Exhibit 10.17


 


JOINDER AGREEMENT AND
SECOND AMENDMENT


TO LOAN AND SECURITY AGREEMENT


AND AMENDMENT TO OTHER FINANCING AGREEMENTS


 


THIS JOINDER AGREEMENT AND SECOND AMENDMENT TO LOAN AND SECURITY
AGREEMENT AND AMENDMENT TO OTHER FINANCING AGREEMENTS (this “Amendment”) is
made and entered into on March 29, 2010, by and among FREEDOM
GROUP, INC., a Delaware corporation (“FGI”), REMINGTON
ARMS COMPANY, INC., a Delaware corporation (“Remington”), THE MARLIN FIREARMS COMPANY, a Connecticut corporation (“Marlin”),
H&R 1871, LLC, a Connecticut
limited liability company (“H&R”), BUSHMASTER FIREARMS
INTERNATIONAL, LLC, a Delaware limited liability company (“Bushmaster”),
DPMS FIREARMS, LLC, a Delaware limited
liability company (“DPMS”), E-RPC, LLC, a
Delaware limited liability company (“E-RPC”), and RA BRANDS,
L.L.C., a Delaware limited liability company (“Brands”), as existing
borrowers,  and FGI
OPERATING COMPANY, INC., a Delaware corporation,  as
a new borrower (“FGIOC”, and together with Remington, Marlin, H&R, Bushmaster,
DPMS, and E-RPC, each individually a “Borrower” and collectively, “Borrowers”);
WELLS FARGO BANK, NATIONAL ASSOCIATION,
a national banking association and successor by merger to Wachovia Bank,
National Association, in its capacity as agent (in such capacity, “Agent”) for
various financial institutions (“Lenders”), and the Lenders party hereto.


 


Recitals:


 


Agent, Lenders, FGI and
Borrowers are parties to a certain Loan and Security Agreement dated July 29,
2009 (as at any other time amended, restated, modified or supplemented, the “Loan
Agreement”), pursuant to which Agent and Lenders have made certain revolving
credit loans to FGI and Borrowers.


 


Prior
to the date hereof, Wachovia Bank, National Association (“Wachovia”)
merged with and into Wells Fargo Bank, National Association (“Wells Fargo”),
with Wells Fargo as the surviving legal entity of such merger, and upon the
effectiveness of such merger, Wells
Fargo became the successor to Wachovia as Agent and a Lender for all purposes
under the Loan Agreement and other Financing Agreements.


 


FGI and Borrowers have
advised Agent and Lenders of (i) the formation by FGI of two new
subsidiaries, FGI Holding Company, Inc., a Delaware corporation (“FGIHC”),
and FGIOC (together with FGIHC, the “New FGI Subsidiaries”), and (ii) the
proposed transfer by FGI to FGIOC of the Capital Stock held by FGI in each of
the other Borrowers (the “Capital Stock Transfer”).  Borrowers have requested that FGIOC be joined
to the Loan Agreement as a Borrower, and that FGIOC be appointed the
Administrative Borrower in the place of FGI.


 


Borrowers have also advised
Agent and Lenders that FGIHC proposes to issue up to $225,000,000 in initial
aggregate principal amount of Senior Pay-In-Kind Notes, the interest on which
shall be payable (a) at FGIHC’s option, either (i) entirely in cash
or (ii) 50% in cash and 50% in-kind, or (b) under certain
circumstances, entirely in-kind, and which shall have a maturity date no sooner
than the maturity date of the Senior Notes (the “FGIHC PIK Notes”).  The FGIHC PIK Notes will be guaranteed by
FGI, but shall not be guaranteed by, nor otherwise constitute the indebtedness
of any of the other Borrowers or Guarantors. 
FGIHC intends to use the proceeds of the FGIHC PIK 


 

















 


Notes
to pay a dividend in the amount of the net proceeds to its parent, FGI, which
FGI will use to redeem certain of its Series A Preferred Stock.


 


In connection with the
proposed issuance of the FGIHC PIK Notes, Borrowers have requested that, after
giving effect to the joinder of FGIOC, Agent and each Lender (i) amend the
Loan Agreement in certain respects (such requested amendments to the Loan
Agreement hereinafter referred to as the “Requested Amendments”) and (ii) release
FGI from all its Obligations under the Loan Agreement and the other Financing
Agreements and release Agent’s Lien in the assets of FGI (such requested
releases hereinafter referred to as the “Requested FGI Release”).


 


The execution and delivery
of this Agreement by FGI and each of the Borrowers is a condition precedent to
the joinder of FGIOC as a Borrower under the Loan Agreement, the appointment of
FGIOC as Administrative Borrower in the place and stead of FGI, and Agent’s and
each Lenders’ consent to the Requested Amendments and the Requested FGI
Release.


 


FGIOC is executing this
Agreement to become a party to the Loan Agreement and to induce Agent and
Lenders to extend credit to FGIOC and to continue to make available credit to
the other Borrowers under the Loan Agreement. 
The parties now desire to reflect the merger of Wachovia and Wells
Fargo, join FGIOC as a Borrower, and otherwise amend and supplement the Loan
Agreement as hereinafter set forth.


 


Subject to the terms and
conditions of this Amendment, Agent and each Lender is willing to amend the
Loan Agreement and agree to certain other matters as hereinafter set forth.


 


NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are hereby
severally acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:


 


1.             Definitions.  All capitalized terms used in this Amendment,
unless otherwise defined herein, shall have the meanings ascribed to such terms
in the Loan Agreement (as amended hereby).


 


2.             Joinder of FGIOC. By its
signature below, FGIOC becomes a Borrower under the Loan Agreement with the
same force and effect as if originally named therein as a Borrower, and FGIOC
hereby assumes, and hereby agrees to perform and observe, each and every one of
the terms and provisions of the Loan Agreement applicable to it as a Borrower
thereunder.  Each reference to “Borrower” or
“Borrowers” in the Loan Agreement shall be deemed to include FGIOC.  Upon the effectiveness of the joinder of
FGIOC to the Loan Agreement, FGIOC shall be directly and primarily liable as a
Borrower for all of the Obligations now or hereafter owing under the Loan
Agreement and the other Financing Agreements and FGIOC hereby confirms that it
has assumed all such Obligations.  The
Obligations owing by FGIOC shall be evidenced by the Loan Agreement and the
other Financing Agreements.  The parties
hereto agree to execute and deliver such other instruments, assignments or
documents as are necessary under applicable law to give effect to or carry out
the intent and purposes of the joinder of FGIOC.


 


3.             Joint and Several Liability;
Administrative Borrower.  FGIOC acknowledges that it has requested that
Agent and Lenders extend financial accommodations to it and to the other
Borrowers in accordance with the provisions of the Loan Agreement, as hereby
amended.  In 


 


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accordance
with the terms of the Loan Agreement, FGIOC acknowledges and agrees that it
shall be jointly and severally liable for the payment and performance of any
and all Loans and for all other Obligations and all interest, fees and other
charges payable in connection therewith. 
FGIOC shall be liable for, on a joint and several basis, the timely
payment by the other Borrowers of, all of the Loans and the other Obligations,
regardless of which Borrower actually may have received the proceeds of any
Loans or other extensions of credit under the Loan Agreement or the amount of
such Loans received or the manner in which Agent or any Lender accounts
for such Loans or other extensions of credit on its books and records, it being
acknowledged and agreed that Loans to one Borrower inure to the mutual benefit
of all Borrowers and that Agent and Lenders are relying on the joint and
several liability of Borrowers in extending the Loans and other financial
accommodations under the Loan Agreement. 
FGIOC is hereby substituted for FGI as the Administrative Borrower and
FGI is hereby released and discharged from any and all obligations and
responsibility as the Administrative Borrower (without regard to any required
period of notice of such replacement, which is hereby waived by all parties
hereto).  Each Borrower hereby
irrevocably appoints  FGIOC,
and FGIOC agrees to act under Section 6.8 of the Loan Agreement, as the
Administrative Borrower for and on behalf of each Borrower for all purposes
under the Loan Agreement, including requesting borrowings and Letters of
Credit, selecting whether any Loan or portion thereof is to bear interest as a
Base Rate Loan or a Eurodollar Rate Loan, and receiving account statements and
other notices and communications to Borrowers (or any of them) from Agent.  Agent may rely, and shall be fully protected
in relying, on any notice of borrowing, notice of conversion, disbursement instructions,
reports, information, Borrowing Base Certificate or any other notice or
communication made or given by FGIOC, whether in its own name, on behalf of any
Borrower or on behalf of “the Borrowers”.


 


4.             Grant
of Security Interest.  To secure
payment and performance of all Obligations, FGIOC hereby grants to Agent, for
itself and the benefit of Secured Parties, as security, all personal property,
and interests in property, of FGIOC, whether now owned or hereafter acquired or
existing, and wherever located (together with all other collateral security for
the Obligations at any time granted to or held or acquired by Agent or any
Lender, collectively, the “Collateral”), including all of FGIOC’s  right, title and interest in and to
the following:


 


(a)           all
Accounts and other Receivables;


 


(b)           all
Additional Interests and Pledged Shares;


 


(c)           all
chattel paper, including, without limitation, all tangible and electronic
chattel paper;


 


(d)           all
commercial tort claims, including, without limitation, those identified on
Schedule 5.2 to the Loan Agreement;


 


(e)           all
deposit accounts;


 


(f)            all
documents;


 


(g)           all
general intangibles, including, without limitation, all Intellectual Property;


 


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(h)           all
goods, including, without limitation, Inventory, Equipment and fixtures;


 


(i)            all
instruments, including, without limitation, all promissory notes;


 


(j)            all
investment property (including securities, whether certificated or
uncertificated, securities accounts, security entitlements, commodity contracts
or commodity accounts);


 


(k)           all
letters of credit, banker’s acceptances and similar instruments and including
all letter-of-credit rights;


 


(l)            all
supporting obligations and all present and future Liens, security interests,
rights, remedies, title and interest in, to and in respect of Receivables and
other Collateral, including (i) rights and remedies under or relating to
guaranties, contracts of suretyship, letters of credit and credit and other
insurance related to the Collateral, (ii) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of
an unpaid vendor, lienor or secured party, (iii) goods described in
invoices, documents, contracts or instruments with respect to, or otherwise
representing or evidencing, Receivables or other Collateral, including
returned, repossessed and reclaimed goods, and (iv) deposits by and
property of account debtors or other persons securing the obligations of
account debtors;


 


(m)          monies,
credit balances, deposits and other property of any Borrower or Guarantor now
or hereafter held or received by or in transit to Agent, any Lender or its
Affiliates or at any other depository or other institution from or for the
account of any Borrower or Guarantor, whether for safekeeping, pledge, custody,
transmission, collection or otherwise;


 


(n)           all
accessions to substitutions for, and all replacements, products and cash and
non-cash proceeds of the foregoing, in any form, including proceeds of and
unearned premiums with respect to insurance policies and all claims against
third parties for loss or damage to or destruction of or other involuntary
conversion of any kind or nature of any or all of the other Collateral; and


 


(o)           all
Records, including, without limitation, customer lists, files, correspondence, tapes,
computer programs, printouts and computer records.


 


Notwithstanding anything to the contrary in this Agreement or in the
Loan Agreement, and except for so long as a security interest in such
Collateral is then in effect to secure the Senior Notes, the Collateral shall
not include any of the Excluded Assets.


 


5.             Amendments to
Loan Agreement and other Financing Agreements.  The Loan Agreement and each
of the other Financing Documents is hereby amended as follows:


 


All references to “Wachovia
Bank, National Association” or “Wachovia” contained in the Loan Agreement and
the other Financing Documents shall hereby mean and be 


 


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deemed references to “Wells
Fargo Bank, National Association” as successor to Wachovia Bank, National
Association.


 


6.             Amendments to Loan Agreement.  Subject to the satisfaction
of each of the conditions precedent set forth in Section 10 of this
Amendment, the Loan Agreement is hereby amended as follows:


 


(a)           By
deleting the definition of “Administrative Borrower” contained in Section 1
of the Loan Agreement and by substituting in lieu thereof the following:


 


“Administrative Borrower” shall mean FGIOC,
in its capacity as Administrative Borrower on behalf of itself and the other
Borrowers pursuant to Section 6.8 hereof and its successors and assigns in
such capacity.


 


(b)           By
deleting the definition of “Borrowers” contained in Section 1 of the Loan
Agreement and by substituting in lieu thereof the following:


 


“Borrowers” shall mean, collectively, the
following (together with their respective successors and assigns): Remington
Arms Company, Inc., a Delaware corporation, The Marlin Firearms Company, a
Connecticut corporation, H&R 1871, LLC, a Connecticut limited liability
company, Bushmaster Firearms International,  LLC, a
Delaware limited liability company, DPMS Firearms, LLC, a Delaware limited
liability company, E-RPC, LLC, a Delaware limited liability company, RA  Brands,  L.L.C., a
Delaware limited liability company, and FGIOC,
and any other direct or indirect domestic Subsidiary of FGIOC that at any time
after the date hereof becomes a Borrower, pursuant to a joinder agreement in
form and substance reasonably satisfactory to Agent and approved by FGIOC, in
connection with an acquisition or investment otherwise permitted under this
Agreement.


 


(c)           By
deleting the definition of “Change of Control” contained in Section 1 of
the Loan Agreement and by substituting in lieu thereof the following:


 


“Change of Control” shall mean the occurrence
of any of the following events: (i) the Sponsor shall cease to own directly (or
through an entity wholly-owned by the Sponsor), of record and beneficially,
in the aggregate, shares of Voting Stock having more than fifty percent (50%)
of the total voting power of all outstanding shares of Voting Stock of FGI; (ii) FGI
shall cease to own directly (or through an entity wholly-owned by the
FGI), of record and beneficially, one hundred percent (100%) of each class
of outstanding Capital Stock of FGIOC; (iii) a “change of control” under
and as defined in the Senior Notes Indenture shall occur; (iv) FGIOC shall
cease to own and control directly, of record and beneficially, one hundred
percent 


 


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(100%) of each class of outstanding
Capital Stock of Remington or Bushmaster free and clear of all Liens (other
than Permitted Liens); (v) Remington shall cease to own and control
directly, of record and beneficially, one hundred percent (100%) of each class
of outstanding Capital Stock of Brands free and clear of all Liens (other than
Permitted Liens); or (vi) FGIOC shall cease to own directly (or through an
entity wholly-owned by FGIOC), of record and beneficially, in the aggregate,
shares of Voting Stock having more than fifty percent (50%) of the total voting
power of all outstanding shares of Voting Stock of each other Borrower; provided,
that, the sale of the Capital Stock of any Obligor, the assets of which
do not constitute at least twenty percent (20%) of the Borrowing Base on the
date of such sale, shall not constitute a Change of Control hereunder if
consented to by Agent.


 


(d)           By
adding the following new definition of “FGIOC” to Section 1 of the Loan
Agreement in proper alphabetical sequence:


 


“FGIOC” shall mean FGI Operating Company, Inc.,
a Delaware corporation.


 


(e)           By
deleting the definition of “Fixed Charge Coverage Ratio” contained in Section 1
of the Loan Agreement and by substituting in lieu thereof the following:


 


“Fixed Charge Coverage Ratio” shall mean,
with respect to Borrowers and Guarantors for any period, the ratio of (i) EBITDA
minus the sum of (A) Unfinanced Maintenance Capital Expenditures, plus (B) all
income taxes paid in cash, plus (C) actual cash pension funding payments
made with respect to pension funding obligations, and any other pension funding
obligations outside the ordinary course of business of Borrowers (unless funded
solely from (I) the proceeds of Permitted Additional Pari Passu
Obligations (as defined in the Senior Notes Indenture) incurred prior to the
Second Amendment Date in an amount of up to $48,600,000, or (II) funds
from sources other than cash from operations so long as such pension funding
payments are made within ten (10) Business Days after Borrowers’ and
Guarantors’ receipt of such funds),  minus (D) the
profit and loss statement charge (or benefit) with respect to such pension
funding obligations, to (ii) Fixed Charges, for such period.


 


(f)            By
deleting the definition of “Fixed Charge Coverage Ratio-Recalibrated” contained
in Section 1 of the Loan Agreement and by substituting in lieu thereof the
following:


 


“Fixed Charge Coverage Ratio-Recalibrated”
shall mean, with respect to Borrowers and Guarantors for any period, the ratio
of (i) 


 


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EBITDA minus the sum of (A) Unfinanced
Capital Expenditures, plus (B) all income taxes paid in cash, plus (C) dividends
or share repurchases with respect to Capital Stock, plus (D) distributions
or redemptions (excluding any one-time distribution to shareholders of a
Borrower or any one-time redemption of any Senior Notes that, in either case,
is paid with proceeds of any issuance of Capital Stock in an initial public
offering or a registered secondary offering by a Borrower), plus (E) actual
cash pension funding payments made with respect to pension funding obligations,
and any other pension funding obligations outside the ordinary course of
business of Borrowers (unless funded solely from (I) the proceeds of
Permitted Additional Pari Passu Obligations (as defined in the Senior Notes
Indenture) incurred prior to the Second Amendment Date in an amount of up to
$48,600,000, or (II) funds from sources other than cash from operations so
long as such pension funding payments are made within ten (10) Business
Days after Borrowers’ and Guarantors’ receipt of such funds),  minus (F) the profit and loss
statement charge (or benefit) with respect to such pension funding obligations,
to (ii) Fixed Charges, in each case for such period.


 


(g)           By
deleting the definition of “Guarantors” contained in Section 1 of the Loan
Agreement and by substituting in lieu thereof the following:


 


“Guarantors” shall mean, collectively, any
direct or indirect domestic wholly owned Subsidiary of FGIOC that at any time
after the date hereof (i) becomes party to a guarantee in favor of Agent
or any Lender pursuant to a joinder agreement in form and substance reasonably
satisfactory to Agent and approved by FGIOC, in connection with an acquisition
or investment otherwise permitted under this Agreement, or (ii) otherwise
becomes liable on or with respect to the Obligations or who is the owner of any
property which is security for the Obligations (other than Borrowers).


 


(h)           By
deleting the lead-in language of clause (ix) of the definition of “Permitted
Investments” contained in Section 1 of the Loan Agreement and by
substituting in lieu thereof the following:


 


(ix)           Investments
by a Borrower or a Guarantor after the date hereof to or in a Subsidiary of
FGIOC that is not a Borrower or Guarantor provided, that:


 


(i)            By
deleting the reference to “Section 9.12(b)(ii)” appearing in clause
(x)(ii)(A) of the definition of “Permitted Investments” contained in Section 1of
the Loan Agreement and by substituting in lieu thereof a reference to “Section 9.12(b)”.


 


(j)            By
adding the following new definition of “Second Amendment Date” to Section 1
of the Loan Agreement in proper alphabetical sequence:


 


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“Second Amendment Date” shall mean the date
upon which the conditions precedent set forth in Section 10 of the Joinder
Agreement and Second Amendment to Loan and Security Agreement and Amendment to
Other Financing Agreements dated March       ,
2010 shall have been satisfied or waived.


 


(k)           By
deleting the definition of “Senior Notes” contained in Section 1 of the
Loan Agreement and by substituting in lieu thereof the following:


 


“Senior Notes” shall mean (i) FGI’s 101⁄4
% Senior Secured Notes due 2015 in the aggregate principal amount of
$200,000,000 which Notes were assumed by FGIOC on the Second Amendment Date and
(ii) any Permitted Additional Pari Passu Obligations which are permitted
to be incurred under (and as defined in) the Senior Notes Indenture as in
effect on the date hereof or as amended with the consent of the Required
Lenders, and which are subject to the Intercreditor Agreement, in an aggregate
principal amount not to exceed $125,000,000; provided  that, for
purposes of Sections 4.1 and 9.16, “Senior Notes” shall mean the notes referred
to in clause (i) only.  For the
avoidance of doubt, to the extent supplements to the Senior Notes Indenture are
required in connection with the issuance of the Permitted Additional Pari Passu
Obligations described above, the consent of the Required Lenders is not
required to such supplements so long as they do not otherwise modify the terms
of the Senior Notes Indenture.


 


(l)            By
deleting the definition of “Total Assets” contained in Section 1 of the
Loan Agreement and by substituting in lieu thereof the following:


 


“Total Assets” shall mean the total
consolidated assets of FGIOC and its Restricted Subsidiaries, as shown on the
most recent financial statements of FGIOC that Agent has received in accordance
with Section 9.6 hereof; provided, that, for purposes of
calculating Total Assets for periods ended prior to the Second Amendment Date, “Total
Assets” shall mean the total consolidated assets of FGI and its Restricted
Subsidiaries, as shown on the most recent financial statements of FGI that
Agent has received in accordance with Section 9.6 hereof.


 


(m)          By
deleting clauses (f), (i), and (m) of Section 9.9 of the Loan
Agreement and by substituting in lieu thereof the following in proper
alphabetical sequence:


 


(f)            Indebtedness
represented by the Senior Notes (not including any additional notes) and any
guarantee of the obligations of FGIOC as “the Issuer” under (and as defined in)
the Senior Notes Indenture and the Senior Notes by any Borrower or Guarantor in



 


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accordance with the
provisions of the Senior Notes Indenture as in effect on the date hereof, as
applicable (and any exchange notes and guarantees thereof);


 


(i)            Indebtedness
arising from agreements of any Borrower or Guarantor providing for
indemnification, adjustment of purchase price or similar obligations, in each
case, incurred in connection with the disposition of any business, assets or a
Subsidiary of FGIOC in accordance with the terms of the Senior Notes Indenture,
other than guarantees of Indebtedness incurred by any Person acquiring all or
any portion of such business, assets or Subsidiary for the purpose of financing
such acquisition;


 


(m)          Indebtedness
of Persons that are acquired by a Borrower or Guarantor or merged into a
Borrower or Guarantor in accordance with the terms of this Agreement or the
Senior Notes Indenture; provided, however, that such
Indebtedness  is not incurred in
contemplation of such acquisition or merger or to provide all or a portion of
the funds or credit support required to consummate such acquisition or merger; provided,
further, however, that after giving effect to such acquisition and the
incurrence of such Indebtedness either:


 


(1)           FGIOC
would be permitted to incur at least $1.00 of additional Indebtedness pursuant
to the Fixed Charge Coverage Ratio test set forth in clause (r) of
this Section 9.9; or


 


(2)           the
Fixed Charge Coverage Ratio would be greater than immediately prior to such
acquisition;


 


(n)           By
deleting clauses (b) and (d) of Section 9.11 of the Loan
Agreement and by substituting in lieu thereof the following:


 


(b)           Borrowers
and Guarantors may declare, make and pay dividends, distributions, redemptions
and repurchases of Capital Stock of a Borrower or Guarantor at any time that no
Default or Event of Default exists or has occurred and is continuing and that
Borrowers shall (i) have (and, after giving effect to such dividend,
distribution, redemption or repurchase, would have) Excess Availability of more
than  $30,000,000, or 16.7% of the
Maximum Credit, whichever is greater, and (ii) have maintained a Fixed
Charge Coverage Ratio of greater than 1.10 to 1.00 for the 12 month period
immediately preceding the date of the applicable dividend, distribution,
redemption or repurchase, except so long as no Event of Default exists,
Borrowers and Guarantors may declare, make and pay the following payments:


 


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(A) payments by any such Borrower or
Guarantor to FGIOC for the payment of cash taxes by or on behalf of FGIOC (or
to any direct or indirect parent company of FGIOC to the extent such taxes are
attributable to the income of FGIOC and the other Borrowers and Guarantors by
virtue of such parent company being the common parent of a consolidated or
combined tax group of which FGIOC and the other Borrowers and Guarantors are
members, provided, however, that in each case, the amount of such payments in
respect of any tax year does not exceed the amount that FGIOC and the other Borrowers
and Guarantors would have been required to pay in the case of federal, state or
local taxes (as the case may be) in respect of such year if Borrowers and
Guarantors paid such taxes directly as a stand-alone taxpayer or stand-alone
group), or to any other Obligor for the payment of cash taxes (other than
federal taxes) by or on behalf such Obligor;


 


(B) payments by Borrowers and Guarantors
of (I) the amounts required for any direct or indirect parent of FGIOC to
pay fees and expenses (including franchise or similar taxes) required to
maintain its corporate existence, customary salary, bonus and other benefits
payable to officers and employees of any direct or indirect parent of FGIOC, if
applicable, and general corporate overhead expenses of any direct or indirect
parent of FGIOC, if applicable, in each case to the extent such fees, expenses,
salaries, bonuses, benefits and indemnities are attributable to the ownership
or operation of FGIOC and the other Borrowers and Guarantors, and in each case
to the extent permitted in Section 9.12(b), and (II) the amounts
required to be paid by any direct or indirect parent of FGIOC for out of pocket
expenses directly related to unsuccessful offerings of debt or equity by such
parent of FGIOC in the public or private capital markets, not to exceed
$2,500,000 in the aggregate; and


 


(C) payment used to fund the payment of
management, consulting or other fees for management or similar services, or of
any Indebtedness owing to any officer, employee, shareholder, director or any
other Affiliate of such Borrower or Guarantor, in each case to the extent
permitted in Section 9.12(b);


 


provided, that,
the payment of dividends on FGIOC’s common stock (or the payment of dividends
to any direct or indirect parent of FGIOC to fund the payment by any direct or
indirect parent of FGIOC of dividends on such entity’s common stock) of up to
6.0% 


 


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per annum of the net
proceeds received by FGIOC from any public offering of common stock (or
contributed to FGIOC by any direct or indirect parent of FGIOC from any public
offering of common stock) will be permitted so long as Excess Availability is
not less than $30,000,000 or 16.7% of the Maximum Credit, whichever is greater,
or would be at least $30,000,000 or 16.7% of the Maximum Credit, whichever is
greater, after giving effect thereto, without requiring compliance with the
Fixed Charge Coverage Ratio set forth in clause (ii) of this Section 9.11(b);
provided  that, in all cases, such dividend, distribution,
redemption or repurchase is not violative of any applicable law relating to
such  dividend, distribution, redemption
or repurchase generally and the dividend, distribution, redemption or
repurchase, either individually or when added to the aggregate amount of all
other such dividends, distributions, redemptions or repurchases, is permitted
under the Senior Notes Indenture by its terms or by requisite consent or waiver
thereunder;


 


(d)           Borrowers
and Guarantors may repurchase Capital Stock (or fund the repurchase of Capital
Stock by a direct or indirect parent of such Borrowers or Guarantors)
consisting of common stock held by employees pursuant to any employee stock
ownership plan thereof upon the termination, retirement or death of any such employee
in accordance with the provisions of such plan, provided, that,
as to any such repurchase, each of the following conditions is satisfied: (i) as
of the date of the payment for such repurchase and after giving effect thereto,
no Default or Event of Default shall exist or have occurred and be continuing, (ii) such
repurchase shall be paid with funds legally available therefor, (iii) such
repurchase shall not violate any law or regulation or the terms of any
indenture, agreement or undertaking to which such Borrower or Guarantor is a
party or by which such Borrower or Guarantor or its or their property are
bound, and (iv) if Excess Availability is less than $30,000,000 or 16.7%
of the Maximum Credit, whichever is greater, the aggregate amount of all payments
for such repurchases (including, without limitation or duplication, any
repurchases by a direct or indirect parent of Borrower or Guarantor that is
funded by such Borrower or Guarantor) in any calendar year shall not exceed
$2,000,000.


 


(o)           By
deleting clause (b) of Section 9.12 of the Loan Agreement and by
substituting in lieu thereof the following:


 


(b)           make
any payments (whether by dividend, loan or otherwise) of management, consulting
or other fees for management or similar services, or of any Indebtedness owing
to any officer, 


 


11

















 


employee, shareholder,
director or any other Affiliate of such Borrower or Guarantor, except the
following payments described in each of clauses (A), (B), (C), and (D) below,
provided, that at any time that an Event of Default exists or
Excess Availability is less than $30,000,000 or 16.7% of the Maximum Credit,
whichever is greater (each, a “Restricted Payment Event”), then the sum of the
aggregate amount of such payments made pursuant to such clauses (A), (B), (C) and
(D) in any fiscal year plus the aggregate amount of Investments made
pursuant to clause (x) of the definition of “Permitted Investments” shall
not exceed $4,000,000 in the aggregate:


 


(A)          the payment of the
amounts described in clauses (B)(I) or (C) of Section 9.11(b);
or


 


(B)           payments or loans
(or cancellation of loans) to employees or consultants in the ordinary course
of business which are approved by a majority of the board of directors of FGIOC
(or any direct or indirect parent of FGIOC) in good faith; or


 


(C)           the entering into of
any agreement (and any amendment or modification of any such agreement) to pay,
and the payment of, annual management, consulting, monitoring and advisory fees
to the Sponsor in an aggregate amount in any fiscal year, not to exceed the
greater of (x) $3,000,000 and (y) 3% of EBITDA, plus all
out-of-pocket reasonable expenses incurred by the Sponsor in connection with
the performance of management, consulting, monitoring, advisory or other
services with respect to the Borrowers and Guarantors; or


 


(D)          payments by the
Borrowers or Guarantors to the Sponsor or Meritage made for any financial
advisory, financing, underwriting or placement services or in respect of other
investment banking activities, including, without limitation, in connection
with acquisitions or divestitures, which payments are approved by a majority of
the board of directors of FGIOC or any direct or indirect parent of FGIOC in
good faith;


 


provided, further,
that such payment limitations arising out of the occurrence of a Restricted
Payment Event shall continue in effect only until a period of forty-five
(45) consecutive days has elapsed after the Restricted Payment Event
during which period (i) Excess Availability shall have been not less than
$30,000,000 or 16.7% of the Maximum Credit, whichever is greater, and (ii) no
Event of Default or Restricted Payment Event shall have occurred;


 


12

















 


(p)           By
supplementing the Schedules to the Loan Agreement by adding thereto the
information set forth on the Schedules attached to this Amendment.


 


7.             Release
of FGI as an Obligor and of Agent’s Liens in the Assets of FGI.  At
the request of Borrowers, and after giving effect to (i) the formation of
the New FGI Subsidiaries, (ii) the joinder of FGIOC as a Borrower under
the Loan Agreement, and (iii) the Capital Stock Transfer, in each case in
form and substance satisfactory to Agent in all respects and in accordance with
applicable law:


 


(a)           Lenders
and Agent hereby release and discharge FGI from all liability with respect to
the Obligations and from any and all other obligations, covenants and
liabilities under the Financing Agreements; and


 


(b)           Lenders
hereby authorize Agent to release its Lien in all of the Collateral granted by
FGI, and Agent hereby releases such Lien.


 


In
furtherance of the foregoing, Agent agrees to file, at Borrowers’ expense,
a UCC termination statement with respect to Agent’s UCC financing
statement filed against FGI with the Delaware Secretary of State.  Except for Agent’s release of its Lien upon
the assets of FGI described above in this Section 7, Agent shall retain
all of its Liens upon all other Collateral, including the Capital Stock of each
of the Borrowers transferred by FGI to FGIOC pursuant to the Capital Stock
Transfer.  Nothing contained herein shall
be deemed or construed to create a novation or accord and satisfaction, and the
Loan Agreement and the other Financing Agreements shall remain in full force
and effect with respect to all Obligors other than FGI.


 


8.             Ratification
and Reaffirmation.  Each
Borrower (including FGIOC) hereby ratifies and reaffirms the Obligations, each
of the Financing Agreements and all of such Borrower’s covenants, duties, indebtedness
and liabilities under the Financing Agreements.


 


9.             Acknowledgments
and Stipulations.  Each
Borrower (including FGIOC) acknowledges and stipulates that the Loan Agreement
and the other Financing Agreements executed by such Borrower are legal, valid
and binding obligations of such Borrower that are enforceable against such
Borrower in accordance with the terms thereof, all of the Obligations are owing
and payable without defense, offset or counterclaim (and to the extent there
exists any such defense, offset or counterclaim on the date hereof, the same is
hereby waived by such Borrower); the Liens granted by such Borrower in favor of
Agent are first priority Liens, subject only to those Permitted Liens which are
expressly permitted by the terms of the Financing Agreements to have priority
over the Liens of Agent; and, as of the close of business on March 25,
2010, the unpaid principal amount of the Revolving Loans totaled $-0-, and the
face amount of outstanding Letters of Credit totaled $6,828,475.87.


 


10.          Representations
and Warranties.  Each
Borrower (including FGIOC) represents and warrants to Agent and Lenders, to
induce Agent and Lenders to enter into this Amendment, as follows:


 


(a)           no Default or Event
of Default exists on the date hereof;


 


13

















 


(b)           the execution,
delivery and performance of this Amendment have been duly authorized by all
requisite entity action on the part of such Borrower and this Amendment has
been duly executed and delivered by such Borrower;


 


(c)           all of the
representations and warranties made by such Borrower in the Loan Agreement are
true and correct in all material respects (except where qualified by
materiality, in which case such representations and warranties that are qualified
by materiality shall be true and correct in all respects) on and as of the date
hereof after giving effect to this Amendment (except where such representations
and warranties expressly relate solely to an earlier date in which case such
representations and warranties were true and correct as of such earlier date);


 


(d)           the formation of the
New FGI Subsidiaries is permitted under Section 9.10 of the Loan Agreement
as one or more Permitted Investments thereunder;


 


(e)           (i) the Capital
Stock Transfers do not result in a Change of Control under the Loan Agreement, (ii) at
the time of and after giving effect to the Capital Stock Transfers, Excess
Availability is not less than $30,000,000 (or 16.7% of the Maximum Amount), and
(iii) the Capital Stock Transfers are permitted under Section 9.7(b) of
the Loan Agreement; and


 


(f)            the Schedules
attached hereto contain true, accurate and complete information with respect to
FGIOC and the matters represented and warranted by FGIOC pursuant to Section 8
of the Loan Agreement, and such Schedules shall be deemed to supplement and be
a part of the Schedules to the Loan Agreement.


 


11.          Conditions
Precedent.  The
effectiveness of this Amendment is subject to the satisfaction of each of the
following conditions precedent:


 


(a)           No Default or Event
of Default occurs or exists on the date hereof;


 


(b)           Agent shall have
received a counterpart of this Amendment duly executed and delivered by a duly
authorized officer of FGI, each of the Borrowers and each Lender;


 


(c)           All requisite entity
action and proceedings in connection with this Amendment and the other
Financing Agreements shall be reasonably satisfactory in form and substance to
Agent, and Agent shall have received all information and copies of all
documents, including records of requisite entity action and proceedings which
Agent may have requested in connection therewith, such documents where
reasonably requested by Agent or its counsel to be certified by appropriate
entity officers or Governmental Authority (and including a copy of the
certificate of incorporation of FGIOC certified by the Secretary of State (or
equivalent Governmental Authority) which shall set forth the same complete
corporate name of FGIOC as is set forth herein and such document as shall set
forth the organizational identification number of FGIOC, if one is issued in
its jurisdiction of incorporation);


 


14

















 


(d)           Agent shall have
received, in form and substance satisfactory to Agent, all consents, waivers,
acknowledgments and other agreements from third persons which Agent may deem
necessary or desirable in order to permit, protect and perfect its security
interests in and Liens upon the Collateral or to effectuate the provisions or
purposes of this Amendment, the Loan Agreement and the other Financing
Agreements, including, without limitation, Collateral Access Agreements;


 


(e)           Agent shall have
received evidence, in form and substance satisfactory to Agent, that Agent has
a valid perfected first priority security interest in all of the First Priority
Collateral (and a perfected security interest in all other Collateral having
the priority for such Collateral required hereunder) in each case subject only
to Permitted Liens permitted to have priority hereunder;


 


(f)            Agent shall have
received and reviewed Lien and judgment search results for the jurisdiction of
organization of FGIOC, the jurisdiction of the chief executive office of FGIOC
and all jurisdictions in which assets of FGIOC are located, which search results
shall be in form and substance satisfactory to Agent;


 


(g)           Agent shall have
received (i) an opinion of Milbank, Tweed, Hadley &
McCloy LLP, and (ii) an opinion of Fredric E. Roth, Jr., General
Counsel of FGI, each in form and substance satisfactory to Agent; and


 


(h)           Agent shall have
received, in form and substance reasonably satisfactory to Agent, (i) copies
of the documentation providing for the assumption by FGIOC of the obligations
of FGI under the Senior Notes, and (ii) copies of the documentation providing
for the Capital Stock Transfer and evidence that all of the issued and
outstanding shares of Capital Stock of each Borrower and Guarantor held by FGI
prior to the Capital Stock Transfer are directly and beneficially owned and
held by FGIOC after giving effect to the Capital Stock Transfer.


 


12.          Reference
to Loan Agreement.  Upon
the effectiveness of this Amendment, each reference in the Loan Agreement to “this
Agreement,” “hereunder,” or words of like import shall mean and be a reference
to the Loan Agreement, as amended by this Amendment.


 


13.          Breach of Amendment.  This Amendment shall be part of the Loan
Agreement and a breach of any representation, warranty or covenant herein shall
constitute an Event of Default.


 


14.          Expenses of Agent.  Borrowers (including FGIOC) jointly and
severally agree to pay, on demand,
all reasonable costs and expenses incurred by Agent in connection with the
preparation, negotiation and execution of this Amendment and any other
Financing Agreements executed pursuant hereto, including, without limitation,
the reasonable costs and fees of Agent’s legal counsel.


 


15.          Effectiveness; Governing Law.  This Amendment, subject to the satisfaction
of the conditions set forth in Section 11, shall be effective upon execution and delivery by Borrowers and written
acceptance by Agent and each Lender (notice of which acceptance is hereby
waived), whereupon the same shall be governed by and construed in
accordance with the internal laws of the 


 


15

















 


State
of New York (without giving effect to the conflict of laws principles thereof,
other than Section 5-1401 of the New York General Obligations Law).


 


16.          Successors and Assigns.  This Amendment shall be binding upon and
inure to the benefit of the Agent, Lenders and Borrowers and their respective
successors and assigns.


 


17.          No Novation, etc.  Except as otherwise expressly provided in
this Amendment, nothing herein shall be deemed to amend or modify any provision
of the Loan Agreement or any of the other Financing Agreements, each of which
shall remain in full force and effect. 
This Amendment is not intended to be, nor shall it be construed to
create, a novation or accord and satisfaction, and the Loan Agreement as herein
modified shall continue in full force and effect with respect to all Obligors
other than FGI.


 


18.          Counterparts; Telecopied Signatures.  This Amendment may be executed in any number
of counterparts and by different parties to this Amendment on separate
counterparts, each  of which, when so
executed, shall be deemed an original, but all such counterparts shall
constitute one and the same agreement. 
Any signature delivered by a party by facsimile transmission shall be
deemed to be an original signature hereto.


 


19.          Further Assurances.  Each Borrower (including FGIOC) agrees to
take such further actions as Agent shall reasonably request from time to time
in connection herewith to evidence or give effect to the amendments set forth
herein or any of the transactions contemplated hereby.


 


20.          Section Titles.  Section titles and references used in
this Amendment shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreements among the parties hereto.


 


21.          Release of Claims.  To induce Agent and the
Lenders to enter into this Amendment, each Borrower hereby releases, acquits
and forever discharges Agent and Lenders, and all officers, directors, agents,
employees, successors and assigns of Agent and Lenders, from any and all
liabilities, claims, demands, actions or causes of action of any kind or nature
(if there be any), whether absolute or contingent, disputed or undisputed, at
law or in equity, that are known to such Borrower as of the date of this
Amendment, or that such Borrower should have reasonably known, arising under or
in connection with any of the Financing Agreements.  Each Borrower represents and warrants to
Lender that such Borrower has not transferred or assigned to any Person any
claim that such Borrower ever had or claimed to have against Agent or any
Lender.


 


22.          Waiver of Jury Trial.  To the fullest extent
permitted by applicable law, the parties hereto each hereby waives the right to
trial by jury in any action, suit, counterclaim or proceeding arising out of or
related to this Amendment.


 


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16

















 


IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered by their respective duly authorized officers on the date
first written above.


 


	
   

  	
  NEW BORROWER

  
	
   

  	
   

  
	
   

  	
  FGI OPERATING COMPANY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen P. Jackson, Jr.

  
	
   

  	
  Title:

  	
  Executive Vice President,
  Chief Financial

  
	
   

  	
   

  	
  Officer and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  EXISTING BORROWERS

  
	
   

  	
   

  
	
   

  	
  FREEDOM GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen P. Jackson,
  Jr.

  
	
   

  	
  Title:

  	
  Chief Financial Officer
  and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  REMINGTON ARMS COMPANY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen P. Jackson,
  Jr.

  
	
   

  	
  Title:

  	
  Chief Financial Officer,
  Secretary and

  
	
   

  	
   

  	
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  THE MARLIN FIREARMS COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Stephen P. Jackson,
  Jr.

  
	
   

  	
  Title: 

  	
  Vice President, Secretary
  and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  H&R 1871, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen P. Jackson,
  Jr.

  
	
   

  	
  Title:

  	
  Member Managed

  
	
   

  	
   

  	
   

  
	
   

  	
  BUSHMASTER FIREARMS

  INTERNATIONAL, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen P. Jackson,
  Jr.

  
	
   

  	
  Title:

  	
  Executive Vice President,
  Chief Financial

  
	
   

  	
   

  	
  Officer and Treasurer

  



 


 


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  DPMS FIREARMS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen P.
  Jackson, Jr.

  
	
   

  	
  Title:

  	
  Executive Vice President,
  Chief Financial

  
	
   

  	
   

  	
  Officer and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  E-RPC, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen P.
  Jackson, Jr.

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  RA
  BRANDS, L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen P.
  Jackson, Jr.

  
	
   

  	
  Title:

  	
  Vice President

  



 


 


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  AGENT

  	
   

  
	
   

  	
   

  
	
  WELLS FARGO BANK,

  	
   

  
	
  NATIONAL ASSOCIATION,

  	
   

  
	
  as successor to Wachovia Bank, National
  Association,

  	
   

  
	
  as Agent and Issuing Bank

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Wells Fargo Bank, National Association

  	
   

  
	
  Title:

  	
  Vice
  President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  LENDERS:

  	
   

  
	
   

  	
   

  
	
  WELLS FARGO BANK,

  	
   

  
	
  NATIONAL ASSOCIATION,

  	
   

  
	
  as successor to Wachovia Bank, National
  Association

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Wells Fargo Bank, National Association

  	
   

  
	
  Title:

  	
  Vice
  President

  	
   

  



 


 


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  BANK OF AMERICA, N.A.

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Christopher M. O’Halloran

  	
   

  
	
  Title:

  	
  Vice
  President

  	
   

  



 


 


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  DEUTSCHE BANK TRUST COMPANY
  AMERICAS

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Enrique Landaeta

  	
   

  
	
  Title:

  	
  Vice
  President

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Omayra Laucella

  	
   

  
	
  Title:

  	
  Vice
  President

  	
   

  



 


 


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  NATIONAL CITY BUSINESS CREDIT,
  INC.

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  National City Business Credit, Inc.

  	
   

  
	
  Title:

  	
  Vice
  President

  	
   

  



 


 


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  RBS CITIZENS, NATIONAL
  ASSOCIATION

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  RBS Citizens, National Association

  	
   

  
	
  Title:

  	
  Senior
  Vice President

  	
   

  



 


 


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  BARCLAYS BANK PLC

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Noam Azachi

  	
   

  
	
  Title:

  	
  Assistant
  Vice President

  	
   

  



 


 


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  REGIONS BANK

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Regions Bank

  	
   

  
	
  Title:

  	
  Attorney
  in Fact

  	
   

  



 


 


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