and groundwater; provided, that (x) Agentuse a reputable environmental consulting firm reasonably acceptable to theCredit Party, (y) such firm carry appropriate levels of insurance and (z) suchaudit not unreasonably interfere with the Credit Party’s operations.  Borrowers shall reimburse Agent for thereasonable costs of such audits and tests and the same will constitute a partof the Obligations secured hereunder.

 

5.9           Landlords’ Agreements, Mortgagee Agreements, BaileeLetters and Real Estate Purchases.  Each CreditParty shall use commercially reasonable efforts to obtain a landlord’sagreement, mortgagee agreement or bailee letter, as applicable, from the lessorof each leased property, mortgagee of owned property or bailee with respect toany warehouse, processor or converter facility or other location whereCollateral is stored or located, which agreement or letter shall contain a waiveror subordination of all Liens or claims that the landlord, mortgagee or baileemay assert against the Collateral at that location, and shall otherwise bereasonably satisfactory in form and substance to Agent.  After the Closing Date, no real property orwarehouse space shall be leased by any Credit Party and no Inventory shall beshipped to a processor or converter under arrangements established after theClosing Date without the prior written consent of Agent or, unless and until areasonably satisfactory landlord agreement or bailee letter, as appropriate,shall first have been obtained with respect to such location.  Each Credit Party shall timely and fully payand perform its material obligations under all leases and other agreements withrespect to each leased location or public warehouse where any Collateral is ormay be located.  To the extent otherwisepermitted hereunder, if any Credit Party proposes to acquire a fee ownershipinterest in Real Estate after the Closing Date, it shall first provide to Agenta mortgage, debenture or deed of trust granting Agent a first priority Lien onsuch Real Estate, together with environmental audits, mortgage title insurancecommitment, real property survey, local counsel opinion(s), and, if required byAgent supplemental casualty insurance and 

 

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flood insurance, and suchother documents, instruments or agreements reasonably requested by Agent, ineach case, in form and substance reasonably satisfactory to Agent.

 

5.10         Further Assurances.  Each CreditParty executing this Agreement agrees that it shall and shall cause each otherCredit Party to, at such Credit Party’s expense and upon request of Agent, dulyexecute and deliver, or cause to be duly executed and delivered, to Agent suchfurther instruments and do and cause to be done such further acts as may benecessary or proper in the reasonable opinion of Agent to carry out moreeffectively the provisions and purposes of this Agreement or any other Loan Document.

 

5.11         Credit Rating.  The CreditParties shall maintain a public corporate rating and ratings with respect tothe credit facilities under this Agreement from both Moody’s and S&P.

 

5.12         Intentionally Omitted.

 

5.13         New Subsidiaries.  At the timeof the formation of any Subsidiary of any Credit Party or acquisition of aSubsidiary of any Credit Party pursuant to Section 6.1(a), CreditParties, or any of them, as appropriate, shall (a) cause each such newUnited States domestic Subsidiary to join this Agreement by providing to Agenta joinder agreement in the form of Exhibit 5.13 hereto (a “CreditAgreement Joinder Agreement”), (b) cause each such new United Statesdomestic Subsidiary to deliver to Agent a supplement to the Guaranty, asupplement to the Security Agreement, a supplement to the Pledge Agreement, andsuch other security documents (including, without limitation, any mortgage,deed to secure debt or deed of trust where such Subsidiary owns real property)requested by Agent in its discretion, together with appropriate UCC-1 financingstatements, all in form and substance satisfactory to Agent and subject toPermitted Encumbrances, (c) with respect to all new Subsidiaries that areowned in whole or in part by a Credit Party, provide to Agent a supplement tothe Pledge Agreement or such other Pledge Agreements, in each case, providingfor the pledge (subject to Permitted Encumbrances) of the direct and beneficialinterests in such new Subsidiary (or, in the case of the pledge of a directForeign Subsidiary, 65% of all of the Stock of such Subsidiary) as shall berequested by Agent, together with appropriate certificates and powers orfinancing statements under the Uniform Commercial Code or other applicablepersonal property or movable property registries or other documents necessaryto perfect such pledge, in form and substance satisfactory to Agent; provided,that no such pledge shall be required with respect to the Stock of a newForeign Subsidiary of a Credit Party unless and until such Subsidiary hasassets with a value of $1,000,000 or more, and (d) provide to Agent allother documentation, including one or more opinions of counsel satisfactory toAgent, which in its opinion is appropriate with respect to such formation andthe execution and delivery of the applicable documentation referred toabove.  Upon execution and delivery of aCredit Agreement Joinder Agreement by each new United States domesticSubsidiary, such Subsidiary shall become a Credit Party hereunder with the sameforce and effect as if originally named as a Credit Party herein.  The execution and delivery of any CreditAgreement Joinder Agreement shall not require the consent of any Credit Partyor Lender hereunder.  The rights andobligations of each Credit Party hereunder shall remain in full force andeffect notwithstanding the addition of any Credit Party hereunder.  Any document, agreement or instrumentexecuted or issued pursuant to this Section 5.13 shall be a “LoanDocument” for purposes of this Agreement.

 

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6.             NEGATIVE COVENANTS

 

EachCredit Party executing this Agreement jointly and severally agrees as to allCredit Parties and their respective Subsidiaries that from and after the datehereof until the Termination Date:

 

6.1           Mergers, Subsidiaries, Etc. No Credit Party shall, or shall permit any Subsidiary to, directly orindirectly, by operation of law or otherwise,

 

(a)           form any Subsidiary after the Closing Date; provided,however, that Credit Parties and their Subsidiaries may form newSubsidiaries after the Closing Date so long as (i) no Default or Event ofDefault has occurred and is continuing, (ii) each Foreign Subsidiary is atleast 80% owned by a Credit Party, (iii) each United States domesticSubsidiary is wholly owned by a Credit Party, (iv) contemporaneously withthe formation of any such new Subsidiary, Credit Parties and each newSubsidiary, as applicable, comply with the provisions of Section 5.13;or

 

(b)           merge with, consolidate with, amalgamate with, acquireall or substantially all of the assets or Stock of, or otherwise combine withor acquire, any Person, except that (i) any Credit Party (other thanHoldings) may merge into a Borrower and any Credit Party that is not a Borroweror Holdings may merge into another Credit Party that is not a Borrower orHoldings, provided that Borrower Representative shall be the survivor ofany such merger to which it is a party and, in the event of a merger between aCredit Party that is not a Borrower and a Borrower, such Borrower shall be thesurvivor of any such merger and (ii) any Foreign Subsidiary may merge intoanother Foreign Subsidiary; provided, however, that Borrower Representativeshall provide Agent with 30 days prior written notice of such merger under thisclause (iii) and Credit Parties shall deliver to Agent on the date ofconsummation of any such merger any additional pledge agreements or amendmentsto the Pledge Agreements as shall be reasonably requested by Agent inconnection with such merger. Notwithstanding the foregoing, any Credit Party or direct ForeignSubsidiary (so long as, with respect to any acquisition by (A) Holdings,contemporaneously therewith, all assets so acquired are transferred to one ormore Credit Parties, and (B) a direct Foreign Subsidiary, such acquisitioncomplies with the limits on acquisitions that involve assets located in ajurisdiction outside of the United States set forth in clause (v) of this Section 6.1(b) andis in the form of an asset acquisition unless the Subsidiary so acquired iscontemporaneously therewith merged into a direct Foreign Subsidiary of a CreditParty), may acquire all or substantially all of the assets or Stock of anyPerson (the “Target”) (in each case, a “Permitted Acquisition”)subject to the satisfaction of each of the following conditions (provided, thatcondition (vi) may be waived by Agent):

 

(i)            Agent shall receive at least ten (10) BusinessDays’ prior written notice of such proposed Permitted Acquisition, which noticeshall include a reasonably detailed description of such proposed PermittedAcquisition;

 

(ii)           such Permitted Acquisition by a Credit Party or adirect Foreign Subsidiary shall comprise a business, or those assets of abusiness, of a type reasonably related to the type engaged in by Borrowers asof the Closing Date, and which business would not subject Agent or any Lenderto regulatory or third party approvals in connection with the exercise of itsrights and remedies under this Agreement or any other Loan Documents other thanapprovals 

 

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applicable to theexercise of such rights and remedies with respect to Borrowers prior to suchPermitted Acquisition;

 

(iii)          such Permitted Acquisition shall be consensual andshall have been approved by the Target’s board of directors;

 

(iv)          no additional Indebtedness, Guaranteed Indebtedness,contingent obligations or other liabilities shall be incurred, assumed orotherwise be reflected on a consolidated balance sheet of Credit Parties andTarget after giving effect to such Permitted Acquisition, except, withoutduplication, (A) Loans made hereunder, (B) ordinary course tradepayables, accrued expenses and unsecured or secured Indebtedness of the Targetto the extent no Default or Event of Default has occurred and is continuing orwould result after giving effect to such Permitted Acquisition and (C) Indebtednesspermitted under Section 6.3(a)(xii) and Section 6.3(a)(xiii);

 

(v)           the sum of all amounts payable in connection with allPermitted Acquisitions (including all transaction costs and all Indebtedness,liabilities and contingent obligations incurred or assumed in connectiontherewith or otherwise reflected in a consolidated balance sheet of Borrowersand Target) shall not exceed $125,000,000 per acquisition and $250,000,000 inthe aggregate during the term of this Agreement, of which $20,000,000 may beused for acquisitions that involve assets located in a jurisdiction outside ofthe United States, plus the amount of Stock issued by Holdings to any seller inconnection with, and as the purchase price or portion of the purchase pricefor, any Permitted Acquisition;

 

(vi)          the Target shall not have incurred an operating lossfor the trailing twelve-month period preceding the date of the Permitted Acquisition,as determined based upon the Target’s financial statements for its mostrecently completed fiscal year and its most recent interim financial periodcompleted within sixty (60) days prior to the date of consummation of suchPermitted Acquisition;

 

(vii)         the business and assets acquired in such PermittedAcquisition shall be free and clear of all Liens (other than PermittedEncumbrances);

 

(viii)        to the extent the assets being acquired in connectionwith any Permitted Acquisition are located in the United States, at or prior tothe closing of such Permitted Acquisition, Agent will be granted a firstpriority perfected Lien (subject to Permitted Encumbrances) in all assetsacquired pursuant thereto, and Credit Parties shall have executed suchdocuments and taken such actions as may be required by Agent in connectiontherewith;

 

(ix)           Concurrently with delivery of the notice referred toin clause (i) above, Borrowers shall have delivered to Agent, inform and substance reasonably satisfactory to Agent:

 

(1)           a pro forma consolidated balance sheet, incomestatement and cash flow statement of Holdings and its Subsidiaries (the “AcquisitionPro Forma”), based on recent financial statements, which shall be completeand shall fairly present in all material respects the assets, liabilities,financial condition and results of operations of Holdings and its Subsidiariesin accordance with GAAP consistently applied, but taking into account such 

 

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Permitted Acquisition andthe funding of all Loans in connection therewith, and such Acquisition ProForma shall reflect that, on a pro forma basis, (A) no Event of Defaulthas occurred and is continuing or would result after giving effect to suchPermitted Acquisition and (B) Borrowers would have been in compliance withthe financial covenants set forth in Annex G for the four quarter periodreflected in the Compliance Certificate most recently delivered to Agentpursuant to Annex E prior to the consummation of such Permitted Acquisition(after giving effect to such Permitted Acquisition and all Loans funded inconnection therewith as if made on the first day of such period);

 

(2)           updated versions of the most recently deliveredProjections covering the 1-year period commencing on the date of such PermittedAcquisition and otherwise prepared in accordance with the Projections (the “AcquisitionProjections”) and based upon historical financial data of a recent datereasonably satisfactory to Agent, taking into account such PermittedAcquisition; and

 

(3)           a certificate of the chief financial officer ofHoldings and each Borrower to the effect that: (w) each Borrower (aftertaking into consideration all rights of contribution and indemnity suchBorrower has against Holdings and each other Subsidiary of Holdings) will beSolvent upon the consummation of the Permitted Acquisition; (x) theAcquisition Pro Forma fairly presents the financial condition of Holdings andits Subsidiaries (on a consolidated basis) as of the date thereof after givingeffect to the Permitted Acquisition; (y) the Acquisition Projections arereasonable estimates of the future financial performance of Holdings and itsSubsidiaries subsequent to the date thereof based upon the historicalperformance of Holdings and its Subsidiaries and the Target and show thatHoldings and its Subsidiaries shall continue to be in compliance with thefinancial covenants set forth in Annex G for the 3-year periodthereafter; and (z) Holdings and Borrowers have completed their due diligenceinvestigation with respect to the Target and such Permitted Acquisition, whichinvestigation was conducted in a manner similar to that which would have beenconducted by a prudent purchaser of a comparable business and the results ofwhich investigation were delivered to Agent and Lenders;

 

(x)            on or prior to the date of such Permitted Acquisition,Agent shall have received, in form and substance reasonably satisfactory toAgent, copies of the acquisition agreement and related agreements andinstruments, and all opinions, certificates, lien search results and otherdocuments reasonably requested by Agent including those specified in the lastsentence of Section 5.9;

 

(xi)           at the time of such Permitted Acquisition and aftergiving effect thereto, no Default or Event of Default has occurred and iscontinuing; and

 

(xii)          after giving effect to any Permitted Acquisition, theaggregate amount of investments in Subsidiaries that are not Credit Partiesshall not exceed the amount set forth in Section 6.2(g) (aftergiving effect to all other investments made under such Section 6.2(g)).

 

Notwithstanding anything to the contrary containedherein, if operating income of the Target for the most recently ended twelvefiscal months is greater than or equal to $5,000,000 and the 

 

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purchase price of the Permitted Acquisition,including, without limitation, any assumed Indebtedness, is less than or equalto $20,000,000, Borrowers shall not be required to deliver the items requiredin Section 6.1(b)(ix); provided that Borrowers shall berequired to deliver (a) a balance sheet, income statement and cash flowstatement of the Target for the Fiscal Year most recently ended and interimfinancial statements, to the extent available, for the period from the mostrecently ended Fiscal Year to the date of such Permitted Acquisition, (b) projectionsof the Target covering the 1 year period commencing on the date of suchPermitted Acquisition and (c) a certificate of the chief financial officerof Holdings and each Borrower to the effect that (i) each Borrower (aftertaking into consideration all rights of contribution and indemnity suchBorrower has against Holdings and each other Subsidiary of Holdings) will beSolvent upon the consummation of the Permitted Acquisition, (ii) Holdingsand Borrowers have completed their due diligence investigation with respect tothe Target and such Permitted Acquisition, which investigation was conducted ina manner similar to that which would have been conducted by a prudent purchaserof a comparable business and the results of which investigation were deliveredto Agent and Lenders and (iii) after giving effect to such PermittedAcquisition, no Default or Event of Default shall have occurred and be continuing.

 

6.2           Investments; Loans and Advances. Except as otherwise expressly permitted by this Section 6,no Credit Party shall, or shall permit any Subsidiary of a Credit Party to,make or permit to exist any investment in, or make, accrue or permit to existloans or advances of money to, any Person, through the direct or indirectlending of money, holding of securities or otherwise (collectively, “investments”),except that:

 

(a)           Borrowers and Foreign Subsidiaries may holdinvestments comprised of notes payable, or stock or other securities issued byAccount Debtors to any Borrower or Foreign Subsidiary, as applicable, pursuantto negotiated agreements with respect to settlement of such Account Debtor’sAccounts in the ordinary course of business, so long as the aggregate amount ofsuch Accounts so settled by Borrowers and Foreign Subsidiaries does not exceed$1,000,000;

 

(b)           each Credit Party may maintain its existinginvestments in its Subsidiaries as of the Closing Date;

 

(c)           each Credit Party and any direct Foreign Subsidiarymay make any investment that constitutes or is otherwise permitted inconnection with a Permitted Acquisition;

 

(d)           Borrowers may make minority investments in anaggregate amount with respect to all such investments not to exceed $1,000,000in a Person that is a corporation or limited liability company, subject to thefollowing conditions (in each case, as may be waived by Agent):

 

(i)            Intentionally Omitted;

 

(ii)           such corporation or limited liability company shall beformed under the laws of the United States or Canada or any state or provincethereof and its assets shall be located in the United States or Canada andcomprise a business, or those assets of a business, of the type engaged in byBorrowers as of the Closing Date;

 

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(iii)          no additional Indebtedness, Guaranteed Indebtedness,contingent obligations or other liabilities shall be incurred, assumed orotherwise be reflected on a consolidated balance sheet of Credit Parties aftergiving effect to such investment, except (1) Loans made hereunder and (2) Indebtednesspermitted under Section 6.3(a)(xiii), and no Credit Party shallhave any obligation to make additional investments in such corporation orlimited liability company after its initial investment therein;

 

(iv)          the corporation or limited liability company shall nothave incurred an operating loss for the trailing twelve-month period precedingthe date of the investment, as determined based upon the corporation or limitedliability company’s financial statements for its most recently completed fiscalyear and its most recent interim financial period completed within 60 daysprior to the date of consummation of such investment;

 

(v)           at or prior to the closing of any such investment, tothe extent not prohibited by the corporate or limited liability companydocuments, Agent will be granted a first priority perfected Lien (subject toPermitted Encumbrances) in Credit Parties’ interest in such corporation orlimited liability company and Credit Parties shall have executed such documentsand taken such actions as may be required by Agent in connection therewith;

 

(vi)          on or prior to the date of such investment, Agentshall have received, in form and substance reasonably satisfactory to Agent,copies of the articles of incorporation or formation, by-laws or operatingagreement and related agreements and instruments, and all opinions,certificates and other documents reasonably requested by Agent; and

 

(vii)         at the time of such investment and after giving effectthereto, no Default or Event of Default has occurred and is continuing;

 

(e)           Foreign Subsidiaries (other than Foreign Subsidiariesoperating in Brazil) and, so long as Agent has not delivered an ActivationNotice, Borrowers may make investments, subject to Control Letters, withrespect to investments of any Credit Party, in favor of Agent or otherwisesubject to a perfected security interest in favor of Agent in (i) marketabledirect obligations issued or unconditionally guaranteed by the United States ofAmerica or Canada or any agency thereof maturing within one year from the dateof acquisition thereof, (ii) commercial paper maturing no more than oneyear from the date of creation thereof and currently having the highest ratingobtainable from either S&P or Moody’s, (iii) certificates of depositmaturing no more than one year from the date of creation thereof issued bycommercial banks incorporated under the laws of the United States of America orCanada, each having combined capital, surplus and undivided profits of not lessthan $300,000,000 and having a senior unsecured rating of “A” or better by anationally recognized rating agency (an “A Rated Bank”), (iv) timedeposits maturing no more than thirty (30) days from the date of creationthereof with A Rated Banks, (v) mutual funds that invest solely in one ormore of the investments described in clauses (i) through (iv) above, (vi) moneymarket funds that invest substantially in one or more of the investmentsdescribed in clauses (i) through (iv) above and (vii) substantiallysimilar investments to those set forth in clauses (i) through (vi) abovedenominated in (A) Euro or Sterling, or (B) other foreign currenciesin an aggregate amount not to exceed $5,000,000 (or the applicable Dollarequivalent); provided that references to the 

 

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United States shall bedeemed to mean foreign countries having a sovereign rating of “A” or betterfrom either S&P or Moody’s;

 

(f)            in the case of Foreign Subsidiaries operating inBrazil, Investments made in the ordinary course of business in export notes inDollars issued by a Brazilian commercial bank with maturities of one year orless from the date of acquisition thereof (or, if export notes are notavailable, certificates of deposit issued by a Brazilian commercial bank withmaturities of one year or less from the date of acquisition thereof anddenominated in Brazilian reals swapped for Dollars pursuant to a hedgeagreement permitted hereunder) and overnight Investments in short termBrazilian government securities made in the ordinary course of business;

 

(g)           (i) investments by any Credit Party in anotherCredit Party, and by any Foreign Subsidiary in another Foreign Subsidiary and (ii) investmentsby Credit Parties in Subsidiaries that are not Credit Parties so long as theaggregate amount of such investments (excluding any such investments that areassumed and exist on the date any Permitted Acquisition is consummated and thatare not made, incurred or created in contemplation of or in connection withsuch Permitted Acquisition) made shall not at any time exceed, in theaggregate, $20,000,000;

 

(h)           investments in an aggregate amount of up to$15,000,000 in Blount China, so long as no Default or Event of Default existsat the time of such investment or would be caused thereby;

 

(i)            Intentionally Omitted; and

 

(j)            other investments not exceeding $7,500,000 in theaggregate at any time outstanding.

 

6.3           Indebtedness.

 

(a)           No Credit Party shall, or shall permit any Subsidiaryof any Credit Party to, create, incur, assume or permit to exist anyIndebtedness, except (without duplication):

 

(i)            Indebtedness secured by purchase money securityinterests and Capital Leases permitted in Section 6.7(c),

 

(ii)           the Loans and the other Obligations,

 

(iii)          unfunded pension fund and other employee benefit planobligations and liabilities to the extent they are permitted to remain unfundedunder applicable law,

 

(iv)          the New Subordinated Debt,

 

(v)           other existing Indebtedness described in DisclosureSchedule (6.3) and refinancings thereof or amendments or modificationsthereto that do not have the effect of increasing the principal amount thereofor changing the amortization thereof (other than to extend the same) and thatare otherwise on terms and conditions no less favorable to any Credit 

 

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Party, Agent or anyLender, as determined by Agent than the terms of the Indebtedness beingrefinanced, amended or modified,

 

(vi)          Indebtedness specifically permitted under Section 6.1,

 

(vii)         Indebtedness specifically permitted under Section 6.6,

 

(viii)        Indebtedness specifically permitted under Section 6.17,

 

(ix)           Indebtedness consisting of intercompany loans andadvances made by any Credit Party or Subsidiary of a Credit Party to any otherCredit Party; provided, that: (A) each Credit Party shall haveexecuted and delivered to each other Credit Party or Subsidiary of a CreditParty, on the Closing Date, a demand note (collectively, the “IntercompanyNotes”) to evidence any such intercompany Indebtedness owing at any time bysuch Credit Party to such other Credit Party or Subsidiary of a Credit Partywhich Intercompany Notes shall be in form and substance reasonably satisfactoryto Agent and shall be pledged and delivered to Agent pursuant to the applicableCollateral Documents as additional collateral security (subject to PermittedEncumbrances) for the Obligations; (B) each Credit Party shall record allintercompany transactions on its books and records in a manner reasonablysatisfactory to Agent; (C) the obligations of each Credit Party under anysuch Intercompany Notes shall be subordinated to the Obligations of such CreditParty hereunder in a manner reasonably satisfactory to Agent; (D) at thetime any such intercompany loan or advance is made by any Credit Party orSubsidiary of a Credit Party to any other Credit Party and after giving effectthereto, each such Credit Party shall be Solvent; and (E) no Default orEvent of Default would occur and be continuing after giving effect to any suchproposed intercompany loan,

 

(x)            Indebtedness of Foreign Subsidiaries owed to CreditParties in an aggregate amount not to exceed $5,000,000 at any timeoutstanding,

 

(xi)           Other Indebtedness of Foreign Subsidiaries in an aggregateamount not to exceed $10,000,000 at any time outstanding,

 

(xii)          Other unsecured Indebtedness (including, withoutlimitation, repurchase obligations arising in connection with financingprovided by certain financial institutions to certain dealers with respect toInventory purchased by such dealers from Credit Parties) in an aggregate amountnot to exceed $20,000,000 at any time outstanding; provided, however,that any such other unsecured Indebtedness of Foreign Subsidiaries shall notexceed $10,000,000 in the aggregate at any time outstanding, and

 

(xiii)         Indebtedness (A) incurred to finance or otherwisein contemplation of any Permitted Acquisition or investment that is unsecuredIndebtedness, or (B) assumed as a result of or in connection with any PermittedAcquisition, in an aggregate amount under clauses (A) and (B) of thisclause not to exceed $50,000,000, of which up to $20,000,000 of theIndebtedness permitted under clause (B) may be secured Indebtedness; provided,that all assumed Indebtedness by Foreign Subsidiaries permitted pursuant tothis clause (xiii), together with the Indebtedness permitted pursuant to Section 6.3(a)(xi)and Section 6.3(a)(xii), shall not exceed $20,000,000; provided,further, that at the time of such incurrence or assumption of 

 

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Indebtedness and aftergiving effect thereto, no Default or Event of Default has occurred and iscontinuing.

 

(b)           No Credit Party shall, directly or indirectly,voluntarily purchase, redeem, defease or prepay any principal of, premium, ifany, interest or other amount payable in respect of, or permit any Subsidiaryto, directly or indirectly, voluntarily purchase, redeem, defease or prepay anyprincipal of, premium, if any, interest or other amount payable in respect of,any Indebtedness, other than:

 

(i)            the Obligations;

 

(ii)           Indebtedness secured by a Permitted Encumbrance if theasset securing such Indebtedness has been sold or otherwise disposed of inaccordance with Sections 6.8(b) or (c);

 

(iii)          Indebtedness permitted by Section 6.3(a)(v) uponany refinancing thereof in accordance with Section 6.3(a)(v);

 

(iv)          other Indebtedness (excluding Subordinated Debt) in anaggregate amount not to exceed $1,000,000; and

 

(v)           as otherwise permitted in Section 6.14.

 

6.4           Employee Loans and Affiliate Transactions.

 

(a)           No Credit Party shall enter into or be a party to anytransaction with any other Credit Party or any Affiliate thereof except in theordinary course of and pursuant to the reasonable requirements of such CreditParty’s business and upon fair and reasonable terms that are no less favorableto such Credit Party than would be obtained in a comparable arm’s lengthtransaction with a Person not an Affiliate of such Credit Party.  In addition, if any Credit Party enters intoa new type of material transaction with an Affiliate after the Closing Date, itshall disclose such transaction in advance to Agent and Lenders.  All such material transactions (other thanInventory sales in the ordinary course of business) existing as of the datehereof are described in Disclosure Schedule (6.4(a)).

 

(b)           No Credit Party shall, or shall permit any Subsidiaryof a Credit Party to, enter into any lending or borrowing transaction with anyemployees of any Credit Party or any such Subsidiaries, except loans to itsrespective employees in the ordinary course of business consistent with pastpractices for travel and entertainment expenses, relocation costs and similarpurposes up to a maximum of $500,000 in the aggregate at any one timeoutstanding.

 

6.5           Capital Structure and Business. No Credit Party shall, or shall permit any Subsidiary of any CreditParty to, (a) make any changes in any of its business objectives, purposesor operations that could in any way adversely affect the repayment of the Loansor any of the other Obligations or could reasonably be expected to have orresult in a Material Adverse Effect, (b) except for mergers oramalgamations among Credit Parties or such Subsidiaries, as applicable,specifically permitted under Section 6.1, make any change in itscapital structure as described in Disclosure Schedule (3.8), includingthe issuance or sale of any shares of Stock 

 

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(except Excluded StockIssuances), warrants or other securities convertible into Stock or any revisionof the terms of its outstanding Stock; provided that Holdings may issueor sell shares of its Stock for cash so long as (i) the proceeds thereofare applied in prepayment of the Obligations as required by Section 1.3(b)(iii),and (ii) no Change of Control occurs after giving effect thereto, or (c) amendits charter or bylaws in a manner that would adversely affect Agent or Lendersor such Credit Party’s duty or ability to repay the Obligations.  No Credit Party shall, or shall permit anySubsidiary of any Credit Party to, engage in any business other than thebusinesses currently engaged in by it or businesses reasonably related thereto.

 

6.6           Guaranteed Indebtedness.  No CreditParty shall, or shall permit any Subsidiary of any Credit Party to, create,incur, assume or permit to exist any Guaranteed Indebtedness except (a) byendorsement of instruments or items of payment for deposit to the generalaccount of any Credit Party or such Subsidiary, (b) for GuaranteedIndebtedness incurred for the benefit of any other Credit Party if the primaryobligation is expressly permitted by this Agreement and (c) for GuaranteedIndebtedness permitted under Section 6.3(a)(v) or Section 6.3(a)(xii)with respect to repurchase obligations arising in connection with financingprovided by certain financial institutions to certain dealers with respect toInventory purchased by such dealers from Credit Parties.

 

6.7           Liens.  No CreditParty shall, or shall permit any Subsidiary of any Credit Party to, create,incur, assume or permit to exist any Lien on or with respect to its Accounts orany of its other properties or assets (whether now owned or hereafter acquired)except for, without duplication:

 

(a)           Permitted Encumbrances;

 

(b)           Liens in existence on the date hereof and summarizedon Disclosure Schedule (6.7) securing the Indebtedness described on DisclosureSchedule (6.3) and permitted refinancings, extensions and renewals thereof,including extensions or renewals of any such Liens; provided that theprincipal amount of the Indebtedness so secured is not increased and the Liendoes not attach to any other property;

 

(c)           Liens created after the date hereof by conditionalsale or other title retention agreements (including Capital Leases) or inconnection with purchase money Indebtedness with respect to Equipment andFixtures acquired by any Credit Party in the ordinary course of business,involving the incurrence of an aggregate amount of purchase money Indebtednessand Capital Lease Obligations of not more than $5,000,000 outstanding at anyone time for all such Liens (provided that such Liens attach only to theassets subject to such purchase money debt and such Indebtedness is incurredwithin 30 days following such purchase and does not exceed 100% of the purchaseprice of the subject assets); and

 

(d)           Liens securing Indebtedness permitted under (A) Section 6.3(a)(xi)to the extent such Liens are solely on property of the issuer of suchIndebtedness or (B) Section 6.3(a)(xiii)(B) to the extentsuch Liens are solely on the assets or Stock of the Target or its Subsidiaries.

 

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In addition, no Credit Party shall become a party toany agreement, note, indenture or instrument, or take any other action, afterthe date hereof that would prohibit the creation of a Lien on any of itsproperties or other assets in favor of Agent, on behalf of itself and Lenders,as additional Collateral for the Obligations, except operating leases, CapitalLeases or Licenses, or in connection with a Permitted Acquisition with respectto properties or other assets secured by Liens permitted under Section 6.7(d)(B),which prohibit Liens upon the assets that are subject thereto.

 

6.8           Sale of Stock and Assets. No Credit Party shall, or shall permit any Subsidiary of any CreditParty to, sell, transfer, convey, assign or otherwise dispose of any of itsproperties or other assets, including the Stock of any of its Subsidiaries(whether in a public or a private offering or otherwise) or any of itsAccounts, other than (a) the sale of Inventory, license of IntellectualProperty or the use of cash or cash equivalents, in each case, in the ordinarycourse of business; (b) the sale, transfer, conveyance or otherdisposition by a Credit Party or any Foreign Subsidiary of Equipment orFixtures that are obsolete or no longer used or useful in such Credit Party’sor such Foreign Subsidiary’s business; (c) the sale of all of the Stock orsubstantially all of the assets of Gear so long as (i) no Default or Eventof Default exists or would be caused thereby or (ii) Requisite Lendersotherwise consent to such sale; (d) other assets having a value notexceeding $5,000,000 in the aggregate in any Fiscal Year; and (e) leasesand subleases of Real Estate not materially interfering with the ordinaryconduct of business of the applicable Credit Parties and otherwise consented toby Agent which consent will not be unreasonably withheld. With respect to anydisposition of assets or other properties permitted pursuant to clauses (b),(c), or (d) above, subject to Section 1.3(b),Agent agrees on reasonable prior written notice to release its Lien on suchassets or other properties in order to permit the applicable Credit Party toeffect such disposition and shall execute and deliver to Borrowers, atBorrowers’ expense, appropriate UCC-3 termination statements and other releasesas are reasonably requested by Borrowers.

 

6.9           ERISA and Benefit Plans.  No CreditParty shall, or shall cause or permit any ERISA Affiliate to, cause or permitto occur an event that could result in the imposition of a Lien under Section 412of the IRC or Section 302 or 4068 of ERISA other than a Lien under Section 412of the IRC or Section 302 of ERISA that is permitted under clause (q) ofthe definition of Permitted Encumbrances or cause or permit to occur an ERISAEvent to the extent such ERISA Event could reasonably be expected to have aMaterial Adverse Effect.

 

6.10         Financial Covenants.  Borrowers shallnot breach or fail to comply with any of the Financial Covenants.

 

6.11         Hazardous Materials.  No CreditParty shall, or shall permit any Subsidiary of any Credit Party to, cause orpermit a Release of any Hazardous Material on, at, in, under, above, to, fromor about any of the Real Estate where such Release would violate in anyrespect, or form the basis for any Environmental Liabilities under, anyEnvironmental Laws or Environmental Permits, other than such violations orEnvironmental Liabilities that could not reasonably be expected to have aMaterial Adverse Effect.

 

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6.12         Sale-Leasebacks.  No CreditParty shall, or shall permit any Subsidiary of any Credit Party to, engage inany sale-leaseback, synthetic lease or similar transaction involving any of itsassets.

 

6.13         Cancellation of Indebtedness. No Credit Party shall, or shall permit any Subsidiary of any CreditParty to, cancel any claim or debt owing to it, except for reasonableconsideration negotiated on an arm’s length basis and in the ordinary course ofits business consistent with past practices.

 

6.14         Restricted Payments.  No CreditParty shall, or shall permit any Subsidiary of a Credit Party to, make anyRestricted Payment, except (a) intercompany loans and advances betweenCredit Parties to the extent permitted by Section 6.3, (b) dividendsand distributions by Subsidiaries of any Credit Party paid to a Credit Party ora Subsidiary of a Credit Party, (c) employee loans permitted under Section 6.4(b),(d) payments of principal and interest of Intercompany Notes issued inaccordance with Section 6.3; (e) scheduled cash payments ofinterest with respect to other Subordinated Debt, provided, that (i) noDefault or Event of Default has occurred and is continuing or would resultafter giving effect to any Restricted Payment pursuant to clause(e) above,and (ii) with respect to any Subordinated Debt created after the ClosingDate, the timing of the Restricted Payments referred to in clause(e) aboveshall be set at dates that permit the delivery of Financial Statementsnecessary to determine current compliance with the Financial Covenants prior toeach such payment and (f) redemptions of Stock of Holdings and/ordividends and distributions to the holders of the Stock of Holdings in anaggregate amount not to exceed $25,000,000 per year and $100,000,000 during theterm of this Agreement, provided, that (i) no Default or Event of Defaulthas occurred and is continuing or would result after giving effect to anyRestricted Payment under clause (f) above and (ii) aftergiving effect to such Restricted Payment under clause (f) above,the Credit Facility Leverage Ratio as reflected in the Compliance Certificatemost recently delivered to Agent pursuant to Annex E prior to theconsummation of such Restricted Payment (after giving effect to such RestrictedPayment and all Loans funded in connection therewith as if made on the firstdate of such period) was not greater than 2.25 to 1.00.

 

6.15         Change of Corporate Name or Location; Change of FiscalYear.  No Credit Party shall, or shall permit anySubsidiary of any Credit Party to, (a) change its name, corporate name ortrade name as it appears in official filings in the state, province, county orother jurisdiction of its existence, incorporation or other organization (b) changeits chief executive office, registered office pursuant to its constituentdocuments, principal place of business, corporate offices or warehouses orlocations at which Collateral is held or stored, or the location of its recordsconcerning the Collateral, (c) change the type of entity that it is, (d) changeits organization identification number, if any, issued by its state ofincorporation or other organization, or (e) change its state, province,county or other jurisdiction of existence, incorporation or organization, ineach case without at least 30 days prior written notice to Agent and afterAgent’s written acknowledgment that any reasonable action requested by Agent inconnection therewith, including to continue the perfection of any Liens infavor of Agent in any Collateral, has been completed or taken, and providedthat any such new location shall be in the continental United States, exceptthat any Credit Party or any Subsidiary of any Credit Party may transferCollateral having value not exceeding $500,000 in the aggregate from anywarehouse or location at which such Collateral is held or stored to anywarehouse or location in Mexico.  Withoutlimiting the 

 

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foregoing, no CreditParty shall change its name, identity or corporate structure in any manner thatmight make any financing, financing change or continuation statement or otherapplicable perfection filing made in connection herewith or with any other LoanDocument seriously misleading within the meaning of Section 9-402(7) ofthe Code or materially misleading within the meaning of any other applicablelaw except upon prior written notice to Agent and Lenders and after Agent’swritten acknowledgment that any reasonable action requested by Agent inconnection therewith, including to continue the perfection of any Liens infavor of Agent in any Collateral, has been completed or taken.  No Credit Party shall, or shall permit anySubsidiary of any Credit Party to, change its Fiscal Year.

 

6.16         No Impairment of Intercompany Transfers. No Credit Party shall, or shall permit any Subsidiary of any CreditParty to, directly or indirectly enter into or become bound by any agreement,instrument, indenture or other obligation (other than this Agreement and theother Loan Documents) that could directly or indirectly restrict, prohibit orrequire the consent of any Person with respect to the payment of dividends ordistributions or the making or repayment of intercompany loans by a Subsidiaryof any Borrower to any Borrower or between Borrowers.

 

6.17         No Speculative Transactions. No Credit Party shall, or shall permit any Subsidiary of any CreditParty to, engage in any transaction involving commodity options, futurescontracts or similar transactions, except solely to hedge against fluctuationsin the prices of commodities owned or purchased by it and the values of foreigncurrencies receivable or payable by it and interest swaps, caps or collars.

 

6.18         Changes Relating to Subordinated Debt; MaterialContracts.  No Credit Party shall, or shall permit anySubsidiary of any Credit Party to, change or amend the terms of anySubordinated Debt (or any indenture or agreement in connection therewith) ifthe effect of such amendment is to: (i) increase the interest rate on suchSubordinated Debt; (ii) change the dates upon which payments of principalor interest are due on such Subordinated Debt other than to extend such dates; (iii) changeany default or event of default other than to delete or make less restrictiveany default provision therein, or add any covenant with respect to suchSubordinated Debt; (iv) change the redemption or prepayment provisions ofsuch Subordinated Debt other than to extend the dates therefor or to reduce thepremiums payable in connection therewith; (v) grant any security orcollateral to secure payment of such Subordinated Debt; (vi) change oramend any subordination terms with respect thereto, including, without limitation,with respect to the New Subordinated Debt Indenture, Article 10 and Section 11.02thereof; or (vii) change or amend any other term if such change oramendment would materially increase the obligations of the Credit Party or anysuch Subsidiary thereunder or confer additional material rights on the holderof such Subordinated Debt in a manner adverse to any Credit Party, Agent or anyLender.

 

7.             TERM

 

7.1           Termination.  The financingarrangements contemplated hereby shall be in effect until the CommitmentTermination Date, and the Loans and all other Obligations shall beautomatically due and payable in full on such date.

 

7.2           Survival of Obligations Upon Termination of FinancingArrangements.  Except as otherwise expressly provided for inthe Loan Documents, no termination or cancellation 

 

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(regardless of cause orprocedure) of any financing arrangement under this Agreement shall in any wayaffect or impair the obligations, duties and liabilities of the Credit Partiesor the rights of Agent and Lenders relating to any unpaid portion of the Loansor any other Obligations, due or not due, liquidated, contingent orunliquidated, or any transaction or event occurring prior to such termination,or any transaction or event, the performance of which is required after theCommitment Termination Date.  Except asotherwise expressly provided herein or in any other Loan Document, allundertakings, agreements, covenants, warranties and representations of orbinding upon the Credit Parties, and all rights of Agent and each Lender, allas contained in the Loan Documents, shall not terminate or expire, but rathershall survive any such termination or cancellation and shall continue in fullforce and effect until the Termination Date; provided, that theprovisions of Section 11, the payment obligations under Sections1.15 and 1.16, and the indemnities contained in the Loan Documentsshall survive the Termination Date.

 

8.             EVENTS OF DEFAULT; RIGHTS AND REMEDIES

 

8.1           Events of Default.  Theoccurrence of any one or more of the following events (regardless of the reasontherefor) shall constitute an “Event of Default” hereunder:

 

(a)           Any Borrower (i) fails to make any payment ofprincipal of, or interest on, or Fees owing in respect of, the Loans or any ofthe other Obligations when due and payable, or (ii) fails to pay orreimburse Agent or Lenders for any expense reimbursable hereunder or under anyother Loan Document within 10 days following Agent’s demand for such reimbursementor payment of expenses.

 

(b)           Any Credit Party fails or neglects to perform, keep orobserve any of the provisions of Sections 1.4, 1.8, 5.4(a) or 6, orany of the provisions set forth in Annexes C or G,  respectively.

 

(c)           Any Borrower fails or neglects to perform, keep orobserve any of the provisions of Section 4 or any provisions setforth in Annexes E or F, respectively, and the same shall remainunremedied for 5 Business Days or more.

 

(d)           Any Credit Party fails or neglects to perform, keep orobserve any other provision of this Agreement or of any of the other LoanDocuments (other than any provision embodied in or covered by any other clauseof this Section 8.1) and the same shall remain unremedied for 30days or more from the date any Credit Party knew or should have known of suchfailure or neglect.

 

(e)           A default or breach occurs under any other agreement,document or instrument (including, without limitation, the New SubordinatedDebt Documents) to which any Credit Party is a party that is not cured withinany applicable grace period therefor, and such default or breach (A) involvesthe failure to make any payment when due in respect of any Indebtedness orGuaranteed Indebtedness (other than the Obligations) of any Credit Party inexcess of $5,000,000 in the aggregate (including (x) undrawn committed oravailable amounts and (y) amounts owing to all creditors under anycombined or syndicated credit arrangements), or (B) causes, or permits anyholder of such Indebtedness or Guaranteed Indebtedness or a trustee to cause,Indebtedness or Guaranteed Indebtedness or a portion thereof in excess of 

 

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$5,000,000 in theaggregate to become due prior to its stated maturity or prior to its regularlyscheduled dates of payment, or cash collateral in respect thereof to bedemanded, in each case, regardless of whether such default is waived, or suchright is exercised, by such holder or trustee.

 

(f)            Any representation or warranty herein or in any LoanDocument or in any written statement, report, financial statement orcertificate made or delivered to Agent or any Lender by any Credit Party isuntrue or incorrect in any material respect as of the date when made or deemedmade.

 

(g)           Assets of any Credit Party or any Foreign Subsidiarywith a fair market value of $5,000,000 or more are attached, seized, leviedupon or subjected to a writ or distress warrant, or come within the possessionof any receiver, interim receiver, receiver and manager, trustee, custodian, liquidator,administrator, sheriff, bailiff or assignee for the benefit of creditors of anyCredit Party or any such Foreign Subsidiary and such condition continues for 30days or more.

 

(h)           An involuntary case or proceeding (including thefiling of any notice of intention thereof) is commenced against any CreditParty or any Foreign Subsidiary that is an operating company seeking a decreeor order in respect of such Credit Party or such Foreign Subsidiary (i) underany Insolvency Law, or any other applicable federal, state or foreignbankruptcy or other similar law or any incorporation law, (ii) appointinga custodian, receiver, interim receiver, receiver and manager, custodian,liquidator, assignee, trustee or sequestrator (or similar official) for such CreditParty or such Foreign Subsidiary or for any substantial part of any such CreditParty’s or such Foreign Subsidiary’s assets, or (iii) ordering thewinding-up, dissolution, suspension of general operations or liquidation of theaffairs of such Credit Party or such Foreign Subsidiary, and such case orproceeding shall remain undismissed or unstayed for 60 days or more or a decreeor order granting the relief sought in such case or proceeding shall be enteredby a court of competent jurisdiction.

 

(i)            Any Credit Party or Foreign Subsidiary that is anoperating company (i) files a petition seeking relief under any InsolvencyLaw, or any other applicable federal, state or foreign bankruptcy or othersimilar law, (ii) consents to or fails to contest in a timely andappropriate manner the institution of proceedings referred to in Section 8.1(h) thereunderor the filing of any such petition or the appointment of or taking possessionby a custodian, receiver, liquidator, assignee, trustee or sequestrator (orsimilar official) for such Credit Party or such Foreign Subsidiary or for anysubstantial part of any such Credit Party’s or such Foreign Subsidiary’sassets, (iii) makes an assignment for the benefit of creditors, (iv) takesany action in furtherance of any of the foregoing or described under Section 8.1(h);or (v) admits in writing its inability to, or is generally unable to, payits debts as such debts become due.

 

(j)            A final judgment or judgments for the payment of moneyin excess of $5,000,000 in the aggregate at any time are outstanding againstone or more of the Credit Parties and the same are not, within 30 days afterthe entry thereof, discharged or execution thereof stayed or bonded pendingappeal, or such judgments are not discharged prior to the expiration of anysuch stay.

 

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(k)           Any material provision of any Loan Document for anyreason ceases to be valid, binding and enforceable in accordance with its terms(or any Credit Party or other Person party to a Loan Document shall challengethe enforceability of any Loan Document or shall assert in writing, or engagein any action or inaction based on any such assertion, that any provision ofany of the Loan Documents has ceased to be or otherwise is not valid, bindingand enforceable in accordance with its terms), or any Lien created under anyLoan Document ceases to be a valid and perfected first priority Lien (except asotherwise permitted herein or therein) in any of the Collateral purported to becovered thereby.

 

(l)            Any Change of Control occurs.

 

(m)          Any Material Adverse Effect occurs.

 

8.2           Remedies.

 

(a)           To the extent permitted under Section 1.5(e),if any Event of Default has occurred and is continuing, Agent may (and at thewritten request of Requisite Lenders shall), without notice except as otherwiseexpressly provided herein, increase the rates of interest applicable to theLoans and the Letter of Credit Fees to the Default Rate.

 

(b)           If any Event of Default has occurred and iscontinuing, Agent may (and at the written request of the Requisite Lendersshall) without notice: (i) terminate the Commitments to make additionalAdvances or incur additional Letter of Credit Obligations (but Lenders maycease funding advances under the Revolving Loan Commitment on any date that anyof the conditions precedent set forth in Section 2.2 are notsatisfied, whether or not Agent terminates any of the Commitments); (ii) declareall or any portion of the Obligations, including all or any portion of any Loanto be forthwith due and payable, and require that the Letter of CreditObligations be cash collateralized as provided in Annex B, all withoutpresentment, demand, protest or further notice of any kind, all of which areexpressly waived by Borrowers and each other Credit Party; or (iii) exerciseall rights and remedies under the Loan Documents, applicable laws of the UnitedStates or any state thereof, including, without limitation, all remediesprovided under the Code and any other applicable law of any jurisdiction; provided,that upon the occurrence of an Event of Default specified in Sections 8.1(h) or(i), the Commitments to make additional Advances or incur additional Letterof Credit Obligations shall be immediately terminated and all of theObligations, including the Loans, shall become immediately due and payablewithout declaration, notice or demand by any Person.  Notwithstanding the foregoing, if any Eventof Default has occurred and is continuing, and if the Requisite Lenders shallnot have otherwise instructed Agent to deliver Activation Notices under AnnexC and to enforce Credit Parties’ covenants under Annex C, at therequest of Requisite Revolving Lenders, Agent shall, without notice, deliverActivation Notices under Annex C and enforce Credit Parties’ covenantsunder Annex C.

 

(c)           Intentionally Omitted.

 

8.3           Waivers by Credit Parties. Except as otherwise provided for in this Agreement, each Credit Partywaives, to the fullest extent permitted by law, (including for purposes of Section 12):(a) presentment, demand and protest and notice of presentment, dishonor,notice of 

 

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intent to accelerate,notice of acceleration, protest, default, nonpayment, maturity, release,compromise, settlement, extension or renewal of any or all commercial paper,accounts, contract rights, documents, instruments, chattel paper and guarantiesat any time held by Agent on which any Credit Party may in any way be liable,and hereby ratifies and confirms whatever Agent may do in this regard, (b) allrights to notice and a hearing prior to Agent’s taking possession or controlof, or to Agent’s replevy, attachment or levy upon, the Collateral or any bondor security that might be required by any court prior to allowing Agent toexercise any of its remedies, and (c) the benefit of all valuation, appraisal,marshaling and exemption laws.  EachCredit Party acknowledges that in the event such Credit Party fails to perform,observe or discharge any of its obligations or liabilities under this Agreementor any other Loan Document, any remedy of law may prove to be inadequate reliefto Agent and the Lenders; therefore, such Credit Party agrees, except asotherwise provided in this Agreement or by applicable law, that Agent and theLenders shall be entitled to temporary and permanent injunctive relief in any suchcase without the necessity of proving actual damages.

 

9.             ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT

 

9.1           Assignments and Participations.

 

(a)           Intentionally Omitted.

 

(b)           Right to Assign.  Each Lendermay sell, transfer, negotiate or assign all or a portion of its rights andobligations hereunder (including all or a portion of its Commitments and itsrights and obligations with respect to Loans and Letters of Credit) to (i) anyexisting Lender, (ii) any Affiliate or Approved Fund of any existingLender or (iii) any other Person acceptable (which acceptance shall not beunreasonably withheld or delayed) to Agent, and with respect to any assignmentof the Revolving Loan or Revolving Loan Commitment, each L/C Issuer, and, aslong as no Event of Default is continuing, Borrowers; provided, however,that (x) such sales do not have to be ratable between the Revolving Loan,the Existing Term Loan and the Extending Term Loan but must be ratable amongthe obligations owing to and owed by such Lender with respect to either theRevolving Loan, the Existing Term Loan or the Extending Term Loan and (y) forboth the Revolving Loan, the Existing Term Loan and the Extending Term Loan,the aggregate outstanding principal amount (determined as of the effective dateof the applicable Assignment Agreement) of the Loans, Commitments and Letter ofCredit Obligations subject to any such sale shall be in a minimum amount of$1,000,000, unless such sale is made to an existing Lender or an Affiliate orApproved Fund of any existing Lender, is of the assignor’s (together with itsAffiliates and Approved Funds) entire interest in the Revolving Loan facilityor the Term Loan B facility or is made with the prior consent of Borrowers andAgent; provided, further, that such sales or assignments by Non-Funding Lendersshall be subject to Agent’s prior written consent.

 

(c)           Procedure.  The partiesto each sale made in reliance on clause (b) above (other than thosedescribed in clause (e) or (f) below) shall execute anddeliver to Agent an assignment agreement (an “Assignment Agreement”)substantially in the form attached hereto as Exhibit 9.1(c) andotherwise in form and substance reasonably satisfactory to, and acknowledgedby, Agent, via an electronic settlement system designated by Agent (or ifpreviously agreed with Agent, via a manual execution and delivery of theassignment) evidencing such sale, together 

 

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with any existing Notesubject to such sale (or any affidavit of loss therefor acceptable to Agent),any tax forms required to be delivered pursuant to Section 1.15 andpayment of an assignment fee in the amount of $3,500, provided that (1) ifa sale by a Lender is made to an Affiliate or an Approved Fund of suchassigning Lender, then no assignment fee shall be due in connection with suchsale, and (2) if a sale by a Lender is made to an assignee that is not anAffiliate or Approved Fund of such assignor Lender, and concurrently to one ormore Affiliates or Approved Funds of such assignee, then only one assignmentfee of $3,500 shall be due in connection with such sale.  Upon receipt of all the foregoing, andconditioned upon such receipt and, if such assignment is made in accordancewith Section 9.1(b)(iii), upon Agent (and Borrowers, if applicable)consenting to such Assignment Agreement, such assignment will be effective fromand after the effective date specified in such Assignment Agreement.

 

(d)           Effectiveness.  (i) Theassignee under the Assignment Agreement shall become a party hereto and, to theextent that rights and obligations under the Loan Documents have been assignedto such assignee pursuant to such Assignment Agreement, shall have the rightsand obligations of a Lender, (ii) any applicable Note shall be transferredto such assignee through such entry and (iii) the assignor thereundershall, to the extent that rights and obligations under this Agreement have beenassigned by it pursuant to such Assignment Agreement, relinquish its rights(except for those surviving the termination of the Commitments and the paymentin full of the Obligations) and be released from its obligations under the LoanDocuments, other than those relating to events or circumstances occurring priorto such assignment (and, in the case of an Assignment Agreement covering all orthe remaining portion of an assigning Lender’s rights and obligations under theLoan Documents, such Lender shall cease to be a party hereto except that eachLender agrees to remain bound by Article 9).

 

(e)           Grant of Security Interests. In addition to the other rights provided in this Section 9.1,each Lender may grant a security interest in, or otherwise assign ascollateral, any of its rights under this Agreement, whether now owned orhereafter acquired (including rights to payments of principal or interest onthe Loans), to (A) any federal reserve bank (pursuant to Regulation A ofthe Federal Reserve Board), without notice to Agent or (B) any holder of,or trustee for the benefit of the holders of, such Lender’s Securities bynotice to Agent; provided, however, that no such holder ortrustee, whether because of such grant or assignment or any foreclosure thereon(unless such foreclosure is made through an assignment in accordance with clause(b) above), shall be entitled to any rights of such Lender hereunderand no such Lender shall be relieved of any of its obligations hereunder.

 

(f)            Participants and SPVs.  In additionto the other rights provided in this Section 9.1, each Lender may, (x) withnotice to Agent, grant to an SPV the option to make all or any part of any Loanthat such Lender would otherwise be required to make hereunder (and theexercise of such option by such SPV and the making of Loans pursuant theretoshall satisfy the obligation of such Lender to make such Loans hereunder) andsuch SPV may assign to such Lender the right to receive payment with respect toany Obligation and (y) without notice to or consent from Agent orBorrowers, sell participations to one or more Persons in or to all or a portionof its rights and obligations under the Loan Documents (including all itsrights and obligations with respect to the Existing Term Loan, the ExtendingTerm Loan, the Revolving Loans and the Letters of Credit); provided, however,that, whether as a result of any term of any Loan Document or of such grant orparticipation, (i) no such SPV or participant shall have a 

 

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commitment, or be deemedto have made an offer to commit, to make Loans hereunder, and, except asprovided in the applicable option agreement, none shall be liable for anyobligation of such Lender hereunder, (ii) such Lender’s rights andobligations, and the rights and obligations of the Credit Parties and the otherLenders towards such Lender, under any Loan Document shall remain unchanged andeach other party hereto shall continue to deal solely with such Lender, whichshall remain the holder of the Obligations, except that (A) each suchparticipant and SPV shall be entitled to the benefit of Sections 1.15and 1.16, but only to the extent such participant or SPV delivers thetax forms such Lender is required to collect pursuant to Section 1.15and then only to the extent of any amount to which such Lender would beentitled in the absence of any such grant or participation and (B) eachsuch SPV may receive other payments that would otherwise be made to such Lenderwith respect to Loans funded by such SPV to the extent provided in theapplicable option agreement and set forth in a notice provided to Agent by suchSPV and such Lender, provided, however, that in no case(including pursuant to clause (A) or (B) above) shallan SPV or participant have the right to enforce any of the terms of any LoanDocument, and (iii) the consent of such SPV or participant shall not berequired (either directly, as a restraint on such Lender’s ability to consenthereunder or otherwise) for any amendments, waivers or consents with respect toany Loan Document or to exercise or refrain from exercising any powers orrights such Lender may have under or in respect of the Loan Documents(including the right to enforce or direct enforcement of the Obligations),except for those described in clauses (iii) and (iv) ofSection 11.2 with respect to amounts, or dates fixed for payment ofamounts, to which such participant or SPV would otherwise be entitled and, inthe case of participants, except for those described in Section 11.2(c)(viii) (oramendments, consents and waivers with respect to Section 11.2(c)(v) torelease all or substantially all of the Collateral).  No party hereto shall institute (and eachBorrower shall cause each other Credit Party not to institute) against any SPVgrantee of an option pursuant to this clause (f) any bankruptcy,reorganization, insolvency, liquidation or similar proceeding, prior to thedate that is one year and one day after the payment in full of all outstandingcommercial paper of such SPV; provided, however, that each Lender havingdesignated an SPV as such agrees to indemnify each Indemnitee against anyLiability that may be incurred by, or asserted against, such Indemnitee as aresult of failing to institute such proceeding (including a failure to getreimbursed by such SPV for any such Liability). The agreement in the preceding sentence shall survive the termination ofthe Commitments and the payment in full of the Obligations.

 

(g)           Agent shall maintain, acting solely in its capacity asagent for Borrowers, a copy of each Assignment Agreement delivered to them anda register for the recordation of the name and address and the Commitments ofeach Lender from time to time party hereto (the “Register”).  The entries in the Register shall beconclusive, and Borrowers, Agent and Lenders may treat each Person whose nameis recorded in the Register pursuant to the terms hereof as a Lender hereunderfor all purposes of this Agreement.  Uponacceptance by Agent of a properly completed and executed Assignment Agreementin respect of any interest under this Agreement which has at any time beenrecorded in the Register, Agent shall record the name, address and percentageshare of the assignee in the Register. No assignment shall be effective unless and until it has been recordedin the Register.

 

(h)           Nothing contained in this Section 9.1shall require the consent of any party for GE Capital to assign any of itsrights in respect of any Swap Related Reimbursement Obligation.

 

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9.2           Appointment of Agent.  GE Capital ishereby appointed to act on behalf of all Lenders with respect to theadministration of Loans made to Borrowers and to act as agent on behalf of allLenders with respect to Collateral of Credit Parties under this Agreement andthe other Loan Documents.  The provisionsof this Section 9.2 are solely for the benefit of Agent and Lendersand no Credit Party nor any other Person shall have any rights as a third partybeneficiary of any of the provisions hereof. In performing its functions and duties under this Agreement and theother Loan Documents, Agent shall act solely as an agent of Lenders and Agentdoes not assume or shall not be deemed to have assumed any obligation toward orrelationship of agency or trust with or for any Credit Party or any otherPerson.  Agent shall not have any dutiesor responsibilities except for those expressly set forth in this Agreement andthe other Loan Documents.  The duties ofAgent shall be mechanical and administrative in nature and Agent shall nothave, or be deemed to have, by reason of this Agreement, any other LoanDocument or otherwise a fiduciary relationship in respect of any Lender.  Except as expressly set forth in thisAgreement and the other Loan Documents, Agent shall not have any duty todisclose, nor shall it be liable for failure to disclose, any informationrelating to any Credit Party or any of their respective Subsidiaries or anyAccount Debtor that is communicated to or obtained by GE Capital or any of itsAffiliates in any capacity.  None ofAgent or any of its Affiliates nor any of their respective officers, directors,employees, agents or representatives shall be liable to any Lender for anyaction taken or omitted to be taken by it hereunder or under any other LoanDocument, or in connection herewith or therewith, except for damages caused byits or their own gross negligence or willful misconduct.

 

IfAgent shall request instructions from Requisite Lenders, Requisite RevolvingLenders or all affected Lenders with respect to any act or action (includingfailure to act) in connection with this Agreement or any other Loan Document,then Agent shall be entitled to refrain from such act or taking such actionunless and until Agent shall have received instructions from Requisite Lenders,Requisite Revolving Lenders or all affected Lenders, as the case may be, andAgent shall not incur liability to any Person by reason of so refraining.  Agent shall be fully justified in failing orrefusing to take any action hereunder or under any other Loan Document (a) ifsuch action would, in the opinion of Agent be contrary to law or the terms ofthis Agreement or any other Loan Document, (b) if such action would, inthe opinion of Agent expose Agent to Environmental Liabilities or (c) ifAgent shall not first be indemnified to its satisfaction against any and allliability and expense which may be incurred by it by reason of taking orcontinuing to take any such action. Without limiting the foregoing, no Lender shall have any right of actionwhatsoever against Agent as a result of Agent acting or refraining from actinghereunder or under any other Loan Document in accordance with the instructionsof Requisite Lenders, Requisite Revolving Lenders or all affected Lenders, asapplicable.

 

9.3           Agent’s Reliance, Etc.  None of Agentor any of its Affiliates nor any of their respective directors, officers,agents or employees shall be liable for any action taken or omitted to be takenby it or them under or in connection with this Agreement or the other LoanDocuments, except for damages caused by its or their own gross negligence orwillful misconduct.  Without limiting thegenerality of the foregoing, Agent:  (a) maytreat the payee of any Note as the holder thereof until Agent receives writtennotice of the assignment or transfer thereof signed by such payee and in formreasonably satisfactory to Agent; (b) may consult with legal counsel,independent public accountants and other experts selected by it and shall notbe liable for any action taken or omitted to be taken by it in good faith inaccordance with the 

 

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advice of such counsel,accountants or experts; (c) makes no warranty or representation to anyLender and shall not be responsible to any Lender for any statements,warranties or representations made in or in connection with this Agreement orthe other Loan Documents; (d) shall not have any duty to ascertain or toinquire as to the performance or observance of any of the terms, covenants orconditions of this Agreement or the other Loan Documents on the part of any CreditParty or to inspect the Collateral (including the books and records) of anyCredit Party; (e) shall not be responsible to any Lender for the dueexecution, legality, validity, enforceability, genuineness, sufficiency orvalue of this Agreement or the other Loan Documents or any other instrument ordocument furnished pursuant hereto or thereto; (f) shall incur noliability under or in respect of this Agreement or the other Loan Documents byacting upon any notice, consent, certificate or other instrument or writing(which may be by telecopy, telegram, cable or telex) believed by it to begenuine and signed or sent by the proper party or parties; and (g) shallbe entitled to delegate any of its duties hereunder to one or more sub-agents.

 

Exceptfor action requiring the approval of Requisite Lenders or all Lenders, as thecase may be, Agent shall each be entitled to use its discretion with respect toexercising or refraining from exercising any rights which may be vested in itby, and with respect to taking or refraining from taking any action or actionswhich it may be able to take under or in respect of, this Agreement, unlessAgent shall have been instructed by Requisite Lenders or all Lenders, as thecase may be, to exercise or refrain from exercising such rights or to take orrefrain from taking such action.  Agentshall not incur any liability to the Lenders under or in respect of thisAgreement with respect to anything which it may do or refrain from doing in thereasonable exercise of its judgment or which may seem to it to be necessary ordesirable in the circumstances, except for its own gross negligence or willfulmisconduct.  Agent shall not be liable toany Lender in acting or refraining from acting under this Agreement inaccordance with the instructions of Requisite Lenders or all Lenders, as thecase may be, and any action taken or failure to act pursuant to suchinstructions shall be binding on all Lenders.

 

9.4           GE Capital and Affiliates. With respect to its Commitments hereunder, GE Capital shall havethe same rights and powers under this Agreement and the other Loan Documents asany other Lender and may exercise the same as though it were not Agent; and theterm “Lender” or “Lenders” shall, unless otherwise expressly indicated, includeGE Capital in its individual capacity. GE Capital and its Affiliates may lend money to, invest in, andgenerally engage in any kind of business with, any Credit Party, any of theirAffiliates and any Person who may do business with or own securities of any CreditParty or any such Affiliate, all as if GE Capital were not Agent and withoutany duty to account therefor to Lenders. GE Capital and its Affiliates may accept fees and other considerationfrom any Credit Party for services in connection with this Agreement orotherwise without having to account for the same to Lenders.  Each Lender acknowledges the potentialconflict of interest between GE Capital, as a Lender, holding disproportionateinterests in the Loans and GE Capital as Agent.

 

9.5           Lender Credit Decision.  Each Lenderacknowledges that it has, independently and without reliance upon Agent or anyother Lender and based on the Financial Statements referred to in Section 3.4(a) andsuch other documents and information as it has deemed appropriate, made its owncredit and financial analysis of the Credit Parties and its own decision toenter into this Agreement.  Each Lenderalso acknowledges that it will, independently and without reliance upon Agentor any other Lender and based on such documents and information 

 

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as it shall deemappropriate at the time, continue to make its own credit decisions in taking ornot taking action under this Agreement. Each Lender acknowledges the potential conflict of interest of eachother Lender as a result of Lenders holding disproportionate interests in theLoans, and expressly consents to, and waives any claim based upon, suchconflict of interest.

 

9.6           Indemnification.  Lenders agreeto indemnify Agent (to the extent not reimbursed by Credit Parties and withoutlimiting the obligations of Borrowers hereunder), ratably according to theirrespective commitments, from and against any and all liabilities, obligations,losses, damages, penalties, actions, judgments, suits, costs, expenses ordisbursements of any kind or nature whatsoever that may be imposed on, incurredby, or asserted against Agent in any way relating to or arising out of thisAgreement or any other Loan Document or any action taken or omitted to be takenby Agent in connection therewith; provided, that no Lender shall beliable for any portion of such liabilities, obligations, losses, damages,penalties, actions, judgments, suits, costs, expenses or disbursementsresulting from Agent’s gross negligence or willful misconduct. Without limitingthe foregoing, each Lender agrees to reimburse Agent promptly upon demand forits ratable share of any out-of-pocket expenses (including reasonable counselfees) incurred by Agent in connection with the preparation, execution,delivery, administration, modification, amendment or enforcement (whetherthrough negotiations, legal proceedings or otherwise) of, or legal advice inrespect of rights or responsibilities under, this Agreement and each other LoanDocument, to the extent that Agent is not reimbursed for such expenses byCredit Parties.

 

9.7           Successor Agent.  Agent mayresign at any time by giving not less than thirty (30) days’ prior writtennotice thereof to Lenders and Borrower Representative and, at any time that GECapital is no longer a holder of any Loans or Commitments, Requisite Lendersmay remove Agent at any time by giving not less than 30 days’ prior writtennotice thereof to Agent, Lenders and Borrower Representative.  Upon any such resignation or removal,Requisite Lenders shall have the right to appoint a successor Agent.  If no successor Agent shall have been soappointed by the Requisite Lenders and shall have accepted such appointmentwithin thirty (30) days after the resigning Agent’s giving notice ofresignation or Requisite Lenders’ giving notice of removal, then the resigningor removed Agent may, on behalf of Lenders, appoint a successor Agent, whichshall be a Lender, if a Lender is willing to accept such appointment, orotherwise shall be a commercial bank or financial institution or a subsidiaryof a commercial bank or financial institution if such commercial bank orfinancial institution is organized under the laws of the United States ofAmerica or of any State thereof and has a combined capital and surplus of atleast $300,000,000.  If no successorAgent has been appointed pursuant to the foregoing, within thirty (30) daysafter the date such notice of resignation was given by the resigning Agent or RequisiteLenders’ giving notice of removal, such resignation shall become effective andthe Requisite Lenders shall thereafter perform all the duties of Agenthereunder until such time, if any, as the Requisite Lenders appoint a successorAgent as provided above.  Any successorAgent appointed by Requisite Lenders hereunder shall be subject to the approvalof Borrower Representative, such approval not to be unreasonably withheld ordelayed; provided that such approval shall not be required if a Defaultor an Event of Default has occurred and is continuing.  Upon the acceptance of any appointment asAgent hereunder by a successor Agent, such successor Agent shall succeed to andbecome vested with all the rights, powers, privileges and duties of theresigning or removed Agent.  Upon theearlier of the acceptance of any appointment as Agent hereunder by a successorAgent or the effective date of the resigning Agent’s resignation or the removedAgent’s removal, the resigning or removed Agent shall be discharged 

 

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from its duties andobligations under this Agreement and the other Loan Documents, except that anyindemnity rights or other rights in favor of such Agent shall continue.  After any Agent’s resignation hereunder, theprovisions of this Section 9 shall inure to its benefit as to anyactions taken or omitted to be taken by it while it was acting as Agent underthis Agreement and the other Loan Documents.

 

9.8           Setoff and Sharing of Payments. In addition to any rights now or hereafter granted under applicable lawand not by way of limitation of any such rights, upon the occurrence and duringthe continuance of any Event of Default and subject to Section 9.9(f),each Lender is hereby authorized at any time or from time to time, withoutnotice to any Credit Party or to any other Person, any such notice being herebyexpressly waived, to offset and to appropriate and to apply any and allbalances held by it at any of its offices for the account of Borrowers orGuarantors (regardless of whether such balances are then due to Borrowers orGuarantors) and any other properties or assets at any time held or owing bythat Lender or that holder to or for the credit or for the account of Borrowersor Guarantors against and on account of any of the Obligations that are notpaid when due.  Any Lender exercising aright of setoff or otherwise receiving any payment on account of theObligations shall purchase for cash (and the other Lenders or holders shallsell) such participations in each such other Lender’s or holder’s Obligationsas would be necessary to cause such Lender to share the amount so offset orotherwise received with each other Lender or holder in accordance with anyagreement among the Lenders (other than offset rights exercised by any Lenderwith respect to Sections 1.13, 1.15 or 1.16).  Each Lender’s obligation under this Section 9.8shall be in addition to and not in limitation of its obligations to purchase aparticipation in an amount equal to its Pro Rata Share of the Swing Line Loansunder Section 1.1.  EachCredit Party that is a Borrower or Guarantor agrees, to the fullest extentpermitted by law, that (a) any Lender may exercise its right to offsetwith respect to amounts in excess of the Obligations owed to it and may sellparticipations in such amounts so offset to other Lenders and holders and (b) anyLender so purchasing a participation in the Loans made or other Obligationsheld by other Lenders or holders may exercise all rights of offset, bankers’lien, counterclaim or similar rights with respect to such participation asfully as if such Lender or holder were a direct holder of the Loans and theother Obligations in the amount of such participation.  Notwithstanding the foregoing, if all or anyportion of the offset amount or payment otherwise received is thereafterrecovered from the Lender that has exercised the right of offset, the purchaseof participations by that Lender shall be rescinded and the purchase pricerestored without interest.  If a Non-FundingLender or Impacted Lender receives any such payment as described in this Section 9.8,such Lender shall turn over such payments to Agent in an amount that wouldsatisfy the cash collateral requirements set forth in Section 9.9(a).

 

9.9           Advances; Payments; Non-Funding Lenders; Information;Actions in Concert.

 

(a)           Advances; Payments.

 

(i)            Lenders with Revolving Loan Commitments shall refundor participate in the Swing Line Loan in accordance with clauses (iii) and(iv) of Section 1.1(c). If the Swing Line Lender declines to make a Swing Line Loan or if SwingLine Availability is zero, Agent shall notify Lenders with Revolving LoanCommitments, promptly after receipt of a Notice of Revolving Credit Advance andin any event prior to 2:00 p.m. (New York time) on the 

 

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date such Notice ofRevolving Advance is received, by telecopy, telephone or other similar form oftransmission.  Each Lender with RevolvingLoan Commitments shall make the amount of such Lender’s Pro Rata Share of suchRevolving Credit Advance available to Agent in same day funds by wire transferto Agent’s account as set forth in Annex H not later than 3:00 p.m.(New York time) on the requested funding date, in the case of an Index RateLoan, and not later than 12:00 noon (New York time) on the requested fundingdate, in the case of a LIBOR Loan.  Afterreceipt of such wire transfers (or, in Agent’s sole discretion, before receiptof such wire transfers), subject to the terms hereof, Agent shall make therequested Revolving Credit Advance to the Borrower designated by BorrowerRepresentative in the Notice of Revolving Credit Advance.  All payments by each Lender shall be madewithout setoff, counterclaim or deduction of any kind.

 

(ii)           On the 2nd Business Day of each calendar week or morefrequently at Agent’s election (each, a “Settlement Date”), Agent shalladvise each Lender by telephone, or telecopy of the amount of such Lender’s ProRata Share of principal, interest and Fees paid for the benefit ofLenders.  Provided that each Lender hasfunded all payments or Advances required to be made by it and has purchased allparticipations required to be purchased by it under this Agreement and theother Loan Documents as of such Settlement Date, Agent shall pay to each Lendersuch Lender’s Pro Rata Share of principal, interest and Fees paid by Borrowerssince the previous Settlement Date for the benefit of such Lender on the Loansheld by it.  Agent shall be entitled toset off the funding short-fall against any Non-Funding Lender’s Pro Rata Shareof all payments received from Borrowers and hold, in a non-interest bearingaccount, all payments received by Agent for the benefit of any Non-FundingLender pursuant to this Agreement as cash collateral for any unfundedreimbursement obligations of such Non-Funding Lender until the Obligations arepaid in full in cash, all Letter of Credit Obligations have been discharged orcash collateralized and all Commitments have been terminated, and upon suchunfunded obligations owing by a Non-Funding Lender becoming due and payable,Agent shall be authorized to use such cash collateral to make such payment onbehalf of such Non-Funding Lender.  Anyamounts owing by a Non-Funding Lender to Agent which are not paid when dueshall accrue interest at the interest rate applicable during such period toRevolving Loans that are Index Rate Loans. Such payments shall be made by wire transfer to such Lender’s account(as specified by such Lender in Annex H or the applicable AssignmentAgreement) not later than 2:00 p.m. (New York time) on the next BusinessDay following each Settlement Date.

 

(b)           Availability of Lender’s Pro Rata Share. Agent may assume that each Lender will make its Pro Rata Share of eachLoan available to Agent on each funding date unless Agent has received priorwritten notice from such Lender that it does not intend to make its Pro RataShare of a Loan because all or any of the conditions set forth in Section 2.2have not been satisfied.  If such ProRata Share is not, in fact, paid to Agent by such Lender when due, Agent willbe entitled to recover such amount on demand from such Lender without setoff,counterclaim or deduction of any kind. If any Lender fails to pay the amount of its Pro Rata Share forthwithupon Agent’s demand, Agent shall promptly notify Borrower Representative andBorrowers shall immediately repay such amount to Agent.  Nothing in this Section 9.9(b) orelsewhere in this Agreement or the other Loan Documents shall be deemed torequire Agent to advance funds on behalf of any Lender or to relieve any Lenderfrom its obligation to fulfill its Commitments hereunder or to prejudice anyrights that Borrowers may have against any Lender 

 

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as a result of anydefault by such Lender hereunder.  UnlessAgent has received prior written notice from a Lender that it does not intendto make its Pro Rata Share of each Loan available to Agent because all or anyof the conditions set forth in Section 2.2 have not been satisfiedto the extent that Agent advances funds to any Borrower on behalf of suchLender and is not reimbursed therefor on the same Business Day as such Advanceis made, Agent shall, without limiting the provisions of Section 9.9(a)(ii),be entitled to retain for its account all interest accrued on such Advanceuntil reimbursed by such Lender.

 

(c)           Return of Payments.

 

(i)            If Agent pays an amount to a Lender under thisAgreement in the belief or expectation that a related payment has been or willbe received by Agent from Borrowers and such related payment is not received byAgent then Agent will be entitled to recover such amount from such Lender ondemand without setoff, counterclaim or deduction of any kind.

 

(ii)           If Agent determines at any time that any amountreceived by Agent under this Agreement must be returned to any Borrower or paidto any other Person pursuant to any insolvency law or otherwise, then,notwithstanding any other term or condition of this Agreement or any other LoanDocument, Agent will not be required to distribute any portion thereof to anyLender.  In addition, each Lender willrepay to Agent on demand any portion of such amount that Agent has distributedto such Lender, together with interest at such rate, if any, as Agent isrequired to pay to any Borrower or such other Person, without setoff,counterclaim or deduction of any kind.

 

(d)           Non-Funding Lenders.  The failureof any Non-Funding Lender to make any Advance, reimbursement of any Letter ofCredit Obligation or any payment required by it hereunder or to purchase anyparticipation in any Swing Line Loan to be made or purchased by it on the datespecified therefor shall not relieve any other Lender (each such other Lender,an “Other Lender”) of its obligations to make such Advance or purchasesuch participation on such date, but none of Agent or any Other Lender, otherthan as expressly set forth herein shall be responsible for the failure of anyNon-Funding Lender to make an Advance, purchase a participation or make anyother payment required hereunder. Notwithstanding anything set forth herein to the contrary, a Non-FundingLender shall not have any voting or consent rights under or with respect to anyLoan Document or constitute a “Lender” or “Lender” (or be, or have its Loansand Commitments, included in the determination of “Requisite Lenders”, “RequisiteRevolving Lenders” or “Lenders directly affected” in Section 11.2)for any voting or consent rights under or with respect to any LoanDocument.  Moreover, for the purposes ofdetermining Requisite Lenders and Requisite Revolving Lenders, the Loans andthe Commitments held by any Non-Funding Lender shall be excluded from the totalLoans and Commitments outstanding. At Borrower Representative’s request, Agentor a Person reasonably acceptable to Agent shall have the right with Agent’sconsent and in Agent’s sole discretion (but shall have no obligation) topurchase from any Non-Funding Lender that is a Lender, and each suchNon-Funding Lender agrees that it shall, at Agent’s request, sell and assign toAgent or such Person, all of the Commitments of that Non-Funding Lender for anamount equal to the principal balance of all Loans held by such Non-FundingLender and all accrued interest and fees with respect thereto 

 

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through the date of sale,such purchase and sale to be consummated pursuant to an executed AssignmentAgreement.

 

(e)           Dissemination of Information. Agent shall use reasonable efforts to provide the Lenders with anynotice of Default or Event of Default received by it from, or delivered by itto, any Credit Party, with notice of any Event of Default of which it hasactually become aware and with notice of any action taken by it following anyEvent of Default; provided, that Agent shall not be liable to any Lenderfor any failure to do so, except to the extent that such failure isattributable to Agent’s gross negligence or willful misconduct.  Lenders acknowledge that Borrowers arerequired to provide Financial Statements and Collateral Reports to Lenders inaccordance with Annexes E and F hereto and agree that Agent shall nothave any duty to provide the same to Lenders.

 

(f)            Actions in Concert.  Anything inthis Agreement to the contrary notwithstanding, each Lender hereby agrees with eachother Lender that no Lender shall take any action to protect or enforce itsrights arising out of this Agreement or the Notes (including exercising anyrights of setoff) without first obtaining the prior written consent of Agentand Requisite Lenders, it being the intent of Lenders that any such action toprotect or enforce rights under this Agreement and the Notes shall be taken inconcert and at the direction or with the consent of Agent or Requisite Lenders;provided, however, that (i) each Lender shall be entitled to file a proofof claim in any proceeding under any Insolvency Law to the extent such Lenderdisagrees with Agent’s composite proof of claim filed on behalf of all Lenders,(ii) each Lender shall be entitled to vote its claim with respect to anyplan of reorganization in any proceeding under any Insolvency Law and (iii) eachLender shall be entitled to pursue its deficiency claim after liquidation ofall or substantially all of the Collateral and application of the proceedstherefrom.

 

9.10         Collateral Matters.

 

(a)           Lenders hereby irrevocably authorize Agent, at itsoption and in its sole discretion, to release any Liens upon any Collateral (i) uponthe termination of the Commitments and payment and satisfaction in full byBorrowers of all Loans and reimbursement obligations in respect of Letters ofCredit, and the termination of all outstanding Letters of Credit (whether ornot any of such obligations are due) and all other Obligations; (ii) constitutingproperty being sold or disposed of if Borrowers certify to Agent that the saleor disposition is made in compliance with Section 6.8 (and Agentmay rely conclusively on any such certificate, without further inquiry); (iii) constitutingproperty in which Credit Parties owned no interest at the time the Lien wasgranted or at any time thereafter; or (iv) constituting property leased toCredit Parties under a lease which has expired or been terminated in atransaction permitted under this Agreement. Except as provided above, Agent will not release any of its Lienswithout the prior written authorization of the Lenders; provided that Agent may(so long as (x) no Default or Event of Default has occurred and iscontinuing, or would result therefrom and (y) Credit Parties have providedevidence to Agent (in form and substance satisfactory to Agent) that EBITDA ofHoldings and its Subsidiaries on a consolidated basis for the most recentlyended four fiscal quarters, exclusive of the amount of such EBITDA which isattributable to the assets of Credit Parties so released from the Collateral,would not be less than $85,000,000), in its discretion, release its Liens onCollateral valued in the aggregate for all such releases from and after the

 

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Closing Date not in excess of $2,500,000 during each Fiscal Yearwithout the prior written authorization of any Lenders and Agent may (so longas (x) no Default or Event of Default has occurred and is continuing, orwould result therefrom and (y) Credit Parties have provided evidence toAgent (in form and substance satisfactory to Agent) that EBITDA of Holdings andits Subsidiaries on a consolidated basis for the most recently ended fourfiscal quarters, exclusive of the amount of such EBITDA which is attributableto the assets of Credit Parties so released from the Collateral, would not beless than $85,000,000) release to release, its Liens on Collateral valued inthe aggregate for all such releases from and after the Closing Date greaterthan $2,500,000 but not in excess of 10% of the aggregate Commitments as of theClosing Date with the prior written authorization of Requisite Lenders.  Upon request by Agent or Borrowers at anytime, Lenders will confirm in writing Agent’s authority to release any Liens uponparticular types or items of Collateral pursuant to this Section 9.10.

 

(b)           Upon receipt by Agent of any authorization requiredpursuant to Section 9.10 from Lenders of Agent’s authority torelease any Liens upon particular types or items of Collateral, and uponat least five Business Days’ prior written request by Borrowers, Agent shall(and is hereby irrevocably authorized by Lenders to) execute such documents asmay be necessary to evidence the release of its Liens upon such Collateral; provided,however, that (i) Agent shall not be required to execute any suchdocument on terms which, in Agent’s opinion, would expose Agent to liability orcreate any obligation or entail any consequence other than the release of suchLiens without recourse or warranty, and (ii) such release shall not in anymanner discharge, affect or impair the Obligations or any Liens (other thanthose expressly being released) upon (or obligations of Credit Parties inrespect of) all interests retained by Credit Parties, including the proceeds ofany sale, all of which shall continue to constitute part of the Collateral.

 

9.11         Additional Agents.  None of theLenders or other entities identified on the facing page of this Agreementas an “arranger” or “syndication agent” shall have any right, power,obligation, liability, responsibility or duty under this Agreement or any otherLoan Document other than those applicable to all Lenders as such.  Without limiting the foregoing, none of theLenders so identified shall have or be deemed to have any fiduciaryrelationship with any other Lender.  EachLender acknowledges that it has not relied, and will not rely, on any of theLenders or other entities so identified in deciding to enter into this Agreementor any other Loan Document or in taking or not taking action hereunder orthereunder.

 

9.12         Distribution of Materials toLenders and L/C Issuers.

 

(a)           Each Borroweracknowledges and agrees that the Loan Documents and all reports, notices,communications and other information or materials provided or delivered by, oron behalf of, the Borrowers hereunder (collectively, the “Borrower Materials”)may be disseminated by, or on behalf of, Agent, and made available, to theLenders and the L/C Issuers by posting such Borrower Materials on Intralinks®or a similar E-System (the “Borrower Workspace”).  Each Borrower authorizes Agent to downloadcopies of its logos from its website and post copies thereof on the BorrowerWorkspace.

 

(b)           Each Borrowerhereby agrees that if either it or Holdings or any Subsidiary of Holdings haspublicly traded equity or debt securities in the United States of 

 

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America(U.S.), it shall (and shall cause any such Person, as the case may be, to) (i) identifyin writing, and (ii) to the extent reasonably practicable, clearly andconspicuously mark such Borrower Materials that do not contain any informationthat is (x) not publicly available with respect to the Borrowers (orHoldings or any Subsidiary of Holdings, as the case may be) and (y) ismaterial with respect to the Borrowers (or Holdings or any Subsidiary ofHoldings, as the case may be) or their securities for purposes of U.S. federaland state securities laws as “PUBLIC”. Each Borrower agrees that by identifying such Borrower Materialspursuant to clause (i) of the preceding sentence and/or marking theBorrower Materials as “PUBLIC” pursuant to clause (ii) of the precedingsentence and/or publicly filing such Borrower Materials with the Securities andExchange Commission, then Agent, the Lenders and the L/C Issuers shall beentitled to treat such Borrower Materials as not containing any materialnon-public information (“MNPI”) with respect to the Borrowers (orHoldings or any Subsidiary of Holdings, as the case may be) for purposes ofU.S. federal and state securities laws. Each Borrower further represent, warrant, acknowledges and agrees thatthe following documents and materials shall be deemed to be PUBLIC, whether ornot so marked, and do not contain any MNPI: (A) the Loan Documents,including the schedules and exhibits attached thereto, and (B) administrativematerials of a customary nature prepared by the Borrowers or Agent (including,notice of borrowings or conversions, L/C and swingline requests).  Before distribution of any Borrower Materialsto prospective Lenders and at the request of Agent, each Borrower agrees (andagrees to cause Holdings or any Subsidiary of Holdings, as the case may be) toexecute and deliver to Agent a letter in which you authorize distribution ofthe evaluation materials to prospective Lenders and their employees willing toreceive material non-public information, and a separate letter in which youauthorize distribution of evaluation material that does not contain materialnon-public information and represent that no material non-public information iscontained therein.

 

(c)           Each Lender and L/CIssuer represents, warrants, acknowledges and agrees that (i) the BorrowerMaterials may contain MNPI concerning the Borrowers, their Affiliates or theirsecurities, (ii) it has developed compliance policies and proceduresregarding the handling and use of MNPI, and (iii) it shall use any suchBorrower Materials in accordance with Section 11.8 and anyapplicable laws and regulations, including federal and state securities lawsand regulations.

 

(d)           If any Lender or L/C Issuer has electedto abstain from receiving MNPI concerning the Borrowers, their Affiliates ortheir securities, such Lender or L/C Issuer acknowledges that, notwithstandingsuch election, Agent and/or the Borrowers will, from time to time, makeavailable syndicate-information (which may contain MNPI) as required by theterms of, or in the course of administering, the credit facilities, includingthis Agreement and the other Loan Documents, to the credit contact(s) identifiedfor receipt of such information on the Lender’s administrative questionnairewho are able to receive and use all syndicate-level information (which maycontain MNPI) in accordance with such Lender’s compliance policies andcontractual obligations and applicable law, including federal and statesecurities laws; provided that if such contact is not so identified in suchquestionnaire, the relevant Lender or L/C Issuer hereby agrees to promptly (andin any even within one Business Day) provide such a contact to Agent and theBorrowers upon oral or written request therefor by Agent or Borrowers.  Notwithstanding such Lender’s or L/C Issuer’selection to abstain from receiving MNPI, such Lender or L/C Issuer acknowledgesthat if such Lender or L/C Issuer chooses to communicate 

 

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with Agent, it assumesthe risk of receiving MNPI concerning the Borrowers, their Affiliates or theirsecurities.

 

10.           SUCCESSORS AND ASSIGNS

 

10.1         Successors and Assigns.  ThisAgreement and the other Loan Documents shall be binding on and shall inure tothe benefit of each Credit Party, Agent, Lenders and their respectivesuccessors and assigns (including, in the case of any Credit Party, adebtor-in-possession on behalf of such Credit Party), except as otherwiseprovided herein or therein.  No CreditParty may assign, transfer, hypothecate or otherwise convey its rights,benefits, obligations or duties hereunder or under any of the other LoanDocuments without the prior express written consent of Agent and Lenders.  Any such purported assignment, transfer,hypothecation or other conveyance by any Credit Party without the prior expresswritten consent of Agent and Lenders shall be void.  The terms and provisions of this Agreementare for the purpose of defining the relative rights and obligations of eachCredit Party, Agent and Lenders with respect to the transactions contemplatedhereby and no Person shall be a third party beneficiary of any of the terms andprovisions of this Agreement or any of the other Loan Documents.

 

11.           MISCELLANEOUS

 

11.1         Complete Agreement; Modification of Agreement. The Loan Documents constitute the complete agreement between the partieswith respect to the subject matter thereof and may not be modified, altered oramended except as set forth in Section 11.2.  Any letter of interest, commitment letter orfee letter (other than the GE Capital Fee Letter) or confidentiality agreement,if any, between any Credit Party and Agent or any Lender or any of theirrespective Affiliates, predating this Agreement and relating to a financing ofsubstantially similar form, purpose or effect shall be superseded by thisAgreement.

 

11.2         Amendments and Waivers.

 

(a)           Except for actions expressly permitted to be taken byAgent, no amendment, modification, termination or waiver of any provision ofthis Agreement or any other Loan Document, or any consent to any departure byany Credit Party therefrom, shall in any event be effective unless the sameshall be in writing and signed by Borrowers and by Requisite Lenders, RequisiteRevolving Lenders or all affected Lenders, as applicable, and delivered toAgent.  Except as set forth in clause (c) below,all such amendments, modifications, terminations or waivers requiring theconsent of any Lenders shall require the written consent of Requisite Lenders.

 

(b)           Intentionally Omitted.

 

(c)           No amendment, modification, termination or waivershall, unless in writing and signed by each Lender and Borrowers affectedthereby and delivered to Agent: (i) increase the principal amount of anyLender’s Commitment; (ii) reduce the principal of, rate of interest on,composition of interest on (i.e. cash pay or payment-in-kind) or Fees payablewith respect to any Loan or Letter of Credit Obligations of any affectedLender; (iii) extend any scheduled payment date (other than payment datesof mandatory prepayments under Section 1.3(b)(ii)-(iv)) or finalmaturity date of the principal amount of any Loan of any Lender; (iv) 

 

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waive, forgive, defer,extend or postpone any payment of interest or Fees as to any Lender; (v) releaseany Credit Party or Guaranty or, except as otherwise permitted herein or in theother Loan Documents, release or subordinate the Lien of Agent in, anyCollateral with an aggregate value for all such releases and subordinationsfrom and after the Closing Date exceeding 10% of the aggregate Commitments asof the Closing Date; (vi) change the percentage of the Commitments or ofthe aggregate unpaid principal amount of the Loans that shall be required forLenders or any of them to take any action hereunder; (vii) amend or waive Section 9.10;or (viii) amend or waive this Section 11.2 or the definitionsof the terms “Commitment Termination Date”, “Obligations”, “Requisite Lenders”or “Requisite Revolving Lenders” insofar as such definitions affect thesubstance of this Section 11.2. Furthermore, no amendment, modification, termination or waiver affectingthe rights or duties of Agent or L/C Issuer, or of GE Capital in respect of anySwap Related Reimbursement Obligations, under this Agreement or any other LoanDocument, including any release of any Guaranty or Collateral requiring awriting signed by all Lenders, shall be effective unless in writing and signedby Agent or L/C Issuer or GE Capital, as the case may be, in addition toLenders required hereinabove to take such action.  No amendment, modification, termination orwaiver shall be required for Agent to take additional Collateral pursuant toany Loan Document.  No amendment,modification, termination or waiver of any provision of any Note shall beeffective without the written concurrence of the holder of that Note.  No notice to or demand on any Credit Party inany case shall entitle such Credit Party or any other Credit Party to any otheror further notice or demand in similar or other circumstances.  Any amendment, modification, termination,waiver or consent effected in accordance with this Section 11.2shall be binding upon each holder of the Obligations at the time outstandingand each future holder of the Obligations.

 

(d)           If, in connection with any proposed amendment,modification, waiver or termination requiring the consent of all affected Lenders,the consent of any Lender or Lenders whose consent is required is not obtained(any such Lender whose consent is not obtained being referred to as a “Non-ConsentingLender”) then, so long as Agent is not a Non-Consenting Lender, at BorrowerRepresentative’s request, Agent or another Person reasonably acceptable toAgent and Borrower Representative (and, with respect to any Person replacing aRevolving Lender, reasonably acceptable to each L/C Issuer) shall have theright with Agent’s consent and in Agent’s sole discretion (but shall have noobligation) to purchase from such Non-Consenting Lenders, and suchNon-Consenting Lenders agree that they shall, upon Agent’s request, sell andassign to Agent or another Person reasonably acceptable to Agent and BorrowerRepresentative (and, with respect to any Person replacing a Revolving Lender,reasonably acceptable to each L/C Issuer), all of the Commitments of suchNon-Consenting Lenders for an amount equal to the principal balance of allLoans held by the Non-Consenting Lenders and all accrued interest and Fees withrespect thereto through the date of sale, such purchase and sale to beconsummated pursuant to an executed Assignment Agreement.

 

(e)           Upon all Letter of Credit Obligations being cashcollateralized, canceled or backed by standby letters of credit in accordancewith Annex B, the payment in full in cash and performance of all of theother Obligations (other than indemnification Obligations), termination of theCommitments and a release of all claims against Agent and Lenders, and so longas no suits, actions, proceedings or claims are pending or threatened againstany Indemnified Person asserting any damages, losses or liabilities that areIndemnified Liabilities, Agent shall deliver to Borrowers terminationstatements, mortgage releases and other documents 

 

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necessary or appropriateto evidence the termination of the Liens securing payment of the Obligations.

 

11.3         Fees and Expenses.  Borrowersshall reimburse (i) Agent for all fees, costs and expenses (including thereasonable fees and expenses of all of its counsel, advisors, consultants andauditors) and (ii) Agent (and, with respect to clauses (c), (d) and(e) below, all Lenders) for all fees, costs and expenses, including thereasonable fees, costs and expenses of counsel or other advisors (includingenvironmental and management consultants and appraisers), incurred inconnection with the negotiation and preparation of the Loan Documents and incurredin connection with:

 

(a)           the forwarding to Borrowers or any other Person onbehalf of Borrowers by Agent of the proceeds of any Loan (including a wiretransfer fee of $25 per wire transfer);

 

(b)           any amendment, modification or waiver of, consent withrespect to, or termination of, any of the Loan Documents or RelatedTransactions Documents or advice in connection with the syndication andadministration of the Loans made pursuant hereto or its rights hereunder orthereunder;

 

(c)           any litigation, contest, dispute, suit, proceeding oraction (whether instituted by Agent, any Lender, any Borrower or any otherPerson and whether as a party, witness or otherwise) in any way relating to theCollateral, any of the Loan Documents or any other agreement to be executed ordelivered in connection herewith or therewith, including any litigation,contest, dispute, suit, case, proceeding or action, and any appeal or reviewthereof, in connection with a case commenced by or against any or all of theBorrowers or any other Person that may be obligated to Agent by virtue of theLoan Documents; including any such litigation, contest, dispute, suit,proceeding or action arising in connection with any work-out or restructuringof the Loans during the pendency of one or more Events of Default; providedthat in the case of reimbursement of counsel for Lenders other than Agent, suchreimbursement shall be limited to one counsel for Lenders; provided,further, that no Person shall be entitled to reimbursement under clauses (c), (d) and(e) in respect of any litigation, contest, dispute, suit, proceeding oraction to the extent any of the foregoing results from such Person’s grossnegligence or willful misconduct;

 

(d)           any attempt to enforce any remedies of Agent againstany or all of the Credit Parties or any other Person that may be obligated toAgent or any Lender by virtue of any of the Loan Documents, including any suchattempt to enforce any such remedies in the course of any work-out orrestructuring of the Loans during the pendency of one or more Events ofDefault; provided, that in the case of reimbursement of counsel forLenders other than Agent, such reimbursement shall be limited to one counselfor Lenders;

 

(e)           any waiver, amendment, forbearance, workout orrestructuring of the Loans during the pendency of one or more Defaults orEvents of Default; provided, that in the case of reimbursement ofcounsel for Lenders other than Agent, such reimbursement shall be limited toone counsel for Lenders; and

 

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(f)            efforts to (i) monitor the Loans or any of theother Obligations, (ii) evaluate, observe or assess any of the CreditParties or their respective affairs, and (iii) verify, protect, evaluate,assess, appraise, collect, sell, liquidate or otherwise dispose of any of theCollateral;

 

including, as to each of clauses (a) through (f) above, allreasonable attorneys’ and other professional and service providers’ feesarising from such services and other advice, assistance or otherrepresentation, including those in connection with any appellate proceedings,and all expenses, costs, charges and other fees incurred by such counsel andothers in connection with or relating to any of the events or actions describedin this Section 11.3, all of which shall be payable, on demand, byBorrowers to Agent.  Without limiting thegenerality of the foregoing, such expenses, costs, charges and fees mayinclude: fees, costs and expenses of accountants, environmental advisors,appraisers, investment bankers, management, financial, turnaround and otherconsultants and paralegals; court costs and expenses; photocopying andduplication expenses; court reporter fees, costs and expenses; long distancetelephone charges; air express charges; telegram or telecopy charges;secretarial overtime charges; and expenses for travel, lodging and food paid orincurred in connection with the performance of such legal or other advisoryservices.

 

If at any time Lendersare entitled to receive reimbursement from Borrowers of fees and expenses ofcounsel for Lenders and Lenders are not able to mutually agree on what counselto engage to represent Lenders, Requisite Lenders shall be entitled to selectcounsel to represent Lenders.

 

11.4         No Waiver.  Agent’s orany Lender’s failure, at any time or times, to require strict performance bythe Credit Parties of any provision of this Agreement or any other LoanDocument shall not waive, affect or diminish any right of Agent or such Lenderthereafter to demand strict compliance and performance herewith ortherewith.  Any suspension or waiver ofan Event of Default shall not suspend, waive or affect any other Event ofDefault whether the same is prior or subsequent thereto and whether the same orof a different type.  Subject to theprovisions of Section 11.2, none of the undertakings, agreements,warranties, covenants and representations of any Credit Party contained in thisAgreement or any of the other Loan Documents and no Default or Event of Defaultby any Credit Party shall be deemed to have been suspended or waived by Agentor any Lender, unless such waiver or suspension is by an instrument in writingsigned by an officer of or other authorized employee of Agent and theapplicable required Lenders, and directed to Borrowers specifying suchsuspension or waiver.

 

11.5         Remedies.  Agent’s andLenders’ rights and remedies under this Agreement shall be cumulative andnonexclusive of any other rights and remedies that Agent or any Lender may haveunder any other agreement, including the other Loan Documents, by operation oflaw or otherwise.  Recourse to theCollateral shall not be required.

 

11.6         Severability.  Whereverpossible, each provision of this Agreement and the other Loan Documents shallbe interpreted in such a manner as to be effective and valid under applicablelaw, but if any provision of this Agreement or any other Loan Document shall beprohibited by or invalid under applicable law, such provision shall beineffective only to the 

 

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extent of suchprohibition or invalidity without invalidating the remainder of such provisionor the remaining provisions of this Agreement or such other Loan Document.

 

11.7         Conflict of Terms.  Except asotherwise provided in this Agreement or any of the other Loan Documents byspecific reference to the applicable provisions of this Agreement, if anyprovision contained in this Agreement conflicts with any provision in any ofthe other Loan Documents, the provision contained in this Agreement shallgovern and control.

 

11.8         Confidentiality.  Agent andeach Lender agree to maintain as confidential (using the same degree of careused in maintaining the confidentiality of its own confidential information)all confidential information provided to them by the Credit Parties anddesignated as confidential for a period of 2 years following the termination ofthis Agreement, except that Agent and any Lender may disclose such information (a) toPersons employed or engaged by Agent or such Lender; (b) to any bona fideassignee or participant or potential assignee or participant that has agreed tocomply with the covenant contained in this Section 11.8 (and anysuch bona fide assignee or participant or potential assignee or participant maydisclose such information to Persons employed or engaged by them as describedin clause (a) above); (c) as required or requested by anyGovernmental Authority or reasonably believed by Agent or such Lender to becompelled by any court decree, subpoena or legal or administrative order orprocess; (d) as, on the advice of Agent’s or such Lender’s counsel, isrequired by law; (e) in connection with the exercise of any right orremedy under the Loan Documents or in connection with any Litigation to whichAgent or such Lender is a party; or (f) that ceases to be confidentialthrough no fault of Agent or such Lender.

 

Notwithstanding anything to the contrary set forthherein or in any other written or oral understanding or agreement to which theparties hereto are parties or by which they are bound, the parties acknowledgeand agree that (i) any obligations of confidentiality contained herein andtherein do not apply and have not applied to the federal tax treatment andfederal tax structure of the Loans (the “Transactions”) (and any relatedtransactions or arrangements) from the commencement of discussions between theparties, and (ii) each party (and each of its employees, representatives,or other agents) may disclose to any and all persons, without limitation of anykind, the federal tax treatment and federal tax structure of the Transactionand all materials of any kind (including opinions or other tax analyses) thatare provided to such party relating to such tax treatment and taxstructure.  The preceding sentence isintended to cause the Transaction to be treated as not having been offeredunder conditions of confidentiality for purposes of Section 1.6011-4(b)(3) (orany successor provision) of the Treasury Regulations promulgated under Section 6011of the Internal Revenue Code of 1986, as amended, and shall be construed in amanner consistent with such purpose. Subject to the proviso with respect to disclosure in the first sentenceof this paragraph, each party hereto acknowledges that it has no proprietary orexclusive rights to the federal tax structure of the transaction contemplatedby this Agreement or any federal tax matter or federal tax idea related to theTransaction.

 

11.9         GOVERNING LAW.  EXCEPT ASOTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS,INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THE LOANDOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCEDIN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK 

 

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APPLICABLE TO CONTRACTSMADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS OF THE UNITED STATESOF AMERICA.  EACH CREDIT PARTY HEREBYCONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY,CITY OF NEW YORK, NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR ANDDETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, AGENT AND LENDERSPERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANYMATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOANDOCUMENTS; PROVIDED, THAT AGENT, LENDERS AND THE CREDIT PARTIESACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY ACOURT LOCATED OUTSIDE OF NEW YORK COUNTY; PROVIDEDFURTHER,  THAT NOTHING IN THIS AGREEMENT SHALL BEDEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGALACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHERSECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER INFAVOR OF AGENT, AND CREDIT PARTIES MAY MAKE ANY COUNTERCLAIMS RELATING TOTHE SAME MATTER, REQUESTS FOR EQUITABLE RELIEF RELATING TO THE SAME MATTER ORAFFIRMATIVE DEFENSES IN CONNECTION THEREWITH. EACH CREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCHJURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH CREDITPARTY HEREBY WAIVES ANY OBJECTION THAT SUCH CREDIT PARTY MAY HAVE BASEDUPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUMNONCONVENIENSAND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS ISDEEMED APPROPRIATE BY SUCH COURT.  EACHCREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHERPROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCHSUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED ORCERTIFIED MAIL ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET FORTH IN ANNEXI OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPONTHE EARLIER OF SUCH CREDIT PARTY’S ACTUAL RECEIPT THEREOF OR 3 DAYS AFTERDEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID.

 

11.10       Notices.  Except asotherwise provided herein, whenever it is provided herein that any notice,demand, request, consent, approval, declaration or other communication shall ormay be given to or served upon any of the parties by any other parties, orwhenever any of the parties desires to give or serve upon any other parties anycommunication with respect to this Agreement, each such notice, demand,request, consent, approval, declaration or other communication shall be inwriting and shall be deemed to have been validly served, given or delivered: (a) uponthe earlier of actual receipt and 3 Business Days after deposit in the UnitedStates Mail (if such communication is initiated in the United States)registered or certified mail, return receipt requested, with proper postageprepaid; (b) upon transmission, when sent by telecopy or other similarfacsimile transmission (with such telecopy or facsimile promptly confirmed bydelivery of a copy by personal delivery or United States Mail or as otherwiseprovided in this Section 11.10); (c) 1 Business Day afterdeposit with a reputable overnight courier with all charges prepaid or (d) whendelivered, if hand-delivered by messenger, all of 

 

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which shall be addressedto the party to be notified and sent to the address or facsimile numberindicated in Annex I or to such other address (or facsimile number) asmay be substituted by notice given as herein provided.  The giving of any notice required hereundermay be waived in writing by the party entitled to receive such notice.  Failure or delay in delivering copies of anynotice, demand, request, consent, approval, declaration or other communicationto any Person (other than Borrower Representative or Agent) designated in AnnexI to receive copies shall in no way adversely affect the effectiveness ofsuch notice, demand, request, consent, approval, declaration or other communication.

 

11.11       Section Titles.  The Section titlesand Table of Contents contained in this Agreement are and shall be withoutsubstantive meaning or content of any kind whatsoever and are not a part of theagreement between the parties hereto.

 

11.12       Counterparts.  ThisAgreement may be executed in any number of separate counterparts, each of whichshall collectively and separately constitute one agreement.

 

11.13       WAIVER OF JURY TRIAL.  THE PARTIESHERETO KNOWINGLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, ORPROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORTOR OTHERWISE, AMONG AGENT, LENDERS AND ANY CREDIT PARTY ARISING OUT OF,CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONGTHEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS ORTHE TRANSACTIONS RELATED THERETO.

 

11.14       Press Releases and Related Matters. Each Credit Party executing this Agreement agrees that neither it norits Affiliates will in the future issue any press releases or other publicdisclosure using the name of GE Capital or its affiliates or referring to thisAgreement, the other Loan Documents or the Related Transactions Documentswithout at least 2 Business Days’ prior notice to GE Capital and without theprior written consent of GE Capital unless (and only to the extent that) suchCredit Party or Affiliate is required to do so under law and then, in anyevent, such Credit Party or Affiliate will consult with GE Capital beforeissuing such press release or other public disclosure.  Each Credit Party consents to the publicationby Agent or any Lender of a tombstone or similar advertising material relatingto the financing transactions contemplated by this Agreement.  Agent reserves the right to provide toindustry trade organizations information necessary and customary for inclusionin league table measurements.

 

11.15       Reinstatement.  ThisAgreement shall remain in full force and effect and continue to be effectiveshould any petition be filed by or against any Borrower for liquidation orreorganization, should any Borrower become insolvent or make an assignment forthe benefit of any creditor or creditors or should a receiver, interimreceiver, receiver and manager or trustee be appointed for all or any significantpart of any Borrower’s assets, and shall continue to be effective or to bereinstated, as the case may be, if at any time payment and performance of theObligations, or any part thereof, is, pursuant to applicable law, rescinded orreduced in amount, or must otherwise be restored or returned by any obligee ofthe Obligations, whether as a “voidable preference,” “fraudulent conveyance,”or otherwise, all as though such payment or performance had not been made.  In the event that any payment, or any partthereof, is rescinded, 

 

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reduced, restored orreturned, the Obligations shall be reinstated and deemed reduced only by suchamount paid and not so rescinded, reduced, restored or returned.

 

11.16       Advice of Counsel.  Each of theparties represents to each other party hereto that it has discussed thisAgreement and, specifically, the provisions of Sections 11.9 and 11.13,with its counsel.

 

11.17       No Strict Construction.  The partieshereto have participated jointly in the negotiation and drafting of thisAgreement.  In the event an ambiguity orquestion of intent or interpretation arises, this Agreement shall be construedas if drafted jointly by the parties hereto and no presumption or burden ofproof shall arise favoring or disfavoring any party by virtue of the authorshipof any provisions of this Agreement.

 

11.18       Currency Equivalent Generally. For the purposes of making valuations or computations under thisAgreement (but not for the purposes of the preparation of any financialstatements delivered pursuant hereto), and in particular, without limitation,for purposes of valuations or computations under Sections 1.3(b), 3,5, 6 and 8, unless expressly provided otherwise, where areference is made to a dollar amount the amount is to be considered as theamount in Dollars and, therefor, each other currency shall be converted intothe Equivalent Amount thereof in Dollars.

 

11.19       Judgment Currency.

 

(a)           If, for the purpose of obtaining or enforcing judgmentagainst any Credit Party in any court in any jurisdiction, it becomes necessaryto convert into any other currency (such other currency being hereinafter inthis Section 11.19 referred to as the “Judgment Currency”)an amount due under any Loan Document in any currency (the “ObligationCurrency”) other than the Judgment Currency, the conversion shall be madeat the rate of exchange prevailing on the Business Day immediately preceding (i) thedate of actual payment of the amount due, in the case of any proceeding in thecourts of any jurisdiction that will give effect to such conversion being madeon such date, or (ii) the date on which the judgment is given, in the caseof any proceeding in the courts of any other jurisdiction (the applicable dateas of which such conversion is made pursuant to this Section 11.19being hereinafter in this Section 11.19 referred to as the “JudgmentConversion Date”).

 

(b)           If, in the case of any proceeding in the court of anyjurisdiction referred to in Section 11.19(a), there is a change inthe rate of exchange prevailing between the Judgment Conversion Date and thedate of actual receipt for value of the amount due, the applicable Credit Partyshall pay such additional amount (if any, but in any event not a lesser amount)as may be necessary to ensure that the amount actually received in the JudgmentCurrency, when converted at the rate of exchange prevailing on the date ofpayment, will produce the amount of the Obligation Currency which could havebeen purchased with the amount of the Judgment Currency stipulated in thejudgment or judicial order at the rate of exchange prevailing on the JudgmentConversion Date.  Any amount due from aCredit Party under Section 11.19(b) shall be due as a separatedebt and shall not be affected by judgment being obtained for any other amountsdue under or in respect of any of the Loan Documents.

 

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(c)           The term “rate of exchange” in this Section 11.19means the rate of exchange at which Agent would, on the relevant date at orabout 1:00 p.m.(New York time), be prepared to sell the ObligationCurrency against the Judgment Currency.

 

11.20       Intentionally Omitted.

 

11.21       Amendment and Restatement. Each Credit Party acknowledges and agrees that the security interestgranted to Agent, for the benefit of Prior Lender Group, or any of them,pursuant to the Loan Documents (as defined in the Prior Credit Agreement),shall remain outstanding and in full force and effect in accordance with thePrior Credit Agreement and the other Loan Documents (as defined in the PriorCredit Agreement), as modified herein and in the other Loan Documents, andshall continue to secure the Obligations. Credit Parties and Lenders acknowledge and confirm that (i) theObligations represent, among other things, the amendment, restatement, renewal,extension, consolidation and modification of the Obligations (as defined in thePrior Credit Agreement) arising in connection with the Prior Credit Agreementand other Loan Documents (as defined in the Prior Credit Agreement); (ii) thePrior Credit Agreement and the other Loan Documents (as defined in the PriorCredit Agreement) and the collateral pledged thereunder shall secure, withoutinterruption or impairment of any kind, all existing Obligations (as defined inthe Prior Credit Agreement) under the Prior Credit Agreement and the other LoanDocuments (as defined in the Prior Credit Agreement) as amended, restated,renewed, extended, consolidated or modified hereunder and under the other LoanDocuments, together with all other Obligations hereunder; (iii) all Liensevidenced by the Loan Documents (as defined in the Prior Credit Agreement) arehereby ratified, confirmed and continued as modified, amended or restated underthe Loan Documents; and (iv) this Agreement is intended to restate, renew,extend, consolidate, amend and modify the Prior Credit Agreement in itsentirety.  Borrowers and Lenders intendthat (i) the provisions of the Prior Credit Agreement and the other LoanDocuments (as defined in the Prior Credit Agreement), to the extent restated,renewed, extended, consolidated, amended or modified hereby and by the otherLoan Documents, be hereby superseded and replaced by the provisions hereof andof the other Loan Documents; and (ii) by entering into and performingtheir respective obligations hereunder, this transaction shall not constitute anovation and shall in no way adversely affect or impair the priority of Liensgranted by the Loan Documents (as defined in the Prior Credit Agreement).

 

12.           CROSS-GUARANTY

 

12.1         Cross-Guaranty.

 

(a)           Each Borrower hereby agrees that such Borrower isjointly and severally liable for, and hereby absolutely and unconditionallyguarantees to Agent and Lenders and their respective successors and assigns,the full and prompt payment (whether at stated maturity, by acceleration orotherwise) and performance of, all Obligations owed or hereafter owing to Agentand Lenders by each other Borrower.  EachBorrower agrees that its guaranty obligation hereunder is a continuing guarantyof payment and performance and not of collection, that its obligations underthis Section 12 shall not be discharged until payment andperformance, in full, of the Obligations has occurred, and that its obligationsunder this Section 12 shall be absolute and unconditional,irrespective of, and unaffected by,

 

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(i)            the genuineness, validity, regularity, enforceabilityor any future amendment of, or change in, this Agreement, any other LoanDocument or any other agreement, document or instrument to which any Borroweris or may become a party;

 

(ii)           the absence of any action to enforce this Agreement(including this Section 12) or any other Loan Document or thewaiver or consent by Agent and Lenders with respect to any of the provisionsthereof;

 

(iii)          the existence, value or condition of, or failure toperfect its Lien against, any security for the Obligations or any action, orthe absence of any action, by Agent and Lenders in respect thereof (includingthe release of any such security);

 

(iv)          the insolvency of any Credit Party; or

 

(v)           any other action or circumstances that might otherwiseconstitute a legal or equitable discharge or defense of a surety or guarantor.

 

Each Borrower shall be regarded, and shall be in the same position, asprincipal debtor with respect to the Obligations guaranteed hereunder.

 

(b)           Each Borrower expressly represents and acknowledgesthat it is part of a common enterprise with the other Borrowers and that anyfinancial accommodations by Lenders, or any of them, to any other Borrowerhereunder and under the other Loan Documents are and will be of direct andindirect interest, benefit and advantage to all Borrowers.

 

12.2         Waivers by Borrowers.  Each Borrowerexpressly waives all rights it may have now or in the future under any statute,or at common law, or at law or in equity, or otherwise, to compel Agent orLenders to marshal assets or to proceed in respect of the Obligationsguaranteed hereunder against any other Credit Party, any other party or againstany security for the payment and performance of the Obligations beforeproceeding against, or as a condition to proceeding against, suchBorrower.  It is agreed among eachBorrower, Agent and Lenders that the foregoing waivers are of the essence ofthe transaction contemplated by this Agreement and the other Loan Documents andthat, but for the provisions of this Section 12 and such waivers,Agent and Lenders would decline to enter into this Agreement.

 

12.3         Benefit of Guaranty.  Each Borroweragrees that the provisions of this Section 12 are for the benefitof Agent and Lenders and their respective successors, transferees, endorseesand assigns, and nothing herein contained shall impair, as between any otherBorrower and Agent or Lenders, the obligations of such other Borrower under theLoan Documents.

 

12.4         Subordination of Subrogation, Etc. Notwithstanding anything to the contrary in this Agreement or in anyother Loan Document, and except as set forth in Section 12.7, eachBorrower hereby expressly and irrevocably subordinates to payment of theObligations any and all rights at law or in equity to subrogation,reimbursement, exoneration, contribution, indemnification or set off and anyand all defenses available to a surety, guarantor or accommodation co-obligoruntil the Obligations are indefeasibly paid in full in cash.  Each Borrower acknowledges and agrees thatthis subordination is intended to benefit Agent and Lenders and shall not limitor otherwise affect such Borrower’s liability hereunder or the 

 

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enforceability of this Section 12,and that Agent, Lenders and their respective successors and assigns areintended third party beneficiaries of the waivers and agreements set forth inthis Section 12.4.

 

12.5         Election of Remedies.  If Agent orany Lender may, under applicable law, proceed to realize its benefits under anyof the Loan Documents giving Agent or such Lender a Lien upon any Collateral,whether owned by any Borrower or by any other Person, either by judicialforeclosure or by non-judicial sale or enforcement, Agent or any Lender may, atits sole option, determine which of its remedies or rights it may pursuewithout affecting any of its rights and remedies under this Section 12.  If, in the exercise of any of its rights andremedies, Agent or any Lender shall forfeit any of its rights or remedies,including its right to enter a deficiency judgment against any Borrower or anyother Person, whether because of any applicable laws pertaining to “election ofremedies” or the like, each Borrower hereby consents to such action by Agent orsuch Lender and waives any claim based upon such action, even if such action byAgent or such Lender shall result in a full or partial loss of any rights ofsubrogation that each Borrower might otherwise have had but for such action byAgent or such Lender.  Any election ofremedies that results in the denial or impairment of the right of Agent or anyLender to seek a deficiency judgment against any Borrower shall not impair anyother Borrower’s obligation to pay the full amount of the Obligations.  In the event Agent or any Lender shall bid atany foreclosure or trustee’s sale or at any private sale permitted by law orthe Loan Documents, Agent or such Lender may bid all or less than the amount ofthe Obligations and the amount of such bid need not be paid by Agent or suchLender but shall be credited against the Obligations.  The amount of the successful bid at any suchsale, whether Agent, Lender or any other party is the successful bidder, shallbe conclusively deemed to be the fair market value of the Collateral and thedifference between such bid amount and the remaining balance of the Obligationsshall be conclusively deemed to be the amount of the Obligations guaranteedunder this Section 12, notwithstanding that any present or futurelaw or court decision or ruling may have the effect of reducing the amount ofany deficiency claim to which Agent or any Lender might otherwise be entitledbut for such bidding at any such sale.

 

12.6         Limitation. Notwithstanding any provision herein contained to the contrary, each Borrower’sliability under this Section 12 shall be limited to an amount notto exceed as of any date of determination the greater of:

 

(a)           the amount of all Loans advanced to such Borrower

 

(b)           the net amount of all Loans advanced to anotherBorrower under this Agreement and then re-loaned or otherwise transferred to,or for the benefit of, such Borrower; and

 

(c)           the amount that could be claimed by Agent and Lendersfrom such Borrower under this Section 12 without rendering suchclaim voidable or avoidable under Section 548 of Chapter 11 of theBankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act,Uniform Fraudulent Conveyance Act or similar foreign or domestic statute orcommon law after taking into account, among other things, such Borrower’s rightof contribution and indemnification from each other Borrower under Section 12.7.

 

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12.7         Contribution with Respect to Guaranty Obligations.

 

(a)           To the extent that any Borrower shall make a paymentunder this Section 12 of all or any of the Obligations (other thanLoans made to that Borrower for which it is primarily liable) (a “GuarantorPayment”) that, taking into account all other Guarantor Payments thenpreviously or concurrently made by any other Borrower, exceeds the amount thatsuch Borrower would otherwise have paid if each Borrower had paid the aggregateObligations satisfied by such Guarantor Payment in the same proportion thatsuch Borrower’s “Allocable Amount” (as defined below) (as determinedimmediately prior to such Guarantor Payment) bore to the aggregate AllocableAmounts of each of the Borrowers as determined immediately prior to the makingof such Guarantor Payment, then, following indefeasible payment in full in cashof the Obligations and termination of the Commitments, such Borrower shall beentitled to receive contribution and indemnification payments from, and bereimbursed by, each other Borrower for the amount of such excess, pro ratabased upon their respective Allocable Amounts in effect immediately prior tosuch Guarantor Payment.

 

(b)           As of any date of determination, the “AllocableAmount” of any Borrower shall be equal to the maximum amount of the claimthat could then be recovered from such Borrower under this Section 12without rendering such claim voidable or avoidable under Section 548 ofChapter 11 of the Bankruptcy Code or under any applicable state UniformFraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statuteor common law.

 

(c)           This Section 12.7 is intended only todefine the relative rights of Borrowers and nothing set forth in this Section 12.7is intended to or shall impair the obligations of Borrowers, jointly andseverally, to pay any amounts as and when the same shall become due and payablein accordance with the terms of this Agreement, including Section 12.1.  Nothing contained in this Section 12.7shall limit the liability of any Borrower to pay the Loans made directly orindirectly to that Borrower and accrued interest, Fees and expenses withrespect thereto for which such Borrower shall be primarily liable.

 

(d)           The parties hereto acknowledge that the rights ofcontribution and indemnification hereunder shall constitute assets of theBorrower to which such contribution and indemnification is owing.

 

(e)           The rights of the indemnifying Borrowers against otherCredit Parties under this Section 12.7 shall be exercisable uponthe full and indefeasible payment of the Obligations and the termination of theCommitments.

 

12.8         Liability Cumulative.  The liabilityof Borrowers under this Section 12 is in addition to and shall becumulative with all liabilities of each Borrower to Agent and Lenders underthis Agreement and the other Loan Documents to which such Borrower is a partyor in respect of any Obligations or obligation of the other Borrower, withoutany limitation as to amount, unless the instrument or agreement evidencing orcreating such other liability specifically provides to the contrary.

 

12.9         USA Patriot Act Notice.  Each ofLenders and Agent hereby notifies Borrowers that, pursuant to the requirementsof the USA Patriot Act (Title III of Pub. L. 107-56 (signed into 

 

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law October 26,2001)), it is required to obtain, verify and record information that identifiesBorrowers, which information includes the name and address of each Borrower andother information that will allow such Lender or Agent, as applicable, toidentify such Borrower in accordance with the USA Patriot Act.

 

[SIGNATURE PAGES FOLLOW]

 

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*Execution Copy*

 

INWITNESS WHEREOF, this Agreement has been duly executed as of the date firstwritten above.

 
|   | **BORROWERS**                                                           |
|--------|-------------------------------------------------------------------------|
|   |                                                                    |
|   | **BLOUNT,  INC**., a  Delaware corporation                              |
|   |                                                                    |   |
|   | By:                                                                     | /s/ Calvin E. Jenness |
|   | Name: Calvin E. Jenness                                                 |
|   | Title: Senior Vice  President & Chief Financial Officer        |
|   |                                                                    |
|   |                                                                    |
|   | **GEAR  PRODUCTS, INC.,**an  Oklahoma corporation                       |
|   |                                                                    |   |
|   | By:                                                                     | /s/ Calvin E.  Jenness |
|   | Name: Calvin E.  Jenness                                                |
|   | Title: Vice  President & Chief Financial Officer               |
|   |                                                                    |
|   |                                                                    |
|   | **OMARK  PROPERTIES, INC.,**an  Oregon corporation                      |
|   |                                                                    |   |
|   | By:                                                                     | /s/ Calvin E. Jenness |
|   | Name: Calvin E. Jenness                                                 |
|   | Title: Senior Vice  President & Chief Financial Officer        |
|   |                                                                    |
|   |                                                                    |
|   | **WINDSOR  FORESTRY TOOLS LLC**,  a Tennessee limited liability company |
|   |                                                                    |
|   | By: Blount, Inc.,  its sole member                                 |
|   |                                                                    |   |
|   | By:                                                                     | /s/ Calvin E. Jenness |
|   | Name: Calvin E. Jenness                                                 |
|   | Title: Senior Vice  President & Chief Financial Officer        |

 

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|   | **AGENT  AND LENDERS:**                                       |
|--------|---------------------------------------------------------------|
|   |                                                          |
|   | **GENERAL ELECTRIC CAPITAL CORPORATION,**as Agent and  Lender |
|   |                                                          |   |
|   | By:                                                           | /s/ Judith A. Langan |
|   | Name: Judith A. Langan                                        |
|   | Title: Duly Authorized  Signatory                             |

 

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Thefollowing Persons are signatories to this Agreement in their capacity as CreditParties and not as Borrowers.

 
|   | **CREDIT  PARTIES:**                                             |
|--------|------------------------------------------------------------------|
|   |                                                             |
|   | **BLOUNT  INTERNATIONAL, INC.**, a Delaware corporation          |
|   |                                                             |   |
|   | By:                                                              | /s/ Calvin E. Jenness |
|   | Name: Calvin E. Jenness                                          |
|   | Title: Senior Vice  President & Chief Financial Officer |
|   |                                                             |
|   |                                                             |
|   | **BI,  L.L.C.,**a  Delaware limited liability company            |
|   |                                                             |
|   | By: Blount, Inc.,  its managing member                      |
|   |                                                             |   |
|   | By:                                                              | /s/ Calvin E. Jenness |
|   | Name: Calvin E. Jenness                                          |
|   | Title: Senior Vice  President & Chief Financial Officer |
|   |                                                             |
|   |                                                             |
|   | **4520  CORP., INC.**, a  Delaware corporation                   |
|   |                                                             |   |
|   | By:                                                              | /s/  Calvin E. Jenness |
|   | Name: Calvin E. Jenness                                          |
|   | Title: Senior Vice  President & Chief Financial Officer |

 

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**ANNEX A (RECITALS)**

**TO**

**CREDIT AGREEMENT**

** **

**DEFINITIONS**

 

Capitalizedterms used in the Loan Documents shall have (unless otherwise providedelsewhere in the Loan Documents) the following respective meanings, and allreferences to Sections, Exhibits, Schedules or Annexes in the followingdefinitions shall refer to Sections, Exhibits, Schedules or Annexes of or tothe Agreement:

 

“AccountDebtor” means any Person who may become obligated to any Credit Partyunder, with respect to, or on account of, an Account, Chattel Paper or GeneralIntangibles (including a payment intangible).

 

“AccountingChanges” has the meaning ascribed thereto in Annex G.

 

“Accounts”means all “accounts,” as such term is defined in the Code, now owned orhereafter acquired by any Credit Party, including (a) all accountsreceivable, other receivables, book debts and other forms of obligations (otherthan forms of obligations evidenced by Chattel Paper, or Instruments),(including any such obligations that may be characterized as an account orcontract right under the Code), (b) all of each Credit Party’s rights in,to and under all purchase orders or receipts for goods or services, (c) allof each Credit Party’s rights to any goods represented by any of the foregoing(including unpaid sellers’ rights of rescission, replevin, reclamation and stoppage intransit and rights to returned, reclaimed or repossessed goods), (d) allrights to payment due to any Credit Party for property sold, leased, licensed,assigned or otherwise disposed of, for a policy of insurance issued or to beissued, for a secondary obligation incurred or to be incurred, for energyprovided or to be provided, for the use or hire of a vessel under a charter orother contract, arising out of the use of a credit card or charge card, or forservices rendered or to be rendered by such Credit Party or in connection withany other transaction (whether or not yet earned by performance on the part ofsuch Credit Party), (e) all health care insurance receivables and (f) allcollateral security of any kind, now or hereafter in existence, given by anyAccount Debtor or any other Person with respect to any of the foregoing.

 

“AcquisitionPro Forma” has the meaning ascribed thereto in Section 6.

 

“ActivationEvent” and “Activation Notice” have the meanings ascribed thereto inAnnex C.

 

“Advance”means the amount of the Loans advanced under Section 1.1 of theAgreement on the occasion of any borrowing thereunder.

 

“AffectedLender” has the meaning ascribed thereto in Section 1.16(d).

 

“Affiliate”means, with respect to any Person, (a) each Person that, directly orindirectly, owns or controls, whether beneficially, or as a trustee, guardianor other fiduciary, 10% or more of the Stock having ordinary voting power inthe election of directors of such 

 

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Person, (b) each Person that controls, iscontrolled by or is under common control with such Person, (c) each ofsuch Person’s officers, directors, joint venturers and partners and (d) inthe case of Borrowers, the immediate family members, spouses and linealdescendants of individuals who are Affiliates of any Borrower.  For the purposes of this definition, “control”of a Person shall mean the possession, directly or indirectly, of the power todirect or cause the direction of its management or policies, whether throughthe ownership of voting securities, by contract or otherwise; provided, however,that the term “Affiliate” shall specifically exclude Agent and eachLender.

 

“Agent”means GE Capital, as agent hereunder and under the other Loan Documents, andits successor appointed pursuant to Section 9.7.

 

“Agreement”means that certain Second Amended and Restated Credit Agreement by and amongBorrowers, the other Credit Parties party thereto, GE Capital, as Agent andLender, and the other Lenders from time to time party thereto, as the same maybe amended, supplemented, restated or otherwise modified from time to time.

 

“Appendices”has the meaning ascribed to it in the recitals to the Agreement.

 

“ApplicableExisting Term Loan Index Margin” means the per annum interest rate fromtime to time in effect and payable in addition to the Index Rate applicable tothe Existing Term Loan, as determined by reference to Section 1.5(a).

 

“ApplicableExisting Term Loan LIBOR Margin” means the per annum interest rate fromtime to time in effect and payable in addition to the LIBOR Rate applicable tothe Existing Term Loan, as determined by reference to Section 1.5(a).

 

“ApplicableExtending Term Loan Index Margin” means the per annum interest rate fromtime to time in effect and payable in addition to the Index Rate applicable tothe Extending Term Loan, as determined by reference to Section 1.5(a).

 

“ApplicableExtending Term Loan LIBOR Margin” means the per annum interest rate fromtime to time in effect and payable in addition to the LIBOR Rate applicable tothe Extending Term Loan, as determined by reference to Section 1.5(a).

 

“ApplicableMargins” means collectively the Applicable Unused Line Fee Margin, theApplicable Revolver Index Margin, the Applicable Existing Term Loan IndexMargin, the Applicable Extending Term Loan Index Margin, the ApplicableRevolver LIBOR Margin, the Applicable Existing Term Loan LIBOR Margin and theApplicable Extending Term Loan LIBOR Margin.

 

“ApplicableRevolver Index Margin” means the per annum interest rate from time to timein effect and payable in addition to the Index Rate applicable to the RevolvingLoan, as determined by reference to Section 1.5(a).

 

“ApplicableRevolver LIBOR Margin” means the per annum interest rate from time to timein effect and payable in addition to the LIBOR Rate applicable to the RevolvingLoan, as determined by reference to Section 1.5(a).

 

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“ApplicableUnused Line Fee Margin” means the per annum fee, from time to time ineffect, payable in respect of Borrowers’ non-use of committed funds pursuant toSection 1.9(b), which fee is determined by reference to Section 1.5(a).

 

“ApprovedFund” means, with respect to any Lender, any Person (other than a naturalPerson) that (a) is or will be engaged in making, purchasing, holding orotherwise investing in commercial loans and similar extensions of credit in theordinary course of its business and (b) is advised or managed by (i) suchLender, (ii) any Affiliate of such Lender or (iii) any Person (otherthan an individual) or any Affiliate of any Person (other than an individual)that administers or manages such Lender.

 

“AssignmentAgreement” has the meaning ascribed to it in Section 9.1.

 

“BankruptcyCode” means the provisions of Title 11 of the United States Code, 11 U.S.C.§§101 etseq., as now and hereafter in effect, any successors tosuch statutes and any other applicable insolvency or other similar law of anyjurisdiction including, without limitation, any law of any jurisdictionpermitting a debtor to obtain a stay or a compromise of the claims of itscreditors against it.

 

“BlockedAccounts” has the meaning ascribed to it in Annex C.

 

“BlountChina” means Blount (Fuzhou) Industries Co. Limited, a wholly-ownedsubsidiary of Blount, Inc. organized under the laws of The People’sRepublic of China.

 

“Blount, Inc.”has the meaning ascribed to it in the preamble of the Agreement.

 

“Borrower”and “Borrowers” have the respective meanings ascribed to them in thepreamble of this Agreement.

 

“BorrowerRepresentative” means Blount, Inc. in its capacity as BorrowerRepresentative pursuant to the provisions of Section 1.1(d).

 

“BorrowingAvailability” means as of any date of determination, the Maximum Amount,less the sum of the aggregate Revolving Loan and Swing Line Loan thenoutstanding.

 

“BusinessDay” means any day that is not a Saturday, a Sunday or a day on which banksare required or permitted to be closed in New York and in reference to LIBORLoans shall mean any such day that is also a LIBOR Business Day.

 

“CapitalExpenditures” means, with respect to any Person, all expenditures (by theexpenditure of cash or the incurrence of Indebtedness) by such Person duringany measuring period for any fixed assets or improvements or for replacements,substitutions or additions thereto that have a useful life of more than oneyear and that are required to be capitalized under GAAP**.**

 

“CapitalLease” means, with respect to any Person, any lease of any property(whether real, personal or mixed) by such Person as lessee that, in accordancewith GAAP, 

 

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would be required to be classified and accounted foras a capital lease on a balance sheet of such Person.

 

“CapitalLease Obligation” means, with respect to any Capital Lease of any Person,the amount of the obligation of the lessee thereunder that, in accordance withGAAP, would appear on a balance sheet of such lessee in respect of such CapitalLease.

 

“CashCollateral Account” has the meaning ascribed to it in Annex B.

 

“CashEquivalents” has the meaning ascribed to it in Annex B.

 

“CashManagement Systems” has the meaning ascribed to it in Section 1.8.

 

“CERCLA”has the meaning ascribed to it in this Annex under the definition of “EnvironmentalLaws”.

 

“Changeof Control” means any of the following: (a) any person or group of persons (within the meaning of theSecurities Exchange Act of 1934), shall have acquired beneficial ownership(within the meaning of Rule 13d-3 promulgated by the Securities andExchange Commission under the Securities Exchange Act of 1934,) of 20% or moreof the issued and outstanding shares of capital Stock of Holdings having theright to vote for the election of directors of Holdings under ordinarycircumstances; (b) during any period of twelve consecutive calendarmonths, individuals who at the beginning of such period constituted the boardof directors of Holdings (together with any new directors whose election by theboard of directors of Holdings or whose nomination for election by theStockholders of Holdings was approved by a vote of at least two-thirds of thedirectors then still in office who either were directors at the beginning ofsuch period or whose election or nomination for election was previously soapproved) cease for any reason other than death or disability to constitute amajority of the directors then in office; (c) Holdings ceases to own andcontrol all of the economic and voting rights associated with all of theoutstanding capital Stock of Blount, Inc., (d) except for minorityinterests in certain Foreign Subsidiaries as of the Closing Date and except asspecifically permitted under Section 6.8(c), Blount, Inc.ceases to own and control all of the economic and voting rights associated withall of the outstanding capital Stock of any of its Subsidiaries, or (e) any“change of control” as defined in the New Subordinated Debt Documents.

 

“Charges”means all federal, state, provincial, county, city, municipal, local, foreignor other governmental taxes (including taxes owed to the PBGC at the time dueand payable), levies, assessments, charges, liens, claims or encumbrances owedby any Credit Party and upon or relating to (a) the Collateral, (b) theObligations, (c) the employees, payroll, income, capital or gross receiptsof any Credit Party, (d) any Credit Party’s ownership or use of anyproperties or other assets, or (e) any other aspect of any Credit Party’sbusiness.

 

“ChattelPaper” means any “chattel paper,” as such term is defined in the Code,including electronic chattel paper, now owned or hereafter acquired by anyCredit Party.

 

“ClosingChecklist” means the schedule, including all appendices, exhibits orschedules thereto, listing certain documents and information to be delivered inconnection with

 

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the Agreement, the other Loan Documents and thetransactions contemplated thereunder, substantially in the form attached heretoas Annex D.

 

“ClosingDate” means December 4, 2009.

 

“Code”means the Uniform Commercial Code as the same may, from time to time, beenacted and in effect in the State of New York; provided, that to theextent that the Code is used to define any term herein or in any Loan Documentand such term is defined differently in different Articles or Divisions of theCode, the definition of such term contained in Article or Division 9 shallgovern; providedfurther, that in the event that, by reason ofmandatory provisions of law, any or all of the attachment, perfection,publication or priority of, or remedies with respect to, Agent’s or any Lender’sLien on any Collateral is governed by the Uniform Commercial Code or foreignpersonal property security laws as enacted and in effect in a jurisdictionother than the State of New York, the term “Code” shall mean the UniformCommercial Code or such foreign personal property security laws as enacted andin effect in such other jurisdiction solely for purposes of the provisionsthereof relating to such attachment, perfection, priority or remedies and forpurposes of definitions related to such provisions; providedfurther,that if such foreign personal property security laws do not contain adefinition that is used in another Loan Document, the definition that is usedin such other Loan Document shall have the meaning given to it in the Code asthough the references to the words “ or such foreign personal property securitylaws” in the second proviso of this definition do not exist.

 

“Collateral”means the property covered by the Security Agreement, the Pledge Agreements,the Mortgages and the other Collateral Documents and any other property, realor personal, tangible or intangible, now existing or hereafter acquired, thatmay at any time be or become subject to a security interest or Lien in favor ofAgent, on behalf of itself and Lenders, to secure the Obligations, or anyportion thereof as specified therein.

 

“CollateralDocuments” means the Security Agreement, the Pledge Agreements, theGuaranties, the Mortgages, the Patent Security Agreements, the TrademarkSecurity Agreements, the Copyright Security Agreements and all similaragreements entered into guaranteeing payment of, or granting a Lien uponproperty as security for payment of, the Obligations.

 

“CollateralReports” means the reports with respect to the Collateral referred to in AnnexF.

 

“CollectionAccount” means that certain account of Agent, account number 502-328-54 inthe name of Agent at Bankers Trust Company in New York, New York ABA No. 021001 033, or such other account as may be specified in writing by Agent as the “CollectionAccount.”

 

“CommitmentTermination Date” means the earliest of (a)(i) with respect to theExisting Term Loan Commitment and the term loans comprising the Existing TermLoan, August 9, 2010, and (ii) with respect to the Revolving LoanCommitment, the Revolving Loans, the Extending Term Loan Commitment and theterm loans comprising the Extending Term Loan, February 9, 2012, (b) thedate of termination of Lenders’ obligations to make Advances and to

 

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incur Letter of Credit Obligations or permit existingLoans to remain outstanding pursuant to Section 8.2(b), and (c) thedate of indefeasible prepayment in full by Borrowers of the Loans and thecancellation and return (or stand-by guarantee) of all Letters of Credit or thecash collateralization of all Letter of Credit Obligations pursuant to AnnexB, and the permanent reduction of all Commitments to zero dollars ($0).

 

“Commitments”means, as to any Lender, the aggregate of such Lender’s Revolving LoanCommitment (including without duplication, the Swing Line Lender’s Swing LineCommitment as a subset of its Revolving Loan Commitment) and Term Loan BCommitment as set forth on Annex J to the Agreement or in the mostrecent Assignment Agreement executed by such Lender and (b) as to allLenders, the aggregate of all Lenders’ Revolving Loan Commitments (including,without duplication, the Swing Line Lender’s Swing Line Commitment as a subsetof its Revolving Loan Commitment) and Term Loan B Commitment which aggregatecommitment shall be One Hundred Seven Million Four Hundred Sixty Five ThousandThree Hundred One Dollars and 84/100 ($107,465,301.84) on the Closing Date, asto each of clauses (a), (b) and (c), as such Commitments may be reduced,amortized or adjusted from time to time in accordance with the Agreement.

 

“ComplianceCertificate” has the meaning ascribed to it in Annex E.

 

“ConcentrationAccounts” has the meaning ascribed to it in Annex C.

 

“Contracts”means all “contracts,” as such term is defined in the Code, now owned orhereafter acquired by any Credit Party, in any event, including all contracts,undertakings, or agreements in or under which any Credit Party may now orhereafter have any right, title or interest, including any agreement relatingto the terms of payment or the terms of performance of any Account.

 

“ControlLetter” means a letter agreement between Agent and (i) the issuer ofuncertificated securities with respect to uncertificated securities in the nameof any Credit Party, (ii) a securities intermediary with respect tosecurities, whether certificated or uncertificated, securities entitlements andother financial assets held in a securities account in the name of any CreditParty, (iii) a futures commission merchant or clearing house, asapplicable, with respect to commodity accounts and commodity contracts held byany Credit Party, whereby, among other things, the issuer, securitiesintermediary or futures commission merchant disclaims any security interest inthe applicable financial assets, acknowledges the Lien of Agent, on behalf ofitself and Lenders, on such financial assets, and agrees to follow the instructionsor entitlement orders of Agent without further consent by the affected CreditParty.

 

“CopyrightLicense” means any and all rights now owned or hereafter acquired by anyCredit Party under any written agreement granting any right to use any Copyrightor Copyright registration.

 

“CopyrightSecurity Agreements” means the Copyright Security Agreements made in favorof Agent, on behalf of itself and Lenders, by each applicable Credit Party.

 

“Copyrights”means all of the following now owned or hereafter adopted or acquired by anyCredit Party: (a) all copyrights and General Intangibles of like nature(whether 

 

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registered or unregistered), all registrations andrecordings thereof, and all applications in connection therewith, including allregistrations, recordings and applications in the United States CopyrightOffice or in any similar office or agency of the United States, any state orterritory thereof or any other country or any political subdivision thereof,and (b) all reissues, extensions or renewals thereof.

 

“CreditAgreement Joinder Agreement” has the meaning ascribed to it in Section 5.13of the Agreement.

 

“CreditFacility Leverage Ratio” means, with respect to Holdings, on a consolidatedbasis, the ratio of (a) the amount of the Loans outstanding (includingLetter of Credit Obligations) as of any date of determination to (b) thesum of EBITDA for the twelve months ending on that date of determination.

 

“CreditParties” means, collectively, Holdings, each Borrower and each domesticSubsidiary of a Borrower that executes and delivers a Guaranty; and “CreditParty” means any one of the foregoing Credit Parties.

 

“Default”means any event that, with the passage of time or notice or both, would, unlesscured or waived, become an Event of Default.

 

“DefaultRate” has the meaning ascribed to it in Section 1.5(e).

 

“DepositAccounts” means all “deposit accounts” as such term is defined in the Code,now or hereafter held in the name of any Credit Party.

 

“Design”means the following now owned or hereafter acquired by any Credit Party:  (a) all industrial designs, designpatents, other designs and intangibles of like nature (whether registered orunregistered) now owned or existing or hereafter adopted or acquired, allregistrations and recordings thereof and all applications in connectiontherewith, including all registrations, recordings and applications in theCanadian Industrial Designs Office or any similar office in any country and allrecords thereof and (b) all reissues, extensions or renewals thereof.

 

“DesignLicense” means rights under any written agreement now owned or hereafteracquired by any Credit Party granting any right to use any Design.

 

“DisbursementAccounts” has the meaning ascribed to it in Annex C.

 

“DisclosureSchedules” means the Schedules prepared by Borrowers and denominated asDisclosure Schedules (1.4) through (6.7) in the Index to theAgreement.

 

“Documents”means all “documents,” as such term is defined in the Code, now owned orhereafter acquired by any Credit Party, wherever located.

 

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

 

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“EBITDA”means, with respect to any Person for any fiscal period, without duplication,an amount equal to (a) consolidated net income of such Person for suchperiod determined in accordance with GAAP, minus (b) the sum of (i) incometax credits, (ii) interest income, (iii) gain from extraordinaryitems for such period, (iv) any aggregate net gain (but not any aggregatenet loss) during any four quarter period exceeding $1,000,000 (and only to theextent that such net gain exceeds $1,000,000, so that the first $1,000,000 ofsuch net gain is not deducted pursuant to this clause (iv)) in the aggregatearising from the sale, exchange or other disposition of capital assets by suchPerson (including any fixed assets, whether tangible or intangible, allInventory sold in conjunction with the disposition of fixed assets and allsecurities), and (v) any other non-cash gains that have been added indetermining consolidated net income, in each case to the extent included in thecalculation of consolidated net income of such Person for such period inaccordance with GAAP, but without duplication, plus (c) the sum of (i) anyprovision for income taxes, (ii) Interest Expense plus fees associatedwith this transaction that are not capitalized, (iii) loss fromextraordinary items for such period, (iv) the amount of non-cash charges(including depreciation and amortization of tangible and intangible assets) forsuch period, (v) amortized debt discount for such period, (vi) theamount of any deduction to consolidated net income as the result of any grantto, or exercise by, any members of the management of such Person of any Stock, (vii) cashexpenses incurred during any four quarter period in connection withdiscontinued operations up to $3,000,000 in the aggregate, (viii) anyaggregate net loss (but not any aggregate net gain) during any four quarterperiod not to exceed $1,000,000 in the aggregate arising from the sale,exchange or other disposition of capital assets by such Person (including anyfixed assets, whether tangible or intangible, all Inventory sold in conjunctionwith the disposition of fixed assets and all securities), (ix) expensesincurred in connection with the consolidation of the Credit Parties’ and theirSubsidiaries’ warehouses and the curtailment of Credit Parties’ logisticsarrangements in an aggregate amount not to exceed $4,000,000 during the term ofthis Agreement,  (x) any non-cashcharges not to exceed $12,500,000 in the aggregate accrued in connection withthe acceleration of scheduled amortization with respect to the liabilities ofone or more of Borrowers’ benefit plans due to the alteration of any suchbenefit plan, and any cash charges associated with the communication of suchalteration or the transition of any defined benefit plan in an amount not toexceed $500,000 in the aggregate incurred in connection therewith, in each caseto the extent included in the calculation of consolidated net income of suchPerson for such period in accordance with GAAP, but without duplication, (xi)restructuring expenses and related charges incurred during the Fiscal Quartersended on or prior to December 31, 2008 in connection with the ForestryDivision sale and related consolidation of corporate and divisionalinfrastructure in an amount not to exceed $5,000,000, (xii) cash restructuringcharges paid during the fiscal year ending December 31, 2009 in anaggregate amount not to exceed $3,500,000 and (xiii) cash expenses incurred inconnection with the transition of such Person’s chief executive officer orchief executive officer designate incurred between January 1, 2009throughout the term of this Agreement in an aggregate amount not to exceed$3,000,000.  For purposes of thisdefinition, the following items shall be excluded in determining consolidatednet income of a Person: (1) the income (or deficit) of any other Personaccrued prior to the date it became a Subsidiary of, or was merged orconsolidated into or amalgamated with, such Person or any of such Person’sSubsidiaries; (2) the income (or deficit) of any other Person (other thana Subsidiary) in which such Person has an ownership interest, except to theextent any such income has actually been received by such Person in the form ofcash dividends or distributions; (3) the undistributed 

 

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earnings of any Subsidiary of such Person to theextent that the declaration or payment of dividends or similar distributions bysuch Subsidiary is not at the time permitted by the terms of any contractualobligation or requirement of law applicable to such Subsidiary; (4) anyrestoration to income of any contingency reserve, except to the extent thatprovision for such reserve was made out of income accrued during such period; (5) anywrite-up of any asset; (6) any net gain from the collection of theproceeds of life insurance policies; (7) any net gain arising from theacquisition of any securities, or the extinguishment, under GAAP, of anyIndebtedness, of such Person, (8) in the case of a successor to suchPerson by consolidation or merger or as a transferee of its assets, anyearnings of such successor prior to such consolidation, merger or transfer ofassets, and (9) any deferred credit representing the excess of equity inany Subsidiary of such Person at the date of acquisition of such Subsidiaryover the cost to such Person of the investment in such Subsidiary.

 

“EMULegislation” means the legislative measures of the European Council for theintroduction of, changeover to or operation of a single or unified Europeancurrency.

 

“EnvironmentalLaws” means all applicable federal, state, provincial, local and foreignlaws, statutes, ordinances, codes, rules, standards, orders-in-council,regulations and any applicable judicial or administrative interpretationthereof, including any applicable judicial or administrative order, consentdecree, order or judgment, imposing liability or standards of conduct for orrelating to the regulation and protection of human health, safety, theenvironment and natural resources (including ambient air, surface water,groundwater, wetlands, land surface or subsurface strata, wildlife, aquaticspecies and vegetation).  EnvironmentalLaws include the Comprehensive Environmental Response, Compensation, andLiability Act of 1980 (42 U.S.C. §§ 9601 et seq.) (“CERCLA”); theHazardous Materials Transportation Authorization Act of 1994 (49 U.S.C. §§ 5101et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act (7U.S.C. §§ 136 et seq.); the Solid Waste Disposal Act (42 U.S.C.§§ 6901 et seq.); the Toxic Substance Control Act (15 U.S.C. §§2601 et seq.); the Clean Air Act (42 U.S.C. §§ 7401 et seq.); theFederal Water Pollution Control Act (33 U.S.C. §§ 1251 et seq.); theOccupational Safety and Health Act (29 U.S.C. §§ 651 et seq.); and theSafe Drinking Water Act (42 U.S.C. §§ 300(f) et seq.), and anyand all regulations promulgated thereunder, and all analogous state, local,provincial and foreign counterparts or equivalents and any transfer ofownership notification or approval statutes relating to the protection of humanhealth, safety, or the environment.

 

“EnvironmentalLiabilities” means, with respect to any Person, all liabilities,obligations, responsibilities, response, remedial and removal costs,investigation and feasibility study costs, capital costs, operation andmaintenance costs, losses, damages, punitive damages, property damages, naturalresource damages, consequential damages, treble damages, costs and expenses(including all reasonable fees, disbursements and expenses of counsel, expertsand consultants), fines, penalties, sanctions and interest incurred as a resultof or related to any claim, suit, action, investigation, proceeding or demandby any Person, whether based in contract, tort, implied or express warranty,strict liability, criminal or civil statute or common law, arising under orrelated to any Environmental Laws, Environmental Permits, or as a result of anyRelease or threatened Release or presence of a Hazardous Material whether on,at, in, under, from or about or in the vicinity of any real or personalproperty.

 

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“EnvironmentalPermits” means all permits, licenses, authorizations, certificates,approvals or registrations required by any Governmental Authority under anyEnvironmental Laws.

 

“Equipment”means all “equipment,” as such term is defined in the Code, now owned orhereafter acquired by any Credit Party, wherever located and, in any event,including all such Credit Party’s machinery and equipment, including processingequipment, conveyors, machine tools, data processing and computer equipment,including embedded Software and peripheral equipment and all engineering,processing and manufacturing equipment, office machinery, furniture, materialshandling equipment, tools, attachments, accessories, automotive equipment,trailers, trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stockand other equipment of every kind and nature, trade fixtures and fixtures notforming a part of real property, together with all additions and accessionsthereto, replacements therefor, all parts therefor, all substitutes for any ofthe foregoing, fuel therefor, and all manuals, drawings, instructions,warranties and rights with respect thereto, and all products and proceedsthereof and condemnation awards and insurance proceeds with respect thereto.

 

“ERISA”means the Employee Retirement Income Security Act of 1974, as amended from timeto time, and any regulations promulgated thereunder.

 

“ERISAAffiliate” means, with respect to any Credit Party, any trade or business(whether or not incorporated) that, together with such Credit Party, aretreated as a single employer within the meaning of Sections 414(b), (c), (m) or(o) of the IRC.

 

“ERISAEvent” means, with respect to any Credit Party or any ERISA Affiliate, (a) anyevent described in Section 4043(c) of ERISA with respect to a TitleIV Plan (other than an event for which the thirty (30) day notice period iswaived); (b) the withdrawal of any Credit Party or ERISA Affiliate from aTitle IV Plan subject to Section 4063 of ERISA during a plan year in whichit was a substantial employer, as defined in Section 4001(a)(2) ofERISA; (c) the complete or partial withdrawal of any Credit Party or anyERISA Affiliate from any Multiemployer Plan; (d) the filing of a notice ofintent to terminate a Title IV Plan or the treatment of a plan amendment as atermination under Section 4041 of ERISA; (e) the institution ofproceedings to terminate a Title IV Plan or Multiemployer Plan by the PBGC; (f) thefailure by any Credit Party or ERISA Affiliate to make when due requiredcontributions to a Multiemployer Plan or Title IV Plan unless such failure iscured within thirty (30) days; (g) the termination of a Multiemployer Planunder Section 4041A of ERISA or the reorganization or insolvency of aMultiemployer Plan under Section 4241 or 4245 of ERISA; or (h) theloss of a Qualified Plan’s qualification or tax exempt status; or (i) thetermination of a Plan described in Section 4064 of ERISA.

 

“ESOP”means a Plan that is intended to satisfy the requirements of Section 4975(e)(7) ofthe IRC.

 

“Euro”means the single currency of the European Union as constituted by the Treaty onEuropean Union and as referred to in the EMU Legislation.

 

“Eventof Default” has the meaning ascribed to it in Section 8.1.

 

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“ExcessCash Flow” means, without duplication, with respect to any Fiscal Year ofHoldings and its Subsidiaries, consolidated net income plus (a) depreciation,amortization and Interest Expense to the extent deducted in determiningconsolidated net income, minus (b) Capital Expenditures during suchFiscal Year (excluding the financed portion thereof and excluding any CapitalExpenditures in such Fiscal Year to the extent in excess of the amountpermitted to be made in such Fiscal Year pursuant to clause (a) of AnnexG), minus (c) Interest Expense paid or accrued (excluding anyoriginal issue discount, interest paid in kind or amortized debt discount, tothe extent included in determining Interest Expense) and scheduled  and voluntary principal payments paid orpayable in respect of Funded Debt, plus or minus (as the case maybe), (d) extraordinary gains or losses which are cash items not includedin the calculation of net income, minus (e) mandatory prepaymentspaid in cash pursuant to Section 1.3 other than mandatoryprepayments made pursuant to Sections 1.3(b)(i), 1.3(b)(ii), 1.3(b)(iv) or1.3(d), plus (f) taxes deducted in determining consolidated netincome to the extent not paid for in cash.

 

“ExcludedProceeds” means:

 

(a)           the proceeds of asset dispositionsunder Section 6.8(a),

 

(b)           the proceeds of asset dispositionsunder Sections 6.8(b) and (d) in an aggregate amountnot to exceed $1,000,000 per year so long as no Default or Event of Default hasoccurred and is continuing, and

 

(c)           to the extent the aggregate amount ofproceeds of asset dispositions under Sections 6.8(b) and (d) exceed$1,000,000 in any year, the proceeds of each asset disposition, or series ofrelated asset dispositions, under Section 6.8(b) or (d) aftermeeting such threshold if the gross proceeds with respect thereto are less than$100,000 per asset disposition, or series of related asset dispositions, ineach case, so long as no Default or Event of Default exists.

 

“ExcludedStock Issuances” means (a) issuances of Stock by Holdings inconnection with the exercise of options by any current or former employee ordirector, (b) issuances of Stock by Holdings to current or formeremployees in the form of restricted stock awards in the ordinary course ofbusiness, (c) issuances of Stock by Holdings to sellers in connectionwith, and as the purchase price for, Permitted Acquisitions and (d) issuancesof Stock, the net proceeds of which are used within 180 days of the issuancethereof in connection with, and as the purchase price for, PermittedAcquisitions or other permitted investments, so long as no later than theBusiness Day following receipt of the proceeds thereof Borrower Representativedelivers to Agent a certificate (a “Notice of Stock Issuance for PermittedAcquisition”) confirming that (A) the Credit Parties intend to investsuch net proceeds in a Permitted Acquisition or other permitted investmentwithin 180 days (the “Investment Period”) of the issuance of such Stockand (B) such net proceeds have been (x) deposited into an accountthat is subject to a Control Letter or a control agreement meeting therequirements of Annex C, which net proceeds when so deposited (1) shallconstitute Collateral, securing the payment of the Obligations thenoutstanding, (2) may be withdrawn by the applicable Credit Party solely tomake a Permitted Acquisition or other permitted investment within 180 days ofthe date of the issuance of such Stock or (y) used to repay the RevolvingLoan (in whole or in part) on a temporary basis and if so used to repay theRevolving Loan and notwithstanding anything herein 

 

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to the contrary such amount may be reborrowed only forthe purpose of funding such Permitted Acquisition or if the Investment Periodhas expired and such amount has not been used to make a Permitted Acquisitionto make the mandatory prepayment required by Section 1.3(b)(iii);provided, that upon the occurrence and during the continuance of an Event ofDefault or upon the expiration of such 180 day Investment Period without suchnet proceeds being used to fund a Permitted Acquisition, an amount equal tosuch net proceeds shall be applied to the repayment of the Obligations as setforth in Section 1.3(b)(iii) and such net proceeds shall notbe deemed to be “Excluded Stock Proceeds.

 

“ExistingTerm Loan” has the meaning assigned to it in Section 1.1(b)(i).

 

“ExistingTerm Loan Commitment” means (a) as to any Lender with a Existing TermLoan Commitment, the commitment of such Lender to make its Pro Rata Share ofthe Existing Term Loan as set forth on Annex J to the Agreement as ineffect as of the Closing Date, and (b) as to all Lenders with a ExistingTerm Loan Commitment, the aggregate commitment of all Lenders to make theExisting Term Loan, which aggregate commitment shall be Three Million NineHundred Thirty-Seven Thousand Eight Hundred Ninety-Three and  06/100 Dollars ($3,937,893.06) on the ClosingDate.

 

“ExistingTerm Loan Note” has the meaning assigned to it in Section 1.1(b)(i).

 

“ExtendingTerm Loan” has the meaning assigned to it in Section 1.1(b)(ii).

 

“ExtendingTerm Loan Commitment” means (a) as to any Lender with a Extending TermLoan Commitment, the commitment of such Lender to make its Pro Rata Share ofthe Extending Term Loan as set forth on Annex J to the Agreement as ineffect as of the Closing Date, and (b) as to all Lenders with a ExtendingTerm Loan Commitment, the aggregate commitment of all Lenders to make theExtending Term Loan, which aggregate commitment shall be One Hundred ThreeMillion Five Hundred Twenty-Seven Thousand Four Hundred Eight and 78/100Dollars ($103,527,408.78) on the Closing Date.

 

“ExtendingTerm Loan Note” has the meaning assigned to it in Section 1.1(b)(ii).

 

“FairLabor Standards Act” means the Fair Labor Standards Act, 29 U.S.C. §201 etseq.

 

“Federal Funds Rate” means, for any day, afloating rate equal to the weighted average of the rates on overnight Federalfunds transactions among members of the Federal Reserve System, as determinedby Agent in its sole discretion, which determination shall be final, bindingand conclusive (absent manifest error).

 

“FederalReserve Board” means the Board of Governors of the Federal Reserve System.

 

“Fees”means any and all fees payable to Agent or any Lender pursuant to the Agreementor any of the other Loan Documents.

 

“FinancialCovenants” means the financial covenants set forth in Annex G.

 

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“FinancialStatements” means the consolidated and, as applicable, separate incomestatements, statements of cash flows and balance sheets of Holdings and itsSubsidiaries delivered in accordance with Section 3.4 and AnnexE.

 

“FiscalMonth” means any of the monthly accounting periods of Credit Parties.

 

“FiscalQuarter” means any of the quarterly accounting periods of Credit Parties,ending on March 31, June 30, September 30 and December 31of each year.

 

“FiscalYear” means any of the annual accounting periods of Credit Parties endingon December 31 of each year.

 

“Fixed Charge Coverage Ratio” means, withrespect to any Person for any fiscal period, the ratio of EBITDA to FixedCharges.

 

“FixedCharges” means, with respect to any Person for any fiscal period, (a) theaggregate of all Interest Expense paid during such period (excluding allnon-cash Interest Expense), plus (b) scheduled payments of principal withrespect to Indebtedness during such period, plus (c) Capital Expendituresduring such period, plus (d) the greater of (i) cash payments ofincome taxes and capital taxes (net of tax refunds received during suchperiod), and (ii) zero, plus (e) Restricted Payments made pursuant toSection 6.14(f).

 

“Fixtures”means all “fixtures” as such term is defined in the Code and all fixtures,facilities and equipment howsoever affixed or attached to real property, nowowned or hereafter acquired by any Credit Party.

 

“ForeignLender” has the meaning ascribed to it in Section 1.15 of theAgreement.

 

“ForeignPledge Agreements” means, collectively, (i) that certain CommercialPledge Agreement over Shares executed by Blount, Inc. in favor of Agent,on behalf of itself and Lenders, pledging 65% of all of the Stock of BlountEurope, S.A., a company formed under the laws of Belgium, (ii) thatcertain Quota Pledge Agreement executed by Blount, Inc. in favor of Agent,on behalf of itself and Lenders, pledging 65% of all of the Stock of BlountIndustrial, Ltda., a company formed under the laws of Brazil, (iii) thatcertain Share Pledge Agreement executed by Blount, Inc. in favor of Agent,on behalf of itself and Lenders, pledging 65% of all of the Stock of SvenskaBlount Aktiebolag, a company formed under the laws of Sweden, (iv) thatcertain Agreement on the Pledge of Shares executed by Blount, Inc. infavor of Agent, on behalf of itself and Lenders, pledging 65% of all of theStock of Blount GmbH, a company formed under the laws of Germany, and (v) thatcertain Pledge Over Interests executed by Blount, Inc. in favor of Agent,on behalf of itself and Lenders, pledging 65% of all of the Stock of BlountChina.

 

“ForeignSubsidiary” means any Subsidiary of a Credit Party that is not formed underthe laws of the United States or any state thereof.

 

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“ForestryDivision” means the Borrowers’ Industrial and Power Equipment Group,Forestry Division, other than the Borrowers’ real and personal property andfacilities previously located in Menominee, Michigan.

 

“Funded Debt” means, with respect to anyPerson, without duplication, all Indebtedness for borrowed money evidenced bynotes, bonds, debentures, or similar evidences of Indebtedness that by itsterms matures more than one year from, or is directly or indirectly renewableor extendible at such Person’s option under a revolving credit or similaragreement obligating the lender or lenders to extend credit over a period ofmore than one year from the date of creation thereof (but only to the extentborrowed thereunder), and specifically including Capital Lease Obligations,current maturities of long-term debt, revolving credit and short-term debtextendible beyond one year at the option of the debtor, and also including, inthe case of Credit Parties, the Obligations (other than Obligations under HedgeAgreements that are not yet due and payable) and, without duplication,Guaranteed Indebtedness consisting of guaranties of Funded Debt of otherPersons.

 

“GAAP”means generally accepted accounting principles in the United States of Americaconsistently applied, as such term is further defined in Annex G to theAgreement.

 

“Gear”has the meaning ascribed to it in the preamble of the Agreement.

 

“GECapital” means General Electric Capital Corporation, a Delawarecorporation.

 

“GECapital Fee Letter” has the meaning ascribed to it in Section 1.9(a) ofthe Agreement.

 

“GeneralIntangibles” means all “general intangibles,” as such term is defined inthe Code, now owned or hereafter acquired by any Credit Party, including allright, title and interest that such Credit Party may now or hereafter have inor under any Contract, all payment intangibles, customer lists, Licenses,Copyrights, Trademarks, Patents, and all applications therefor and reissues,extensions or renewals thereof, rights in Intellectual Property, interests inpartnerships, joint ventures and other business associations, licenses,permits, copyrights, trade secrets, proprietary or confidential information,inventions (whether or not patented or patentable), technical information,procedures, designs, knowledge, know-how, Software, data bases, data, skill,expertise, experience, processes, models, drawings, materials and records,goodwill (including the goodwill associated with any Trademark or TrademarkLicense), all rights and claims in or under insurance policies (includinginsurance for fire, damage, loss and casualty, whether covering personalproperty, real property, tangible rights or intangible rights, all liability,life, key man and business interruption insurance, and all unearned premiums),uncertificated securities, choses in action, deposit, checking and other bankaccounts, rights to receive tax refunds and other payments, rights to receivedividends, distributions, cash, Instruments and other property in respect of orin exchange for pledged Stock and Investment Property, rights of indemnification,all books and records, correspondence, credit files, invoices and other papers,including without limitation all tapes, cards, computer runs and other papersand documents in the possession or under the control of such Credit Party orany computer bureau or service company from time to time acting for such CreditParty.

 

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“Goods”means all “goods” as defined in the Code, now owned or hereafter acquired byany Credit Party, wherever located, including embedded Software to the extentincluded in “goods” as defined in the Code, manufactured homes, standing timberthat is cut and removed for sale and unborn young of animals.

 

“GovernmentalAuthority” means any nation or government, any state or other politicalsubdivision thereof, and any agency, department or other entity exercisingexecutive, legislative, judicial, regulatory or administrative functions of orpertaining to government.

 

“GuaranteedIndebtedness” means as to any Person, any obligation of such Personguaranteeing, providing comfort or otherwise supporting any Indebtedness,lease, dividend, or other obligation (“primary obligation”) of any otherPerson (the “primary obligor”) in any manner, including any obligationor arrangement of such Person to (a) purchase or repurchase any suchprimary obligation, (b) advance or supply funds (i) for the purchaseor payment of any such primary obligation or (ii) to maintain workingcapital or equity capital of the primary obligor or otherwise to maintain thenet worth or solvency or any balance sheet condition of the primary obligor, (c) purchaseproperty, securities or services primarily for the purpose of assuring theowner of any such primary obligation of the ability of the primary obligor tomake payment of such primary obligation, (d) protect the beneficiary ofsuch arrangement from loss (other than product warranties given in the ordinarycourse of business) or (e) indemnify the owner of such primary obligationagainst loss in respect thereof except for such indemnifications created in theordinary course of business pursuant to transactions that are not otherwiseprohibited hereunder or under the other Loan Documents.  The amount of any Guaranteed Indebtedness atany time shall be deemed to be an amount equal to the lesser at such time of (x) thestated or determinable amount of the primary obligation in respect of whichsuch Guaranteed Indebtedness is incurred and (y) the maximum amount forwhich such Person may be liable pursuant to the terms of the instrumentembodying such Guaranteed Indebtedness, or, if not stated or determinable, themaximum reasonably anticipated liability (assuming full performance) in respectthereof.

 

“Guaranties”means, collectively, the Guaranty and any other guaranty executed by anyGuarantor in favor of Agent in respect of the Obligations.

 

“Guarantors”means Holdings and each domestic Subsidiary of any Credit Party and each otherPerson, if any, that executes a guaranty or other similar agreement in favor ofAgent, for itself and the ratable benefit of Lenders, in connection with thetransactions contemplated by the Agreement and the other Loan Documents.

 

“Guaranty”means that certain Guaranty dated as of May 15, 2003 from each CreditParty signatory thereto in favor of Agent, on behalf of itself and Lenders, asamended, restated, supplemented or otherwise modified from time to time.

 

“HazardousMaterial” means any substance, material or waste regulated by, or formingthe basis of liability under, any Environmental Laws, including any material orsubstance that is (a) defined as a “solid waste,” “hazardous waste,” “hazardousmaterial,” “hazardous substance,” “dangerous goods,” “extremely hazardouswaste,”  “restricted hazardous waste,” “pollutant,”“contaminant,” “hazardous constituent,” “special waste,” “toxic substance” 

 

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or other similar term or phrase under anyEnvironmental Laws, or (b) petroleum or any fraction or by-productthereof, asbestos, polychlorinated biphenyls (PCB’s), or any radioactivesubstance.

 

“HedgeAgreement” shall mean any and all transactions, agreements or documents nowexisting or hereafter entered into between or among any Credit Party, on theone hand, and a Lender (or an Affiliate of a Lender), on the other hand, whichprovides for an interest rate, credit or equity swap, cap, floor, collar,forward foreign exchange transaction, currency swap, cross currency rate swap,currency option, or any combination of, or option with respect to, these orsimilar transactions, for the purpose of hedging such Credit Party’s exposureto fluctuations in interest or exchange rates, loan, credit exchange, securityor currency valuations.

 

“Holdings”means Blount International, Inc., a Delaware corporation.

 

“ImpactedLender” means any Lender that fails to promptly provide any Borrower orAgent, upon such Person’s request, reasonably satisfactory assurance that suchLender will not become a Non-Funding Lender.

 

“Indebtedness”means, with respect to any Person, without duplication, (a) allindebtedness of such Person for borrowed money or for the deferred purchaseprice of property payment for which is deferred 6 months or more, but excludingobligations to trade creditors incurred in the ordinary course of business, (b) allreimbursement and other obligations with respect to letters of credit, bankers’acceptances and surety bonds, whether or not matured, (c) all obligationsevidenced by notes, bonds, debentures or similar instruments, (d) allindebtedness created or arising under any conditional sale or other titleretention agreement with respect to property acquired by such Person (eventhough the rights and remedies of the seller or lender under such agreement inthe event of default are limited to repossession or sale of such property), (e) allCapital Lease Obligations and the present value (discounted at the Index Rateas in effect on the Closing Date) of future rental payments under all syntheticleases, (f) all obligations of such Person under commodity purchase oroption agreements or other commodity price hedging arrangements, in each casewhether contingent or matured, (g) all obligations of such Person underany foreign exchange contract, currency swap agreement, interest rate swap, capor collar agreement or other similar agreement or arrangement designed to alterthe risks of that Person arising from fluctuations in currency values orinterest rates, in each case whether contingent or matured, (h) allIndebtedness referred to above secured by (or for which the holder of suchIndebtedness has an existing right, contingent or otherwise, to be secured by)any Lien upon or in property or other assets (including accounts and contractrights) owned by such Person, even though such Person has not assumed or becomeliable for the payment of such Indebtedness, and (i) the Obligations.

 

“IndemnifiedLiabilities” has the meaning ascribed to it in Section 1.13.

 

“IndemnifiedPerson” has the meaning ascribed to it in Section 1.13.

 

“IndexRate” means:

 

(a) withrespect to any Revolving Loan bearing interest at the Index Rate, for any day,a rate per annum equal to the highest of (i) the rate last quoted by TheWall Street Journal as 

 

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the “Prime Rate” in the United States or, if The WallStreet Journal ceases to quote such rate, the highest per annum interest ratepublished by the Federal Reserve Board in Federal Reserve Statistical ReleaseH.15 (519) (Selected Interest Rates) as the “bank prime loan” rate, or, if suchrate is no longer quoted therein, any similar rate quoted therein (asreasonably determined by Agent) or any similar release by the Federal ReserveBoard (as reasonably determined by Agent), (ii) the sum of (A) theFederal Funds Rate, plus (B) 3.00% per annum and (iii) the sum of (A) theLIBOR Rate with respect to Revolving Loans, plus (B) the excess of theApplicable Revolver LIBOR Margin over the Applicable Revolver Index Margin, ineach instance, as of such day;

 

(b) withrespect to any Extending Term Loan bearing interest at the Index Rate, for anyday, a rate per annum equal to the highest of (i) the rate last quoted byThe Wall Street Journal as the “Prime Rate” in the United States or, if TheWall Street Journal ceases to quote such rate, the highest per annum interestrate published by the Federal Reserve Board in Federal Reserve StatisticalRelease H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate, or,if such rate is no longer quoted therein, any similar rate quoted therein (as reasonablydetermined by Agent) or any similar release by the Federal Reserve Board (asreasonably determined by Agent), (ii) the sum of (A) the FederalFunds Rate, plus (B) 3.00% per annum and (iii) the sum of (A) theLIBOR Rate with respect to the Extending Term Loan calculated for each daybased on a LIBOR Period of one (1) month determined two (2) BusinessDays prior to such day, plus (B) the excess of the Applicable ExtendingTerm Loan LIBOR Margin over the Applicable Extending Term Loan Index Margin, ineach instance, as of such day; and

 

(c) withrespect to any Existing Term Loan bearing interest at the Index Rate, for anyday, a floating rate equal to the higher of (i) the rate publicly quotedfrom time to time by The Wall Street Journal as the “base rate on corporateloans posted by at least 75.00% of the nation’s 30 largest banks” (or, if TheWall Street Journal ceases quoting a base rate of the type described, thehighest per annum rate of interest published by the Federal Reserve Board inFederal Reserve statistical release H.15 (519) entitled “Selected InterestRates” as the Bank prime loan rate or its equivalent), and (ii) theFederal Funds Rate plus 50 basis points per annum.

 

Eachchange in any interest rate provided for in the Agreement based upon the IndexRate shall take effect at the time of such change in the Index Rate.

 

“IndexRate Loan” means a Loan denominated in Dollars or portion thereof bearinginterest by reference to the Index Rate.

 

“InsolvencyLaws” means any of the Bankruptcy Code, as now and hereafter in effect, anysuccessors to such statutes and any other applicable insolvency or othersimilar law of any jurisdiction including, without limitation, any law of anyjurisdiction permitting a debtor to obtain a stay or a compromise of the claimsof its creditors against it.

 

“Instruments”means all “instruments,” as such term is defined in the Code, now owned orhereafter acquired by any Credit Party, wherever located, and, in any event,including all certificated securities, all certificates of deposit, and allpromissory notes and other evidences of indebtedness, other than instrumentsthat constitute, or are a part of a group of writings that constitute, ChattelPaper.

 

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“IntellectualProperty” means any and all Licenses, Patents, Designs, Copyrights,Trademarks, the goodwill associated with such Trademarks, trade secrets andcustomer lists.

 

“IntercompanyNotes” has the meaning ascribed to it in Section 6.3.

 

“InterestExpense” means, with respect to any Person for any fiscal period, interestexpense (whether cash or non-cash) of such Person determined in accordance withGAAP for the relevant period ended on such date, including, interest expensewith respect to any Funded Debt of such Person and interest expense for therelevant period that has been capitalized on the balance sheet of such Person.

 

“InterestPayment Date” means (a) as to any Index Rate Loan, the first BusinessDay of each month to occur while such Loan is outstanding, and (b) as toany LIBOR Loan, the last day of the applicable LIBOR Period; providedthat, in addition to the foregoing, each of (x) the date upon which all ofthe Commitments have been terminated and the Loans have been paid in full and (y) theCommitment Termination Date shall be deemed to be an “Interest Payment Date”with respect to any interest that has then accrued under the Agreement.

 

“Inventory”means all “inventory,” as such term is defined in the Code, now owned orhereafter acquired by any Credit Party, wherever located, and in any eventincluding inventory, merchandise, goods and other personal property that areheld by or on behalf of any Credit Party for sale or lease or are furnished orare to be furnished under a contract of service, or that constitute rawmaterials, work in process, finished goods, returned goods, or materials orsupplies of any kind, nature or description used or consumed or to be used orconsumed in such Credit Party’s business or in the processing, production,packaging, promotion, delivery or shipping of the same, including all suppliesand embedded Software.

 

“InvestmentProperty” means all “investment property” as such term is defined in theCode now owned or hereafter acquired by any Credit Party, wherever located,including (i) all securities, whether certificated or uncertificated,including stocks, bonds, interests in limited liability companies, partnershipinterests, treasuries, certificates of deposit, and mutual fund shares; (ii) allsecurities entitlements of any Credit Party, including the rights of any CreditParty to any securities account and the financial assets held by a securitiesintermediary in such securities account and any free credit balance or othermoney owing by any securities intermediary with respect to that account; (iii) allsecurities accounts of any Credit Party; (iv) all commodity contracts ofany Credit Party; and (v) all commodity accounts held by any Credit Party.

 

“IRC”means the Internal Revenue Code of 1986, as amended, and all regulationspromulgated thereunder.

 

“IRS”means the Internal Revenue Service.

 

“L/C Issuer” has the meaning ascribed to it in AnnexB.

 

“L/CSublimit” has the meaning ascribed to it in Annex B.

 

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“Lender-Related DistressEvent” means,with respect to any Lender or any Person that directly or indirectly controlssuch Lender (each a “Distressed Person”), a voluntary or involuntarycase with respect to such Distressed Person under the Bankruptcy Code or anysimilar bankruptcy laws of its jurisdiction of formation, or a custodian,conservator, receiver or similar official is appointed for such DistressedPerson or any substantial part of such Distressed Person’s assets, or suchDistressed Person or any Person that directly or indirectly controls suchDistressed Person is subject to a forced liquidation, merger, sale or otherchange of majority control supported in whole or in part by guaranties or othersupport (including, without limitation, the nationalization or assumption ofmajority ownership or operating control by) the U.S. government or otherGovernmental Authority, or such Distressed Person makes a general assignmentfor the benefit of creditors or is otherwise adjudicated as, or determined by anyGovernmental Authority having regulatory authority over such Distressed Personor its assets to be, insolvent, bankrupt, or deficient in meeting any capitaladequacy or liquidity standard of any such Governmental Authority.  For purposes of this definition, control of aPerson shall have the same meaning as in the second sentence of the definitionof “Affiliate”.

 

“Lenders” means GE Capital and the otherLenders named on the signature pages of the Agreement, and, if any suchLender shall decide to assign all or any portion of the Obligations, such termshall include any assignee of such Lender.

 

“Letterof Credit Fee” has the meaning ascribed to it in Annex B.

 

“Letter of Credit Obligations” means alloutstanding obligations incurred by Agent and Revolving Lenders at the requestof Borrower Representative, whether direct or indirect, contingent orotherwise, due or not due, in connection with the issuance of Letters of Creditby Agent or another L/C Issuer or the purchase of a participation as set forth inAnnex B with respect to any Letter of Credit.  The amount of such Letter of CreditObligations shall equal the maximum amount that may be payable at such time orat any time thereafter by Agent or Revolving Lenders thereupon or pursuantthereto.

 

“Letter-of-CreditRights” means “letter-of-credit rights” as such term is defined in theCode, now owned or hereafter acquired by any Credit Party, including rights topayment or performance under a letter of credit, whether or not such CreditParty, as beneficiary, has demanded or is entitled to demand payment orperformance.

 

“Lettersof Credit” means documentary or standby letters of credit issued for theaccount of any Borrower by any L/C Issuer, and bankers’ acceptances issued byany Borrower, for which Agent and Lenders have incurred Letter of CreditObligations.  The term does not include aSwap Related L/C.

 

 “Leverage Ratio” means, with respect toHoldings, on a consolidated basis, the ratio of (a) Funded Debt as of anydate of determination to (b) the sum of EBITDA for the twelve monthsending on that date of determination.

 

 “LIBOR Business Day” means a BusinessDay on which banks in the City of London are generally open for interbank orforeign exchange transactions.

 

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“LIBORLoan” means a Loan or any portion thereof bearing interest by reference tothe LIBOR Rate.

 

“LIBORPeriod” means, with respect to any LIBOR Loan, each period commencing on aLIBOR Business Day selected by Borrower Representative pursuant to theAgreement and ending one, two or three months thereafter, as selected byBorrower Representative’s irrevocable notice to Agent as set forth in Section 1.5(e);provided, that the foregoing provision relating to LIBOR Periods issubject to the following:

 

(a)           if any LIBOR Period would otherwiseend on a day that is not a LIBOR Business Day, such LIBOR Period shall beextended to the next succeeding LIBOR Business Day unless the result of suchextension would be to carry such LIBOR Period into another calendar month inwhich event such LIBOR Period shall end on the immediately preceding LIBORBusiness Day;

 

(b)           any LIBOR Period that would otherwiseextend beyond the Commitment Termination Date shall end 2 LIBOR Business Daysprior to such date;

 

(c)           any LIBOR Period that begins on thelast LIBOR Business Day of a calendar month (or on a day for which there is nonumerically corresponding day in the calendar month at the end of such LIBORPeriod) shall end on the last LIBOR Business Day of a calendar month;

 

(d)           Borrower Representative shall selectLIBOR Periods so as not to require a payment or prepayment of any LIBOR Loanduring a LIBOR Period for such Loan; and

 

(e)           Borrower Representative shall selectLIBOR Periods so that there shall be no more than 5 separate LIBOR Loans inexistence at any one time.

 

“LIBORRate” means for each LIBOR Period, a rate of interest determined by Agentequal to:

 

(a) withrespect to each Revolving Loan bearing interest at the LIBOR Rate, for eachLIBOR Period, a rate of interest determined by Agent equal to the greater of(i)(A) the offered rate for deposits of Dollars for a three-month LIBORPeriod that appears on Reuters Screen LIBOR01 Page as of 11:00 A.M.(London, England time) two (2) Business Days prior to the first day ineach LIBOR Period; divided by (B) a number equal to 1.0 minus theaggregate (but without duplication) of the rates (expressed as a decimalfraction) of reserve requirements in effect on the day that is 2 LIBOR BusinessDays prior to the beginning of such LIBOR Period (including basic,supplemental, marginal and emergency reserves under any regulations of theFederal Reserve Board or other Governmental Authority having jurisdiction withrespect thereto, as now and from time to time in effect) for Eurocurrencyfunding (currently referred to as “Eurocurrency Liabilities” in Regulation D ofthe Federal Reserve Board that are required to be maintained by a member bankof the Federal Reserve System; and (ii) 2.50%.  If no such offered rate exists with respect toany Revolving Loan,such rate shall be the rate of interest per annum, as determined by Agent andBorrower Representative (rounded upwards, if necessary, to the nearest 1/100 of1.00%) at which deposits of Dollars in immediately available funds are offeredat 11:00 A.M. (London, England time) two (2) Business Days prior tothe first day in the 

 

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applicable LIBOR Period by major financialinstitutions reasonably satisfactory to Agent in the London interbank marketfor the applicable LIBOR Period and for an amount equal or comparable to theprincipal amount of the Revolving Loans to be borrowed, converted or continuedas a LIBOR Loan on such date of determination;

 

(b) with respect to each term loan comprising the Extending Term Loan bearinginterest at the LIBOR Rate, for each LIBOR Period, a rate of interestdetermined by Agent equal to the greater of (i)(A) the offered rate fordeposits of Dollars for the applicable LIBOR Period that appears on ReutersScreen LIBOR01 Page as of 11:00 A.M. (London, England time) two (2) BusinessDays prior to the first day in each LIBOR Period; divided by (B) a numberequal to 1.0 minus the aggregate (but without duplication) of the rates(expressed as a decimal fraction) of reserve requirements in effect on the daythat is 2 LIBOR Business Days prior to the beginning of such LIBOR Period(including basic, supplemental, marginal and emergency reserves under anyregulations of the Federal Reserve Board or other Governmental Authority havingjurisdiction with respect thereto, as now and from time to time in effect) forEurocurrency funding (currently referred to as “Eurocurrency Liabilities” inRegulation D of the Federal Reserve Board that are required to be maintained bya member bank of the Federal Reserve System; and (ii) 2.00%.  If no such offered rate exists with respect toany loans comprising the Extending Term Loan, such rate shall be the rate of interest per annum,as determined by Agent and Borrower Representative (rounded upwards, ifnecessary, to the nearest 1/100 of 1.00%) at which deposits of Dollars inimmediately available funds are offered at 11:00 A.M. (London, Englandtime) two (2) Business Days prior to the first day in the applicable LIBORPeriod by major financial institutions reasonably satisfactory to Agent in theLondon interbank market for the applicable LIBOR Period and for an amount equalor comparable to the principal amount of the Extending Term Loan to beborrowed, converted or continued as a LIBOR Loan on such date of determination;or

 

(c) with respect to each term loan comprising the Existing Term Loan bearinginterest at the LIBOR Rate, for each LIBOR Period, a rate of interestdetermined by Agent equal to: (i) the offered rate for deposits in USDollars for the applicable LIBOR Period that appears on Telerate Page 3750as of 11:00 a.m. (London time), on the second full LIBOR Business Day nextpreceding the first day of such LIBOR Period (unless such date is not aBusiness Day, in which event the next succeeding Business Day will be used);divided by (ii) a number equal to 1.0 minus the aggregate (butwithout duplication) of the rates (expressed as a decimal fraction) of reserverequirements in effect on the day that is 2 LIBOR Business Days prior to thebeginning of such LIBOR Period (including basic, supplemental, marginal andemergency reserves under any regulations of the Federal Reserve Board or otherGovernmental Authority having jurisdiction with respect thereto, as now and fromtime to time in effect) for Eurocurrency funding (currently referred to as “EurocurrencyLiabilities” in Regulation D of the Federal Reserve Board that are required tobe maintained by a member bank of the Federal Reserve System.  With respect to the loans comprising theExisting Term Loan, if such interest rates shall cease to be available fromReuters, the LIBOR Rate shall be determined from such financial reportingservice or other information as shall be mutually acceptable to Agent andBorrower Representative.

 

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“License”means any Copyright License, Patent License, Design License, Trademark Licenseor other license of rights or interests now held or hereafter acquired by anyCredit Party.

 

“Lien”means any mortgage or deed of trust, pledge, hypothecation, assignment, depositarrangement, lien, charge, claim, security interest, easement or encumbrance,or preference, priority or other security agreement or preferential arrangementof any kind or nature whatsoever (including any lease or title retentionagreement, any financing lease having substantially the same economic effect asany of the foregoing, and the filing of, or agreement to give, any financingstatement perfecting a security interest under the Code or comparable law ofany jurisdiction).

 

“Litigation”has the meaning ascribed to it in Section 3.13.

 

“LoanAccount” has the meaning ascribed to it in Section 1.12.

 

“LoanDocuments” means the Agreement, any Notes, the Collateral Documents, theMaster Standby Agreement, the Master Documentary Agreement, and all otheragreements, instruments, documents and certificates identified in the ClosingChecklist executed and delivered to, or in favor of, Agent or any Lenders andincluding all other pledges, powers of attorney, consents, assignments,contracts, notices, and all other written matter whether heretofore, now orhereafter executed by or on behalf of any Credit Party, or any employee of anyCredit Party, and delivered to Agent or any Lender in connection with theAgreement or the transactions contemplated thereby.  Any reference in the Agreement or any otherLoan Document to a Loan Document shall include all appendices, exhibits orschedules thereto, and all amendments, restatements, supplements or othermodifications thereto, and shall refer to the Agreement or such Loan Documentas the same may be in effect at any and all times such reference becomesoperative.  Notwithstanding theforegoing, none of the Hedge Agreements shall constitute Loan Documents.

 

“Loans”means the Revolving Loan, the Swing Line Loan, the Existing Term Loan and theExtending Term Loan; and “Loan” means any one of the foregoing Loans.

 

“LockBoxes” has the meaning ascribed to it in Annex C.

 

“MarginStock” has the meaning ascribed to in Section 3.10.

 

“MasterDocumentary Agreement” means the Master Agreement for Documentary Lettersof Credit dated as of May 15, 2003 among Borrowers, as Applicant(s), andGE Capital, as amended, restated, supplemented or otherwise modified from timeto time.

 

“MasterStandby Agreement” means the Master Agreement for Standby Letters of Creditdated as of May 15, 2003 among Borrowers, as Applicant(s), and GE Capital,as issuer, as amended, restated, supplemented or otherwise modified from time totime.

 

“MaterialAdverse Effect” means a material adverse effect on (a) the business,assets, operations, prospects or financial or other condition of the CreditParties considered as a whole, (b) any Borrower’s ability to pay any ofthe Loans or any of the other Obligations in 

 

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accordance with the terms of the Agreement, (c) theCollateral or Agent’s Liens, on behalf of itself and Lenders on the Collateralor the priority of such Liens, or (d) Agent’s or any Lender’s rights andremedies under the Agreement and the other Loan Documents.

 

 “Maximum Amount” means, as of any dateof determination, an amount equal to the Revolving Loan Commitment of allLenders as of that date.

 

“MaximumLawful Rate” has the meaning ascribed to it in Section 1.5(f).

 

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

 

“MortgagedProperties” has the meaning assigned to it in Annex D.

 

“Mortgages”means each of the mortgages, debentures, deeds of trust, leasehold mortgages,leasehold deeds of trust, collateral assignments of leases or other real estatesecurity documents delivered by any Credit Party to Agent, on behalf of itselfand Lenders with respect to the Mortgaged Properties, as amended, restated,supplemented or otherwise modified from time to time, all in form and substancereasonably satisfactory to Agent.

 

“MultiemployerPlan” means a “multiemployer plan” as defined in Section 4001(a)(3) ofERISA, and to which any Credit Party or ERISA Affiliate is making, is obligatedto make or has made or been obligated to make, contributions on behalf ofparticipants who are or were employed by any of them.

 

“NewSubordinated Debt” means the Indebtedness evidenced by the New SubordinatedDebt Documents.

 

“NewSubordinated Debt Documents” means the New Subordinated Notes, the NewSubordinated Debt Indenture, and all other documents executed in connectiontherewith.

 

“NewSubordinated Debt Indenture” means that certain Indenture dated as of August 9,2004 among Blount, Inc., as issuer, the “Guarantors” (as defined therein)and The Bank of New York as trustee.

 

“NewSubordinated Notes” means those certain 8.875% Senior Subordinated Notesdue 2012 issued by Blount, Inc. in an aggregate original principal amountof $175,000,000.

 

“Non-FundingLender” means any Lender (a) that has failed to fund any paymentsrequired to be made by it****within three (3) BusinessDays after any such payment is due, (b) that has given verbal or writtennotice to a Borrower, Agent or any Lender or has otherwise publicly announcedthat such Lender believes it will fail to fund all payments required to be madeby it or fund all purchases of participations required to be funded by it underthis Agreement and the other Loan Documents as of any Settlement Date, (c) asto which Agent or any L/C Issuer has a good faith belief that such Lender hasdefaulted in fulfilling its obligations (as a lender, agent or letter of creditissuer) under one or more other syndicated credit facilities or (d) withrespect to which one or more Lender-Related Distress Events has occurred withrespect to such Person or any Person that directly or indirectly controls suchLender and Agent has 

 

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determined that such Lender may become a Non-FundingLender.  For purposes of this definition,control of a Person shall have the same meaning as in the second sentence ofthe definition of Affiliate.

 

“Notes”means, collectively, the Revolving Notes, the Swing Line Notes and the ExistingTerm Loan Notes and the Extending Term Loan Notes; and “Note” means anyone of the foregoing Notes.

 

“Noticeof Conversion/Continuation-LIBOR Rate” has the meaning ascribed to it in Section 1.5(f).

 

“Noticeof Revolving Credit Advance” has the meaning ascribed to it in Section 1.1(a)(i).

 

“Obligations” means all loans, advances, debts, liabilities and obligations for theperformance of covenants, tasks or duties or for payment of monetary amounts(whether or not such performance is then required or contingent, or such amountsare liquidated or determinable) owing by any Credit Party to Agent or anyLender, and all covenants and duties regarding such amounts, of any kind ornature, present or future, whether or not evidenced by any note, agreement,letter of credit agreement or other instrument, arising under the Agreement orany of the other Loan Documents.  Thisterm includes all principal, interest, Fees, expenses, attorneys’ fees and anyother sum chargeable to any Credit Party under the Agreement or any of theother Loan Documents (including all interest, fees and expenses thataccrue after the commencement of any case or proceeding by or against anyCredit Party in bankruptcy or any similar proceeding, whether or not allowed insuch case or proceeding) and all SwapRelated Reimbursement Obligations and alldebts, liabilities and obligations of any kind or nature, present or future, ofany Credit Party to any Lender (or any Affiliate of any Lender) arising inconnection with any Hedge Agreement and if any Person ceases to be a Lenderhereunder, any debts, liabilities and obligations of any kind or nature,present or future, of any Credit Party to such Person (or an Affiliate of suchPerson) arising in connection with any Hedge Agreement entered into at a timewhen such Person was a Lender hereunder.

 

“Omark”has the meaning ascribed to it in the preamble of the Agreement.

 

“OtherTaxes” has the meaning ascribed to it in Section 1.15(b).

 

 “Patent License” means rights under anywritten agreement now owned or hereafter acquired by any Credit Party grantingany right with respect to any invention on which a Patent is in existence.

 

“PatentSecurity Agreements” means the Patent Security Agreements made in favor ofAgent, on behalf of itself and Lenders, by each applicable Credit Party.

 

“Patents”means all of the following in which any Credit Party now holds or hereafteracquires any interest: (a) all letters patent of the United States or ofany other country, all registrations and recordings thereof, and allapplications for letters patent of the United States or of any other country,including registrations, recordings and applications in the United States 

 

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Patent and Trademark Office or in any similar officeor agency of the United States or any State, and (b) all reissues,continuations, continuations-in-part or extensions thereof.

 

“PBGC”means the Pension Benefit Guaranty Corporation.

 

“PensionPlan” means a Plan described in Section 3(2) of ERISA.

 

“PermittedAcquisition” has the meaning ascribed to it in Section 6.1(b).

 

“PermittedEncumbrances” means the following encumbrances: (a) Liens for taxes orassessments or other governmental Charges not yet due and payable or which arebeing contested in accordance with Section 5.2(b); (b) pledgesor deposits of money securing statutory obligations under workmen’scompensation, unemployment insurance, social security or public liability lawsor similar legislation (excluding Liens under ERISA); (c) pledges ordeposits of money securing bids, tenders, contracts (other than contracts forthe payment of money) or leases to which any Credit Party is a party as lesseemade in the ordinary course of business; (d) inchoate and unperfectedworkers’, mechanics’ or similar liens arising in the ordinary course ofbusiness, so long as such Liens attach only to Equipment, Fixtures and/or RealEstate; (e) carriers’, warehousemen’s, suppliers’ or other similarpossessory liens arising in the ordinary course of business and securingliabilities in an outstanding aggregate amount not in excess of $100,000 at anytime; (f) deposits securing, or in lieu of, surety, appeal or customsbonds in proceedings to which any Credit Party is a party; (g) anyattachment or judgment lien not constituting an Event of Default under Section 8.1(j);(h) zoning restrictions, easements, licenses, or other restrictions on theuse of any Real Estate or other minor irregularities in title (includingleasehold title) thereto, so long as the same do not materially impair the use,value, or marketability of such Real Estate; (i) presently existing orhereafter created Liens in favor of Agent, on behalf of itself and Lenders; (j) Liensexpressly permitted under clauses (b), (c) and (d) ofSection 6.7 of the Agreement; (k) [Reserved]; (l) Liensor other encumbrances for which exceptions are included in the title insurancepolicies accepted by Agent involving the Mortgages; (m) any interest ortitle of a lessor under any lease entered into by any Credit Party orSubsidiary of a Credit Party in the ordinary course of business and coveringonly the assets so leased; (n) Liens arising from precautionary UniformCommercial Code financing statement filings with respect to operating leases orconsignment arrangements entered into by any Credit Party or any Subsidiary ofany Credit Party in the ordinary course of business and only covering theassets so leased or consigned; (o) subject to the requirements of AnnexC, Liens in favor of any banking institution arising by operation of law encumberingdeposits (including the right of set-off) held by such banking institutionsincurred in the ordinary course of business and which are within the generalparameters customary in the banking industry; (p) leases and subleases ofReal Estate not materially interfering with the ordinary conduct of business ofthe applicable Credit Parties and otherwise consented to by Agent which consentwill not be unreasonably withheld; and (q) Liens under Section 412 ofthe IRC or Section 302 of ERISA so long as such Liens secure liabilitiesnot in excess of $250,000 and so long as the PBGC has not taken any affirmativeaction to perfect such Liens.

 

“Person”means any individual, sole proprietorship, partnership, joint venture, trust,unincorporated organization, association, corporation, limited liabilitycompany, institution, public benefit corporation, other entity or government(whether federal, state, county, 

 

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city, municipal, local, foreign, or otherwise,including any instrumentality, division, agency, body or department thereof).

 

“Plan”means, at any time, an “employee benefit plan”, as defined in Section 3(3) ofERISA, other than a Multiemployer Plan, that any Credit Party or ERISAAffiliate maintains, contributes to or has an obligation to contribute to orhas maintained, contributed to or had an obligation to contribute to at anytime within the past seven (7) years on behalf of participants who are orwere employed by any Credit Party or ERISA Affiliate.

 

“PledgeAgreement” means, collectively, the US Pledge Agreement, the Foreign PledgeAgreements and any other pledge agreements entered into after the Closing Dateby any Credit Party (as required by the Agreement or any other Loan Document).

 

 “Prior Credit Agreement” has themeaning ascribed to it in the recitals hereof.

 

“PriorLender Group” has the meaning ascribed to it in the recitals hereof.

 

“ProForma” means the unaudited consolidated balance sheet of Holdings and itsSubsidiaries as of September 30, 2009 after giving proformaeffect to the Related Transactions.

 

“ProRata Share” means with respect to all matters relating to any Lender, (a) withrespect to the Revolving Loan, the percentage obtained by dividing (i) theRevolving Loan Commitment of that Lender by (ii) the aggregate RevolvingLoan Commitments of all Lenders, as any such percentages may be adjusted byassignments permitted pursuant to Section 9.1, (b) withrespect to the Term Loan B, the percentage obtained by dividing (i) the TermLoan B Commitment of that Lender by (ii) the aggregate Term Loan BCommitments of all Lenders, as any such percentages may be adjusted byassignments permitted pursuant to Section 9.1, (c) withrespect to all Loans prior to the Commitment Termination Date, the percentageobtained by dividing (i) the aggregate Commitments of that Lender by (ii) theaggregate Commitments of all Lenders, and (d) with respect to all Loans onand after the Commitment Termination Date, the percentage obtained by dividing (i) theaggregate outstanding principal balance of the Loans held by that Lender, by (ii) theoutstanding principal balance of the Loans held by all Lenders.

 

“Proceeds”means “proceeds,” as such term is defined in the Code, including (a) anyand all proceeds of any insurance, indemnity, warranty or guaranty payable toany Credit Party from time to time with respect to any of the Collateral, (b) anyand all payments (in any form whatsoever) made or due and payable to any CreditParty from time to time in connection with any requisition, confiscation,condemnation, seizure or forfeiture of all or any part of the Collateral by anyGovernmental Authority (or any Person acting under color of governmentalauthority), (c) any claim of any Credit Party against third parties (i) forpast, present or future infringement of any Patent or Patent License, or  (ii) for past, present or futureinfringement or dilution of any Copyright, Copyright License, Designs, DesignLicenses, Trademark or Trademark License, or for injury to the goodwillassociated with any Trademark or Trademark License, (d) any recoveries byany Credit Party against third parties with respect to any litigation ordispute concerning any of the Collateral including claims arising out of theloss or nonconformity of, interference with the use of, defects in, orinfringement of rights in, or damage to, Collateral, (e) all amountscollected on, or distributed on account of, other Collateral, 

 

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including dividends, interest, distributions andInstruments with respect to Investment Property and pledged Stock, and (f) anyand all other amounts, rights to payment or other property acquired upon thesale, lease, license, exchange or other disposition of Collateral and allrights arising out of Collateral.

 

“Projections”means Holdings’ forecasted consolidated: (a) balance sheets; (b) profit and loss statements; (c) cashflow statements; and (d) capitalization statements, all prepared on aSubsidiary by Subsidiary or division-by-division basis, if applicable, andotherwise consistent with the historical Financial Statements of Holdings,together with appropriate supporting details and a statement of underlyingassumptions.

 

 “Qualified Plan” means a Pension Planthat is intended to be tax-qualified under Section 401(a) of the IRC.

 

“ReaffirmationAgreement” means that certain Reaffirmation Agreement, dated as of theClosing Date, entered into by and among Agent, on behalf of itself and Lenders,and each Credit Party.

 

“RealEstate” has the meaning ascribed to it in Section 3.6.

 

“Refinancing”means the amendment and restatement of the Prior Credit Agreement pursuant tothe terms and conditions herein.

 

“RefundedSwing Line Loan” has the meaning ascribed to it in Section 1.1(c)(iii).

 

 “Related Transactions” means theborrowing of Revolving Credit Advances and the Term Loan B on the Closing Date,the Refinancing, the payment of all fees, costs and expenses associated withall of the foregoing and the execution and delivery of all of the RelatedTransactions Documents.

 

“RelatedTransactions Documents” means the Loan Documents and all other agreementsor instruments executed in connection with the Related Transactions.

 

“Release”means any release, threatened release, spill, emission, leaking, pumping,pouring, emitting, emptying, escape, injection, deposit, disposal, discharge,dispersal, dumping, leaching or migration of Hazardous Material in the indooror outdoor environment, including the movement of Hazardous Material through orin the air, soil, surface water, ground water or property.

 

“ReplacementLender” has the meaning ascribed to it in Section 1.16(d).

 

“RequisiteLenders” means Lenders holding 50.1% or more of the unutilized Commitments(unless such Commitments have been terminated), participations in Swing LineLoans and Letters of Credit, the Revolving Loans and the Term Loan B.

 

“RequisiteRevolving Lenders” means Lenders having (a) 50.1% or more of theRevolving Loan Commitments, or (b) if the Revolving Loan Commitments havebeen 

 

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terminated, 50.1% or more of the aggregate outstandingamount of the Revolving Loan, participation interests in Swing Line Loans.

 

“RestrictedPayment” means, with respect to any Credit Party (a) the declarationor payment of any dividend or the incurrence of any liability to make any otherpayment or distribution of cash or other property or assets in respect ofStock; (b) any payment on account of the purchase, redemption, defeasance,sinking fund or other retirement of such Credit Party’s Stock or any otherpayment or distribution made in respect thereof, either directly or indirectly;(c) any payment or prepayment of principal of, premium, if any, orinterest, fees or other charges on or with respect to, and any redemption,purchase, retirement, defeasance, sinking fund or similar payment and any claimfor rescission with respect to, any Subordinated Debt; (d) any paymentmade to redeem, purchase, repurchase or retire, or to obtain the surrender of,any outstanding warrants, options or other rights to acquire Stock of suchCredit Party now or hereafter outstanding; (e) any payment of a claim forthe rescission of the purchase or sale of, or for material damages arising fromthe purchase or sale of, any shares of such Credit Party’s Stock or of a claimfor reimbursement, indemnification or contribution arising out of or related toany such claim for damages or rescission; (f) any payment, loan,contribution, or other transfer of funds or other property to any Stockholderof such Credit Party other than payment of compensation in the ordinary courseof business to Stockholders who are employees of such Person; and (g) anypayment of management fees (or other fees of a similar nature) by such CreditParty to any Stockholder of such Credit Party or its Affiliates.

 

 “Revolving Credit Advance” has themeaning ascribed to it in Section 1.1(a)(i).

 

“RevolvingLender” means, as of any date of determination, a Lender having a RevolvingLoan Commitment.

 

“RevolvingLoan” and “Revolving Loans” means, at any time, the sum of (i) theaggregate amount of Revolving Credit Advances outstanding to Borrowers plus(ii) the aggregate Letter of Credit Obligations incurred on behalf ofBorrowers.  Unless the context otherwiserequires, references to the outstanding principal balance of the Revolving Loanshall include the outstanding balance of Letter of Credit Obligations.

 

“Revolving Loan Commitment” means (a) asto any Lender, the aggregate commitment of such Lender to make Revolving CreditAdvances or incur Letter of Credit Obligations as set forth on Annex Jto this Agreement or, if such Lender enters into an Assignment Agreement afterthe Closing Date, in the most recent Assignment Agreement executed by suchLender and (b) as to all Lenders, the aggregate commitment of all Lendersto make Revolving Credit Advances or incur Letter of Credit Obligations, whichaggregate commitment shall be Sixty Million Dollars ($60,000,000), as suchamount may be adjusted, if at all, from time to time in accordance with theAgreement.

 

“Revolving Note” and “Revolving Notes”have the respective meanings ascribed to them in Section 1.1(a)(ii).

 

“S&P” means Standard & Poor’sRatings Group, a division of McGraw Hill, Inc.

 

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“SecurityAgreement” means the Security Agreement dated as of May 15, 2003entered into by and among Agent, on behalf of itself and Lenders, and eachCredit Party that is a signatory thereto, as amended, restated, supplemented orotherwise modified from time to time.

 

“Software”means all “software” as such term is defined in the Code, now owned orhereafter acquired by any Credit Party, other than software embedded in anycategory of Goods, including all computer programs and all supportinginformation provided in connection with a transaction related to any program.

 

“Solvent”means, with respect to any Person organized under the laws of the United Statesor any state thereof, on a particular date, that on such date (a) the fairvalue of the property of such Person is greater than the total amount ofliabilities, including contingent liabilities, of such Person; (b) thepresent fair salable value of the assets of such Person is not less than theamount that will be required to pay the probable liability of such Person onits debts as they become absolute and matured; (c) such Person does notintend to, and does not believe that it will, incur debts or liabilities beyondsuch Person’s ability to pay as such debts and liabilities mature; and (d) suchPerson is not engaged in a business or transaction, and is not about to engagein a business or transaction, for which such Person’s property would constitutean unreasonably small capital. The amount of contingent liabilities (such aslitigation, guaranties and pension plan liabilities) at any time shall becomputed as the amount that, in light of all the facts and circumstancesexisting at the time, represents the amount that can be reasonably be expectedto become an actual or matured liability.

 

“SPV” means anyspecial purpose funding vehicle identified as such in a writing by any Lenderto Agent.

 

“Sterling” meansthe lawful money of the United Kingdom.

 

“Stock”means all shares, options, warrants, general or limited partnership interests,membership interests or other equivalents (regardless of how designated) of orin a corporation, partnership, limited liability company or equivalent entitywhether voting or nonvoting, including common stock, preferred stock or anyother “equity security” (as such term is defined in Rule 3a11-1 of theGeneral Rules and Regulations promulgated by the Securities and ExchangeCommission under the Securities Exchange Act of 1934).

 

“Stockholder”means, with respect to any Person, each holder of Stock of such Person.

 

“SubordinatedDebt” means the Indebtedness evidenced by the New Subordinated DebtDocuments and any other Indebtedness of any Credit Party subordinated to theObligations in a manner and form satisfactory to Agent and Lenders in theirsole discretion, as to right and time of payment and as to any other rights andremedies thereunder.

 

“Subsidiary”means, with respect to any Person, (a) any corporation of which anaggregate of more than 50% of the outstanding Stock having ordinary votingpower to elect a majority of the board of directors of such corporation(irrespective of whether, at the time, Stock of any other class or classes ofsuch corporation shall have or might have voting power by reason of thehappening of any contingency) is at the time, directly or indirectly, ownedlegally or 

 

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beneficially by such Person or one or moreSubsidiaries of such Person, or with respect to which any such Person has theright to vote or designate the vote of 50% or more of such Stock whether byproxy, agreement, operation of law or otherwise, and (b) any partnershipor limited liability company in which such Person and/or one or moreSubsidiaries of such Person shall have an interest (whether in the form ofvoting or participation in profits or capital contribution) of more than 50% orof which any such Person is a general partner or may exercise the powers of ageneral partner.  Unless the contextotherwise requires, each reference to a Subsidiary shall be a reference to a Subsidiaryof a Borrower.

 

“SupportingObligations” means all “supporting obligations” as such term is defined inthe Code, including letters of credit and guaranties issued in support ofAccounts, Chattel Paper, Documents, General Intangibles, Instruments, orInvestment Property.

 

“SwapRelated L/C” means a letter of credit or other credit enhancement providedby GE Capital to the extent supporting the payment obligations by any Borrowerunder an interest rate protection or hedging agreement or transaction (including,but not limited to, interest rate swaps, caps, collars, floors and similartransactions) designed to protect or manage exposure to the fluctuations in theinterest rates applicable to any of the Loans, and which agreement ortransaction Borrower entered into as the result of a specific referral pursuantto which GE Capital, GE Corporate Financial Services, Inc. or any otherAffiliate of GE Capital had arranged for any Borrower to enter into suchagreement or transaction.  The termincludes a Swap Related L/C as it may be increased from time to time fully tosupport any Borrower’s payment obligations under any and all such interest rateprotection or hedging agreements or transactions.”

 

“SwapRelated Reimbursement Obligation” has the meaning ascribed to it in Section 1.2A.

 

“SwingLine Advance” has the meaning ascribed to it in Section 1.1(c)(i).

 

“SwingLine Availability” has the meaning ascribed to it in Section 1.1(c)(i).

 

“SwingLine Commitment” means, as to the Swing Line Lender, the commitment of theSwing Line Lender to make Swing Line Advances as set forth on Annex Jto the Agreement, which commitment constitutes a subfacility of the RevolvingLoan Commitment of the Swing Line Lender.

 

“SwingLine Lender” means GE Capital.

 

“SwingLine Loan” means, as the context may require, at any time, the aggregateamount of Swing Line Advances outstanding to Borrowers.

 

“SwingLine Note” has the meaning ascribed to it in Section 1.1(c)(ii).

 

“Target”has the meaning ascribed to it in Section 6.1(b).

 

“Taxes”means present and future taxes (including, but not limited to, income,corporate, capital, excise, property, ad valorem, sales, use, payroll, valueadded and franchise 

 

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taxes, deductions, withholdings and custom duties),charges, fees, imposts, levies, deductions or withholdings and all liabilitieswith respect thereto, imposed by any Governmental Authority excluding, in thecase of Section 1.15 only, (a) taxes imposed on or measured bythe net income or capital of Agent or a Lender by the jurisdictions under thelaws of which Agent and Lenders are organized or conduct business or anypolitical subdivision thereof, (b) any branch profits taxes imposed by theUnited States of America or any similar tax imposed by any other jurisdictionin which a Lender is located and (c) in the case of a Foreign Lender(other than an assignee pursuant to a request by Borrowers under Section 1.16(d)),any withholding tax that is imposed on amounts payable to such Foreign Lenderat the time such Foreign Lender becomes a party to this Agreement (ordesignates a new lending office, unless such designation is at the request ofBorrowers) or is attributable to such Foreign Lender’s failure to comply with Section 1.15(d),except to the extent that such Foreign Lender (or its assignor, if any) wasentitled, at the time of designation of a new lending office (or assignment),to receive additional amounts from Borrowers with respect to such withholdingtax pursuant to Section 1.15(a).

 

“Term Loan B” means, collectively, the ExistingTerm Loan and the Extending Term Loan.

 

“TermLoan B Commitment” means, collectively, the Existing Term Loan Commitmentand the Extending Term Loan Commitment.

 

“TerminationDate” means the date on which (a) the Loans have been indefeasiblyrepaid in full, (b) except as set forth in clause (c) below, allother Obligations under the Agreement and the other Loan Documents have beencompletely discharged (other than contingent indemnification obligations solong as no suits, actions, proceedings or claims are pending or threatenedagainst any Indemnified Person asserting any damages, losses and liabilitiesthat are Indemnified Liabilities), (c) all Letter of Credit Obligationshave been cash collateralized, cancelled or backed by standby letters of creditin accordance with Annex B, and (d) none of Borrowers shall haveany further right to borrow any monies under the Agreement.

 

“TitleIV Plan” means a Pension Plan (other than a Multiemployer Plan), that iscovered by Title IV of ERISA, and that any Credit Party or ERISA Affiliatemaintains, contributes to or has an obligation to contribute to on behalf ofparticipants who are or were employed by any of them.

 

“Trademark License” means rights under anywritten agreement now owned or hereafter acquired by any Credit Party grantingany right to use any Trademark.

 

“TrademarkSecurity Agreements” means the Trademark Security Agreements made in favorof Agent, on behalf of itself, by each applicable Credit Party.

 

“Trademarks”means all of the following now owned or hereafter existing or adopted oracquired by any Credit Party: (a) all trademarks, trade names, corporatenames, business names, trade styles, service marks, logos, other source orbusiness identifiers, prints and labels on which any of the foregoing haveappeared or appear, designs and general intangibles of like nature (whetherregistered or unregistered), all registrations and recordings thereof, and allapplications in connection therewith, including registrations, recordings andapplications in the 

 

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United States Patent and Trademark Office or in anysimilar office or agency of the United States, any state or territory thereof,or any other country or any political subdivision thereof; (b) allreissues, extensions or renewals thereof; and (c) all goodwill associatedwith or symbolized by any of the foregoing.

 

“UnfundedPension Liability” means, at any time, the aggregate amount, if any, of thesum of (a) the amount by which the present value of all accrued benefitsunder each Title IV Plan exceeds the fair market value of all assets of suchTitle IV Plan allocable to such benefits in accordance with Title IV of ERISA,all determined as of the most recent valuation date for each such Title IV Planusing the actuarial assumptions for funding purposes in effect under such TitleIV Plan, and (b) for a period of 5 years following a transaction whichmight reasonably be expected to be covered by Section 4069 of ERISA, theliabilities (whether or not accrued) that could be avoided by any Credit Partyor any ERISA Affiliate as a result of such transaction.

 

“USPledge Agreement” means the Amended and Restated Pledge Agreement dated asof August 9, 2004 executed by the Credit Parties in favor of Agent, onbehalf of itself and the Lenders pledging all Stock of their domesticSubsidiaries and 65% of the stock of their direct Foreign Subsidiaries, if any,and all indebtedness for money borrowed of a Subsidiary of Holdings, asamended, restated, supplemented or otherwise modified from time to time.

 

Rules ofconstruction with respect to accounting terms used in the Agreement or theother Loan Documents shall be as set forth in Annex G.  All other undefined terms contained in any ofthe Loan Documents shall, unless the context indicates otherwise, have themeanings provided for by the Code to the extent the same are used or definedtherein; in the event that any term is defined differently in differentArticles or Divisions of the Code, the definition contained in Article orDivision 9 shall control.  Unlessotherwise specified, references in the Agreement or any of the Appendices to aSection, subsection or clause refer to such Section, subsection or clause ascontained in the Agreement.  The words “herein,”“hereof” and “hereunder” and other words of similar import refer to theAgreement as a whole, including all Annexes, Exhibits and Schedules, as thesame may from time to time be amended, restated, modified or supplemented, andnot to any particular section, subsection or clause contained in the Agreementor any such Annex, Exhibit or Schedule. An Event of Default shall “exist”, “continue” or be “continuing” untilsuch Event of Default is waived in writing in accordance with Section 11.2of the Agreement.

 

Whereverfrom the context it appears appropriate, each term stated in either thesingular or plural shall include the singular and the plural, and pronounsstated in the masculine, feminine or neuter gender shall include the masculine,feminine and neuter genders.  The words “including”,“includes” and “include” shall be deemed to be followed by the words “withoutlimitation”; the word “or” is not exclusive; references to Persons includetheir respective successors and assigns (to the extent and only to the extentpermitted by the Loan Documents) or, in the case of governmental Persons,Persons succeeding to the relevant functions of such Persons; and allreferences to statutes and related regulations shall include any amendments ofthe same and any successor statutes and regulations.  Whenever any provision in any Loan Documentrefers to the knowledge (or an analogous phrase) of any Credit Party, suchwords are intended to signify that such Credit Party has actual knowledge orawareness of a particular fact 

 

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or circumstance or that such Credit Party, if it hadexercised reasonable diligence, would have known or been aware of such fact orcircumstance.

 

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**ANNEX E (SECTION 4.1(A))TOCREDIT AGREEMENT**

** **

**FINANCIAL STATEMENTS ANDPROJECTIONS — REPORTING**

 

Borrowersshall deliver or cause to be delivered to Agent or to Agent and Lenders, asindicated, the following:

 

(a)           Monthly Financials.  To Agent and Lenders, within 30 days afterthe end of each Fiscal Month, financial information regarding Holdings and itsSubsidiaries, certified by the Chief Financial Officer of Holdings, consistingof consolidated (i) unaudited balance sheets as of the close of suchFiscal Month and the related statements of income and cash flows for thatportion of the Fiscal Year ending as of the close of such Fiscal Month; (ii) unauditedstatements of income and cash flows for such Fiscal Month, setting forth incomparative form the figures for the corresponding period in the prior year andthe figures contained in the Projections for such Fiscal Year, all prepared inaccordance with GAAP (subject to normal year-end adjustments); and (iii) asummary of the outstanding balance of all Intercompany Notes as of the last dayof that Fiscal Month; provided, however, Holdings and itsSubsidiaries shall not be required to deliver such monthly financial reportsunless EBITDA for the 4 Fiscal Quarter period ended as of the last FiscalQuarter for which financial statements have been delivered pursuant to clause (b) ofthis Annex E is less than $75,000,000. If required, such financial information shall be accompanied by thecertification of the Chief Financial Officer of Holdings that (i) suchfinancial information presents fairly in accordance with GAAP (subject tonormal year-end adjustments) the financial position and results of operationsof Holdings and its Subsidiaries, on a consolidated basis as at the end of suchFiscal Month and for that portion of the Fiscal Year then ended and (ii) anyother information presented is true, correct and complete in all materialrespects and that there was no Default or Event of Default in existence as ofsuch time or, if a Default or Event of Default has occurred and is continuing,describing the nature thereof and all efforts undertaken to cure such Defaultor Event of Default.  In addition, suchfinancial information shall be accompanied by the information and reportsrequired by clause (a) of Annex F.

 

(b)           Quarterly Financials.  To Agent and Lenders, within 45 days afterthe end of each Fiscal Quarter, consolidated financial information regardingHoldings and its Subsidiaries, certified by the Chief Financial Officer ofHoldings, including (i) unaudited balance sheets as of the close of suchFiscal Quarter and the related statements of income and cash flow for thatportion of the Fiscal Year ending as of the close of such Fiscal Quarter and (ii) unauditedstatements of income and cash flows for such Fiscal Quarter, in each casesetting forth in comparative form the figures for the corresponding period inthe prior year and the figures contained in the Projections for such FiscalYear, all prepared in accordance with GAAP (subject to normal year-endadjustments).  Such financial informationshall be accompanied by (A) a statement in reasonable detail (each, a “ComplianceCertificate”) showing the calculations used in determining compliance witheach of the Financial Covenants that is tested on a quarterly basis and (B) thecertification of the Chief Financial Officer of Holdings that (i) suchfinancial information presents fairly in accordance with GAAP (subject tonormal year-end adjustments) the financial position, results of operations andstatements of cash flows of Holdings and its 

 

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Subsidiaries, on a consolidated basis, as at the endof such Fiscal Quarter and for that portion of the Fiscal Year then ended, and (ii) anyother information presented is true, correct and complete in all materialrespects and that there was no Default or Event of Default in existence as ofsuch time or, if a Default or Event of Default has occurred and is continuing,describing the nature thereof and all efforts undertaken to cure such Defaultor Event of Default.  In addition, suchfinancial information shall be accompanied by the information and reportsrequired by clause (a) of Annex F.

 

(c)           Operating Plan. To Agent andLenders, as soon as available, but not later than 30 days after the end of eachFiscal Year, an annual operating plan for Holdings and its Subsidiaries, on aconsolidated basis, approved by the Board of Directors of Holdings, for thefollowing Fiscal Year, which (i) includes a statement of all of thematerial assumptions on which such plan is based, (ii) includes monthlybalance sheets, income statements and statements of cash flows for thefollowing year and (iii) integrates sales, gross profits, operatingexpenses, operating profit, cash flow projections and Borrowing Availabilityprojections, all prepared on the same basis and in similar detail as that onwhich operating results are reported (and in the case of cash flow projections,representing management’s good faith estimates of future financial performancebased on historical performance), and including plans for personnel, CapitalExpenditures and facilities.

 

(d)           Annual Audited Financials. ToAgent and Lenders, within 90 days after the end of each Fiscal Year, auditedFinancial Statements for Holdings and its Subsidiaries on a consolidated basis,consisting of balance sheets and statements of income and retained earnings andcash flows, setting forth in comparative form in each case the figures for theprevious Fiscal Year, which Financial Statements shall be prepared inaccordance with GAAP and certified without qualification, by an independentcertified public accounting firm of national standing or otherwise acceptableto Agent.  Such Financial Statements shallbe accompanied by (i) a statement prepared in reasonable detail showingthe calculations used in determining compliance with each of the FinancialCovenants, (ii) a report from such accounting firm to the effect that, inconnection with their audit examination, nothing has come to their attention tocause them to believe that a Default or Event of Default has occurred (orspecifying those Defaults and Events of Default that they became aware of), itbeing understood that such audit examination extended only to accountingmatters and that no special investigation was made with respect to theexistence of Defaults or Events of Default, (iii) if available, a letteraddressed to Agent, on behalf of itself, and Lenders, in form and substancereasonably satisfactory to Agent and subject to standard qualificationsrequired by nationally recognized accounting firms, signed by such accountingfirm acknowledging that Agent and Lenders are entitled to rely upon suchaccounting firm’s certification of such audited Financial Statements, (iv) theannual letters to such accountants in connection with their audit examinationdetailing contingent liabilities and material litigation matters, and (v) thecertification of the Chief Executive Officer or Chief Financial Officer ofHoldings and its Subsidiaries that all such Financial Statements present fairlyin accordance with GAAP the financial position, results of operations andstatements of cash flows of Holdings and its Subsidiaries on a consolidatedbasis, as at the end of such Fiscal Year and for the period then ended, andthat there was no Default or Event of Default in existence as of such time or,if a Default or Event of Default has occurred and is continuing, describing thenature thereof and all efforts undertaken to cure such Default or Event ofDefault.

 

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(e)           Management Letters.  To Agent and Lenders, within a reasonableperiod of time (in no event in excess of 30 days) after delivery thereof to anyCredit Party or the audit committee of Holdings for review, copies of allmanagement letters, exception reports or similar letters or reports received bysuch audit committee or Credit Party from its independent certified publicaccountants.

 

(f)            Default Notices.  To Agent and Lenders, as soon as practicable,and in any event within 5 Business Days after an executive officer of anyBorrower has actual knowledge of the existence of any Default or Event ofDefault, telephonic or telecopied notice specifying the nature of such Defaultor Event of Default or other event, including the anticipated effect thereof,which notice, if given telephonically, shall be promptly confirmed in writingon the next Business Day.

 

(g)           SEC Filings and Press Releases.  To Agent and Lenders, promptly upon theirbecoming available, copies of:  (i) allFinancial Statements, reports, notices and proxy statements made publiclyavailable by any Credit Party to its security holders; (ii) all regularand periodic reports and all registration statements and prospectuses, if any,filed by any Credit Party with any securities exchange or with the Securitiesand Exchange Commission or any governmental or private regulatory authority;and (iii) all press releases and other statements made available by any CreditParty to the public concerning material changes or developments in the businessof any such Person.

 

(h)           Subordinated Debt and EquityNotices.  To Agent, as soon aspracticable, copies of all material written notices given or received by anyCredit Party with respect to any Subordinated Debt or Stock of such Person,and, within 2 Business Days after any Credit Party obtains knowledge of anymatured or unmatured event of default with respect to any Subordinated Debt,notice of such event of default.

 

(i)            Supplemental Schedules.  To Agent, supplemental disclosures, if any,required by Section 5.6.

 

(j)            Litigation.  To Agent in writing, promptly upon learningthereof, notice of any Litigation commenced or threatened against any CreditParty that (i) could reasonably be likely to result in damages in excessof $1,000,000 (net of insurance coverages for such damages), (ii) seeksinjunctive relief, (iii) is asserted or instituted against any Plan, itsfiduciaries or its assets or against any Credit Party or ERISA Affiliate inconnection with any Plan, (iv) alleges criminal misconduct by any CreditParty, (v) alleges the violation of any law regarding, or seeks remediesin connection with, any Environmental Liabilities to the extent such Litigationis commenced by a Governmental Authority or otherwise to the extent suchLitigation seeks damages in excess of $1,000,000, or (vi) involves anyproduct recall.

 

(k)           Insurance Notices.  To Agent, disclosure of losses or casualtiesrequired by Section 5.4.

 

(l)            Lease Default Notices.  To Agent, within two (2) Business Daysafter receipt thereof, copies of (i) any and all default notices receivedunder or with respect to any 

 

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leased location or public warehouse where Collateralis located, and (ii) such other notices or documents as Agent mayreasonably request.

 

(m)          Lease Amendments.  To Agent, within two (2) Business Daysafter receipt thereof, copies of all material amendments to real estate leaseswith respect to real property located in Clackamas, Oregon and Kansas City,Missouri.

 

(n)           Indemnification Agreements.  To Agent, within two (2) Business Daysafter receipt of any claim, Blount, Inc. shall provide to Agent a reportof any claims, individually or in the aggregate, in excess of $1,000,000 (andany payments made by any Credit Party in connection therewith) pursuant to anyindemnification obligations with respect to any sale or purchase documentsexecuted by any Credit Party.

 

(o)           Other Documents.  To Agent and Lenders, such other financialand other information respecting any Credit Party’s business or financialcondition as Agent or any Lender shall from time to time reasonably request.

 

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**ANNEX G (SECTION 6.10)TOCREDIT AGREEMENT**

** **

**FINANCIAL COVENANTS**

 

Borrowersshall not breach or fail to comply with any of the following financialcovenants, each of which shall be calculated in accordance with GAAPconsistently applied:

 

(a)           Maximum Capital Expenditures.  Holdings and its Subsidiaries on aconsolidated basis shall not make Capital Expenditures during any Fiscal Yearthat exceed in the aggregate amount set forth in the table below for suchFiscal Year:

 
| **Fiscal  Year Ending:**                                | ** ** | **Maximum Capital  Expenditures:** | ** ** |
|---------------------------------------------------------|------------|------------------------------------|------------|
| December 31,  2009 and each Fiscal Year thereafter |       | $                                  | 32,500,000 |   |
|                                                         |            |                                    |            |  |

 

(b)           Minimum Fixed Charge CoverageRatio.  Holdings and its Subsidiariesshall have on a consolidated basis at the end of each Fiscal Quarter a FixedCharge Coverage Ratio for the 4 Fiscal Quarter period then ended of not lessthan the following:

 
| **Fiscal  Quarters Ending:**                                | ** ** | **Minimum Fixed Charge Coverage Ratio:** | ** ** |
|-------------------------------------------------------------|------------|------------------------------------------|------------|
| September 30,  2009 and each Fiscal Quarter thereafter |       | 1.15 to 1.00                             |       |

 

(c)           Intentionally Omitted.

 

(d)           Maximum Leverage.  Holdings and its Subsidiaries shall notpermit, at any time, the Leverage Ratio to exceed the applicable amount setforth below:

 
| **Period:**                            | ** ** | **Maximum Leverage Ratio:** | ** ** |
|----------------------------------------|------------|-----------------------------|------------|
| September 30, 2009 and thereafter |       | 4.50 to 1.00                |       |

 

(e)           Maximum Credit Facility Leverage.  Holdings and its Subsidiaries shall notpermit, at any time, the Credit Facility Leverage Ratio to exceed theapplicable amount set forth below:

 

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| **Period:**                            | ** ** | **Maximum Leverage Ratio:** | ** ** |
|----------------------------------------|------------|-----------------------------|------------|
| September 30, 2009 and thereafter |       | 2.50 to 1.00                |       |

 

Unlessotherwise specifically provided herein, any accounting term used in theAgreement shall have the meaning customarily given such term in accordance withGAAP, and all financial computations hereunder shall be computed in accordancewith GAAP consistently applied.  Thatcertain items or computations are explicitly modified by the phrase “inaccordance with GAAP” shall in no way be construed to limit the foregoing.  If any “Accounting Changes” (as definedbelow) occur and such changes result in a change in the calculation of thefinancial covenants, standards or terms used in the Agreement or any other LoanDocument, then Borrowers, Agent and Lenders agree to enter into negotiations inorder to amend such provisions of the Agreement so as to equitably reflect suchAccounting Changes with the desired result that the criteria for evaluatingHoldings’ and its Subsidiaries’ financial condition shall be the same aftersuch Accounting Changes as if such Accounting Changes had not been made; provided,however, that the agreement of Requisite Lenders to any requiredamendments of such provisions shall be sufficient to bind all Lenders.  Any amendments to the Financial Covenants orthe definitions used therein pursuant to the foregoing (including the proviso)or otherwise shall not be deemed to result in a reduction in the rate ofinterest for purposes of Section 11.2(c)(ii) of the CreditAgreement.  “Accounting Changes”means (i) changes in accounting principles required by the promulgation ofany rule, regulation, pronouncement or opinion by the Financial AccountingStandards Board of the American Institute of Certified Public Accountants (orsuccessor thereto or any agency with similar functions), (ii) changes inaccounting principles concurred in by any Credit Party’s certified publicaccountants; (iii) purchase accounting adjustments under A.P.B. 16 or 17and EITF 88-16, and the application of the accounting principles set forth inFASB 109, including the establishment of reserves pursuant thereto and anysubsequent reversal (in whole or in part) of such reserves; and (iv) thereversal of any reserves established as a result of purchase accountingadjustments.  If Agent, Borrowers andRequisite Lenders agree upon the required amendments, then after appropriateamendments have been executed and the underlying Accounting Change with respectthereto has been implemented, any reference to GAAP contained in the Agreementor in any other Loan Document shall, only to the extent of such AccountingChange, refer to GAAP, consistently applied after giving effect to theimplementation of such Accounting Change. If Agent, Borrowers and Requisite Lenders cannot agree upon the requiredamendments within 30 days following the date of implementation of anyAccounting Change, then all Financial Statements delivered and all calculationsof financial covenants and other standards and terms in accordance with theAgreement and the other Loan Documents shall be prepared, delivered and madewithout regard to the underlying Accounting Change.  For purposes of Section 8.1, abreach of a Financial Covenant contained in this Annex G (otherthan clause (a) of this Annex G) shall be deemed to have occurredas of any date of reasonable determination by Agent or as of the last day of anyspecified measurement period, regardless of when the Financial Statementsreflecting such breach are delivered to Agent.

 

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