Document:

Exhibit 10.4

 

EXECUTION VERSION

 

INTERCREDITOR
AGREEMENT

 

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

 

Recitals:

 

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

 

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

 

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

 

 

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

 

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

 

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

 

1.                                        Certain
Definitions; Rules of Construction.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

“Court” shall mean a court of competent jurisdiction.

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

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

 

10

 

3.                                      Priority of Liens.

 

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

 

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

 

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

 

11

 

4.                                      Lien Enforcement Action.

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

5.                                      Allocation of Proceeds of Collateral.

 

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

 

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

 

14

 

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

 

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

 

6.                                      Release of Liens.

 

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

 

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

 

15

 

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

 

7.                                      Agreement on Certain Bankruptcy Matters.

 

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

 

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

 

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

 

16

 

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

 

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

 

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

 

17

 

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

 

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

 

18

 

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

 

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

 

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

 

8.                                      Loan Administration; Amendments to Documents.

 

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

 

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

 

19

 

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

 

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

 

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

 

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

 

20

 

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

 

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

 

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

 

9.             Access to
and Use of Notes Priority Collateral.

 

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

 

21

 

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

 

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

 

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

 

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

 

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

 

22

 

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

 

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

 

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

 

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

 

23

 

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

 

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

 

	
  (A)

  	
  If
  to ABL Parties:

  	
  Wachovia
  Bank, National Association, as Agent

  
	
   

  	
   

  	
  301
  South College Street

  
	
   

  	
   

  	
  Charlotte,
  NC 28288-0737

  
	
   

  	
   

  	
  Attention: Freedom
  Group Loan Administration

  
	
   

  	
   

  	
  Telecopy:
  (704) 374-273

  
	
   

  	
   

  	
   

  
	
   

  	
  With
  a courtesy copy (which shall not

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  constitute
  notice) to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Parker,
  Hudson, Rainer & Dobbs LLP

  
	
   

  	
   

  	
  1500
  Marquis Two Tower

  
	
   

  	
   

  	
  285
  Peachtree Center Avenue, N.E.

  
	
   

  	
   

  	
  Atlanta,
  GA 30303

  
	
   

  	
   

  	
  Attention: Mitchell
  Purvis, Esq.

  
	
   

  	
   

  	
  Telecopy:
  (404) 522-8409

  
	
   

  	
   

  	
   

  
	
  (B)

  	
  If
  to Notes Parties:

  	
  Wilmington
  Trust FSB

  
	
   

  	
   

  	
  246
  Goose Lane, Suite 105

  
	
   

  	
   

  	
  Guilford,
  CT 06437

  
	
   

  	
   

  	
  Attention: Joseph
  O’Donnell

  
	
   

  	
   

  	
  Telecopy:
  (203) 453-1183

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With
  a courtesy copy (which shall not

  
	
   

  	
   

  	
  constitute
  notice) to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Dorsey &
  Whitney LLP

  
	
   

  	
   

  	
  Suite 1500

  
	
   

  	
   

  	
  50
  South Sixth Street

  
	
   

  	
   

  	
  Minneapolis,
  MN 55402

  
	
   

  	
   

  	
  Attention:
  Steven J. Heim

  
	
   

  	
   

  	
  Telecopy:
  (612) 340-2643

  

 

24

 

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

 

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

 

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

 

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

 

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

 

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

 

25

 

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

 

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

 

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

 

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

 

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

 

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

 

26

 

24.         Binding Effect;
Participations and Assignments.

 

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

 

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

 

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

 

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

 

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

 

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

 

27

 

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

 

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

 

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

 

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

 

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

 

[Signatures
on following pages]

 

28

 

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

 

	
   

  	
  ABL AGENT:

  
	
   

  	
   

  	
   

  
	
   

  	
  WACHOVIA
  BANK, NATIONAL ASSOCIATION, as ABL Agent

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

 

	
   

  	
  NOTES AGENT:

  
	
   

  	
   

  	
   

  
	
   

  	
  WILMINGTON TRUST, FSB,
  as Notes Agent

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

 

ACKNOWLEDGMENT,
CONSENT AND AGREEMENT

 

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

 

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

 

July       ,
2009.

 

	
   

  	
   

  	
  “OBLIGORS”

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  FREEDOM
  GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Secretary

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  REMINGTON
  ARMS COMPANY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Secretary

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  THE
  MARLIN FIREARMS COMPANY  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Secretary

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

[Signatures continue on following page.]

 

 

	
  ATTEST:

  	
   

  	
  H&R
  1871, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Secretary

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  BUSHMASTER
  FIREARMS INTERNATIONAL, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Secretary

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  DPMS
  FIREARMS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Secretary

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  E-RPC,
  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Secretary

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  DA
  ACQUISITIONS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Secretary

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  RA BRANDS, L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Secretary

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

[Signatures continue on following page.]

 

 

	
  ATTEST:

  	
   

  	
  RACI
  HOLDING, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Secretary

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  REMINGTON
  STEAM, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Secretary

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  BUSHMASTER
  HOLDINGS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Secretary

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

EXHIBIT A

 

ABL Priority Collateral

 

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

 

(i)              all
Inventory;

 

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

 

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

 

(iv)            all
Receivables;

 

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

 

(vi)            all
Deposit Accounts Collateral;

 

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

 

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

 

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

 

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

 

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

 

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

 

(xiii)          all
IP Collateral;

 

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

 

 

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

 

(xv)           all
Collateral Records; and

 

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

 

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

 

Applicable Definitions

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

EXHIBIT B

 

Notes Priority Collateral

 

“Notes
Priority Collateral” shall mean all “Collateral” as defined in the Notes
Documents and all other assets pledged pursuant to the Notes Documents to
secure the Notes Debt (in each case, other than ABL Priority Collateral).Exhibit
10.5

 

REMINGTON

 

COLLECTIVE BARGAINING

AGREEMENT

 

Between

 

REMINGTON ARMS COMPANY,

INC

lLION, NEW YORK

 

and

 

INTERNATIONAL UNION,

UNITED MINE WORKERS OF

AMERICA

 

1

 

Table of Contents

 

	
  Article I - Enabling Clause

  	
  5

  
	
  Section (a) Prior Agreements, Practices
  and Customs

  	
  5

  
	
  Section (b) Recognition

  	
  5

  
	
  Section (c) Non-Discrimination

  	
  5

  
	
  Section (d) Definitions

  	
  5

  
	
  Section (e) Payroll Deduction

  	
  6

  
	
  Section (f) Successorship

  	
  6

  
	
  Article II – Scope and Coverage

  	
  7

  
	
  Section (a) Work Jurisdiction

  	
  7

  
	
  Section (b) Exemptions Clause

  	
  7

  
	
  Section (c) Supervisors Shall Not
  Perform-Classified Work

  	
  7

  
	
  Section (d) Management of the Plant

  	
  8

  
	
  Section (e) UNION’S Rights

  	
  8

  
	
  Section (f) Contracting and
  Subcontracting

  	
  9

  
	
  Section (g) Job Security

  	
  9

  
	
  Article III - Wages and Hours

  	
  10

  
	
  Section (a) Basic Workday

  	
  10

  
	
  Section (b) Basic Workweek

  	
  10

  
	
  Section (c) Overtime Pay and Premium Pay

  	
  10

  
	
  Section (d) Standard Daily Wage Rate

  	
  13

  
	
  Section (e) Hourly Wage Rates and Shift
  Differential

  	
  13

  
	
  Article IV – Holidays

  	
  15

  
	
  Section (a) Holidays Observed

  	
  15

  
	
  Section (b) Saturday and Sunday Holidays

  	
  15

  
	
  Section (c) Plant Floater and
  December 24

  	
  16

  
	
  Section (d) Pay for holidays Worked

  	
  16

  
	
  Section (e) Pay for Holidays Not Worked

  	
  16

  
	
  Section (f) Birthday Holidays

  	
  16

  
	
  Section (g) Time of Payment

  	
  17

  
	
  Article V
  – Vacation

  	
  17

  
	
  Section (a) Regular Vacation

  	
  17

  
	
  Section (b) Plant Shutdown

  	
  17

  
	
  Section (c) Staggered Vacation

  	
  18

  
	
  Section (d) Work During Shutdown

  	
  18

  
	
  Section (e) Time of Payment

  	
  18

  
	
  Section (f) Obligation for Payment

  	
  19

  
	
  Article VI – Allowance

  	
  19

  
	
  Section (a) Bereavement Pay

  	
  19

  
	
  Section (b) Jury Duty

  	
  20

  
	
  Section (c) Reporting Pay and Call - In
  Pay

  	
  21

  
	
  Section (d) Military Duty

  	
  21

  
	
  Article VII – Joint Labor – Management Communication Committee

  	
  21

  
	
  Article VIII
  – Health and Safety

  	
  22

  
	
  Section (a) Right to a Safe Working
  place

  	
  22

  

 

2

 

	
  Section (b) Health
  and Safety Committee

  	
  22

  
	
  Section (c) Settlement of Health or
  Safety Disputes

  	
  24

  
	
  Section (d) Drug and Alcohol Testing

  	
  24

  
	
  Article IX
  – Seniority

  	
  24

  
	
  Section (a) Definition of Seniority

  	
  24

  
	
  Section (b) Termination of Seniority

  	
  24

  
	
  Section (c) Probationary Period

  	
  25

  
	
  Section (d) Filling Vacancies

  	
  25

  
	
  Section (e) Reduction Realignment
  Procedure

  	
  25

  
	
  Section (f) Panel

  	
  27

  
	
  Section (g) Panel Custodians

  	
  27

  
	
  Section (h) Panel Members Accrue
  Seniority

  	
  27

  
	
  Section (i) Right to be Recalled

  	
  27

  
	
  Section (j) Recall of Persons on Layoff
  Status

  	
  28

  
	
  Section (k) Job Bidding and Posting
  Procedure

  	
  28

  
	
  Section (1) Temporary Assignments

  	
  31

  
	
  Section (m) Separation Pay

  	
  32

  
	
  Article X
  – Settlement of Disputes

  	
  33

  
	
  Section (a) Grievance Committee

  	
  33

  
	
  Section (b) Grievance Procedure

  	
  34

  
	
  Section (c) Finality of Decision or
  Settlement

  	
  37

  
	
  Section (d) Waiver of Time Limits

  	
  37

  
	
  Article
  XI – Discipline and Discharge

  	
  37

  
	
  Section (a) Just Cause Required

  	
  37

  
	
  Section (b) Procedure

  	
  37

  
	
  Section (c) Suspension

  	
  38

  
	
  Section (d) Compensation for Lost
  Earnings

  	
  38

  
	
  Section (e) Removal of Employee
  Disciplinary Records

  	
  38

  
	
  Article XII
  – Benefits and Practices

  	
  38

  
	
  Section (a) Eligibility

  	
  38

  
	
  Section (b) Benefits of Choice

  	
  38

  
	
  Section (c) Length of Service

  	
  39

  
	
  Section (d) Practices

  	
  39

  
	
  Section (e) Administrative and Design
  Matters and Uniformity

  	
  39

  
	
  Article XIII
  – Miscellaneous

  	
  40

  
	
  Section (a) Pay Day

  	
  40

  
	
  Section (b) Bulletin Boards

  	
  40

  
	
  Section (c) Safety Shoes

  	
  40

  
	
  Section (d) Bye Examinations

  	
  40

  
	
  Section (e) Disability Accommodation

  	
  41

  
	
  Section (f) Medical Appointments

  	
  41

  
	
  Article XIV
  – No Strike or Lockout

  	
  41

  
	
  Section (a) Union Not to Strike

  	
  41

  
	
  Section (b) Union to Halt Breach

  	
  42

  
	
  Section (c) Discipline for Breach

  	
  42

  
	
  Section (d) No Lockout

  	
  42

  

 

3

 

	
  Article XV – Maintain Integrity of the Contract
  and Resort to Courts

  	
  42

  
	
  Article XVI – Modification and Severability Clause

  	
  42

  
	
  Section (a) Modification

  	
  42

  
	
  Section (b) Severability

  	
  43

  
	
  Article XVII - Ratification and Termination of this Agreement

  	
  43

  
	
  SHORT TERM DISABILITY PAY PLAN

  	
  45

  
	
  APPENDIX A

  	
  46

  
	
  APPENDIX B

  	
  48

  
	
  APPENDIX C

  	
  49

  
	
  APPPENDIX D

  	
  51

  

 

4

 

AGREEMENT

 

Article I - Enabling Clause

 

Effective this 23rd day of October 2007,
the Ilion Plant of REMINGTON ARMS COMPANY, INC., situated at Ilion, New York, hereinafter
referred to as the PLANT or the EMPLOYER, and the INTERNATIONAL UNION, UNITED
MINE WORKERS OF AMERICA, hereinafter referred to as the UNION, in consideration
of the mutual covenants herein contained have agreed and do agree as follows:

 

Section (a) Prior Agreements, Practices and
Customs

 

This agreement supersedes the collective bargaining
agreements previously executed by the parties. There shall be no prior
practices and customs observed at the Ilion Plant, unless identified in
Appendix C. All previous agreements not contained in this agreement, will be
superseded by this Agreement and to remain in effect must be signed and dated
on or after the effective date of this Agreement.

 

Section (b) Recognition

 

The UNION has been and is recognized as the
exclusive bargaining agency for the Employees of said Ilion Plant. This agreement
pertains to only the unit to be recognized; it does not create any rights or
obligations not expressly stated herein. All Employees shall be or become
members of the UNION, to the extent and in the manner permitted by law.

 

Section (c) Non-Discrimination

 

The PLANT and the UNION affirm the policy of
nondiscrimination against any Employee or applicant for employment because of
age, disability (within the meaning of the ADA), race, creed, religion, color, sex,
national origin, ancestry or political activity (whether intra-UNION or
otherwise) with respect to wages, hours and working conditions.

 

Section (d) Definitions

 

Wherever the following terms are used in this
Agreement, they are defined as follows:

 

(1)            The term “PLANT” shall mean the Ilion Plant of
Remington Arms Company, Inc. located at Ilion, New York.

 

5

 

(2)            The terms “Employee” or “Employees”
shall mean any or all of those employees at the Plant included within the
bargaining unit covered by this Agreement

 

(3)            The terms “Current Employee”
or “Current Employees” shall mean only those employees hired before September 11,
1997.

 

(4)            The terms “New Employee” and
“New Employees” shall mean only those employees hired on or after September 11,
1997.

 

(5)            When the term “Employee(s)”
or a personal noun or pronoun appears in this Agreement, it shall be understood
to refer to either the masculine or feminine gender or both as applicable in
the context in which it appears.

 

Section (e)  Payroll Deduction

 

(1)    The PLANT will deduct the membership dues, including
initiation fees and assessments, or the legally required equivalent thereof, of
the UNION and its various subdivisions, prescribed by the UNION, and other
authorized deductions, from the salary payable within the month of an Employee
who authorizes the PLANT to make such deductions on a form entitled United Mine
Workers of America Checkoff Authorization Form.

 

(2)    All sums deducted in this manner shall be turned
over by the PLANT to the designated representatives of the UNION, together with
a statement listing the names and social security numbers of all unit Employees
and the amount checked off for each authorized deduction.

 

Section (f)  Successorship

 

In consideration of the UNION’S execution of this Agreement,
the EMPLOYER promises that the PLANT covered by this Agreement shall not be
sold, conveyed, or otherwise transferred or assigned to any successor without
first securing the successor’s agreement to assume the EMPLOYER’S obligations
under this Agreement including Appendix A. Immediately upon the conclusion of
any such sale, conveyance, assignment or transfer of the PLANT, the EMPLOYER
shall notify the UNION of the transaction. Such notification shall be by
certified mail to the Secretary-Treasurer of the International Union and shall
be accompanied by documentation that the successor obligation set forth herein
has been satisfied.

 

6

 

Article II - Scope and Coverage

 

Section (a) Work Jurisdiction

 

All current bargaining unit work including processes
related to the production and processing of firearms and routine repair and
routine maintenance work normally performed at the PLANT, and work of the type
customarily related to all of the above shall be performed by bargaining unit
Employees of the EMPLOYER covered by and in accordance with the terms of this
Agreement, except as otherwise specified herein.

 

Section (b) Exemptions Clause

 

It is the Intention of this Agreement to reserve to
the EMPLOYER and except from this Agreement an adequate force of supervisory
employees to effectively conduct the safe and efficient operation of the PLANT
and at the same time, to provide against the abuse of such exemptions by
excepting more such employees than are reasonably required for that purpose.

 

Exempt employees under this provision are salaried
employees exempt under the Fair Labor Standards Act including the Plant Manager,
his assistants and their staff, Supervisory employees, with authority to hire, discharge,
promote, transfer, or otherwise effect changes in status of Employees or
effectively to recommend such action. All non-exempt employees excluded from the
bargaining unit will retain such status. All other Employees working in or
around the PLANT shall be covered by this Agreement, except as otherwise
specified herein.

 

The UNION will not seek to organize or ask
recognition for such exempt employees during the life of this Agreement. The
EMPLOYER shall not use this provision to exempt from the provisions of this
Agreement more persons than are necessary for the safe and efficient operation
of the PLANT.

 

Section (c) Supervisors Shall Not Perform
Classified Work

 

Supervisory employees shall perform no classified
work covered by this Agreement except in emergencies and except if such work is
necessary for the purpose of training or instructing bargaining unit Employees.
Plant Management retains the right to audit operations which may include
measuring and gauging components and auditing finished product as well as engineering
support for product development and troubleshooting so long as the number of
bargaining unit Employees currently performing such work is not eliminated or
reduced. When a dispute arises under this section, it shall be adjudicated
through the grievance and arbitration procedures covered by this Agreement and
in such proceedings the following rule will apply: the burden is

 

7

 

on
the EMPLOYER to prove that classified work has not been performed by supervisory
personnel.

 

Section (d)
Management of the PLANT

 

(1)    Management Rights

 

The UNION recognizes and agrees that, except as
specifically limited by the express provisions of this Agreement, the PLANT
maintains the sole and exclusive right to manage its business in such a manner
as the PLANT shall determine to be in its best interest. The exercise or
nonexercise of the rights retained by the PLANT shall not be deemed to waive
any such rights or the discretion to exercise any such rights in some other way
in the future.

 

(2)    Most Favored Nations

 

During the term of this Agreement should the UNION
either (A) enter into an agreement with any other competing firearm
manufacturer (with comparable gross sales) other than Remington Arms Co., Inc.
or any of its component divisions, the terms or conditions of which agreement
are more advantageous to the other employer than those contained in this
Agreement; or (B) Countenance a course of conduct by any other comparable
competing firearms manufacturer signed to an agreement with the UNION, which
course of conduct enables the other employer to operate under more advantageous
terms and conditions than are provided for in this Agreement, the PLANT shall
be privileged to adopt such advantageous terms and conditions upon written
notice to the UNION of its intent to do so.

 

Section (e)
UNION’S Rights

 

(1) Authorized representatives of the District
and the International will be allowed access to the PLANT property to insure
compliance with this Agreement, after giving notice and their reason for
seeking access. The President, International Vice Presidents, Field
Representatives and International Safety Representatives and
Secretary-Treasurer of the International Union will be granted access to the
PLANT provided that such officials have given a minimum of 48 hours advance
notification and reason of their desire to visit, provided there is no
interference with production. The EMPLOYER shall provide candidates for UNION
office reasonable opportunity to campaign among its Employees during their
non-working hours and in non-working areas, provided there is no interference
with production. The EMPLOYER further agrees to provide space on PLANT property
for the holding of UNION elections and the ratification of collective
bargaining agreements. However, the UNION agrees that there shall be no
solicitation or UNION meetings or promotional UNION activity on PLANT time.

 

8

 

(2)   The Local Union President, Vice
President, Financial Secretary, Recording Secretary and Employees who are
either elected or appointed to the Joint Labor-Management Communications
Committee, the Health and Safety Committee, and the Grievance Committee shall
have the right of movement throughout the PLANT in the performance of their
official duties, provided the UNION officials noted above do not unreasonably
interfere with the production of Employees. Local Union Officers and committee
member shall seek permission from their supervisor to leave their work area in
order to meet their responsibilities as outlined within this Agreement. Permission
will be granted unless there is a justifiable business reason for denying such
permission. Once permission has been granted, the Employee will be paid their
regular rate as long as the responsibilities are carried out during the
Employee’s regular work hours.

 

(3)     UNION officials noted above
in subsection (2), with proper advance notification to Human Resources, will be
excused to participate in UNION activities. In cases where multiple UNION
officials noted above in subsection (2) are requesting to be excused for
multiple days, the request shall be submitted as far in advance as possible but
no less than two (2) working days prior to the requested time off. In
cases of District or International Conventions or conferences, no more than ten
(10) Employees shall be excused to attend. Employees who have an official
request for a leave of absence shall be granted leave to serve as District or
International officers or representatives and shall retain their seniority and
accrue seniority while they are on such leave. Employees who have an official
request for a leave of absence shall be granted leave to accept a temporary
UNION assignment, not to exceed four (4) consecutive months, and to return
to their former jobs and shifts. No more than two (2) Employees may accept
such temporary UNION assignments at the same time. Permanent UNION appointees
and those Employees who are elected to District or International office shall
be entitled to return to a job, provided that Employees with greater seniority
at the PLANT are not on layoff.

 

Section (f) Contracting and Subcontracting

 

Notwithstanding anything to-the contrary in this
Agreement, the PLANT has the unlimited right to contract out or transfer work.

 

Section (g) Job Security

 

During the life of this Agreement, and based on
market demand, the M/7, M/700, M/7600, M/7400, M/1187, M/1100, M/870, SP10, M/552,
M/572, M750, M7615 and 105CTi will continue to be produced only at the Ilion
Plant; however, in accordance with Article II, Section (f), the PLANT
retains the right to purchase and/or procure component parts and services for
the foregoing models.

 

9

 

Article III - Wages and Hours

 

Section (a) Basic Workday

 

The regular or basic “workday” shall begin at 7:00
am and end the following day at 7:00 am. The EMPLOYER may designate other “workdays”
for individual Employees or groups of Employees following discussion of the
need to do so with the Local Union.

 

Section (b) Basic Workweek

 

The regular or basic “workweek” shall begin Monday
at 7:00 a.m. and shall end the following Monday at 7:00 am. The EMPLOYER may
designate other “workweeks” for individual Employees or groups of Employees
following discussion of the need to do so and agreement by the Local Union. An
Employee’s basic “workweek” will not be changed without seven days prior notice.
In the event the parties are unable to reach agreement regarding the work week
change, the EMPLOYER may implement the change, subject to the UNION’s right to
file a grievance and submit the matter to arbitration for final resolution. In
cases where the change is of a single week duration, the agreement and notice
provisions of this section shall not apply, but the affected Employee(s) will
be given as much notice as possible.

 

Section (c) Overtime Pay and Premium Pay

 

(1)           Overtime pay at one and
one-half times the Employee’s regular rate will be paid for:

 

(A)        All hours worked at the direction of management in
excess of eight (8) hours in any period of twenty-four (24) consecutive
hours. This provision shall not be applicable if the excess hours worked are at
the request of the Employee.

 

(B)         All hours worked in excess of forty (40) in the
regular workweek.

 

(C)         All hours worked on the Employee’s sixth consecutive
day off.

 

(D)        All hours worked on Saturday unless Saturday is
included in the Employee’s regularly scheduled workweek.

 

(2)           Overtime pay at double the
Employee’s regular rate will be paid for:

 

(A)         All hours worked on the
Employee’s seventh consecutive day.

 

10

 

(B)         All hours worked on Sunday unless Sunday is included
in the Employee’s regularly scheduled workweek.

 

(3)                                For the purpose
of determining whether an Employee has worked a sixth or seventh day within the
regular workweek as set forth in this Article, such Employee shall be
considered to have performed a day’s work when:

 

(A)                          The Employee works the
regularly scheduled hours in a day.

 

(B)                           The Employee is off work due
to a Holiday or other Contractual day.

 

(C)                           The Employee is excused for
part of the day by management.

 

(D)                          The Employee is absent a
full day as a result of being sent home due to lack of work without prior
notification not to report.

 

(4)           Work on the seventh
consecutive day and all holidays is optional. In the event all Employees refuse
such work, management retains the right to assign the least senior Employees in
the needed job title to work.

 

(5)           An Employee who is required
to work on one of his scheduled days of rest shall not be required to take
compensating time off.

 

(6)           Overtime opportunities shall
be distributed on an equitable basis. The EMPLOYER is responsible for
scheduling overtime and determining qualified Employees to perform overtime
work. Weekend (and sixth and seventh day worked) overtime hours shall be
distributed by the EMPLOYER among the Employees qualified to perform the work
involved pursuant to the following guidelines:

 

(A)        All shifts on a particular assignment working overtime:

 

(i)              Ask regular operator(s) of that primary
assignment on the shift that will be running.

 

(ii)             If he refuses, ask other operators in the same
Department, on the same shift, who are qualified to perform the work.

 

(iii)            If they refuse, ask other operators in the same Area
Manager’s area, on the same shift, who are qualified to perform the work.

 

11

 

(iv)          If they refuse, the
EMPLOYER may assign the work to the least senior employee in the Area Manager’s
area qualified to perform the work.

 

(B)         Only
one shift of a multi-shift job working overtime:

 

The overtime opportunity will be offered to all regular operators of
that assignment on all shifts on an equitable basis. Management reserves the
right to schedule the specific hours of such overtime work. If there are an
insufficient number of volunteers, the EMPLOYER may assign the work to the
least senior regular operators of that assignment.

 

Note that in emergency situations, the
EMPLOYER will take whatever steps are necessary to keep a job running and
assure no break in the production flow.

 

(7)            When
more than one rate is applicable to the same hours of work, the rates shall not
be pyramided, but only the highest single rate applicable shall be paid. Any
hours paid for at any overtime rate, except hours worked on Holidays, shall not
be used again for the purpose of determining any other overtime hours. When
time and one-half (1 1/2), two (2), or two and one half
(2 1/12) times rates are paid for hours worked, such hours shall be
considered overtime hours.

 

(8)            If
there are an insufficient number of volunteers for overtime pursuant to
Subsection (6) of this Article III(c), then the EMPLOYER may require
mandatory overtime of up to ten (10) hours per work week consisting of
work shifts not to exceed:

 

i.              Up
to ten (10) hours on the first five (5) days of any scheduled work
week (i.e., not to exceed two (2) hours of mandatory overtime per shift).

 

ii.             Six
(6) hours on the sixth (6th) day worked.

 

(A)        The
EMPLOYER has the right to determine the hours of work and determining qualified
Employees to perform overtime work.

 

(B)         Employee
absences during mandatory overtime and voluntary overtime once accepted by the
Employee shall be logged on the Employee’s work history and counted as an
unexcused absence in the Attendance Policy.

 

(C)         Overtime
shall not be applicable for the Short Term Disability Pay Plan or vacation considerations.

 

(D)        Employees
shall be given twenty-four (24) hour advance notice of mandatory overtime
scheduled on the sixth (6th). By way of

 

12

 

example, if an Employee is going to be
scheduled for mandatory overtime on a Saturday, the Employee shall be informed
of the assignment by the end of his shift on Thursday.

 

Section (d) Standard Daily Wage Rate

 

The Employee’s Standard daily wage rate as used
herein shall be calculated in accordance with the following formula: 

 

	
  Employee’s
  Established

  	
   

  	
   

  	
   

  	
   

  
	
  Monthly
  Salary x 12

  	
   

  	
  =

  	
   

  	
  Straight Time Rate

  
	
  52
  Weeks x 40 Hours Per Week

  	
   

  	
   

  	
   

  	
  (Per hour)

  

 

The
term regular rate as used herein shall mean the straight time rate plus shift
differential, if any, but excluding all other payments.

 

Section (e) Hourly Wage
Rates and Shift Differential

 

(1) Hourly
Wage Rates

 

(A)        The
four (4) Level Pay Structure is included in this Agreement as Appendix A. This
structure will remain the same during the life of this Agreement however, all
Employees actively employed on the effective date of this Agreement will
receive:

 

	
  Effective Date

  	
   

  	
  Amount

  	
   

  
	
  October 29, 2007

  	
   

  	
  3.5

  	
  %

  
	
  November 3, 2008

  	
   

  	
  3

  	
  %

  
	
  November 2, 2009

  	
   

  	
  3

  	
  %

  
	
  November 1, 2010

  	
   

  	
  3

  	
  %

  
	
  November 7, 2011

  	
   

  	
  3.5

  	
  %

  

 

(B)         Appendix
B lists each of the pay levels and the job titles and job code numbers
incorporated within each pay level. The EMPLOYER shall not introduce additional
pay levels or job titles during the life of this

 

13

 

Agreement or combine existing job titles or
pay levels without discussions with and agreement by the Local Union. In the
event the parties are unable to reach agreement regarding the appropriate pay
level and job code number, the EMPLOYER may implement the change, subject to
the UNION’s right to file a grievance and submit the matter to arbitration for
final resolution.

 

(2) Shift
Differential

 

An Employee permanently scheduled or temporarily
assigned to work between the hours of 3:30 p.m. and 7:00 a.m. shall receive a
night shift differential amounting to ten percent (10%) of the applicable rate
for Current Employees and $0.75 per hour for New Employees for such hours, according
to the procedures in paragraphs (A) through (E) of this Section. No
shift differential shall be paid when such hours worked at the request of the
Employee.

 

(A)        A
day shift Employee shall receive shift differential when the hours worked in a
workday amount to four or more* between the hours of 3:30 pm and 7:00 am, and
provided the Employee worked his normal shift and the hours qualifying for
shift differential are an extension of that shift.

 

*Employees scheduled to begin work at 4:00 a.m.
will receive shift differential for those hours worked between the hours of 4:00
a.m. and 7:00 a.m.

 

(B)         A
day shift Employee shall receive shift differential for all hours worked
between 3:30 p.m. and 7:00 a.m. provided the Employee worked his normal shift
and a break in work of one hour or more occurs between the normal shift and
those hours qualifying for shift differential.

 

(C)         If
the majority of hours worked by a day shift Employee are worked on a night
shift (3:30 p.m. to 7:00 a.m.), he will be paid according to paragraph (D) of
this Section.

 

(D)        A
second or third shift Employee shall receive shift differential for all hours
worked on his normal shift, as well as for all hours worked which are an
extension of his normal shift, provided he works his normal shift.

 

(E)         If
the majority of hours worked by a second or third shift Employee are worked on
the day shift (7:00 am to 3:30 pm), he will be paid according to paragraphs (A) and
(B) of this Section.

 

(F)         Night
shift Employees may be temporarily assigned by the EMPLOYER to work the day
shift. When these Employees are reassigned to days, they will continue to
receive their night shift differential for a

 

14

 

period not to exceed two (2) regular
work weeks unless an extension of time is deemed necessary by both parties.

 

This policy will not apply when:

 

(i) The request to work the day shift is originated by the
Employee.

 

(ii) Supervision determines a need for retraining due to a lack of
performance on the part of the Employee.

 

(iii) An Employee who is a successful bidder to a night shift job
which requires training on the day shift and is accordingly assigned to days
for initial training.

 

(iv) An employee is moved pursuant to a medical restriction.

 

Article IV – Holidays 

 

Section (a) Holidays Observed

 

(1)             In each year of this
Agreement there shall be eleven paid Holidays:

 

New Year’s Day

Good Friday

Memorial Day

July 4th

Labor Day

Thanksgiving Day

Day after Thanksgiving

December 24 – day before Christmas

Christmas Day

Employee’s Birthday

Plant Floater

 

(2)           With
the exception of the Employee’s Birthday and the Plant Floater, foregoing
Holidays shall be celebrated on the legally designated days.

 

Section (b) Saturday and Sunday Holidays

 

(1)           When any of the
foregoing Holidays falls on Saturday, the preceding Friday will be observed as
the Holiday.

 

15

 

(2)            When
any of the foregoing Holidays, except December 24, falls on Sunday, the
following Monday will be observed as the Holiday.

 

Section (c)
Plant Floater and December 24

 

(1)            The date of celebration of the Plant Floater Holiday will
be selected by each individual Employee to be scheduled in accordance with the
provisions for scheduling vacations as set forth in Article V.

 

(2)            When December 24 falls on Friday, the preceding
Thursday will be observed as the Holiday. When December 24 falls on Sunday,
the following Tuesday will be observed as the Holiday.

 

Section (d) Pay for Holidays Worked

 

Employees who work on the foregoing Holidays, including
designated birthday Holidays, shall be paid at one and one-half (1 1/2) times the
Employee’s regular rate for all such hours worked, and in addition, will be
paid a Holiday allowance calculated at the Employee’s regular rate for the
hours normally scheduled on the day of the workweek, or the Employee shall be
paid overtime pay at two and one-half (2 1/2) times the Employee’s regular rate for such Holiday hours worked, whichever
yields the greater pay.

 

Section (e) Pay for Holidays Not Worked

 

Employees who do not work on the foregoing Holidays
will be paid their regular earnings for such day, including regularly scheduled
overtime rates.  In order to qualify for
Holiday pay for Holidays not worked, the Employee must work both on the
Employee’s last scheduled day prior to the Holiday and on the Employee’s next
scheduled day following the Holiday, unless excused from work on such days by
PLANT management.

 

Section (f) Birthday Holidays

 

With supervisory approval, an Employee may elect to
float his/her birthday to any regularly scheduled workday within the calendar
year in which the birthday falls except for Sunday, a day of vacation or a
recognized PLANT wide holiday.

 

(1) Employees will be asked in order of
seniority to schedule their birthday Holiday prior to any vacation scheduling
each year.

 

16

 

(2)            Employees
who choose not to float their birthday Holiday and elect to take the day of
their birthday off, will have preference over any employee floating the Holiday
or scheduling a split day of vacation.

 

(3)            If
an Employee elects not to schedule the birthday Holiday floater prior to
vacation scheduling, the birthday Holiday will not take preference over
vacation days but will be granted on a first-come first-served basis. The
birthday Holiday will be given consideration along with any late vacation
requests.

 

(4)            If
the Employee’s birthday falls during a scheduled week of vacation, the Employee
may reschedule the extra vacation day at some other time during the calendar
year following established split vacation guidelines.

 

(5)            Employees
will observe their birthday Holiday on the day selected. In emergency
situations, however, an Employee’s birthday Holiday may be granted or changed
with approval of Area Supervision prior to the start of the shift during which
the Holiday was to be celebrated.

 

Section (g) Time of Payment

 

Payment for Holidays not worked shall be included
with pay for the pay period in which the Holiday occurs.

 

Article V – Vacation

 

Section (a) Regular Vacation

 

Employees will qualify for up to five (5) weeks
of regular vacation under the following formula:

 

Two weeks after one (1) year of service 

Three weeks after five (5) years of service 

Four weeks after ten (10) years of service 

Five weeks after twenty (20) years of service

 

Section (b) PLANT Shutdown

 

The EMPLOYER shall have the option of declaring a
vacation shutdown for up to 10 working days during any calendar year of this
Agreement. If the EMPLOYER elects this option it will notify the Local Union
President by January 15th of the year so elected. One of the two weeks
elected for shutdown shall occur during the time period of June 1 - August 31.
If the EMPLOYER elects to exercise the right to shut down the PLANT, up to

 

17

 

10
working days of an Employee’s regular vacation may be assigned to these
shutdown periods. Vacation shutdown weeks may include observed Holidays covered
by this Agreement. In such cases the EMPLOYER may assign vacation only to those
days not covered by Holidays for a combined total of five (5) days during
the shutdown week.

 

Section (c) Staggered Vacation

 

Any vacation other than vacation described in Section (b) above,
shall be scheduled by the EMPLOYER at times desired by the individual Employees
provided the Employee requests the vacation two (2) working days prior to
the actual vacation. Notwithstanding the foregoing, an Employee may request to
use no more than three (3) vacation days per calendar year with less than
two (2) working days notice prior to the actual vacation. The EMPLOYER may
excuse the two (2) working day prior request requirement in the event of a
verifiable severe weather condition. Vacations shall be scheduled by Employees
in accordance with the past practice of vacation scheduling, recognizing
production needs and the Employee’s right to schedule vacation in weekly
segments or split action of single day or 1/2 day segments.

 

Section (d) Work During Shutdown

 

In the event the EMPLOYER declares a vacation
shutdown between the months  of June 1 – August 31, Employees who are required to work
during the shutdown shall be  assured of scheduling equal days off during the  months of June,
July, or August, if they
so desire.

 

Section (e) Time of Payment

 

(1)            Vacation
payment for three (3) or more consecutive days vacation shall be made by
separate check no later than the last pay day immediately preceding the
beginning of the respective vacation periods, providing advanced vacation forms
are turned into the Payroll Department in a timely fashion. Any vacation of
less than three (3) consecutive days will be paid in the same pay period
in which the regular work for that week will be paid.

 

(2)

 

(A)          Employees who leave
their employment (for reasons other than discharge for just cause) prior to
receiving vacation pay shall receive their pro rata share of vacation payment
earned for each of the qualifying years (i.e., first, fifth, tenth, and
twentieth) by their second regular pay period from the time their employment is
severed according to the following guidelines:

 

18

 

· If the Employee leaves employment during or
after their anniversary month, they will receive full pay for the additional
week of vacation earned.

 

· Should the Employee
leave employment before their anniversary month, their additional week of
vacation pay will be reduced by 1/12 of a week for each month the Employee
leaves prior to the anniversary month. For example, an Employee with an
anniversary month of July who wants to leave in February of a
qualifying year will be leaving five (5) months prior to his anniversary
month and will therefore have the additional week’s vacation pay reduced by
5/12’s of a week.

 

(B)           Employees who leave
their employment (for reasons other than discharge for just cause) prior to
receiving vacation pay in the years between qualifying years, shall receive
full vacation pay based on their years of service outlined in Section (a) of
this Article.

 

(C)           Any vacation
previously paid during the calendar year will be considered part of total
allotment.

 

 

Section (f) Obligation for Payment

 

Failure of the EMPLOYER to make full and prompt
payment of the amounts required hereby, in the manner and on the dates herein
provided, shall at the option of the UNION, be deemed a violation of this
Agreement.  This obligation shall be a
direct and continuing obligation of the EMPLOYER during the life of this
Agreement; and it shall be deemed a violation of this Agreement if the PLANT, to
which this Agreement is applicable, shall be sold, leased, subleased, assigned
or otherwise disposed of for the purpose of avoiding the obligation hereunder.

 

Article VI – Allowance

 

Section (a) Bereavement Pay

 

(1)            An
Employee who is excused from work because of death in the Employee’s immediate
family, shall be paid the Employee’s regular rate of pay for the Employee’s
scheduled working hours excused for a maximum of three (3) scheduled
working days, starting on the day of death or on the day following death to and
including the day after the funeral, but in no event extending beyond the day
after the funeral. A member of the Employee’s immediate family shall be limited
for the purpose of this Section to Mother, Father, Step-Parent, Mother-in-law,
Father-in-law, Sister, Brother, Husband, Wife, Son, Daughter, Step-child, Grandparent
and Grandchild of the employee. No pay allowance shall be granted in the case
where, because of distance or other cause,

 

19

 

the
Employee does not attend the funeral of the deceased. In instances of distant
death, where a local memorial service is held, Employees will be excused with
pay, for up to eight hours, on the day of the service.

 

(2)            Spring interment or split time off (funeral and interment
at a later date) may be granted as long as it does not exceed three (3) working
days in total time off. If an Employee is on vacation and a death occurs in the
family, days used under the above provisions may be rescheduled at a later
date.

 

(3)            In case of death of a Brother-in-law*, Sister-in-law*, Son-in-law,
Daughter-in-law, an Employee may be excused from work up to eight (8) hours
on the day of the funeral and shall be paid the Employee’s regular rate of pay
for the working hours excused. No pay allowance shall be granted in the case
where, because of distance or other cause, the Employee does not attend the
funeral of the deceased. Notice of such deaths must be given to the Employee’s
supervision as soon as it is reasonably possible. In instances of distant death,
where a local memorial service is held, Employees will be excused with pay, for
up to eight hours, on the day of the service.

 

(4)            The hours thus paid for but not worked shall not be used
in computing overtime pay for hours worked in excess of forty (40) in the
workweek, nor shall Such days be counted as days worked in determining whether the
Employee has worked a sixth (6th) or seventh (7th) day in the regularly scheduled workweek.

 

(5)            The EMPLOYER may require verification of death and
relation to the Employee.

 

*Brother-in-law
and Sister-in-law are defined as the spouse of the Employee’s Brother or Sister
and the Brother or Sister of-the Employee’s spouse.

 

Section (b) Jury Duty

 

When an Employee is called for jury duty service, he
shall be excused from work for the  hours he is required to appear in
court and for time granted by supervision for the Employee to prepare for jury
duty (travel time, clothes change, etc.). The amount of this time will be
determined at the discretion of the EMPLOYER’s supervisor. Employees attending
jury duty will be paid their regular rate for the excused hours they would have
been scheduled to work, not to exceed eight (8) hours for any one day and
shall be allowed to retain jury fees received for jury duty service. Time
absent for jury duty will be paid as excused jury duty. An Employee called to
jury duty while on vacation (other than previously scheduled vacation shutdown)
will be permitted to reschedule vacation beginning with the first day of jury
duty. Employees who have been selected to jury duty must complete proper PLANT
forms and return them to their supervision each week of jury duty service.

 

20

 

Section (c)
Reporting Pay and Call - In Pay

 

(1)           An Employee who reports for scheduled
work, without prior notification not to report, shall be retained for the
half-day period and given such useful work as may be at hand at the Employee’s
regular rate. If the Employee is offered and does not accept substitute work,
the Employee will be paid only for the time spent at the PLANT until such work
is offered. This provision does not apply to cases where work is not available
for reasons beyond the EMPLOYER’s control, such as power failure, fire, or
serious mechanical difficulties affecting an entire area, or in cases where
Employees return to work following unexcused absences without notifying their
supervision. Disability pay shall not be paid during periods of PLANT shutdown
beyond the EMPLOYER’s control.

 

(2)           An Employee who is called in and
reports for work between regular shifts with less than eight (8) hours
notice shall receive a call-in allowance of two (2) hours pay at the
Employee’s regular rate, in addition to any other pay to which may be entitled.

 

Section (d)
Military Duty

 

Employees required
to perform military service will receive compensation, rights and benefits per
the Remington Military Leave Policy, as amended from time to time by the
EMPLOYER.

 

Article VII
– Joint Labor – Management Communication Committee

 

The parties
recognize that the prosperity and efficiency of the PLANT are dependent upon
their ability to work cooperatively. In order to further implement this
expression of purpose, Joint Labor-Management Communication Committee shall be
established at the PLANT. The UNION representation on this committee shall be the
Local Union Executive Board. The EMPLOYER shall designate its representatives
to the Committee. Neither party shall have more than six (6) representatives on
the Committee. The Committee shall meet at mutually agreeable times, but no
less than once a month. The function of the Committee shall be to identify
problem areas, exchange information and to seek to develop a good working
relationship within the PLANT. Representatives from the UNION or the EMPLOYER
may suggest areas of special concern or interest as topics of discussion during
these Committee meetings, as long as they are consistent with the purpose of
this Committee and the provisions of this Agreement.

21

 

Article VIII – Health and
Safety

 

Section (a) Right to a
Safe Working place

 

Every Employee covered by this
Agreement is entitled to a safe and healthful place to work, and the parties
jointly pledge their individual and joint efforts to attain and maintain this
objective. Recognizing that the health and safety of the Employees covered by
this Agreement are one of the highest priorities of the parties, the EMPLOYER
and UNION will continue to cooperate to reach the objective of eliminating
accidents and health hazards, and will encourage Employees to use the
procedures stated herein to reach that objective.

 

Section (b) Health and
Safety Committee

 

(1)           At the PLANT there shall be a Health and Safety Committee
made up of nine (9) UNION members employed at the PLANT who are qualified
by experience or training and selected by the Local Union. The Local Union
shall inform the EMPLOYER of the names of the Committee members. Committee
members shall be deemed to be acting within the scope of their employment at
the PLANT within the meaning of the applicable workers’ compensation law, while
in the performance of their duties as outlined within this Agreement. The
Health and Safety Committee shall select, from among its members, a Chairman
who shall coordinate the activities and functions of the Committee and who will
serve as their representative on the Central Safety Committee and the joint
Labor-Management Communications Committee.

 

(2)           A member of the Health and Safety Committee, assigned by
the Committee Chairman, may participate with Management in the existing
inspection program and scheduled Serious Potential Incident meetings.

 

(3)           Employees should first report health and safety complaints
or conditions to their immediate supervision. Members of the Health and Safety
Committee will make every effort to ensure that the Employee has first brought the
complaint to the attention of their immediate supervision before presentation
to the Plant Safety Supervisor. Upon presentation of alleged health and safety
complaints or conditions by the Chairman of the Health and Safety Committee or
his designee to the Safety Supervisor, the UNION and the Safety Supervisor will
schedule a joint investigation of the complaint or condition.

 

Management will notify the
Chairman of the Health and Safety Committee or his designee of a complaint or
accident as soon as practicable, using its best efforts to do so. The Chairman
of the Health and Safety Committee or his designee shall be given a copy of any
incident report generated as a result of an injury to an Employee. A member of
the Health and Safety Committee shall participate with the Safety Supervisor in
the initial

 

22

 

formal safety investigation if the Safety
Supervisor determines that an investigation is necessary.

 

(4)           PLANT Management and up to three (3) members of the
Health and Safety Committee shall meet regularly at times arranged by the
parties for the purpose of discussing health and safety matters. Meetings shall
be held on a monthly basis or more frequently if needed. No more than three (3) members
of the Health and Safety Committee shall be compensated, at their regular rate
of pay, by the EMPLOYER for any lost time spent in these meetings.

 

(5)           A member of the Health and Safety Committee, and an
authorized representative of the International Union, shall be allowed to accompany
a representative of any State or Federal agency regarding health and safety on
an inspection of the PLANT.

 

(6)           A member of the Health and Safety Committee, assigned by
the Health and Safety Committee Chairman, shall be invited to attend Serious
Potential Incident meetings, Joint Complaint Investigations and other scheduled
safety sub-committee meetings. Time spent performing the above recognized Committee
activities will be compensated at his regular rate of pay, by the EMPLOYER, if
performed during the member’s regularly scheduled work hours. Off shift
employees will be scheduled to attend safety meetings as part of their
regularly scheduled work hours.

 

(7)           The UNION and the EMPLOYER agree that, prior to requesting
intervention from a federal or state agency on any matter relating to employee
health and safety, the UNION will present the issue to the EMPLOYER, which will
then be given a reasonable period of time within which to respond. Only after
receipt of the EMPLOYER’s response, or the EMPLOYER’s failure to respond, will
the UNION seek such outside intervention.

 

(8)           The Safety Supervisor shall each month provide the Health
and Safety Committee with two copies of a list of all (i) first aid
treatment cases and (ii) accidents reported to OSHA, which shall include,
but not limited to the OSHA 200 log. Such report will reflect the nature of the
injury and the location of the accident.

 

(9)           The Health and Safety Committee shall attend annual Health
and Safety Training of up to five (5) working days as agreed to by the
UMWA International Union and the EMPLOYER. The training will be designed to
improve Health and Safety knowledge skills. Committee members attending and
participating in such training shall be paid at their regular rate of pay for
lost working time by the EMPLOYER for attendance at the training.

 

23

 

Section (c) Settlement
of Health or Safety Disputes

 

When a dispute arises at the
PLANT involving Health and Safety, an immediate, earnest and sincere effort
shall be made to resolve the matter. If the dispute is not resolved by the
Employee and his immediate supervisor, nor with the assistance of the Health
and Safety Committee, the dispute will be adjudicated through the grievance
procedure.

 

Section (d) Drug and
Alcohol Testing

 

(1)           During the Probationary Period, Employees shall be subject
to the Remington Drug Free Workplace Policy, as amended from time to time by
the EMPLOYER.

 

(2)           Employees shall be subject to the drug and alcohol testing
policy set forth in Appendix C.

 

Article IX – Seniority

 

Section (a) Definition
of Seniority

 

Seniority of Employees
employed in the bargaining unit shall be the Employee’s most recent date of
hire at the PLANT adjusted for any previous period of unbroken seniority
provided such seniority was not terminated in accordance with section (b) below.

 

Section (b) Termination of Seniority

 

Seniority shall be terminated
upon the Employee’s termination for just cause; voluntary resignation; transfer
to a job outside the bargaining unit, expiration of recall rights after
termination for lack of work; or failure to return to work as scheduled after
completion of a leave of absence agreed to by the PLANT or the failure to
return to work as return to work as scheduled. Employees who transfer to a job
outside of the bargaining unit will lose their seniority and in the event the
employee returns to the bargaining unit will be treated as a new employee.

 

24

 

Section (c) Probationary
Period

 

During the first one hundred
twenty (120) calendar days of employment, a new Employee will be subject to
demotion, transfer, or termination by the PLANT and such action shall not be
subject to Articles X and XI of this Agreement After one hundred twenty (120)
days probationary period, the Employee’s seniority will be established in
accordance with the provisions of Section (a) of this Article. Any discipline
in the first 120 days will carry into the next sixty (60) days.

 

Section (d) Filling
Vacancies

 

When vacancies occur, they
will be filled in the following order:

 

(1)           To Employees qualified for the job, per provisions of the
Job Bidding and Posting Procedure.

 

(2)           To reasonably available former bargaining unit Employees
laid off due to reduction of force and on a panel and possessing the necessary
qualifications to step in and perform the work of the job at the time the job
is awarded.

 

(3)           To new applicants qualified to step in and perform the
work of the job.

 

If opportunities arise to bring products of
any type currently manufactured elsewhere to the Ilion facility, Management
reserves the right to permanently fill jobs associated with those products
without regard to the provisions of Article IX section (d), Filling
Vacancies, and such placements will not be subject to the Grievance Procedure
under Article X section (b). Any openings that occur after the first year
of production will be filled in accordance with the provisions of Article IX,
section (d). During the first year of production, employees placed under this
provision will not be subject to displacement under Article IX, section
(e), Reduction Realignment Procedure, unless a PLANT-wide excess creates a
reduction in force. This section does not apply to product designed and
developed to be produced at Ilion.

 

Section (e) Reduction
Realignment Procedure

 

In the event the EMPLOYER
determines that there is an “excess” of jobs within a job code in the
bargaining unit, representatives of the EMPLOYER shall notify the Local Union
and the parties will follow the process covered within this section. In all
cases where the work force is to be reduced, Employees with the greatest
seniority at the PLANT shall be retained provided that they have the required
qualifications (as would normally be posted) and the ability to perform the available
work. If at any time there is an excess within a training progression, those
Employees in level 03 of the training progression will be added to the excess
list and Employees on temporary assignments

 

25

 

will be returned to their primary assignments
for purposes of regression. When an excess occurs in normal progression
positions, the least senior person in the progression will be excessed. Prior
to any excess process, all open jobs will be posted one cycle. Employees
considered excess will be given twenty four (24) hour written notice prior to
posting, if the business conditions indicate that the excess condition could
reverse within the next six (6) months, which may allow some or all of the
operators to return to their primary assignment, management may place the group
of employees on Temporary Assignments during that period. Realignments or
reductions of the work force shall be in accordance with the following
guidelines:

 

(1)           Once excess assignments are determined, if the Employees
in those assignments are not the lowest senior Employees, they will have the
option to replace the lowest senior Employees within the Department, level, job
code and shift.

 

(2)           Excessed employees will be given options, by seniority,
providing their choice does not result in a higher pay level:

 

(A)          Accept any open position and receive immediate bid rights
and retain preferential treatment or:

 

(B)           Bump the lowest seniority person in the PLANT in the same
pay level and shift. If Employee(s) cannot preserve pay level and
shift, or:

 

(C)           Bump the lowest seniority person in the PLANT in same pay
level or same shift. When neither (A) nor (B) is satisfied,
Employee(s) will be advised of their options to preserve (C), prior to
choosing shift or level.

 

(3)           When Employee(s) have no options in their pay level,
they will drop one (1) pay level at a time until their need is satisfied
maintaining their shift.

 

(4)           When an excess is declared, all open jobs will be posted
one cycle.

 

(5)           Bidding restrictions will be removed for excessed
Employees only. If an excessed employee is successful in bidding they will
receive immediate bid rights and retain preferential treatment.

 

(6)           In a bumping situation if shift and level are preserved,
the Employee will not have bid rights restored for six (6) months
following the date an excess offering was awarded.

 

(7)           For purposes of regression, all Employees within code 742
(Department Specialist) will return to code 741 (Machine Line Operator).

 

(8)           Employees transferring for any reason between production
and support departments will receive the second step of the pay level and will
progress depending on performance. If the Employee left the support department
within twenty-four (24)

 

26

 

months and at the top of the rate of pay, the
Employee will return to the support department at the top rate of the job.

 

(9)           During
any excess resulting in a layoff, the Volunteer Leave of Absence (VOLA) procedure will
be followed as per current practice.

 

Section (f) Panel

 

Employees with seniority who
are laid off because of a reduction in the work force shall be placed on a
panel from which they shall be returned to employment on the basis of seniority
as outlined in Section (d)(2) of this Article.

 

Section (g) Panel
Custodians

 

A designated representative
of the EMPLOYER and the Recording Secretary of the Local Union shall retain
panel records. It shall be the obligation of laid off Employees, with
seniority, to keep the custodians of the panel informed of any change of
address and/or phone number where they may be regularly reached. Notice to the
last known address of the laid-off Employee by certified mail shall be
sufficient notice of recall. The Employee so notified may either accept or
reject the job which is available; but if the Employee rejects a job which he
has the ability to perform, or fails to respond within five (5) working
days after receipt of such notice, or accepts but fails to report for work in a
reasonable amount of time, his name shall be removed from the panel and he
shall sacrifice his seniority rights at the PLANT.

 

Section (h) Panel
Members Accrue Seniority

 

Employees who are placed on
the panel shall retain the seniority earned prior to their layoff, and, in
order to protect their relative seniority standing, will continue to accrue
seniority while on the panel.

 

Section (i)  Right to be Recalled

 

(1)            Employees, with seniority, laid off for lack of work
shall retain their seniority for five (5) years. Employees laid-off for
lack of work may exercise their seniority in accordance with the provisions of
this Article.

 

(2)            Any person on the panel list who secures other employment
during the period when no work is available for him at the PLANT shall in no
way jeopardize his seniority rights while engaged in such other employment.
However, any person on the panel list who secures other employment and does not
return to work when there is

 

27

 

available employment at the PLANT, shall
sacrifice his seniority rights at the PLANT and shall have his name removed
from the panel list.

 

Section (j) Recall of
Persons on Layoff Status

 

When a job at the PLANT exists that is not
filled by Employees within the active working force, the panel custodians will
review the list and the EMPLOYER shall recall the appropriate person from the panel
list to the job to be filled.

 

Section (k) Job Bidding
and Posting Procedure

 

(1)          Eligibility: Employees with one year
or more of service will be eligible to bid open jobs unless the employee is not
available to return to work within 30 work days from time of bid. All open jobs
will be posted at the appropriate pay level for the job title as listed in
Appendix B. The senior Employee, among those eligible bidders, with the
required posted qualifications and ability to perform the job will be awarded the
job. If an excess situation exists, and an excess Employee has less than one
year of service, the excessed Employee will be allowed to bid. If an employee
has been shift realigned, they will be able to bid for shift.

 

(2)          Job Progressions: All open jobs will
be posted at the level of the opening. If there is no successful bidder who
meets requirements stipulated, a training bid (when appropriate) will then be
offered at the training bid level (the training bid level is one step below the
normal entry level for the position). In the event of a training bid, some
minimal established requirements will be necessary to fill the opening. The
successful bidder of a training bid will then take the responsibility to get
education, etc. and demonstrate improvement in order to progress.

 

(3)           Posting
Procedure: Open jobs will be posted PLANT wide for three (3) working days.
Open jobs within a progression will be filled by qualified people in the
progression prior to posting. Each posting will include:

 

·              job
title

·              rate
level

·              shift

·              department

·              brief
description of the job

·              qualifications
and experience needed.

 

(4)           Bidding Procedure:

 

(A)          Open
jobs, not filled by normal progressions, will be posted PLANT wide. Any
Employee interested in the position must bid during

 

28

 

the posting period. Skilled jobs will be awarded by seniority following
successful interviews and demonstrations of skills and abilities. With the
exception of skilled jobs, no job will be reposted waiving restrictions.
Skilled jobs may be reposted to provide for training bids when appropriate.
Training bids will be awarded by seniority upon successful demonstrations of
abilities and interviews. Any Employee restricted from bidding otherwise shall
be allowed to bid on training bid positions. Once the posting has been removed
from the boards the job posted cannot be withdrawn without agreement between
the UNION and the EMPLOYER.

 

(B)           If the Employee is
the senior qualified bidder, meets qualification and medical requirements to
more than one job at a given time, the Employee will be given 24 hours from the
time notified to select which bid to accept. The Employee will also have the
option of rejecting any or all successful bids during that 24 hour period.

 

(C)           Successful bidders
will be moved to the new assignment within 20 production days following the
award of the bid, unless an extension of time is agreed upon by both parties.
If the new job involves transferring to a higher level of pay, and an extension
beyond 20 production days is required, the Employee will receive the higher
level of pay, at one step above crossover, beginning on the twenty-first day.
Employees transferring, for any reason, between Production and Support
Departments will receive the second step of the pay level and will progress
depending on performance.

 

(D)          Preferential
treatment shall be awarded to Employees who were “excessed” from a job back to
the same primary assignment he/she was “excessed” or “bumped” from, for a
period of 24 months from the date of the “excess”, provided the Employee has
not successfully bid to another job opening in this 24 month period.

 

(E)           If there are no
qualified bidders (including Employees entitled to preferential treatment) or
other bargaining unit personnel in need of a permanent assignment, the job may
be filled by posting a training bid (if applicable) or by a qualified person
from the layoff panel. If there are no qualified persons on the panel list, the
job may be filled by hiring a new Employee.

 

(F)           Employees will be
restricted to one (1) bid per 24 month period throughout the term of this
Agreement.

 

(G)           Training of
Employees shall take place on their normal shift, unless such training is not
reasonably available on that shift.

 

29

 

(5)       Training: Appropriate training periods
for successful bidders, excessed placements, new hires, and all other transfers
should not exceed the following:

 

·                       Three (3) weeks for
level three (3) jobs.

·                       Level four (4), level five (5) and
level six (6) jobs will allow for reasonable amounts of training
appropriate for the specific assignment.

·                       Training time for job moves
will be determined by management based on the complexity of the assignment and
the training required to operate the job safely.

 

Employees who are unable to satisfactorily
perform jobs after the appropriate amount of training will, at the discretion
of management, be declared non-performers and will be placed according to the
Non-Performance section of this Agreement.

 

(6)       Non-Performance: An Employee, not capable
of performing all the requirements and duties of a job, will be placed by the
Employment Office to an open job. This procedure will be available two (2) times
per affected Employee during the duration of this Agreement upon the third time
the employee is not capable of performing all the requirements and duties of a
job, the employee will be discharged.

 

(7)       Medical Placement Procedure: Employees
with permanent medical impairments will be placed on jobs best suited for their
permanent work restrictions and which are equal to or less than their existing
rate of pay in accordance with the following procedure:

 

(A)          Permanent medical
impairment and work restrictions will be determined after consultation with the
Medical Department.

 

(B)           Employees with a
permanent medical impairment will be placed in the first job for which they
have the required skill and which meets their work restriction following the
sequence outlined in Article IX, Section (e)(2).

 

Employees displaced by this process will also be handled in accordance
with the same provisions as outlined in Article IX, Section (e)(2).

 

(C)           This procedure does
not apply to Employees who are temporarily impaired.

 

(D)          Once employed, an
Employee cannot be terminated or refused recall from the panel for medical
reasons over his objection without the concurrence of a majority of a group
composed of an EMPLOYER approved physician, an Employee-approved physician, and
a neutral qualified third party (if necessary), that there is a permanent
medical condition or physical restriction which prevents the Employee from
performing an established job, within the bargaining unit, which their

 

30

 

seniority would entitle them to hold. Each party shall bear the cost of
examination by the physician it designates and shall share equally the cost of
examination by the qualified third party. Where the EMPLOYER challenges the
physical ability of an Employee or panel member to perform his regular work and
is subsequently proven wrong, the Employee shall be compensated for time lost
due to the EMPLOYER’s challenge.

 

Section (l) Temporary Assignments

 

It is understood that to
meet production needs operators may be moved to other assignments within their
Area Manager’s area.

 

All primary assignments in an area may not
have full time operators assigned. Assignments requiring less than a full time
person every day or is not operated on a full time basis will be covered by the
flexibility of the operators in the area.

 

Additionally flexibility in
the area will be used to cover for absences, short term bottlenecks, short term
fluctuations in the schedule and back filling for cross training. The parties
recognize that there are instances where such assignments are necessary, and
agree that temporary assignments may be made under the following guidelines:

 

Only if the reassignment is
outside the Area Manager’s area will it be considered a temporary assignment.

 

(1)           The
temporary assigning of an individual Employee shall not exceed one hundred eight 180 working days in a
rolling 12 month period.

 

(2)           Employees
filling temporary assignments shall be compensated at the higher of the two
rates involved (the regular rate of his normal job or the regular rate of his
temporary assignment).

 

(3)           Notification of temporary assignments of more than 10
consecutive work days duration will be made to the Chairman of the Grievance
Committee.

 

(4)           All regular full time job openings that are determined to
be greater than six (6) months in duration will be posted according to the
provisions of the Job Bidding and Posting Procedure unless mutually agreed to
by the EMPLOYER and the UNION.

 

(5)           DCSI
or its replacement will be the official record keeping system for tracking of
temporary moves. The Grievance Committee Chairman will have access to this
information when requested.

 

31

 

Section (m) Separation
Pay

 

(1)           The receipt of separation of pay provided under this Article is
conditioned upon the separation of an Employee from the active workforce
employment rolls as laid-off due to lack of work during the term of this
Agreement.

 

(2)           An Employee who has one (1) year or more of service
shall be paid separation pay each time he is terminated because of lack of
work, except that such pay will not be paid when:

 

(A)          He accepts, before
his separation becomes effective, a job at any REMINGTON ARMS COMPANY, INC’s
location;

 

(B)           He is pensioned;

 

(C)           He resigns his
employment;

 

(D)          He is scheduled off
from work temporarily due to curtailment or cessation of operation caused by;

 

i.              Fire, flood, power
failure, transportation difficulties, material shortages, and the like; or

 

ii.             Any emergency
condition beyond the direct control of the EMPLOYER. When an Employee is
“scheduled off” for such reason for a definite or indefinite temporary period,
he shall not be considered as terminated for the purpose of this Article; or

 

(E)           A buyer or recipient
of Remington assets offers an Employee continued employment.

 

(3)           The PLANT may elect
to pay separation pay in a lump sum or weekly installments.

 

(4)           Separation pay, if being paid in weekly installments,
shall be discontinued when a former Employee is re-employed at any REMINGTON
ARMS COMPANY, INC’s plant, or is offered and refuses re-employment at the Ilion
Plant.

 

(5)           The amount of an Employee’s separation pay, subject to the
foregoing provisions in this Article, shall be:

 

(A)          One (1) week’s
pay for each of the first four (4) years of service, plus,

 

32

 

(B)           One (1) week’s
pay for each year of service over four (4) reduced by the amount of any
separation pay previously paid at any REMINGTON ARMS COMPANY, INC’s location
for service after December 1, 1993 over four (4) years. However, this
reduction shall be reduced in monthly increments to zero over a forty-eight
(48) month period of re-employment from last termination for lack of work.

 

A fractional part of a year, after his first year of service, shall be
computed at the rate of one-twelfth (1/12) of one (1) week’s pay for each
month of service. In such computation, if, in addition to full months of service
an Employee has accrued fifteen (15) or more days on the date he is terminated,
he shall be credited with a full month.

 

For separation pay purposes, a week’s pay shall be the Employee’s
current “straight-time” rate per hour multiplied by the number of hours, not to
exceed forty (40) hours, constituting his normal weekly hours of work at the
time of his termination.

 

(C)           Any other provisions
of the Article to the contrary notwithstanding, separation pay shall never
exceed twenty (20) weeks.

 

(6)           An employee who has received separation pay shall not be
required to return any portion of such pay to the PLANT in the event he is
reemployed.

 

(7)           Separation pay shall be in addition to any vacation
allowance and any employment compensation benefits to which the Employee may be
entitled.

 

(8)           Nothing contained in the Article shall be deemed to
qualify, limit or alter in any way the PLANT’s rights to reduce hours of work
to avoid terminations because of lack of work.

 

(9)           Wherever the term “service” is used in this Article, it
shall mean the total length of time an Employee has been actively employed by
the PLANT.

 

Article X – Settlement of
Disputes

 

Section (a) Grievance
Committee

 

(1)           A Grievance Committee consisting of fifteen (15) members
shall be elected by the members of the UNION employed at the PLANT. Each member
of the Committee shall be an Employee at the PLANT and shall be eligible to
serve as a Committee member only so long as he continues to be an Employee of
the PLANT who is not on layoff. The duties of the Grievance Committee shall be
confined to the adjustment of disputes arising out of this Agreement that the
PLANT and the Employee

 

33

 

or Employees, with the assistance of the
Grievance Committee, fail to adjust. The Grievance Committee shall have the
authority on behalf of the grievants to settle or withdraw any grievance at
step 2 or proceed to step 3 of the grievance procedure.

 

(2)            The Grievance Committee shall have no other authority or
exercise any other control, except as outlined in this Agreement, nor shall the
Committee in any way interfere with the operation of the PLANT.

 

A Grievance Committee member
who violates this provision shall not be suspended or discharged for official
actions as a Committee member, but may be removed from the Committee by the
PLANT. If the PLANT seeks to remove a Committee member for violation of this
section, it shall so notify the affected Committee member and the other members
of the Committee. If the Committee objects to such removal, the matter shall be
submitted directly to arbitration. If the other members of the Committee so
determine, the affected member shall remain on the Committee until the case is
settled or decided by an arbitrator.

 

(3)           The Grievance Committee shall select a Chairman from among
its members to coordinate its activities and to sit as their representative on
the joint Labor-Management Communication Committee.

 

Section (b) Grievance
Procedure

 

Should differences arise
between the UNION and the PLANT as to the meaning and application of the
provisions of this Agreement, an earnest effort shall be made to settle such
differences at the earliest practicable time. If differences arise about
matters not specifically mentioned in this Agreement, those matters are to be
referred to the Joint Labor-Management Communication Committee set forth in Article VII
and are not subject to grievance/arbitration provisions found in Article X
of this Agreement. At all steps of the complaint and grievance procedure, the
grievant and the UNION representatives shall disclose to the PLANT
representatives a full statement of the facts and provisions of the Agreement
relied upon by them. In the same manner, the PLANT representatives shall
disclose all the facts relied upon by it. The grievant shall have the right to
be present at each step of the grievance procedure until such time as all
evidence is taken. Disputes that remain unresolved despite such effort shall be
resolved as follows:

 

(1)           Step 1 – The Employee will make his complaint to his
immediate Supervisor who shall have the authority to settle the dispute. The
Employee shall make the complaint within ten (10) working days of when he
first knew or should have known of the complaint. Where an Employee makes a
complaint during work time, the Supervisor shall, if possible without
interrupting production, discuss the matter briefly on the spot. The Employee
shall be entitled, at his request, to have a member of the Grievance Committee
present to assist him at any discussion with his supervisor. If the PLANT so
chooses, the supervisor shall be entitled to have another representative of the
PLANT in attendance. The Employee’s immediate supervisor will notify the
Employee

 

34

 

of his decision by the end of the Employee’s
second regular scheduled shift following the complaint. Settlements or
withdrawals at this step shall not constitute a precedent in the handling of
other grievances.

 

(2)           Step
2 – If no agreement is reached between the Employee and his supervisor, the
complaint will be reduced to writing and shall be submitted on the Standard
Grievance form and shall be taken up within five (5) working days of the
supervisor’s decision by no more than two (2) members of the Grievance
Committee and the President of the Local Union and the PLANT’s Step 2
representative(s). At the step 2 meeting the Grievance Committee and the PLANT
representative(s) will complete the standard grievance form and, if the
complaint is not settled, the grievance shall be referred to a representative
of the UMWA District and the PLANT’s representative(s) for step 3.

 

(3)           Step 3 – Within seven working days of the time the
grievance is referred to them, the District representative and the
representative(s) of the PLANT, who shall be different from the PLANT’s step 2
representative(s) shall meet and review the facts and pertinent contract
provisions in an effort to resolve the grievance. No more than three (3) members
of the Grievance Committee and the President of the Local Union and the PLANT’s
step 2 representative(s) shall have the right to be present. No verbatim
transcript of the testimony shall be taken nor shall either party be
represented by an attorney licensed to practice law in any jurisdiction in
steps 1 through 3 of the grievance procedure except by mutual agreement
applicable to a particular case.

 

(4)           Step
4 – In cases where the District representative and the representative(s) of the
PLANT fail to resolve the grievance at step 3, the matter shall, within 10
working days after referral to them, be referred to the appropriate arbitrator
who shall decide the case without delay. Cases shall be assigned to arbitrators
in the following manner:

 

(A)          The District
representative and the Company representative shall attempt to select an
arbitrator. In the event the parties do not agree on the selection of an
arbitrator, the District representative shall request from the Federal
Mediation and Conciliation Service (FMCS) three panels of seven (7) arbitrators
(including biographical sketches) by fax or mail with a copy of the request
provided to the Plant Human Resources Manager.

 

(B)           Within ten (10) working
days after receipt of the three panels of arbitrators from FMCS, the parties
shall alternately strike names of the seven arbitrators on each panel so as to
end up with a single name from each panel. The parties shall alternate the
right of first strike.

 

(C)           The parties shall
then jointly contact each of the three (3) arbitrators so selected to
determine who among these three who has the earliest available date to hear the
case within two weeks to sixty days, and the case then shall be scheduled by
FMCS

 

35

 

with the arbitrator who has the earliest available date.

 

(D)          Both the PLANT and
the UNION shall have the right to cross-examine all witnesses.

 

(E)           The arbitrator shall
render his decision as expeditiously as possible. Failure to do so within sixty
(60) days after the record is closed shall be reported to the FMCS.

 

(F)           The arbitrator shall
have no authority to change, add to or subtract from, or to modify any
provisions of this Agreement. The arbitrator shall make his decision based on
the provisions of the contract and the evidence before him.

 

(G)           The decision and or
award of the arbitrator shall be final and binding on both parties and
enforceable in a court of law.

 

(H)          Compensation and
expenses of the arbitrator and general expenses of the arbitration shall be
shared equally by the parties, except that each party shall bear the expenses
of its representatives and witnesses.

 

(I)            Hearings shall
take place at a location mutually agreed upon by the parties.

 

(J)            In cases in which
the parties have agreed that there is no question of fact involved in the grievance,
the arbitrator may decide the case upon the basis of a joint statement of the
parties and such exhibits as they shall submit.

 

(K)          The hearing shall be
recorded by the arbitrator and shall be closed upon the completion of
testimony, except for the purpose of filing post-hearing briefs (copies of
which will be provided to all parties). The arbitrator shall render his
decision as soon after the close of the hearing as may be feasible. If the
arbitrator is unable to make his decision within 60 days of the close of the
hearing, he shall promptly advise the parties of the reasons for the delay and
the date when his decision will be submitted. Either party may make an official
transcript of the hearing. A copy of such transcript shall be provided to the other
party at no charge.

 

(L)           In cases involving
compensation, in no event may the arbitrator award compensation for more than
ten (10) working days prior to the date the grievant(s) knew or
should have known of the complaint.

 

36

 

Section (c) Finality
of Decision or Settlement

 

Settlements reached at any
step of the grievance procedure shall be final and binding on both parties and
shall not be subject to further proceedings under this Article except by
mutual agreement. Settlements reached at steps 2 and 3 shall be in writing and
signed by appropriate representatives of the UNION and the PLANT.

 

Section (d) Waiver
of Time Limits

 

By agreement the parties may
waive the time limits set forth in each step of the grievance procedure. Absent
a mutual agreement, if the PLANT’s answer is not appealed (i) within
fifteen (15) calendar days of the EMPLOYER’s response in Step 2, or (ii) within
twenty (20) calendar days of the EMPLOYER’s response in Step 3, then the answer
made by the PLANT at that step shall be final.

 

Article XI
– Discipline and Discharge

 

Section (a) Just
Cause Required

 

No Employee covered by this
Agreement may be disciplined or discharged except for just cause. The burden
shall be on the EMPLOYER to establish grounds for discipline or discharge in
all proceedings under this Article. In no event, will the EMPLOYER initiate any
form of discipline, beyond ten (10) working days of the time it knew, or
should have known of the infraction, or against an Employee without a member of
the Grievance Committee present, if the Employee requests UNION representation.

 

Section (b) Procedure

 

Where the EMPLOYER concludes
that the conduct of an Employee justifies discharge, the Employee shall be
suspended with the intent to discharge and shall be given written notice
stating the reason, with a copy to be furnished to the Grievance Committee.
After 24 hours, but within 48 hours, the  Employee shall be afforded the
right to meet with the PLANT’s Step 3 representative(s). At such meeting, no
more than three (3) members of the Grievance Committee and the President
of the Local Union shall be present and, if requested by the Employee or the
Grievance Committee, a representative of the District shall also be present.
Upon request by the Employee, the Grievance Committee, or the District
representative, the forty-eight hour time limit will be extended by an
additional 48 hours. The EMPLOYER shall be entitled to have an equal number of
representatives at the meeting. Full disclosure of all information relied upon
by the parties shall be provided at the 24/48 hour meeting.

 

37

 

Section (c) Suspension

 

If within 24 hours after the
conclusion of the 24/48 hour meeting, the EMPLOYER informs the Employee and the
Grievance Committee that it still intends to discharge the Employee (or if no
meeting was requested) the Employee shall have five (5) working days to
file the grievance. If the Employee does not file a grievance within five (5) working
days of the notice of suspension with intent to discharge, the discharge shall
become effective immediately. Grievances involving discharge shall bypass steps
1 through 3 and shall proceed directly to step 4 of the grievance procedure.

 

Section (d) Compensation
for Lost Earnings

 

In all arbitration cases
where it is determined that just cause for discharge has not been established,
the Employee shall be reinstated and compensated for lost earnings at his
applicable regular rates and any regularly scheduled mandatory overtime prior
to discharge less monies earned during the back pay period. Nothing in this
section shall be construed to, in any way, limit the arbitrator’s right to
modify or mitigate the penalty of discharge.

 

Section (e) Removal of
Employee Disciplinary Records

 

All records of Employee
discipline issued during the term of this Agreement may be used as the basis
for subsequent progressive disciplinary action no later than fifteen (15)
months following the date of issuance and shall not be used in subsequent
disciplinary action against the Employee. However, all records of Employee
discipline only shall remain in an Employee’s file in Human Resources.

 

Article XII – Benefits and
Practices

 

Section (a) Eligibility

 

Employees, except as set forth
below, shall be entitled to participate in the following benefit plans and
practices of the EMPLOYER.

 

Section (b) Benefits of
Choice

 

·                  Remington Arms Company, Inc. Pension and
Retirement Plan

·                  Remington Savings and Investment Plan

·                  Remington Arms Company Welfare Plan

·                  The Remington Medical Plan

 

38

 

·                  The Remington Dental Plan

·                  Vision Care

·                  Employee Life Insurance

·                  Optional Life Insurance

·                  Dependent Optional Life Insurance

·                  Long Term Disability Insurance

·                  Accidental Death &  Dismemberment

·                  Flexible Spending Accounts

·                  Employee Assistance Program

 

The specifications for the
structure of the benefit arrangements are set out in Appendix D and are
incorporated herein as though fully stated in this Article XII.

 

Section (c) Length of
Service

 

With the exception of the Remington Arms
Company, Inc. Pension and Retirement Plan as provided below, a Current
Employee on the old Remington payroll on November 30, 1993 and hired on
the new Remington payroll on December 1, 1993 shall have his length of
service at DuPont recognized for consideration of the benefits and practices
set forth in Sections (b) and (d) herein.

 

Section (d) Practices

 

Service Recognition Plan

 

Section (e) Administrative
and Design Matters and Uniformity

 

The EMPLOYER (or appropriate fiduciary of the
applicable plan) in its sole and exclusive discretion, may modify the benefits
(consistent with the terms set forth in Appendix D), change the administrator,
add or delete investment options offered to participants and beneficiaries,
change funding vehicles, investment advisers and managers, and service
providers and/or (without any limitation arising from the foregoing
enumeration) make any other changes as it determines in its sole and exclusive
discretion provided that any such amendment, modification, change or
termination shall apply equally to employees and non-unit employees unless
otherwise agreed to by the UNION and the EMPLOYER.

 

39

 

Article XIII
– Miscellaneous

 

Section (a) Pay Day

 

All Employees will be paid
on a weekly basis. Payment shall be made by check, or by Direct Deposit if
elected by the employee, with recognition for legitimate deductions. The
Employee shall receive, with his pay, a plain statement itemizing the number of
hours worked during the pay period and setting forth straight time, overtime
and premium time hours worked during the pay period. The statement shall also
itemize all payroll deductions.

 

Section (b) Bulletin Boards

 

The PLANT will provide and maintain bulletin
boards at mutually agreeable locations for exclusive use by the UNION on which
the UNION may post notices. Such notices shall not be offensive in nature to
any individual or group of persons. Such notices shall show a removal date and
shall be delivered to the Human Resources Manager or their designee prior to
posting. An Employee designated by the President of the Local Union to post
notices only will be compensated by the EMPLOYER for time spent posting notices
on bulletin boards for up to two (2) hours per posting no more than twelve
(12) postings per month on the first (1st) shift or as otherwise agreed upon by the Local
Union and the Human Resources Manager.

 

Section (c) Safety
Shoes

 

Each
calendar year of this Agreement’s term, the PLANT will provide each Employee
the option of electing either (i) an allowance per current practice up to
$125.00 for the purchase of safety shoes, or (ii) a cash allowance of
seventy five dollars ($75.00).

 

Employees may purchase shoes
from the “Shoe Truck” Program or from an authorized dealer(s) in this
area.

 

Section (d) Eye
Examinations

 

Each Employee requiring an
eye examination within an eighteen (18) month time period, upon presenting a
paid receipt to the Plant Medical Department, will be reimbursed for the
expense of such examination up to a maximum of $50, but in no case is the
reimbursement to exceed the cost of the examination. This section shall not
apply to any employee participating in the EMPLOYER’s vision care benefit plan.

 

40

 

Section (e) Disability
Accommodation

 

This Agreement shall not
prevent the PLANT from making a reasonable accommodation of disabled persons as
required by state and/or federal law, including the Americans With Disabilities
Act. In the event a proposed accommodation would conflict with an express
provision of this Agreement, the parties, at either’s request, shall meet to
discuss the proposed accommodation. Nothing in this section shall require the
UNION to agree to modify terms of this Agreement or to waive seniority rights
under this Agreement. In the event the PLANT and the UNION, in settling a
grievance or litigation would agree, or a court or arbitrator would order that
the PLANT make an accommodation that otherwise conflicts with the terms of this
Agreement, that accommodation shall supersede such conflicting terms of this
Agreement. The parties agree that any accommodation made by the PLANT with
respect to job duties or any other term or condition of employment made
pursuant to settlement of a grievance or litigation (whether formal or
informal), or arbitral or court order, shall not, in any way, become applicable
to any other individual, class, or group of Employees but shall apply only to
the person or persons accommodated in the particular situation. The fact that
such person(s) was accommodated, the manner and method of such
accommodation shall be without precedent and therefore may not be used or
relied upon by any person for that purpose at any time in the future.

 

Section (f) Medical
Appointments

 

Employees shall make every
attempt to schedule medical appointments during non-working time. With prior
approval, Employees will be excused from work and paid for up to four (4) hours
up to twelve (12) times per calendar year for the Employee to report for a
medical appointment during work hours. Such medical appointments must be for
diagnosis, follow-up to a recent problem or diagnostic testing. Dental
appointments will be covered only for tooth extractions and root canals.
Routine visits are not covered by this procedure and must be scheduled during
non-working hours. Where that is not possible, the supervisor may excuse the
employee without pay. The EMPLOYER reserves the right to deny the granting of
time off for a medical appointment. Employees are required to provide
verification from a licensed healthcare provider of the medical appointment,
including the time of the appointment and the time the employee arrived and
left the appointment.

 

Article XIV
– No Strike or Lockout

 

Section (a) UNION Not
to Strike

 

Under no circumstances will the UNION or
Employees participate in, instigate, cause, or encourage, any strike during the
term of this Agreement, including economic,

 

41

 

unfair labor practice strikes, sympathy
strikes, jurisdictional strikes, slowdown, walkout, sit-down, mass absenteeism,
retarding of work or boycott or work stoppages.

 

Section (b) UNION to Halt Breach

 

In the event of a breach of Section (a), the UNION shall use
reasonable means to end the breach, including advising the involved Employees
that their conduct may be in violation of the Agreement, and if it is they may
be disciplined up to and including discharge, and that they should immediately
cease the offending conduct.

 

Section (c) Discipline for Breach

 

The PLANT has the right to
discipline, up to and including discharge, any Employee who violates this Article and
such discipline shall be deemed to be for good cause. Any such discipline or
discharge under this Section shall be subject to the grievance procedure.

 

Section (d) No
Lockout

 

The PLANT agrees not to
lockout the Employees during the term of this Agreement.

 

Article XV
— Maintain Integrity of the Contract and Resort to Courts

 

The UMWA and the EMPLOYER agree and affirm that, except as provided
herein, they will maintain the integrity of this contract and that all disputes
which are not settled by agreement shall be settled by the machinery provided
in the “Settlement of Disputes” Article of this Agreement. Nothing in this
provision, however, is intended to diminish any individual rights an Employee
might enjoy by law. In addition, the EMPLOYER expressly authorizes the UNION to
seek judicial relief, without exhausting the grievance machinery, in cases
involving successorship.

 

Article XVI — Modification and Severability
Clause

 

Section (a)
Modification

 

If during the life of this Agreement there shall be in existence any
applicable law, rule, regulation or order issued by Governmental authority, which
shall be inconsistent with any provision of this Agreement, the parties will
meet to modify such provision to the extent necessary to comply with such law,
rule, regulation or order.

 

42

 

Section (b) Severability

 

In the event that any provision of this Agreement shall at any time be
declared invalid by any court of competent jurisdiction, such decision shall
not invalidate the entire Agreement, it being the express intention of the
parties hereto that all other provisions not so declared invalid shall remain
in full force and effect.

 

Article XVII
- Ratification and Termination of this Agreement

 

This Agreement shall become
effective at 12:01 am on the day following notification to the Remington Arms Co., Inc.,
by the International Union, United Mine Workers of America, that this Agreement
has been ratified and approved by the membership covered hereby.

 

This Agreement shall not be
subject to termination by either party signatory hereto prior to 12:01 a.m.
October 28, 2012, provided, however, that either the party the first part
or the party of the second part may terminate this Agreement on or after 12:01 a.m.
October 28, 2012, by giving at least sixty days written notice to the
other party of such desired termination date.

 

IN WITNESS WHEREOF, each of
the parties signatory hereto has caused this Agreement to be signed, effective
this 27th day of October 2007, the Agreement having been ratified and
approved by the membership covered hereby on October 26, 2007.

 

 

	
  On
  Behalf of:

  	
   

  
	
  UNITED
  MINE WORKERS OF AMERICA

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Edward D.
  Yankovich Jr.

  	
   

  
	
   

  	
  Edward D. Yankovich Jr.

  	
   

  
	
   

  	
  International
  District 2 Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  On Behalf of:

  	
   

  
	
  LOCAL UNION 717

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Stu Kennedy

  	
   

  
	
   

  	
  Stu Kennedy

  	
   

  
	
   

  	
  President

  	
   

  

 

43

 

	
  On Behalf of:

  	
   

  
	
  REMINGTON ARMS COMPANY,
  INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Joseph B.
  Gross

  	
   

  
	
   

  	
  Joseph B. Gross

  	
   

  
	
   

  	
  Plant Manager

  	
   

  

 

44

 

SHORT TERM DISABILITY PAY
PLAN

 

The Short term Disability
Pay Plan for Ilion hourly Employees shall be amended as of the effective date
of this Agreement to read as follows:

 

Disability Pay

 

All Employees will be
entitled to participate in the Company’s Short Term Disability Plan as outlined
in the Health and Welfare Summary Plan Description, starting on the Employee’s
first calendar day of disability. The pay structure will be as follows:

 

	
  Duration Per Occurrence

  	
   

  	
  Percentage of regular rate of pay*

  	
   

  
	
  First calendar day

  	
   

  	
  0

  	
  %

  
	
  Consecutive Days 2 through
  9

  	
   

  	
  50

  	
  %

  
	
  Consecutive Days 10
  through 180

  	
   

  	
  100

  	
  %

  

 

*Or
awarded State Workers Compensation, whichever is higher.

 

All Employees will be
expected to see a doctor on the second calendar day of illness and must report
to the Plant Medical Department on any absence which extends to the third day.

 

To receive disability pay,
an Employee must submit medical documentation explaining and confirming: (1) the
date the Employee became disabled, (2) the medical reasons why the
Employee is unable to work, (3) the cause of the disability, if known, and
(4) the nature, severity and expected duration of the disability. The
EMPLOYER, at its expense, may require an examination by a second health care
provider designated by the EMPLOYER. If the second health care provider’s
opinion conflicts with the medical documentation submitted by the Employee, the
EMPLOYER, at its expense, may require a neutral qualified third party to
conduct an examination and provide a final and binding opinion. If an Employee
fails to provide the medical documentation required under this provision, or
fails to submit to the examinations specified herein, the Employee’s claim for
disability pay may be denied.

 

45

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