Document:

Exhibit 4.5

 

EXECUTION VERSION

 

 

Registration Rights Agreement

 

Dated as of July 29, 2009

 

by and among

 

FREEDOM GROUP, INC.

 

and

 

the Subsidiary Guarantors listed on the Signature pages hereof,

 

on the one hand,

 

and

 

Banc of America Securities LLC,

Deutsche Bank Securities Inc.,

Wells Fargo Securities, LLC

 

and

 

the other Initial Purchasers,

 

on the other hand

 

 

 

REGISTRATION
RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS AGREEMENT (the “Agreement”) is made and entered into on July 29, 2009
(the “Closing Date”),
by and among FREEDOM GROUP, INC., a Delaware corporation (the “Company”),  and the
subsidiary guarantors listed on the signature page of this Agreement (the “Subsidiary Guarantors”),  on the one
hand, and Banc of America Securities LLC, Deutsche Bank Securities Inc. and
Wells Fargo Securities, LLC, on behalf of themselves and as representatives of
each of the other Initial Purchasers named in Schedule A hereto
(collectively, the “Initial Purchasers”),  on the other hand.

 

This Agreement is made pursuant to that certain
Purchase Agreement, dated July 15, 2009 by and among the Company, the
Subsidiary Guarantors and the Initial Purchasers (the “Purchase
Agreement”),  which provides
for the sale by the Company to the Initial Purchasers of an aggregate of $200,000,000
in principal amount of the Company’s 101/4% Senior Secured Notes due 2015 (the “Notes”), which are guaranteed by the Subsidiary
Guarantors.  In order to induce the
Initial Purchasers to enter into the Purchase Agreement, the Company and the Subsidiary
Guarantors have agreed to provide to the Initial Purchasers and their direct
and indirect transferees the registration rights set forth in this
Agreement.  The execution of this
Agreement is a condition to the closing under the Purchase Agreement.

 

NOW, THEREFORE, in consideration of the foregoing premises
and the mutual promises contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the
parties hereto covenant and agree as follows:

 

1.             Definitions.

 

As used in this Agreement, the following capitalized
defined terms shall have the following meanings:

 

“1933 Act”  shall mean the Securities Act of 1933, as amended from time
to time.

 

“1934 Act”  shall mean the Securities Exchange Act of 1934, as amended
from time to time.

 

“Additional Guarantor”  shall mean any subsidiary of the Company that executes a Subsidiary
Guarantee under the Indenture after the date of this Agreement.

 

“Additional Interest”  shall have the meaning set forth in Section 2.5(a) hereof.

 

“Automatic Shelf
Registration Statement”  shall mean an “automatic
shelf registration statement” as that term is defined in Rule 405, as
amended, under the 1933 Act.

 

“Business Day”  shall mean any day that is not a Saturday, Sunday or other day
on which commercial banks in New York City are authorized or required by law to
remain closed.

 

“Closing”  shall mean the Closing Date as defined in the Purchase
Agreement.

 

 

“Company” shall
have the meaning set forth in the preamble and shall also include the Company’s
successors.

 

“Depositary”  shall mean The Depository Trust Company, or any other
depositary appointed by the Company, provided, however, that such
depositary must have an address in the Borough of Manhattan, in the City of New
York.

 

“Effectiveness Period”  shall have the meaning set forth in Section 2.2(b).

 

“Event Date”  shall have the meaning set forth in Section 2.5(b).

 

“Exchange Dates”  shall have the meaning set forth in Section 2.1.

 

“Exchange Notes”
shall mean the new notes to be exchanged for Transfer Restricted Notes, not
subject to restrictions on transfer in the United States.

 

“Exchange Offer”  shall mean the exchange offer by the Company and the
Subsidiary Guarantors of Exchange Notes for Transfer Restricted Notes pursuant
to Section 2.1 hereof.

 

“Exchange Offer
Registration”  shall mean a
registration under the 1933 Act effected pursuant to Section 2.1
hereof.

 

“Exchange Offer
Registration Statement”  shall mean an
exchange offer registration statement on Form S-4 (or, if applicable, on
another appropriate form), and all amendments and supplements to such
registration statement, including the Prospectus contained therein, all exhibits
thereto and all documents incorporated by reference therein.

 

“Free Writing Prospectus”  means each free writing prospectus (as defined in Rule 405
under the 1933 Act) prepared by or on behalf of the Company or used or referred
to by the Company in connection with the sale of the Notes or the Exchange
Notes.

 

“Freely Tradable”  shall mean, with respect to a Note, a Note that at any time
of determination (i) may be resold to the public in accordance with Rule 144
under the 1933 Act or any successor provision thereof (“Rule 144”) without
regard to volume, manner of sale or any other restrictions contained in Rule 144
(other than the holding period requirement in paragraph (d)(1)(ii) of Rule 144
so long as such holding period requirement is satisfied at such time of determination),
(ii) does not bear any restrictive legends relating to the 1933 Act and (iii) does
not bear a restricted CUSIP number.

 

“Holder” shall
mean an Initial Purchaser, for so long as it owns any Transfer Restricted
Notes, and each of its successors, assigns and direct and indirect transferees
who become registered owners of Transfer Restricted Notes under the Indenture
and each Participating Broker-Dealer that holds Exchange Notes for so long as
such Participating Broker-Dealer is required to deliver a prospectus meeting
the requirements of the 1933 Act in connection with any resale of such Exchange
Notes.

 

2

 

“Indenture”  shall mean the Indenture relating to the Notes, dated as of
July 29, 2009, among the Company, the Subsidiary Guarantors, and
Wilmington Trust, FSB, as trustee and collateral agent, as the same may be
amended, supplemented, waived or otherwise modified from time to time in accordance
with the terms thereof.

 

“Initial Purchaser”  or “Initial Purchasers”  shall have the meaning set forth in the preamble.

 

“Issuer Information”
shall have the meaning set forth in Section 4(a)(i).

 

“Majority Holders”
shall mean the Holders of a majority of the aggregate principal amount of
outstanding Transfer Restricted Notes; provided that whenever the
consent or approval of Holders of a specified percentage of Transfer Restricted
Notes is required hereunder, Transfer Restricted Notes held by the Company and
other obligors on the Notes or any Affiliate (as defined in the Indenture) of
the Company or any Subsidiary Guarantor shall be disregarded in determining
whether such consent or approval was given by the Holders of such required percentage
amount; provided, further, that if the Company shall issue any
additional Notes under the Indenture prior to consummation of the Exchange
Offer, or if applicable, prior to the effectiveness of any Shelf Registration
Statement or prior to the Transfer Restricted Notes otherwise becoming Freely
Tradable, such additional Notes and the Transfer Restricted Notes to which this
Agreement relates shall be treated together as one class for purposes of
determining whether the consent or approval of Holders of a specified
percentage of Transfer Restricted Notes has been obtained.

 

“Notes” shall
have the meaning set forth in the preamble hereof.

 

“Participating Broker-Dealer”  shall mean any of the Initial Purchasers and any other
broker-dealer which makes a market in the Notes and exchanges Transfer
Restricted Notes in the Exchange Offer for Exchange Notes.

 

“Person”  shall mean an individual, partnership (general or limited),
corporation, limited liability company, trust or unincorporated organization,
or a government or agency or political subdivision thereof.

 

“Prospectus”  shall mean the prospectus included in, or, pursuant to the rules and
regulations of the 1933 Act, deemed a part of, a Registration Statement,
including any preliminary prospectus, and any such prospectus as amended or
supplemented by any prospectus supplement, including any such prospectus
supplement with respect to the terms of the offering of any portion of the
Transfer Restricted Notes covered by a Shelf Registration Statement, and by all
other amendments and supplements to a prospectus, including post-effective amendments,
and in each case including all material incorporated by reference therein.

 

“Purchase Agreement”  shall have the meaning set forth in the preamble.

 

“Registration Default”  shall have the meaning set forth in Section 2.5(a).

 

3

 

“Registration Expenses”  shall mean any and all expenses incident to performance of
or compliance by the Company and the Subsidiary Guarantors with this Agreement,
including without limitation: (i) all SEC, stock exchange or Financial
Industry Regulatory Authority (“FINRA”)
registration and filing fees, including, if applicable, the fees and expenses
of any “qualified independent underwriter” that is required to be retained by
any holder of Transfer Restricted Notes in accordance with the rules and
regulations of FINRA, (ii) all fees and expenses incurred in connection
with compliance with state securities or blue sky laws and compliance with the rules of
FINRA (including reasonable fees and disbursements of counsel for any underwriters
or Holders in connection with blue sky qualification of any of the Exchange
Notes or Transfer Restricted Notes and any filings with FINRA), (iii) all
expenses of any Persons in preparing or assisting in preparing, word processing,
printing and distributing any Registration Statement, any Prospectus, any
amendments or supplements thereto, any underwriting agreements, securities
sales agreements and other documents relating to the performance of and compliance
with this Agreement, (iv) all fees and expenses incurred in connection
with the listing, if any, of any of the Transfer Restricted Notes on any
securities exchange or exchanges, (v) all rating agency fees, (vi) the
fees and disbursements of counsel for the Company and the Subsidiary Guarantors
and of the independent public accountants of the Company and the Subsidiary Guarantors,
including the expenses of any special audits or “cold comfort” letters required
by or incident to such performance and compliance, and in the case of a Shelf
Registration Statement, the reasonable fees and disbursements of one counsel
for the Holders as a group (which counsel shall be selected by the Majority
Holders and which counsel may also be counsel for the Initial Purchasers), (vii) the
fees and expenses of the Trustee (including the reasonable fees and disbursements
of its counsel), and any escrow agent or custodian, (viii) all fees and
disbursements relating to the qualification of the Indenture under applicable
securities laws, and (ix) any fees and disbursements of the underwriters
customarily required to be paid by issuers or sellers of securities and the
fees and expenses of any special experts retained by the Company and the Subsidiary
Guarantors in connection with any Registration Statement, but excluding
underwriting discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of Transfer Restricted Notes by a Holder.  Notwithstanding the foregoing, except as
specifically provided above, the Company and the Subsidiary Guarantors shall
not be responsible for the fees and expenses of the Initial Purchasers in connection
with the Exchange Offer, or the fees and expenses of counsel to the Initial
Purchasers in connection therewith.

 

“Registration Statement”  shall mean any registration statement of the Company and
the Subsidiary Guarantors which covers any of the Exchange Notes or Transfer
Restricted Notes pursuant to the provisions of this Agreement, and all
amendments and supplements to any such Registration Statement, including
post-effective amendments, in each case including the Prospectus contained
therein or deemed a part thereof, all exhibits thereto and all material incorporated
by reference therein.

 

“Registration Trigger Date”  means the fifth Business Day following the one year anniversary
of the date hereof.

 

“SEC” shall mean
the Securities and Exchange Commission or any successor agency or government
body performing the functions currently performed by the United States
Securities and Exchange Commission.

 

4

 

“Shelf Registration”  shall mean a registration effected pursuant to Section 2.2.

 

“Shelf Registration
Statement”  shall mean a “shelf”
registration statement of the Company and the Subsidiary Guarantors pursuant to
the provisions of Section 2.2, including an Automatic Shelf
Registration Statement, if applicable, which covers all or a portion of the
Transfer Restricted Notes on an appropriate form under Rule 415 under the
1933 Act, or any similar rule that may be adopted by the SEC, and all
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein or deemed a part thereof, all exhibits thereto and all material incorporated
by reference therein.

 

“Shelf Request”  shall have the meaning set forth in Section 2.2(a)(ii).

 

“Subsidiary Guarantees”  shall mean the guarantees of the Notes and the Exchange
Notes by the Subsidiary Guarantors under the Indenture.

 

“Subsidiary Guarantors”  shall have the meaning set forth in the preamble and shall
also include any Subsidiary Guarantor’s successors and any Additional
Guarantors.

 

“TIA” shall have
the meaning set forth in Section 2.1(d) hereof.

 

“Transfer Restricted Notes”
shall mean the Notes; provided, however, that the Notes shall
cease to be Transfer Restricted Notes on the earliest to occur of (i) the
date on which a Registration Statement with respect to such Notes has become
effective under the 1933 Act and such Notes have been exchanged or disposed of
pursuant to such Registration Statement, (ii) the date on which such Notes
cease to be outstanding under the Indenture or (iii) the date on which
such Notes are Freely Tradable.

 

“Trustee” shall
mean the trustee with respect to the Notes under the Indenture.

 

“Underwriter”  shall have the meaning set forth in Section 4(a).

 

“WKSI” shall
mean a “well-known seasoned issuer” as that term is defined in Rule 405,
as amended, under the 1933 Act.

 

2.             Registration Under the 1933 Act.

 

2.1           Exchange Offer.

 

(a)           To the extent not prohibited
by any applicable law or applicable interpretations of the staff of the SEC,
with respect to any Notes, if any, that on the Registration Trigger Date are
Transfer Restricted Notes, the Company and the Subsidiary Guarantors shall use
commercially reasonable efforts to (X) cause to be filed and to become
effective an Exchange Offer Registration Statement covering an offer to the
Holders to exchange all the Transfer Restricted Notes for Exchange Notes and (Y) have
such Registration Statement remain effective until 90 days after the last
Exchange Date for use by one or more Participating Broker Dealers if one or
more broker dealers notify the Company in writing that they anticipate that
they will be Participating Broker 

 

5

 

Dealers. 
The Company and the Subsidiary Guarantors shall commence the Exchange
Offer promptly after the Exchange Offer Registration Statement is declared
effective by the SEC and use commercially reasonable efforts to complete the
Exchange Offer  not later than 45 days after
such effective date.

 

(b)           The Company and the
Subsidiary Guarantors shall, for the benefit of the Holders, at the Company’s
and Subsidiary Guarantors’ cost, commence the Exchange Offer, if any, by
mailing the related Prospectus, appropriate letters of transmittal and other
accompanying documents to each Holder stating, in addition to such other
disclosures as are required by applicable law, substantially the following:

 

(i)            that the
Exchange Offer is being made pursuant to this Agreement and that all Transfer
Restricted Notes validly tendered and not properly withdrawn will be accepted
for exchange;

 

(ii)           the dates of
acceptance for exchange (which shall be a period of at least 20 Business Days
from the date such notice is mailed) (the “Exchange Dates”);

 

(iii)          that any
Transfer Restricted Notes not tendered will remain outstanding and continue to
accrue interest but will not retain any rights under this Agreement, except as
otherwise specified herein;

 

(iv)          that any Holder
electing to have a Transfer Restricted Note exchanged pursuant to the Exchange
Offer will be required to (A) surrender such Transfer Restricted Note,
together with the appropriate letters of transmittal, to the institution and at
the address (located in the Borough of Manhattan, The City of New York) and in
the manner specified in the notice, or (B) effect such exchange otherwise
in compliance with the applicable procedures of the Depositary, in each case
prior to the close of business on the last Exchange Date; and

 

(v)           that any Holder
will be entitled to withdraw its election, not later than the close of business
on the last Exchange Date, by (A) sending to the institution and at the
address specified in the notice, a telegram, telex, facsimile transmission or
letter setting forth the name of such Holder, the principal amount of Transfer
Restricted Notes delivered for exchange and a statement that such Holder is
withdrawing its election to have such Transfer Restricted Notes exchanged or (B) effecting
such withdrawal in compliance with the applicable procedures of the Depositary.

 

(c)           Upon the effectiveness of
the Exchange Offer Registration Statement, if any, the Company and the
Subsidiary Guarantors shall promptly commence the Exchange Offer, it being the
objective of such Exchange Offer  to enable each
Holder eligible and electing to exchange Transfer Restricted Notes for Exchange
Notes (assuming that such Holder makes representations and warranties to the
Company that (a) it is not an affiliate of the Company within the meaning
of Rule 405 under the 1933 Act or, if an affiliate, such Holder will
comply with the registration and prospectus delivery requirements of the 1933
Act and will provide information to be included in a Shelf Registration
Statement in order to have its Exchange Notes included in such Shelf
Registration Statement, (b) any Exchange Notes to be received by it will
be acquired in the 

 

6

 

ordinary course of its business, (c) if
such Holder is not a broker-dealer, that it is not engaged in, and does not
intend to engage in, the distribution of the Exchange Notes, (d) if such
Holder is a broker-dealer that will receive Exchange Notes for its own account
in exchange for Transfer Restricted Notes acquired as a result of market-making
or other trading activities, then such broker-dealer will deliver a prospectus
(or, to the extent permitted by law, make available a Prospectus) in connection
with any resale of such Exchange Notes, and (e) it has no arrangements or
understandings with any Person to participate in the distribution of the
Transfer Restricted Notes or the Exchange Notes) to transfer such Exchange
Notes from and after their receipt without any limitations or restrictions
under the 1933 Act and under state securities or blue sky laws.

 

(d)           The Exchange Notes, if any,
shall be issued under (i) the Indenture or (ii) an indenture
identical in all material respects to the Indenture and which, in either case,
has been qualified under the Trust Indenture Act of 1939, as amended (the “TIA”), or is exempt from such qualification and shall
provide that the Exchange Notes shall not be subject to the transfer restrictions
set forth in the Indenture.  The Exchange
Notes and the Notes shall vote and consent together on all matters as one class
and none of the Exchange Notes or the Notes will have the right to vote or
consent as a separate class on any matter.

 

(e)           As soon as practicable after
the close of the Exchange Offer, the Company and the Subsidiary Guarantors
shall:

 

(i)            accept for
exchange all Transfer Restricted Notes duly tendered and not validly withdrawn
pursuant to the Exchange Offer in accordance with the terms of the Exchange
Offer Registration Statement and the letter of transmittal which shall be an exhibit
thereto;

 

(ii)           deliver to the
Trustee for cancellation all Transfer Restricted Notes so accepted for exchange;
and

 

(iii)          cause the
Trustee promptly to authenticate and deliver Exchange Notes to each Holder of
Transfer Restricted Notes so accepted for exchange in a principal amount equal
to the principal amount of the Transfer Restricted Notes of such Holder so
accepted for exchange.

 

(f)            Interest on each Exchange
Note, including Additional Interest, will accrue (a) from the later of (i) the
last date on which interest was paid on the Transfer Restricted Notes surrendered
in exchange therefor or (ii) if the Transfer Restricted Notes are
surrendered for exchange on a date in a period which includes the record date
for an interest payment date to occur on or after the date of such exchange and
as to which interest will be paid, the date of such interest payment date or (b) if
no interest has been paid on the Transfer Restricted Notes, from the date of
issuance.  If requested in writing the  Company shall
inform the Initial Purchasers of the names and addresses of the Holders to whom
the Exchange Offer is made, and the Initial Purchasers shall have the right,
but not the obligation, to contact such Holders and otherwise facilitate the
tender of Transfer Restricted Notes in the Exchange Offer.

 

(g)           The Company and the Subsidiary
Guarantors  shall use
commercially reasonable efforts to complete the Exchange Offer as provided
above and shall comply with the applicable 

 

7

 

requirements of the 1933 Act, the 1934 Act
and other applicable laws and regulations in connection with the Exchange
Offer.  The Offer shall not be subject to
any conditions, other than (1) the Exchange Offer does not violate any
applicable law or applicable interpretations of the staff of the SEC, (2) no
action or proceeding shall have been instituted or threatened in any court or
by any governmental agency with respect to the Exchange Offer and (3) all
governmental approvals shall have been obtained that the Company deems
necessary for the consummation of the Exchange Offer.

 

2.2           Shelf Registration.

 

(a)           If,

 

(i)            the Company and
the Subsidiary Guarantors would otherwise be required to consummate an Exchange
Offer Registration pursuant to Section 2.1 but determine that such
Exchange Offer Registration is not available or the Exchange Offer may not be
completed as soon as practicable after the last Exchange Date because it would
violate any applicable law, SEC rules and regulations or any
interpretation of the staff of the SEC,

 

(ii)           the Exchange
Offer is not for any other reason completed by the 45th day following the date
the Exchange Offer Registration Statement is declared effective, or

 

(iii)          any Initial
Purchaser notifies the Company that it holds Transfer Restricted Notes that, in
the opinion of counsel for such Holder, are not Freely Tradable on the
Registration Trigger Date (a “Shelf Request”),

 

the Company and the Subsidiary Guarantors
shall promptly deliver to the Holders and the Trustee written notice thereof
and shall use commercially reasonable efforts to cause to be filed as soon as
practicable after such determination, date or Shelf Request, as the case may
be, a Shelf Registration Statement providing for the sale of all the Transfer
Restricted Notes by the Holders thereof and to have such Shelf Registration
Statement become effective by the 90th day following
such determination, date or Shelf Request.

 

(b)           In the event that the
Company and the Subsidiary Guarantors are required to file a Shelf Registration
Statement pursuant to a Shelf Request, the Company and the Subsidiary Guarantors
shall use commercially reasonable efforts to file and have become effective a
Shelf Registration Statement with respect to offers and sales of Transfer
Restricted Notes after the completion of the Exchange Offer and an Exchange
Offer Registration Statement if otherwise required pursuant to this
Agreement.  In the event that the Company
and the Subsidiary Guarantors are required to file a Shelf Registration
Statement, the Company and the Subsidiary Guarantors agree to use commercially
reasonable efforts to keep the Shelf Registration Statement continuously
effective, supplemented and amended (including through post-effective
amendments on Form S-3 if the Company is eligible to use such Form) until
the date that is one year from the date the Shelf Registration Statement is
declared effective or such shorter period ending when no Notes covered by such
Shelf Registration Statement constitute Transfer Restricted Notes (the “Effectiveness Period”).

 

8

 

(c)           Notwithstanding any other
provisions hereof, the Company and the Subsidiary Guarantors shall use
commercially reasonable efforts to ensure that (i) any Shelf Registration
Statement and any amendment thereto and any Prospectus forming a part thereof
and any supplement thereto complies in all material respects with the 1933 Act
and the rules and regulations thereunder, (ii) any Shelf Registration
Statement and any amendment thereto does not, when it becomes effective,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading and (iii) any Prospectus forming part of any Shelf Registration
Statement, and any supplement to such Prospectus (as amended or supplemented
from time to time), does not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements, in
light of the circumstances under which they were made, not misleading.

 

(d)           The Company and the
Subsidiary Guarantors shall not permit any securities other than Transfer
Restricted Notes to be included in the Shelf Registration Statement; provided,
however, that if the offer and sale of the Transfer Restricted Notes is
registered pursuant to an Automatic Shelf Registration Statement, the foregoing
prohibition shall apply only to the supplement or amendment covering such
registration.  The Company and the
Subsidiary Guarantors agree, if necessary, to supplement or amend the Shelf
Registration Statement, as required by Section 3(b) below.

 

(e)           If the Company is obligated
to file a Shelf Registration Statement pursuant to this Section 2.2,
and at the time such obligation arises, the Company is a WKSI, then, in lieu of
filing such Shelf Registration Statement, the Company shall file an Automatic
Shelf Registration Statement or supplement or amend an existing Automatic Shelf
Registration Statement, as appropriate, to include the offer and sale of the
Transfer Restricted Notes by the Holders from time to time in accordance with
the methods of distribution elected by the Holders of a majority in aggregate
principal amount of Transfer Restricted Notes participating in such
registration and set forth in such Automatic Shelf Registration Statement (or
supplement or amendment thereto), within the time frame specified in this Section 2.2.

 

2.3           Expenses.  The Company and the Subsidiary Guarantors
shall pay all Registration Expenses in connection with the registration
pursuant to Sections 2.1 and 2.2. 
Each Holder shall pay all underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of such Holder’s
Transfer Restricted Notes pursuant to the Shelf Registration Statement.

 

2.4           Effectiveness.

 

(a)           The Company and the
Subsidiary Guarantors will be deemed not to have used commercially reasonable
efforts to cause the Exchange Offer Registration Statement or the Shelf
Registration Statement, as the case may be, to become, or to remain, effective during
the requisite period if either the Company or any Subsidiary Guarantor
voluntarily takes any action that would, or omits to take any action which
omission would, result in any such Registration Statement not being declared
effective, or in the Holders of Transfer Restricted Notes covered thereby not
being able to exchange or offer and sell such Transfer Restricted Notes during
that period as and to the extent contemplated hereby, unless such action is
required by applicable law, in each case other than under the circumstances
described in Sections 3(e)(iii), (iv), (v) or (vi) below.

 

9

 

(b)           Neither an Exchange Offer
Registration Statement pursuant to Section 2.1 hereof nor a Shelf
Registration Statement pursuant to Section 2.2 hereof, if not
otherwise effective upon filing with the SEC as provided by Rule 462, will
be deemed to have become effective unless it has been declared effective by the
SEC; provided, however, that if, after it becomes effective, the
offering of Transfer Restricted Notes pursuant to an Exchange Offer
Registration Statement or a Shelf Registration Statement is interfered with by
any stop order, injunction or other order or requirement of the SEC or any
other governmental agency or court, such Registration Statement will not be
effective during the period of such interference, until the offering of
Transfer Restricted Notes pursuant to such Registration Statement may legally
resume.

 

2.5           Additional Interest.

 

(a)           In the event that (i) an
Exchange Offer Registration Statement is required pursuant to Section 2.1
and (x) such Exchange Offer Registration Statement does not become
effective on or prior to the two year anniversary of the date hereof or (y) the
Exchange Offer is not completed within 45 days after the date on which the
Exchange Offer Registration Statement becomes effective, or (ii) a Shelf
Registration Statement is required in accordance with Section 2.2
and such Shelf Registration Statement (x) does not become effective on or
prior to the 90th day following (A) the date of such
determination, in the case of a Shelf Registration Statement required pursuant
to Section 2.2(a)(i), (B) such date, in the case of a Shelf
Registration Statement required pursuant to Section 2.2(a)(ii) (which
in no event shall be earlier than the date the Exchange Offer Registration
Statement is required to be declared effective pursuant to clause 2.5(a)(i)(x) above)
or (C) the date of such Shelf Request, in the case of a Shelf Registration
Statement required pursuant to Section 2.2(a)(iii), or (y) becomes
effective but ceases to be effective or the corresponding Prospectus ceases to
be usable at any time during the Effectiveness Period, and such failure to
remain effective or usable exists for more than 60 days (whether or not consecutive)
in any 12-month period (any event referred to in the foregoing clauses (i) or
(ii) a “Registration Default”),  then, in each case, the interest rate on the Transfer
Restricted Notes will be increased by (i) 0.25% per annum for the first
90-day period immediately following such Registration Default and (ii) an
additional 0.25% per annum with respect to each subsequent 90-day period, up to
a maximum of 1.00% per annum, in each case until the earlier of the date such
Registration Default is cured or the date on which no Notes constitute Transfer
Restricted Notes.  Any amounts payable
under this paragraph shall also be deemed “Additional Interest”  for purposes of this Agreement.

 

(b)           The Company shall notify the
Trustee within three business days after each and every date on which an event
occurs in respect of which Additional Interest is required to be paid (an “Event Date”).  Any
Additional Interest due shall be payable on each interest payment date to the
Holder of Notes with respect to which Additional Interest is due and
owing.  Each obligation to pay Additional
Interest shall be deemed to accrue from and including the day following the
applicable Event Date.

 

3.             Registration Procedures.

 

In connection with the obligations of the Company
and the Subsidiary Guarantors with respect to Registration Statements pursuant
to Sections 2.1 and 2.2 hereof, the Company and the Subsidiary
Guarantors shall:

 

10

 

(a)           prepare and file with the
SEC a Registration Statement, within the relevant time periods specified in Section 2,
on the appropriate form under the 1933 Act and the rules promulgated
thereunder, which form (i) shall be selected by the Company, (ii) shall,
in the case of a Shelf Registration, be available for the sale of the Transfer
Restricted Notes by the selling Holders thereof, (iii) shall comply as to
form in all material respects with the requirements of the applicable form and
include or incorporate by reference all financial statements required by the
SEC to be filed therewith or incorporated by reference therein and (iv) shall
comply in all respects with the requirements of Regulation S-T under the 1933
Act, and use commercially reasonable efforts to cause such Registration
Statement to become effective and remain effective for the applicable period in
accordance with Section 2 hereof,

 

(b)           prepare and file with the
SEC such amendments and post-effective amendments to each Registration
Statement as may be necessary under applicable law to keep such Registration
Statement effective for the applicable period; and cause each Prospectus to be
supplemented by any required prospectus supplement, and as so supplemented to
be filed pursuant to Rule 424 (or any similar provision then in force)
under the 1933 Act and comply with the provisions of the 1933 Act, the 1934 Act
and the rules and regulations thereunder applicable to them with respect
to the disposition of all securities covered by each Registration Statement
during the applicable period in accordance with the intended method or methods
of distribution by the selling Holders thereof (including sales by any Participating
Broker-Dealer); and keep each Prospectus current during the period described in
Section 4(3) of and Rule 174 under the 1933 Act that is
applicable to transactions by brokers or dealers with respect to the Transfer
Restricted Notes or Exchange Notes;

 

(c)           in the case of a Shelf
Registration, (i) notify each Holder of Transfer Restricted Notes to be
covered thereby, at least five business days prior to filing, that a Shelf Registration
Statement (except in the case of an Automatic Shelf Registration Statement, in
which case at least five business days prior to the inclusion of information
regarding selling security holders in the Prospectus forming a part of such
Automatic Shelf Registration Statement) with respect to such Transfer
Restricted Notes is being filed and advising such Holders that the distribution
of such Transfer Restricted Notes will be made in accordance with the method
selected by a majority in aggregate principal amount of the Holders of Transfer
Restricted Notes participating in the Shelf Registration; (ii) furnish to
each Holder of Transfer Restricted Notes to be covered thereby and to each
underwriter of an underwritten offering of Transfer Restricted Notes, if any,
without charge, as many copies of each Prospectus, including each preliminary
Prospectus, and any amendment or supplement thereto and such other documents as
such Holder or underwriter may reasonably request, including financial
statements and schedules and, if the Holder so requests, all exhibits in order
to facilitate the public sale or other disposition of the Transfer Restricted
Notes; and (iii) do hereby consent to the use of the Prospectus or any
amendment or supplement thereto by each of the selling Holders of Transfer
Restricted Notes in connection with the offering and sale of the Transfer
Restricted Notes covered by the Prospectus or any amendment or supplement
thereto;

 

11

 

(d)           use commercially reasonable
efforts to register or qualify the Transfer Restricted Notes under all
applicable state securities or “blue sky” laws of such jurisdictions as any
Holder of Transfer Restricted Notes covered by a Registration Statement and
each underwriter of an underwritten offering of Transfer Restricted Notes shall
reasonably request by the time the applicable Registration Statement is
declared effective by the SEC, cooperate with such Holders in connection with
any filings required to be made with FINRA, and do any and all other acts and
things which may be reasonably necessary or advisable to enable each such
Holder and underwriter to consummate the disposition in each such jurisdiction
of such Transfer Restricted Notes owned by such Holder; provided, however,
that the Company and the Subsidiary Guarantors shall not be required to (i) qualify
as a foreign corporation or as a dealer in securities in any jurisdiction where
they would not otherwise be required to qualify but for this Section 3(d),
or (ii) take any action which would subject them to general service of
process or taxation in any such jurisdiction where they are not then so subject;

 

(e)           notify promptly each Holder
of Transfer Restricted Notes under a Shelf Registration or any Participating
Broker-Dealer who has notified the Company that it is utilizing the Exchange Offer
Registration Statement as provided in clause (f) below and, if
requested by such Holder or Participating Broker-Dealer, confirm such advice in
writing promptly (i) when a Registration Statement has become effective
and when any post-effective amendments and supplements to a Registration
Statement have become effective, (ii) of any request by the SEC or any
state securities authority for post-effective amendments and supplements to a
Registration Statement and Prospectus or for additional information after the
Registration Statement has become effective, (iii) of the issuance by the
SEC or any state securities authority of any stop order suspending the effectiveness
of a Registration Statement or the initiation of any proceedings for that
purpose, including the receipt by the Company of any notice of objection of the
SEC to the use of a Shelf Registration Statement or any post-effective
amendment thereto pursuant to Rule 401(g)(2) under the 1933 Act, (iv) in
the case of a Shelf Registration, if, between the effective date of a
Registration Statement and the closing of any sale of Transfer Restricted Notes
covered thereby, the representations and warranties of the Company and the Subsidiary
Guarantors contained in any underwriting agreement, securities sales agreement
or other similar agreement, if any, relating to the offering cease to be true
and correct in all material respects, (v) of the happening of any event or
the discovery of any facts during the period a Shelf Registration Statement is
effective which makes any statement made in such Registration Statement or the
related Prospectus untrue in any material respect or which requires the making
of any changes in such Registration Statement or Prospectus in order to make
the statements therein not misleading, (vi) of the receipt by the Company
of any notification with respect to the suspension of the qualification of the
Transfer Restricted Notes or the Exchange Notes, as the case may be, for sale
in any jurisdiction or the initiation or threatening of any proceeding for such
purpose and (vii) of any determination by the Company that a
post-effective amendment to such Registration Statement would be appropriate;

 

(f)            in the case of the Exchange
Offer Registration Statement (i) include in the Exchange Offer
Registration Statement a section entitled “Plan of Distribution” which 

 

12

 

section
shall be in customary form, and which shall contain a summary statement of the
positions taken or policies made by the staff of the SEC with respect to the
potential “underwriter” status of any broker-dealer that holds Transfer
Restricted Notes acquired for its own account as a result of market-making
activities or other trading activities and that will be the beneficial owner
(as defined in Rule 13d-3 under the 1934 Act) of Exchange Notes to be
received by such broker-dealer in the Exchange Offer, whether such positions or
policies have been publicly disseminated by the staff of the SEC or such
positions or policies, represent the prevailing views of the staff of the SEC,
including a statement that any such broker dealer who receives Exchange Notes
for Transfer Restricted Notes pursuant to the Exchange Offer may be deemed a
statutory underwriter and must deliver a prospectus meeting the requirements of
the 1933 Act in connection with any resale of such Exchange Notes, (ii) furnish
to each Participating Broker-Dealer who has delivered to the Company the notice
referred to in Section 3(e), without charge, as many copies of each
Prospectus included in the Exchange Offer Registration Statement, including any
preliminary prospectus, and any amendment or supplement thereto, as such
Participating Broker Dealer may reasonably request, (iii) do hereby
consent to the use of the Prospectus forming part of the Exchange Offer
Registration Statement or any amendment or supplement thereto, by any Person
subject to the prospectus delivery requirements of the SEC, including all
Participating Broker-Dealers, in connection with the sale or transfer of the
Exchange Notes covered by the Prospectus or any amendment or supplement
thereto, and (iv) include in the transmittal letter or similar
documentation to be executed by an exchange offeree in order to participate in
the Exchange Offer (x) the following provision:

 

“If
the exchange offeree is a broker-dealer holding Transfer Restricted Notes acquired
for its own account as a result of market-making activities or other trading
activities, it will deliver a prospectus meeting the requirements of the 1933
Act in connection with any resale of Exchange Notes received in respect of such
Transfer Restricted Notes pursuant to the Exchange Offer;” and

 

(y) a statement to the effect that by a
broker-dealer’s making the acknowledgment described in clause (x) and
by delivering a Prospectus in connection with the exchange of Transfer
Restricted Notes, the broker-dealer will not be deemed to admit that it is an underwriter
within the meaning of the 1933 Act;

 

(g)           use commercially reasonable
efforts to obtain the withdrawal of any order suspending the effectiveness of a
Registration Statement at the earliest practicable moment, and, in the case of
a Shelf Registration, the resolution of any objection of the SEC pursuant to Rule 401(g)(2),
including by filing an amendment to such Shelf Registration Statement on the
proper form, at the earliest possible moment and provide immediate notice to
each Holder of the withdrawal of any such order or such resolution;

 

(h)           in the case of a Shelf
Registration, if requested in writing, furnish to each Holder of Transfer
Restricted Notes, and each underwriter, if any, without charge, at least one
conformed copy of each Registration Statement and any post-effective amendment 

 

13

 

thereto,
including financial statements and schedules (without documents incorporated
therein by reference and all exhibits thereto, unless requested);

 

(i)            in the case of a Shelf
Registration, cooperate with the selling Holders of Transfer Restricted Notes
to facilitate the timely preparation and delivery of certificates representing
Transfer Restricted Notes to be sold and not bearing any restrictive legends;
and enable such Transfer Restricted Notes to be in such denominations
(consistent with the provisions of the Indenture) and registered in such names
as the selling Holders or the underwriters, if any, may reasonably request at
least three business days prior to the closing of any sale of Transfer
Restricted Notes;

 

(j)            in the case of a Shelf
Registration, upon the occurrence of any event or the discovery of any facts,
each as contemplated by Sections 3(e)(v) and 3(e)(vi) hereof,
as promptly as practicable after the occurrence of such an event, use
commercially reasonable efforts to prepare and file with the SEC a supplement
or post-effective amendment to the Registration Statement or the related
Prospectus or any document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the purchasers of the
Transfer Restricted Notes or Participating Broker-Dealers, such Prospectus will
not contain at the time of such delivery any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading or
will remain so qualified;

 

(k)           in the case of a Shelf
Registration Statement, a reasonable time prior to the filing of any
Registration Statement, any Prospectus, any amendment to a Registration
Statement or amendment or supplement to a Prospectus or of any document that is
to be incorporated by reference into a Registration Statement or a Prospectus
after the initial filing of a Registration Statement, provide copies of such
document to the Initial Purchasers on behalf of such Holders; and make
representatives of the Company and the Subsidiary Guarantors as shall be
reasonably requested by the Holders of Transfer Restricted Notes, or the
Initial Purchasers on behalf of such Holders, available for discussion of such
document; and the Company and the Subsidiary Guarantors shall not, at any time
after initial filing of a Registration Statement, use or file any Prospectus,
any amendment of or supplement to a Registration Statement, or any document
that is to be incorporated by reference into a Registration Statement or a
Prospectus, of which the Initial Purchasers shall not have previously been
advised and furnished a copy or to which the Initial Purchasers shall object;

 

(l)            obtain a CUSIP number for
all Exchange Notes or Transfer Restricted Notes, as the case may be, not later
than the effective date of a Registration Statement, and provide the Trustee
with certificates for the Exchange Notes or the Transfer Restricted Notes, as
the case may be, in a form eligible for deposit with the Depositary;

 

(m)          (i) in the case of a
Shelf Registration, cause the indenture to be qualified under the TIA in
connection with the registration of the Transfer Restricted Notes, and, in the
case of an Exchange Offer Registration, cause or maintain, as the case may be,
the Indenture to be qualified under the TIA in connection with the registration
of the Exchange 

 

14

 

Notes,
(ii) cooperate with the Trustee and the Holders to effect such changes to
the Indenture as may be required for the Indenture to be, or continue to be, so
qualified in accordance with the terms of the TIA and (iii) execute, and
use commercially reasonable efforts to cause the Trustee to execute, all
documents as may be required to effect such changes, and all other forms and
documents required to be filed with the SEC to enable the Indenture to be so
qualified in a timely manner;

 

(n)           in the case of a Shelf
Registration, enter into agreements (including underwriting agreements) and
take all other customary and appropriate actions in order to expedite or
facilitate the disposition of such Transfer Restricted Notes and if so
requested by the holders of such Transfer Restricted Notes and in such
connection whether or not an underwriting agreement is entered into and whether
or not the registration is an underwritten registration:

 

(i)            make such representations
and warranties to the Holders of such Transfer Restricted Notes and the
underwriters, if any, as the Company and the Subsidiary Guarantors are able to
make, in form, substance and scope as are customarily made by issuers to
underwriters in similar underwritten offerings as may be reasonably requested
by them;

 

(ii)           in connection with an
underwritten registration, obtain opinions of counsel to the Company and the
Subsidiary Guarantors and updates thereof (which counsel and opinions (in form,
scope and substance) shall be reasonably satisfactory to the managing
underwriters, if any, and the holders of a majority in principal amount of the
Transfer Restricted Notes being sold) addressed to each selling Holder and the
underwriters, if any, covering the matters customarily covered in opinions
requested in sales of securities or underwritten offerings and such other
matters as may be reasonably requested by such Holders and underwriters;

 

(iii)          in connection with an
underwritten registration, obtain “cold comfort” letters and updates thereof
from the Company’s and the Subsidiary Guarantor’s independent certified public
accountants (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business acquired by the
Company for which financial statements are, or are required to be, included in
the Registration Statement) addressed to the underwriters, if any, and use
commercially reasonable efforts to have such letter addressed to the selling
Holders of Transfer Restricted Notes (to the extent consistent with Statement
on Auditing Standards No.  72 of the American Institute of Certified
Public Accountants), such letters to be in customary form and covering matters
of the type customarily covered in “cold comfort” letters to underwriters in
connection with similar underwritten offerings;

 

(iv)          enter into a securities
sales agreement with the Holders and an agent of the Holders providing for,
among other things, the appointment of such agent for the selling Holders for
the purpose of soliciting purchases of Transfer Restricted Notes, which
agreement shall be in form, substance and scope customary for similar offerings;

 

15

 

(v)           if an underwriting agreement
is entered into, cause the same to set forth indemnification provisions and
procedures substantially equivalent to the indemnification provisions and
procedures set forth in Section 4 hereof with respect to the
underwriters and all other parties to be indemnified pursuant to said Section or,
at the request of any underwriters, in the form customarily provided to such
underwriters in similar types of transactions; and

 

(vi)          deliver such documents and
certificates as may be reasonably requested and as are customarily delivered in
similar offerings to the Holders of a majority in principal amount of the
Transfer Restricted Notes being sold and the managing underwriters, if any.

 

The
above shall be done at (i) the effectiveness of such Shelf Registration
Statement (and each post-effective amendment thereto) and (ii) each
closing under any underwriting or similar agreement as and to the extent required
thereunder;

 

(o)           in the case of a Shelf
Registration or if a Prospectus is required to be delivered by any
Participating Broker-Dealer in the case of an Exchange Offer, make available
for inspection by representatives of the Holders of the Transfer Restricted
Notes, any underwriters participating in any disposition pursuant to a Shelf
Registration Statement, any Participating Broker-Dealer and any counsel or
accountant retained by any of the foregoing, all non-confidential financial and
other records, pertinent corporate documents and properties of the Company or
any Subsidiary Guarantor reasonably requested by any such persons, and cause
the respective officers, directors, employees, and any other agents of the
Company and the Subsidiary Guarantors to supply all information reasonably
requested by any such representative, underwriter, special counsel or
accountant in connection with a Registration Statement, and make such
representatives of the Company and the Subsidiary Guarantors available for
discussion of such documents as shall be reasonably requested by such persons;

 

(p)           if so requested by the
Initial Purchasers, in the case of an Exchange Offer Registration Statement, a
reasonable time prior to filing of any Exchange Offer Registration Statement, any
Prospectus forming a part thereof, any amendment to an Exchange Offer
Registration Statement or amendment or supplement to such Prospectus, provide
copies of such document to the Initial Purchasers and to counsel to the Holders
of Transfer Restricted Notes; and

 

(q)           in the case of a Shelf
Registration, a reasonable time prior to filing any Shelf Registration
Statement, any Prospectus forming a part thereof, any amendment to such Shelf
Registration Statement or amendment or supplement to such Prospectus, provide
copies of such documents to the Initial Purchasers, if so requested, to the
Holders of Transfer Restricted Notes to be covered thereby, to counsel for such
Holders designated by them and to the underwriter or underwriters of an
underwritten offering of such Transfer Restricted Notes, if any, make such
changes in any such document prior to the filing thereof relating to such
Holders or such Transfer Restricted Notes as the counsel to the Holders or the
underwriter or underwriters reasonably request and not file any such document
in a form to which the holders of a majority in aggregate principal amount of 

 

16

 

Transfer
Restricted Notes covered by such Shelf Registration Statement, counsel for such
Holders of the Transfer Restricted Notes covered by such Shelf Registration
Statement, or any underwriter shall not have previously been advised and
furnished a copy of or to which the Majority Holders of Transfer Restricted
Notes covered by such Shelf Registration Statement, counsel to such Holders of
Transfer Restricted Notes or any underwriter shall reasonably object, and make
the representatives of the Company and the Subsidiary Guarantors available for
discussion of such document as shall be reasonably requested by such Holders of
Transfer Restricted Notes, the counsel for such Holders of Transfer Restricted
Notes or any underwriter;

 

(r)            in the case of a Shelf
Registration, use commercially reasonable efforts to cause all Transfer
Restricted Notes to be listed on any securities exchange on which similar debt
securities issued by the Company and the Subsidiary Guarantors are then listed
if requested by the Holders of a majority in aggregate principal amount of such
Transfer Restricted Notes covered by such Shelf Registration Statement, or if
requested by the underwriter or underwriters of an underwritten offering of
Transfer Restricted Notes, if any;

 

(s)           in the case of a Shelf
Registration, use commercially reasonable efforts to cause the Transfer
Restricted Notes to be rated by the appropriate rating agencies, if so
requested by the Holders of a majority in aggregate principal amount of the
Transfer Restricted Notes covered by such Shelf Registration Statement, or if
requested by the underwriter or underwriters of an underwritten offering of
Transfer Restricted Notes, if any;

 

(t)            otherwise comply with all
applicable rules and regulations of the SEC and make available to their
security holders, as soon as reasonably practicable after the effective date of
the applicable Registration Statement, an earnings statement covering at least
12 months which shall satisfy the provisions of Section 11(a) of the
1933 Act and Rule 158 thereunder;

 

(u)           cooperate and assist in any
filings required to be made with FINRA and, in the case of a Shelf
Registration, in the performance of any due diligence investigation by any
underwriter and its counsel (including any “qualified independent underwriter”
that is required to be retained in accordance with the rules and
regulations of FINRA);

 

(v)           if reasonably requested by
any Holder of Transfer Restricted Notes covered by a Shelf Registration
Statement, promptly include in a Prospectus supplement or post-effective
amendment such information with respect to such Holder as such Holder reasonably
requests to be included therein and make all required filings of such Prospectus
supplement or such post-effective amendment as soon as the Company has received
notification of the matters to be so included in such filing;

 

(w)          so long as any Transfer
Restricted Notes remain outstanding, cause each Additional Guarantor upon such
Person becoming an Additional Guarantor, to execute a joinder to this
Agreement; and

 

(x)            amend or supplement the
Prospectus contained in the Exchange Offer Registration Statement for a period
of up to 90 days after the last Exchange Date (as such 

 

17

 

period
may be extended pursuant to this Agreement), in order to expedite or facilitate
the disposition of any Exchange Notes by Participating Broker-Dealers
consistent with the positions of the staff of the SEC.  The Company and the Subsidiary Guarantors
agree that Participating Broker-Dealers shall be authorized to deliver such
Prospectus (or, to the extent permitted by law, make available) during such
period in connection with the resales contemplated by this clause (x).

 

In the case of a Shelf Registration Statement, the
Company and the Subsidiary Guarantors may (as a condition to such Holder’s
participation in the Shelf Registration) require each Holder of Transfer
Restricted Notes to furnish to the Company and Subsidiary Guarantors such
information regarding the Holder and the proposed distribution by such Holder
of such Transfer Restricted Notes as the Company and Subsidiary Guarantors may
from time to time reasonably request in writing.

 

In the case of a Shelf Registration Statement, each
Holder agrees that, upon receipt of any notice from the Company or any
Subsidiary Guarantor of the happening of any event or the discovery of any
facts, each of the kind described in Section 3(e)(iii) or (vi) hereof,
such Holder will forthwith discontinue disposition of Transfer Restricted Notes
pursuant to a Registration Statement until such Holder’s receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 3(k) hereof,
and, if so directed by the Company and Subsidiary Guarantors, such Holder will
deliver to the Company and Subsidiary Guarantors (at its expense) all copies in
such Holder’s possession, other than permanent file copies then in such Holder’s
possession, of the Prospectus covering such Transfer Restricted Notes current
at the time of receipt of such notice.

 

If any of the Transfer Restricted Notes covered by
any Shelf Registration Statement are to be sold in an underwritten offering,
the underwriter or underwriters and manager or managers that will manage such
offering will be selected by the Majority Holders of such Transfer Restricted
Notes to be included in such offering and shall be acceptable to the Company
and Subsidiary Guarantors.  No Holder of
Transfer Restricted Notes may participate in any underwritten registration
hereunder unless such Holder (a) agrees to sell such Holder’s Transfer
Restricted Notes on the basis provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (b) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting arrangements.

 

If the Company and the Subsidiary Guarantors shall
give any notice to suspend the disposition of Transfer Restricted Notes
pursuant to a Registration Statement, the Company and the Subsidiary Guarantors
shall extend the period during which such Registration Statement shall be maintained
effective pursuant to this Agreement by the number of days during the period
from and including the date of the giving of such notice to and including the
date when the Holders of such Transfer Restricted Notes shall have received
copies of the supplemented or amended Prospectus necessary to resume such
dispositions.  The Company and the
Subsidiary Guarantors may suspend the disposition of Transfers Restricted Notes
no more than an aggregate of 90 days in any 365-day period.

 

18

 

4.             Indemnification; Contribution.

 

(a)           The Company and the
Subsidiary Guarantors agree to indemnify, jointly and severally, and hold
harmless the Initial Purchasers and each of their affiliates and any other
Person under common control with the Initial Purchasers, each Holder, each
Participating Broker-Dealer, each Person who participates as an underwriter
(any such Person being an “Underwriter”)
and each Person, if any, who controls any Holder or Underwriter within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
(collectively the “Company Indemnitees”)
as follows:

 

(i)            against any and
all loss, liability, claim, damage and expense whatsoever, as incurred, arising
out of any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement (or any amendment or supplement
thereto) pursuant to which Exchange Notes or Transfer Restricted Notes were
registered under the 1933 Act, including all documents incorporated therein by
reference, any Free Writing Prospectus used in violation of this Agreement or
any “issuer information” (“Issuer  Information”) filed or required to be filed pursuant to Rule 433(d) under
the 1933 Act, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or arising out of any untrue statement or alleged untrue statement
of a material fact contained in any Prospectus (or any amendment or supplement
thereto) or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;

 

(ii)           against any and
all loss, liability, claim, damage and expense whatsoever, as incurred, to the
extent of the aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission; provided
that (subject to Section 4(d) below) any such settlement is
effected with the written consent of the Company and the Subsidiary Guarantors;
and

 

(iii)          against any and
all expense whatsoever, as incurred (including the fees and disbursements of
counsel chosen by any indemnified party), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense is
not paid under subparagraph for (ii) above;

 

provided, however,
that this indemnity agreement shall not apply to any loss, liability, claim,
damage or expense to the extent arising out of any untrue statement or omission
or alleged untrue statement or omission made in reliance upon and in conformity
with written information concerning any Company Indemnitee furnished to the
Company by any Company Indemnitee expressly for use in a Registration Statement
(or any amendment thereto) or any Prospectus (or any amendment or supplement
thereto); and provided, further, that the indemnity agreement contained
in this subsection shall not inure to the benefit of any Company Indemnitee
from whom 

 

19

 

the person asserting any
such losses, claims, damages or liabilities purchased the Notes concerned, to
the extent that a prospectus relating to such Notes was required to be
delivered by such Company Indemnitee in connection with such purchase and any
such loss, claim, damage or liability of such Company Indemnitee results from
the fact that there was not sent or given to such person, at or prior to the
sale of such Notes to such person, a copy of such prospectus if the Company had
previously furnished copies thereof to such Company Indemnitee.

 

(b)           Each Company Indemnitee,
severally, but not jointly, agrees to indemnify and hold harmless the Company,
the Subsidiary Guarantors, each Underwriter and the other selling Holders, and
each of their respective directors and officers, and each Person, if any, who
controls the Company, any Subsidiary Guarantor, any Underwriter or any other
selling Holder within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act, against any and all loss, liability, claim, damage and expense
described in the indemnity contained in Section 4(a) hereof,
as incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Shelf Registration Statement (or
any amendment thereto) or any Prospectus included therein (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
with respect to such Company Indemnitee furnished to the Company and the
Subsidiary Guarantors by such Company Indemnitee expressly for use in the Shelf
Registration Statement (or any amendment thereto) or such Prospectus (or any
amendment or supplement thereto); provided, however, that no such
Company Indemnitee shall be liable for any claims hereunder in excess of the
amount of net proceeds received by such Company Indemnitee from the sale of
Transfer Restricted Notes pursuant to such Shelf Registration Statement.

 

(c)           Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action or proceeding commenced against it in respect of which indemnity may
be sought hereunder, but failure so to notify an indemnifying party shall not relieve
such indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this
indemnity agreement.  An indemnifying
party may participate at its own expense in the defense of such action; provided,
however, that counsel to the indemnifying party shall not (except with
the consent of the indemnified party) also be counsel to the indemnified
party.  In no event shall the
indemnifying party or parties be liable for the fees and expenses of more than
one counsel (in addition to any local counsel) separate from their own counsel
for all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances.  No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with respect
to any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever in respect of
which indemnification or contribution could be sought under this Section 4
(whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act by or on behalf of any indemnified party.

 

20

 

(d)           If the indemnification
provided for in this Section 4, is for any reason unavailable to or
insufficient to hold harmless an indemnified party in respect of any losses,
liabilities, claims, damages or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate amount of such losses,
liabilities, claims, damages and expenses incurred by such indemnified party,
as incurred, in such proportion as is appropriate to reflect the relative fault
of the Company and the Subsidiary Guarantors, on the one hand, and the Company
Indemnitees, on the other hand, in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as
well as any other relevant equitable considerations.

 

The relative fault of the Company and the Subsidiary
Guarantors on the one hand and the Company Indemnitees on the other hand shall
be determined by reference to, among other things, whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company, the Subsidiary
Guarantors or the Company Indemnitees and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.

 

The Company, the Subsidiary Guarantors and the
Company Indemnitees agree that it would not be just and equitable if
contribution pursuant to this Section 4 were determined by pro rata
allocation (even if the Initial Purchasers were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 4.  The aggregate amount of losses, liabilities,
claims, damages and expenses incurred by an indemnified party and referred to
above in this Section 4 shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission.

 

No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation.

 

For purposes of this Section 4, each
Person, if any, who controls an Initial Purchaser or Holder within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as such Initial Purchaser or Holder, and
each director of the Company or any Subsidiary Guarantor, and each Person, if
any, who controls the Company or any Subsidiary Guarantor within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have
the same rights to contribution as the Company and the Subsidiary Guarantors.  The Initial Purchasers’ respective
obligations to contribute pursuant to this Section 4 are several in
proportion to the principal amount of Notes set forth opposite their respective
names in Schedule A to the Purchase Agreement and not joint.  Notwithstanding the provisions of this Section 4,
in no event shall a Holder be required to contribute any amount in excess of
the amount by which the total price at which all of the Notes sold by such
Holder exceeds the amount of any damages that such Holder has otherwise been
required to pay under Section 4(b) hereof.

 

The remedies provided for in this Section 4
are not exclusive and shall not limit any rights or remedies that may otherwise
be available to any indemnified party at law or in equity.

 

21

 

The indemnity and contribution provisions contained
in this Section 4 shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of the Company Indemnitees or any Person
controlling any Company Indemnitee, or by or on behalf of the Company or the
Subsidiary Guarantors or the officers or directors of or any Person controlling
the Company or the Subsidiary Guarantors, (iii) acceptance of any of the
Exchange Notes and (iv) any sale of Transfer Restricted Notes pursuant to
a Shelf Registration Statement; provided, however, that the
indemnity and contribution rights provided for, in this Section 4
shall not extend to any losses, liabilities or other damages arising out of
actions occurring after the termination of this Agreement.

 

5.             Miscellaneous.

 

5.1           Rule 144 and Rule 144A.  For so long as the Company and the Subsidiary Guarantors are subject to
the reporting requirements of Section 13 or 15 of the 1934 Act, the Company
and the Subsidiary Guarantors covenant that they will file and furnish the
reports required to be filed by them under the 1933 Act and Section 13(a) or
15(d) of the 1934 Act and the rules and regulations adopted by the
SEC thereunder.  If the Company and the
Subsidiary Guarantors cease to be so required to file and furnish such reports,
the Company and Subsidiary Guarantors covenant that they will upon the request
of any Holder of Transfer Restricted Notes (a) make publicly available
such information as is necessary to permit sales pursuant to Rule 144
under the 1933 Act, (b) deliver such information to a prospective
purchaser as is necessary to permit sales pursuant to Rule 144A under the
1933 Act and take such further action as any Holder of Transfer Restricted
Notes may reasonably request, and (c) take such further action that is
reasonable in the circumstances, in each case, to the extent required from time
to time to enable such Holder to sell its Transfer Restricted Notes without
registration under the 1933 Act within the limitation of the exemptions
provided by (i) Rule 144 under the 1933 Act, as such Rule may be
amended from time to time, (ii) Rule 144A under the 1933 Act, as such
Rule may be amended from time to time, or (iii) any similar rules or
regulations hereafter adopted by the SEC. 
Upon the request of any Holder of Transfer Restricted Notes, the Company
and the Subsidiary Guarantors will deliver to such Holder a written statement
as to whether they have complied with such requirements.

 

5.2           No Inconsistent Agreements.  The Company and the Subsidiary Guarantors have not entered into, and
the Company and the Subsidiary Guarantors will not after the date of this
Agreement enter into, any agreement which is inconsistent with the rights
granted to the Holders of Transfer Restricted Notes in this Agreement or
otherwise conflicts with the provisions hereof. 
The rights granted to the Holders hereunder do not and will not for the
term of this Agreement in any way conflict with the rights granted to the
holders of the Company’s or Subsidiary Guarantors’ other issued and outstanding
securities under any such agreements.

 

5.3           Amendments and Waivers.  The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the Company and the Subsidiary Guarantors have obtained the
written consent of Holders of at least a majority in aggregate principal amount
of the outstanding Transfer Restricted Notes affected by such amendment,
modification, supplement, waiver or departure.

 

22

 

5.4           Notices.  All notices and other
communications provided for or permitted hereunder shall be made in writing by
hand delivery, registered first-class mail, telex, telecopier, or any courier
guaranteeing overnight delivery (a) if to a Holder, at the most current
address given by such Holder to the Company by means of a notice given in
accordance with the provisions of this Section 5.4, which address
initially, and until so changed, is the address set forth in the Purchase
Agreement with respect to the Initial Purchasers; and (b) if to the
Company and the Subsidiary Guarantors, initially at the Company’s address set
forth in the Purchase Agreement, and thereafter at such other address of which
notice is given in accordance with the provisions of this Section 5.4.

 

All such notices and communications shall be deemed
to have been duly given: at the time delivered by hand, if personally
delivered; three business days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt is
acknowledged, if telecopied; and on the next business day if timely delivered
to an air courier guaranteeing overnight delivery.

 

Copies of all such notices, demands, or other
communications shall be concurrently delivered by the person giving the same to
the Trustee under the Indenture at the address specified therein.

 

5.5           Successor and Assigns.  This Agreement shall inure
to the benefit of and be binding upon the successors, assigns and transferees
of each of the parties, including, without limitation and without the need for
an express assignment, subsequent Holders; provided that nothing herein
shall be deemed to permit any assignment, transfer or other disposition of Transfer
Restricted Notes in violation of the terms of the Purchase Agreement or the
Indenture.  If any transferee of any
Holder shall acquire Transfer Restricted Notes, in any manner, whether by operation
of law or otherwise, such Transfer Restricted Notes shall be held subject to
all of the terms of this Agreement, and by taking and holding such Transfer
Restricted Notes such person shall be conclusively deemed to have agreed to be
bound by and to perform all of the terms and provisions of this Agreement,
including the restrictions on resale set forth in this Agreement and, if
applicable, the Purchase Agreement, and such person shall be entitled to receive
the benefits hereof.  The Initial
Purchasers (in their capacity as Initial Purchasers) shall have no liability or
obligation to the Company of the Subsidiary Guarantors with respect to any
failure by a Holder to comply with, or any breach by any Holder of, any of the
obligations of such Holder under this Agreement

 

5.6           Third Party Beneficiaries.  The Initial Purchasers (even
if the Initial Purchasers are not Holders of Transfer Restricted Notes) shall
be third party beneficiaries to the agreements made hereunder between the
Company and the Subsidiary Guarantors, on the one hand, and the Holders, on the
other hand, and shall have the right to enforce such agreements directly to the
extent they deem such enforcement necessary or advisable to protect their rights
or the rights of Holders hereunder.  Each
Holder of Transfer Restricted Notes shall be a third party beneficiary to the
agreements made hereunder between the Company and the Subsidiary Guarantors, on
the one hand, and the Initial Purchasers, on the other hand, and shall have the
right to enforce such agreements directly to the extent it deems such
enforcement necessary or advisable to protect its rights hereunder.

 

23

 

5.7           Remedies.  Each of the Company and the
Subsidiary Guarantors hereby agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agree to waive the defense in any
action for specific performance that a remedy at law would be adequate.

 

5.8           Counterparts.  This Agreement may be
executed in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same
agreement.  This Agreement may be executed
by facsimile signature.

 

5.9           Headings.  The headings in this
Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.

 

5.10         Governing Law.  This Agreement shall be
governed by and construed in accordance with the law of the state of New York
without regard to the principles of conflict of laws thereof.

 

5.11         Severability.  In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.

 

[signature page follows]

 

24

 

IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.

 

	
   

  	
  FREEDOM
  GROUP, INC.,

  
	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
   

  	
  GUARANTORS:

  
	
   

  	
   

  	
   

  
	
   

  	
  RACI HOLDING, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  REMINGTON ARMS COMPANY,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  REMINGTON
  STEAM, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  RA BRANDS, L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE MARLIN FIREARMS
  COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  H&R 1871, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

2

 

	
   

  	
  DA ACQUISITIONS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BUSHMASTER HOLDINGS,
  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BUSHMASTER FIREARMS
  INTERNATIONAL, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DPMS FIREARMS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  E-RPC, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

3

 

	
  CONFIRMED
  AND ACCEPTED,

  
	
  as
  of the date first above written:

  
	
   

  	
   

  	
   

  
	
  BANC
  OF AMERICA SECURITIES LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
  Managing
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  DEUTSCHE
  BANK SECURITIES INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
  Managing
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  DEUTSCHE
  BANK SECURITIES INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
  Managing
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  WELLS
  FARGO SECURITIES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
  Managing
  Director

  
				

 

 

For
themselves  and as representatives of the other
Initial Purchasers

 

4

 

Schedule
A

 

	
  Initial
  Purchaser

  
	
  Banc
  of America Securities LLC

  
	
  Deutsche
  Bank Securities Inc.

  
	
  Wells
  Fargo Securities LLC

  
	
  Barclays
  Capital Inc.

  
	
  Jefferies &
  Company, Inc.

  

 

5Exhibit 10.1

 

EXECUTION
VERSION

 

LOAN AND SECURITY AGREEMENT

 

by and among

 

FREEDOM GROUP, INC.

 

and certain
of its Subsidiaries

 

as Borrowers

 

THE LENDERS AND ISSUING BANKS FROM TIME TO TIME PARTY HERETO

 

WACHOVIA BANK, NATIONAL ASSOCIATION

 

as Agent

 

and

 

BANK OF AMERICA, N.A.,

as
Syndication Agent

 

and

 

DEUTSCHE BANK TRUST COMPANY AMERICAS,

as
Co-Documentation Agent

 

and

 

BARCLAYS BANK PLC,

as
Co-Documentation Agent

 

	
  WELLS FARGO SECURITIES, LLC

  	
   

  	
  WELLS FARGO SECURITIES, LLC

  
	
   

  	
   

  	
   

  
	
  BANC OF AMERICA SECURITIES LLC

  	
   

  	
  BANC OF AMERICA SECURITIES LLC

  
	
   

  	
   

  	
   

  
	
  and

  	
   

  	
  and

  
	
   

  	
   

  	
   

  
	
  DEUTSCHE BANK SECURITIES INC.

  	
   

  	
  DEUTSCHE BANK SECURITIES INC.

  
	
   

  	
   

  	
   

  
	
  as Joint Arrangers

  	
   

  	
  as Joint Bookrunners

  

 

 

Dated: July 29,
2009

 

 

TABLE OF CONTENTS

 

	
  SECTION  1.

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  SECTION  2.

  	
  CREDIT FACILITIES

  	
  34

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Loans

  	
  34

  
	
  2.2

  	
  Letters of Credit

  	
  37

  
	
  2.3

  	
  Increase in Maximum Credit

  	
  39

  
	
  2.4

  	
  Commitments

  	
  41

  
	
  2.5

  	
  Nature and Extent of Each
  Borrower’s Liability

  	
  41

  
	
  2.6

  	
  Voluntary Reduction of
  Commitments

  	
  42

  
	
   

  	
   

  	
   

  
	
  SECTION  3.

  	
  INTEREST AND FEES

  	
  43

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Interest

  	
  43

  
	
  3.2

  	
  Fees

  	
  43

  
	
  3.3

  	
  Changes in Laws and Increased
  Costs of Loans

  	
  45

  
	
   

  	
   

  	
   

  
	
  SECTION  4.

  	
  CONDITIONS PRECEDENT

  	
  46

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Conditions Precedent to Initial
  Loans and Letters of Credit

  	
  46

  
	
  4.2

  	
  Conditions Precedent to All Loans
  and Letters of Credit

  	
  48

  
	
   

  	
   

  	
   

  
	
  SECTION  5.

  	
  GRANT AND PERFECTION OF SECURITY
  INTEREST

  	
  49

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Grant of Security Interest

  	
  49

  
	
  5.2

  	
  Perfection of Security Interests

  	
  51

  
	
   

  	
   

  	
   

  
	
  SECTION  6.

  	
  COLLECTION AND ADMINISTRATION

  	
  54

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Borrowers’ Loan Accounts

  	
  54

  
	
  6.2

  	
  Statements

  	
  55

  
	
  6.3

  	
  Collection of Accounts

  	
  55

  
	
  6.4

  	
  Payments

  	
  56

  
	
  6.5

  	
  Taxes

  	
  57

  
	
  6.6

  	
  Authorization to Make Loans

  	
  59

  
	
  6.7

  	
  Use of Proceeds

  	
  59

  
	
  6.8

  	
  Appointment of Administrative Borrower as Agent for
  Requesting Loans and Receipts of Loans and Statements

  	
  60

  
	
  6.9

  	
  Pro Rata Treatment

  	
  60

  
	
  6.10

  	
  Sharing of Payments, Etc.

  	
  60

  
	
  6.11

  	
  Settlement Procedures

  	
  61

  
	
  6.12

  	
  Obligations Several; Independent
  Nature of Lenders’ Rights

  	
  63

  
	
  6.13

  	
  Bank Products

  	
  63

  
	
   

  	
   

  	
   

  
	
  SECTION  7.

  	
  COLLATERAL REPORTING AND
  COVENANTS

  	
  64

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Collateral Reporting

  	
  64

  
	
  7.2

  	
  Accounts Covenants

  	
  64

  
	
  7.3

  	
  Inventory Covenants

  	
  65

  
	
  7.4

  	
  Equipment Covenants

  	
  65

  
	
  7.5

  	
  Power of Attorney

  	
  65

  
	
  7.6

  	
  Right to Cure

  	
  66

  

 

i

 

	
  7.7

  	
  Access to Premises

  	
  66

  
	
  7.8

  	
  Trademark Appraisals

  	
  67

  
	
   

  	
   

  	
   

  
	
  SECTION  8.

  	
  REPRESENTATIONS AND WARRANTIES

  	
  67

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Corporate Existence, Power and
  Authority

  	
  67

  
	
  8.2

  	
  Name; State of Organization;
  Chief Executive Office; Collateral Locations

  	
  67

  
	
  8.3

  	
  Financial Statements

  	
  68

  
	
  8.4

  	
  Priority of Liens; Title to
  Properties

  	
  68

  
	
  8.5

  	
  Tax Returns

  	
  68

  
	
  8.6

  	
  Litigation

  	
  68

  
	
  8.7

  	
  Compliance with Other Agreements
  and Applicable Laws

  	
  69

  
	
  8.8

  	
  Environmental Compliance

  	
  69

  
	
  8.9

  	
  Employee Benefits

  	
  70

  
	
  8.10

  	
  Bank Accounts

  	
  70

  
	
  8.11

  	
  Intellectual Property

  	
  70

  
	
  8.12

  	
  Subsidiaries; Affiliates;
  Capitalization; Solvency

  	
  71

  
	
  8.13

  	
  Labor Disputes

  	
  72

  
	
  8.14

  	
  Reserved

  	
  72

  
	
  8.15

  	
  Material Contracts

  	
  72

  
	
  8.16

  	
  Payable Practices

  	
  72

  
	
  8.17

  	
  Investment Company Act

  	
  72

  
	
  8.18

  	
  Accuracy and Completeness of
  Information

  	
  72

  
	
  8.19

  	
  Survival of Warranties;
  Cumulative

  	
  72

  
	
   

  	
   

  	
   

  
	
  SECTION  9.

  	
  AFFIRMATIVE AND NEGATIVE
  COVENANTS

  	
  73

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Maintenance of Existence

  	
  73

  
	
  9.2

  	
  New Collateral Locations

  	
  73

  
	
  9.3

  	
  Compliance with Laws,
  Regulations, Etc.

  	
  73

  
	
  9.4

  	
  Payment of Taxes and Claims

  	
  74

  
	
  9.5

  	
  Insurance

  	
  74

  
	
  9.6

  	
  Financial Statements and Other
  Information

  	
  74

  
	
  9.7

  	
  Sale of Assets, Consolidation,
  Merger, Dissolution, Etc.

  	
  76

  
	
  9.8

  	
  Encumbrances

  	
  77

  
	
  9.9

  	
  Indebtedness

  	
  79

  
	
  9.10

  	
  Loans and Investments; Repayment
  of Indebtedness

  	
  82

  
	
  9.11

  	
  Dividends and Redemptions of
  Capital Stock

  	
  82

  
	
  9.12

  	
  Transactions with Affiliates

  	
  83

  
	
  9.13

  	
  Reserved

  	
  84

  
	
  9.14

  	
  End of Fiscal Years; Fiscal
  Quarters

  	
  84

  
	
  9.15

  	
  Change in Business

  	
  84

  
	
  9.16

  	
  Redemption of Existing Remington
  Notes

  	
  84

  
	
  9.17

  	
  Fixed Charge Coverage Ratios

  	
  85

  
	
  9.18

  	
  Minimum Excess Availability

  	
  85

  
	
  9.19

  	
  License Agreements

  	
  85

  
	
  9.20

  	
  Foreign Assets Control
  Regulations, Etc.

  	
  86

  
	
  9.21

  	
  Costs and Expenses

  	
  86

  
	
  9.22

  	
  Further Assurances

  	
  87

  

 

ii

 

	
  SECTION  10.

  	
  EVENTS OF DEFAULT AND REMEDIES

  	
  87

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  Events of Default

  	
  87

  
	
  10.2

  	
  Remedies

  	
  89

  
	
   

  	
   

  	
   

  
	
  SECTION  11.

  	
  JURY TRIAL WAIVER; OTHER WAIVERS
  AND CONSENTS; GOVERNING LAW

  	
  92

  
	
   

  	
   

  	
   

  
	
  11.1

  	
  Governing Law; Choice of Forum;
  Service of Process; Jury Trial Waiver

  	
  92

  
	
  11.2

  	
  Waiver of Notices

  	
  93

  
	
  11.3

  	
  Amendments and Waivers

  	
  93

  
	
  11.4

  	
  Waiver of Counterclaims

  	
  96

  
	
  11.5

  	
  Indemnification

  	
  96

  
	
   

  	
   

  	
   

  
	
  SECTION  12.

  	
  THE AGENT

  	
  97

  
	
   

  	
   

  	
   

  
	
  12.1

  	
  Appointment, Powers and
  Immunities

  	
  97

  
	
  12.2

  	
  Reliance by Agent

  	
  97

  
	
  12.3

  	
  Events of Default

  	
  97

  
	
  12.4

  	
  Wachovia in its Individual
  Capacity

  	
  98

  
	
  12.5

  	
  Indemnification

  	
  98

  
	
  12.6

  	
  Non-Reliance on Agent and Other
  Lenders

  	
  98

  
	
  12.7

  	
  Failure to Act

  	
  99

  
	
  12.8

  	
  Additional Loans

  	
  99

  
	
  12.9

  	
  Concerning the Collateral and the
  Related Financing Agreements

  	
  99

  
	
  12.10

  	
  Field Audit, Examination Reports
  and other Information; Disclaimer by Lenders

  	
  99

  
	
  12.11

  	
  Collateral Matters

  	
  100

  
	
  12.12

  	
  Agency for Perfection

  	
  102

  
	
  12.13

  	
  Successor Agent

  	
  102

  
	
  12.14

  	
  Other Agent Designations

  	
  103

  
	
  12.15

  	
  Agent May File Proofs of
  Claim

  	
  103

  
	
   

  	
   

  	
   

  
	
  SECTION  13.

  	
  TERM OF AGREEMENT; MISCELLANEOUS

  	
  104

  
	
   

  	
   

  	
   

  
	
  13.1

  	
  Term

  	
  104

  
	
  13.2

  	
  Interpretative Provisions

  	
  104

  
	
  13.3

  	
  Notices

  	
  106

  
	
  13.4

  	
  Partial Invalidity

  	
  107

  
	
  13.5

  	
  Confidentiality

  	
  107

  
	
  13.6

  	
  Successors

  	
  108

  
	
  13.7

  	
  Assignments; Participations

  	
  108

  
	
  13.8

  	
  Entire Agreement

  	
  110

  
	
  13.9

  	
  USA PATRIOT Act

  	
  110

  
	
  13.10

  	
  Counterparts, Etc.

  	
  110

  
	
  13.11

  	
  Guarantee

  	
  110

  

 

iii

 

INDEX

TO

EXHIBITS
AND SCHEDULES

 

	
  Exhibit A

  	
  Form of
  Assignment and Acceptance

  
	
   

  	
   

  
	
  Exhibit B

  	
  Form of
  Compliance Certificate

  
	
   

  	
   

  
	
  Exhibit C

  	
  Form of
  Borrowing Base Certificate

  
	
   

  	
   

  
	
  Schedule
  1.37

  	
  Existing
  Lenders

  
	
   

  	
   

  
	
  Schedule
  1.38

  	
  Existing
  Letters of Credit

  
	
   

  	
   

  
	
  Schedule
  5.2

  	
  Collateral
  Matters

  
	
   

  	
   

  
	
  Schedule
  8.2

  	
  Name;
  State of Organization; Chief Executive Office; Collateral Locations

  
	
   

  	
   

  
	
  Schedule
  8.4

  	
  Priority
  of Liens; Title to Properties; Mortgaged Properties

  
	
   

  	
   

  
	
  Schedule
  8.6

  	
  Litigation

  
	
   

  	
   

  
	
  Schedule
  8.11

  	
  Intellectual
  Property

  
	
   

  	
   

  
	
  Schedule
  8.12

  	
  Subsidiaries;
  Affiliates; Capitalization; Solvency

  
	
   

  	
   

  
	
  Schedule
  8.13

  	
  Labor
  Disputes

  
	
   

  	
   

  
	
  Schedule
  8.15

  	
  Material
  Contracts

  
	
   

  	
   

  
	
  Schedule
  9.10

  	
  Loans
  and Investments

  

 

iv

 

LOAN AND SECURITY AGREEMENT

 

This Loan and Security
Agreement dated July 29, 2009 is entered into by and among FREEDOM GROUP, INC., a Delaware corporation (“FGI”), REMINGTON ARMS COMPANY, INC., a Delaware corporation (“Remington”),
THE MARLIN FIREARMS COMPANY, a
Connecticut corporation (“Marlin”), H&R 1871, LLC,
a Connecticut limited liability company (“H&R”), BUSHMASTER
FIREARMS INTERNATIONAL, LLC, a Delaware limited liability company (“Bushmaster”),
DPMS FIREARMS, LLC, a Delaware limited
liability company (“DPMS”), E-RPC, LLC, a
Delaware limited liability company (“E-RPC”), 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
hereinafter further defined), RACI HOLDING, INC.,
a Delaware corporation (“RACI” ), REMINGTON STEAM, LLC,
a New York limited liability company (“Remington Steam”), and BUSHMASTER HOLDINGS, LLC, a Delaware limited liability
company (“Bushmaster Holdings” and together with RACI and Remington Steam,  each individually a “Guarantor” and
collectively, “Guarantors” as hereinafter further defined), the parties hereto
from time to time as lenders, whether by execution of this Agreement or an
Assignment and Acceptance (each individually, a “Lender” and collectively, “Lenders”
as hereinafter further defined) and WACHOVIA BANK, NATIONAL
ASSOCIATION , a national banking association, in its capacity as
agent for Lenders (in such capacity, “Agent” as hereinafter further defined).

 

W I T N E S S E T H:

 

WHEREAS, Borrowers and
Guarantors have requested that Agent and Lenders enter into financing
arrangements with Borrowers pursuant to which Lenders may make loans and
provide other financial accommodations to Borrowers; and

 

WHEREAS, each Lender is
willing to agree (severally and not jointly) to make such loans and provide
such financial accommodations to Borrowers on a pro rata basis according to its
Commitment (as defined below) on the terms and conditions set forth herein and
Agent is willing to act as agent for Lenders on the terms and conditions set
forth herein and the other Financing Agreements;

 

NOW, THEREFORE, in
consideration of the mutual conditions and agreements set forth herein, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:

 

SECTION 
1.        DEFINITIONS

 

For purposes of this
Agreement, the following terms shall have the respective meanings given to them
below:

 

“Accommodation Payment”
shall have the meaning set forth in Section 2.5(d).

 

“Accounts”
shall, as to each Borrower and each Guarantor, have the meaning ascribed to the
term “account” in the UCC and shall include all present and future rights of
such Borrower or Guarantor to payment of a monetary obligation, whether or not
earned by performance, which is not evidenced by chattel paper or an
instrument, (a) for property that has been or is to be sold, leased,
licensed, assigned, or otherwise disposed of, (b) for services rendered or
to be rendered, (c) for a secondary obligation incurred or to be incurred,
or (d) arising out of the use of a credit or charge card or information
contained on or for use with the card.

 

 

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

 

“Adjusted
Eurodollar Rate” shall mean, with respect to each Interest Period for any
Eurodollar Rate Loan comprising part of the same borrowing (including
conversions, extensions and renewals), the rate per annum determined by
dividing (a) the London Interbank Offered Rate for such Interest Period by
(b) percentage equal to: (i) one (1) minus (ii) the Reserve
Percentage.  For purposes hereof, “Reserve
Percentage” shall mean for any day, that percentage (expressed as a decimal)
which is in effect from time to time under Regulation D of the Board of
Governors of the Federal Reserve System (or any successor), as such regulation
may be amended from time to time or any successor regulation, as the maximum
reserve requirement (including, without limitation, any basic, supplemental,
emergency, special, or marginal reserves) applicable with respect to
Eurocurrency liabilities as that term is defined in Regulation D (or
against any other category of liabilities that includes deposits by reference
to which the interest rate of Eurodollar Rate Loans is determined), whether or
not any Lender has any Eurocurrency liabilities subject to such reserve
requirement at that time.  Eurodollar
Rate Loans shall be deemed to constitute Eurocurrency liabilities and as such
shall be deemed subject to reserve requirements without benefits of credits for
proration, exceptions or offsets that may be available from time to time to a
Lender.  The Adjusted Eurodollar Rate
shall be adjusted automatically on and as of the effective date of any change
in the Reserve Percentage.

 

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

 

“Affiliate”
shall mean a Person (other than a Subsidiary): 
(i) which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, a Person; (ii) which
beneficially owns or holds ten percent (10%) or more of any class of the Voting
Stock or other Capital Stock of a Person; or (iii) ten percent (10%) or
more of the Voting Stock or other Capital Stock of which is beneficially owned
or held by a Person or a Subsidiary of a Person.  For purposes hereof, “control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a Person, whether through the ownership
of any Voting Stock or other Capital Stock, by contract or otherwise.  No portfolio company of Sponsor (other than
FGI and its direct and indirect Subsidiaries or any other Person that controls
FGI or an Obligor) shall be deemed an Affiliate of an Obligor for purposes of
this Agreement.

 

“Agent”
shall mean Wachovia Bank, National Association, in its capacity as agent on
behalf of Lenders pursuant to the terms hereof and any replacement or successor
agent hereunder.

 

“Agent
Payment Account” shall mean account no. **82789126 of Agent at Wachovia, or
such other account of Agent as Agent may from time to time designate to
Administrative Borrower as the Agent Payment Account for purposes of this
Agreement and the other Financing Agreements.

 

“Applicable Margin” shall
mean, with respect to Base Rate Loans and Eurodollar Rate Loans, subject to the
provisions below, the applicable percentage (on a per annum basis) set forth
below based on the Quarterly Average Excess Availability for the immediately
preceding three (3) month period beginning on the first day of the month
of such period.

 

2

 

 

	
  Tier

  	
   

  	
  Quarterly Average Excess Availability

  	
   

  	
  Applicable Eurodollar

  Rate Margin

  	
   

  	
  Applicable Base

  Rate Margin

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  Greater
  than $70,000,000

  	
   

  	
  3.25

  	
  %

  	
  2.25

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  Less
  than or equal to $70,000,000 and greater than $30,000,000

  	
   

  	
  3.50

  	
  %

  	
  2.50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  Less
  than or equal to $30,000,000

  	
   

  	
  3.75

  	
  %

  	
  2.75

  	
  %

  

 

Provided, that, the
Applicable Margin shall be calculated on the first day of each calendar quarter
based on the Quarterly Average Excess Availability for the preceding calendar
quarter and shall remain in effect until so calculated on the first day of the
succeeding calendar quarter, provided  that, notwithstanding
anything to the contrary contained herein, the Applicable Margin through December 31,
2009, shall be the amount for Tier 2 set forth above and (iv) in the event
that Borrowers fail to provide any Borrowing Base Certificate or other
information with respect thereto for any period on the date required hereunder,
effective as of the date on which such Borrowing Base Certificate or other
information was otherwise required, at Agent’s option (or at the direction of
the Required Lenders if Agent has not exercised such option for five (5) Business
Days following such date), the Applicable Margin shall be based on the highest
rate above until the next Business Day after the Borrowing Base Certificate or
other information is provided for the applicable period at which time the
Applicable Margin shall be adjusted as otherwise provided herein.  In the event that at any time after the end
of any three (3) month period the Quarterly Average Excess Availability
for such three (3) month period used for the determination of the
Applicable Margin is determined to have been more or been less than the actual
amount of the Quarterly Average Excess Availability for such period as a result
of the inaccuracy of information provided by or on behalf of Borrowers to Agent
for the calculation of Excess Availability, the Applicable Margin for such
prior period shall be adjusted to the applicable percentage based on such
actual Quarterly Average Excess Availability and either (i) if any
additional interest shall be payable for the applicable period as a result of
such recalculation, such additional interest shall be promptly paid to Agent or
(ii) if any excess interest was paid for the applicable period as a result
of such recalculation, such excess interest shall be promptly paid to
Administrative Borrower.  The foregoing
shall not be construed to limit the rights of Agent and Lenders with respect to
the amount of interest payable after a Default or Event of Default whether
based on such recalculated percentage or otherwise.

 

“Arrangers” shall mean,
collectively, Wells Fargo Securities, LLC, Banc of America Securities LLC and
Deutsche Bank Securities, Inc.

 

“Assignment
and Acceptance” shall mean an Assignment and Acceptance substantially in the
form of Exhibit A attached hereto (with blanks appropriately
completed) delivered to Agent in connection with an assignment of a Lender’s
interest hereunder in accordance with the provisions of Section 13.7
hereof.

 

“Average
Excess Availability” shall mean, for any period, the daily average of the
Excess Availability for such period.

 

“Bank
Product Provider” shall mean any Lender or any Affiliate of a Lender.

 

“Bank
Products” shall mean any one or more of the following types or services or
facilities provided to a Borrower or a Guarantor by a Bank Product Provider: (a) credit
cards, debit cards or stored value cards or the processing of credit card,
debit card or stored value card sales or receipts, (b) cash 

 

3

 

management or related
services, including (i) operating, collections, payroll, trust or other
depository or disbursement accounts, (ii) the automated clearinghouse
transfer of funds for the account of a Borrower or Guarantor pursuant to
agreement or overdraft for any accounts of Borrowers or Guarantors maintained
at Agent or any Bank Product Provider that are subject to the control of Agent
pursuant to any Deposit Account Control Agreement to which Agent or such Bank
Product Provider is a party, as applicable, and (iii) controlled
disbursement services and (c) Hedge Agreements consisting of rate swap
agreements, basis swaps, forward rate swaps, interest rate options, rate cap
agreements, rate floor agreements, rate collar agreements or any other similar
interest rate protection agreement (including any option to enter into any of
the foregoing or a master agreement for any the foregoing together with all
supplements thereto) for the purpose of protecting against or managing exposure
to fluctuations in interest rates), if and to the extent permitted hereunder.

 

“Base
Rate” shall mean the higher of (i) the rate of interest publicly announced
by Wachovia as its “prime rate,” subject to each increase or decrease in such
prime rate, effective as of the day any such change occurs, or (ii) the
Federal Funds Effective Rate from time to time plus 0.50%.  All Swing Line Loans shall be Base Rate
Loans.

 

“Base
Rate Loans” shall mean any Loans or portion thereof on which interest is
payable based on the Base Rate in accordance with the terms thereof.

 

“Blocked
Accounts” shall have the meaning set forth in Section 6.3(a) hereof.

 

“Blocked
Person” shall have the meaning set forth in Section 9.20 hereof.

 

“BofA”
shall mean Bank of America, N.A., a national banking association.

 

“Borrower
Allocable Percentage” shall have the meaning set forth in Section 2.5(d).

 

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

 

“Borrowing
Base” shall mean, at any time, the amount equal to:

 

(a)           the sum of:

 

(i)            eighty-five
percent (85%) of the Eligible Accounts, plus

 

(ii)           the lesser of:

 

(A)                              the Inventory
Loan Limit, or

 

(B)                                the sum of:

 

4

 

(1)           the lesser of:

 

(y)           seventy-five
percent (75%) multiplied by the Value of the Eligible Inventory consisting of
finished goods, or

 

(z)            eighty-five
percent (85%) of the Net Recovery Percentage multiplied by the Value of such
Eligible Inventory consisting of finished goods,

 

plus

 

(2)           the lesser of:

 

(y)           fifty percent
(50%) multiplied by the Value of the Eligible Inventory consisting of raw
materials, or

 

(z)            eighty-five
percent (85%) of the Net Recovery Percentage multiplied by the Value of
Eligible Inventory consisting of raw materials,

 

plus

 

(3)           the lesser of:

 

(y)           the sum
of:  (I) eight percent (8%)
multiplied by the Value of Eligible Inventory of Remington, Marlin, H&R,
E-RPC and Dakota consisting of Parts, plus (II) thirty-five percent
(35%) multiplied by the Value of Eligible Inventory of Bushmaster consisting of
Parts, plus (III) thirty percent (30%) multiplied by the Value of
Eligible Inventory of DPMS consisting of Parts, or

 

(z)            eighty-five
percent  (85%) of the Net Recovery
Percentage multiplied by the Value of such Eligible Inventory consisting of
Parts,

 

minus

 

(b)           Reserves;

 

provided, that not more than
$1,500,000 of availability under the Borrowing Base at any time shall be
attributable to Eligible Inventory of DPMS until such time as DPMS has
established a perpetual inventory system that is satisfactory to Agent.

 

“Borrowing
Base Certificate” shall mean a certificate, in the form requested by Agent (a
form of which as required as of the date hereof being attached hereto as Exhibit C),
by which Borrowers shall certify to Agent and Lenders the amount of the
Borrowing Base as of the date of the certificate and the calculation of such
amount.

 

“Business
Day” shall mean any day other than a Saturday, Sunday, or other day on which
commercial banks are authorized or required to close under the laws of the
State of New York or the State 

 

5

 

of North Carolina, except
that if a determination of a Business Day shall relate to any Eurodollar Rate
Loans, the term Business Day shall also exclude any day on which banks are
closed for dealings in dollar deposits in the London interbank market or other
applicable Eurodollar Rate market.

 

“Capital
Expenditures” shall mean with respect to any Borrower or Guarantor for any
period the aggregate of all expenditures by such Person made during such period
that in accordance with GAAP are or should be included in “property, plant and
equipment” or in similar items reflected in the cash flow statement, whether
such expenditures are paid in cash or financed and including all obligations
under Capital Leases paid or payable during such period.

 

“Capital
Leases” shall mean, as applied to any Person, any lease of (or any agreement
conveying the right to use) any property (whether real, personal or mixed) by
such Person as lessee which in accordance with GAAP, is required to be
reflected as a liability on the balance sheet of such Person.

 

“Capital
Stock” shall mean, with respect to any Person, any and all shares, interests,
participations or other equivalents (however designated) of such Person’s
capital stock or partnership, limited liability company or other equity
interests at any time outstanding, and any and all rights, warrants or options
exchangeable for or convertible into such capital stock or other interests (but
excluding any debt security that is exchangeable for or convertible into such
capital stock).

 

“Cash
Equivalents” shall mean (a) marketable direct obligations issued or
unconditionally guaranteed by the government of the United States and backed by
the full faith and credit of the government of the United States maturities of
not more than 12 months from the date of acquisition; (b) domestic
certificates of deposit and time deposits having maturities of not more than 12
months from the date of acquisition, bankers’ acceptances having maturities of
not more than 12 months from the date of acquisition and overnight bank
deposits, in each case issued by any commercial bank organized under the laws
of Canada or of the United States, any state thereof or the District of
Columbia, which at the time of acquisition are rated A-1 (or better) by S&P
or P-1 (or better) by Moody’s, and (unless issued by a Lender) not subject to
offset rights in favor of such bank arising from any banking relationship with
such bank; (c) repurchase obligations with a term of not more than thirty
(30) days for underlying securities of the types described in clauses (a) and
(b) entered into with any financial institution meeting the qualifications
specified in clause (b) above; and (d) commercial paper having at the
time of investment therein or a contractual commitment to invest therein a
rating of A-1 (or better) by S&P or P-1 (or better) by Moody’s, and having
a maturity within 9 months after the date of acquisition thereof.

 

“Cash
Management Event” shall mean the occurrence or existence of any of the
following events or conditions: (a) on any date Excess Availability shall
be less than $20,000,000 (whether or not Excess Availability shall thereafter
equal or exceed such amount) or (b) an Event of Default shall exist
and Agent or the Required Lenders shall have, in its or their
sole discretion, elected to enforce, collect and receive all amounts owing
with respect to the Accounts or other Collateral.

 

“Cash
Management Reinstatement Event” mean the occurrence or existence of each of the
following events or conditions after a Cash Management Event has occurred: (a) 
no Event of Default exists (b) Excess Availability shall have been (i) not
less than $20,000,000 for a period of ninety (90) consecutive days after
the occurrence of a Cash Management Event, or (ii) not less than
$30,000,000 for a period of sixty (60) consecutive days after the
occurrence of a Cash Management Event and (c) during such 90-day or 60-day
period, no event or condition shall exist which would constitute a Cash
Management Event.

 

“Change
of Control” shall mean the occurrence of any of the following events: (i) the
Sponsor shall cease to own directly (or through an entity wholly-owned by the
Sponsor), of record and 

 

6

 

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

 

“Code”
shall mean the Internal Revenue Code of 1986, as the same now exists or may
from time to time hereafter be amended, modified, recodified or supplemented,
together with all rules, regulations and interpretations thereunder or related
thereto.

 

“Collateral”
shall have the meaning set forth in Section 5 hereof.

 

“Collateral
Access Agreement” shall mean an agreement in writing, in form and substance
satisfactory to Agent, from any lessor of premises to any Borrower or
Guarantor, or any other person to whom any Collateral is consigned or who
(other than another Obligor) has custody, control or possession of any such
Collateral or is otherwise the owner or operator of any premises on which any
of such Collateral is located, in favor of Agent with respect to the Collateral
at such premises or otherwise in the custody, control or possession of such
lessor, consignee or other person, by which such person agrees to waive or
subordinate any security interest or Lien it may have with respect to such
Collateral in favor of Agent’s security interest and Lien and to permit Agent
to enter upon such premises and remove such Collateral or to use such Premises
to store or dispose of such Collateral.

 

“Commitment”
shall mean, at any time, as to each Lender, the principal amount set forth
below such Lender’s signature on the signatures pages hereto designated as
the Commitment or on Schedule 1 to the Assignment and Acceptance Agreement
pursuant to which such Lender became a Lender hereunder in accordance with the
provisions of Section 13.7 hereof, as the same may be adjusted from time
to time in accordance with the terms hereof.

 

“Consolidated Net Income”
shall mean, with respect to any period, the aggregate of the net income (loss)
of Borrowers and Guarantors, on a consolidated basis (but excluding any
Subsidiary of any Borrower or Guarantor if such Subsidiary is not itself a
Borrower or Guarantor), for such period, but

 

(a)           excluding (to the extent
included therein):

 

(i)            any
extraordinary, one-time or non-recurring gains,

 

(ii)           any
extraordinary, one-time or non-recurring non-cash losses,

 

(iii)          any non-cash
impairment charges pursuant to the write-down of goodwill or intellectual
property,

 

(iv)          any gain or
non-cash loss realized upon the sale, write-down  or other disposition of (A) any assets
that are not sold in the ordinary course of business or (B) any Capital
Stock of such Person or a Subsidiary of such Person that is a Borrower or
Guarantor,

 

7

 

(v)           any non-cash
stock compensation,

 

(vi)          any non-cash
rent,

 

(vii)         any non-cash
gain or non-cash loss realized as a result of (A) purchase accounting
adjustment or (B) the extinguishment of debt,

 

(viii)        any
non-capitalized cash expenses incurred pursuant to raising debt or equity
capital in the public markets, and

 

(ix)           any cash
expenses or charges pursuant to (A) Permitted Acquisitions and (B) corporate
restructuring and integration, provided, that, such cash expenses or charges
incurred under this clause (ix) shall not exceed in the aggregate
$4,000,000 during the period applicable thereto;

 

and (b) including (to the extent not included therein):

 

(i)            cash rent
expense,

 

(ii)           cash stock
compensation, and

 

(iii)          the amount of
any cash expenditures for charges previously added back to the calculation of
Consolidated Net Income in prior periods; and after deducting the Provision for
Taxes for such period;

 

all as determined in accordance with GAAP; provided,
that,

 

(a)           the net income of any
Borrower or Guarantor that is accounted for by the equity method of accounting
shall be included only to the extent of the amount of dividends or
distributions paid or payable to such Person or to a Borrower or Guarantor that
is a Subsidiary of such Person;

 

(b)           except to the extent
included pursuant to the foregoing clause (a), the net income of any Person
(the “target”) accrued prior to the date on which (i) the target becomes a
Borrower or Guarantor, or (ii) the target is merged into or consolidated
with a Borrower or Guarantor, or (ii) the target’s assets are acquired by
a Borrower or Guarantor, shall be excluded;

 

(c)           the net income (if positive)
of any Borrower or Guarantor that is a wholly-owned Subsidiary of a Borrower or
Guarantor, to the extent that the declaration or payment of dividends or
similar distributions by such wholly-owned Subsidiary to such Borrower or
Guarantor, or to any other wholly-owned Subsidiary of such Borrower or
Guarantor, is not at the time permitted by operation of the terms of such
wholly-owned Subsidiary’s organizational documentation or any agreement,
instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to such wholly-owned Subsidiary, shall be excluded.

 

“Contributing
Borrower” shall have the meaning set forth in Section 2.5(d).

 

“Covenant
Recalibration Period” shall mean the period commencing on the date on which
Agent receives a Trademark Appraisal that reports a Trademark Value of less
than $65,000,000 and ends on the date on which Agent receives another Trademark
Appraisal that reports a Trademark Value of $65,000,000 or more.

 

8

 

“Credit
Facility” shall mean the Loans and Letters of Credit provided to or for the
benefit of any Borrower pursuant to Sections 2.1, 2.2 and 2.3 hereof.

 

“Default”
shall mean an act, condition or event which with notice or passage of time or
both would constitute an Event of Default.

 

“Defaulting
Lender” shall have the meaning set forth in Section 6.11(d) hereof.

 

“Deposit
Account Control Agreement” shall mean an agreement in writing, in form and
substance satisfactory to Agent, by and among Agent, the Borrower or Guarantor
with a deposit account at any bank and the bank at which such deposit account
is at any time maintained which provides that such bank will comply with
instructions originated by Agent directing disposition of the funds in the
deposit account without further consent by such Borrower or Guarantor and has
such other terms and conditions as Agent may require.

 

“Deutsche
Bank” shall mean Deutsche Bank Trust Company Americas, a New York banking
corporation.

 

“EBITDA” shall mean, as to
any Person, with respect to any period, an amount equal to (a) the
Consolidated Net Income of such Person for such period, plus (b) each of
the following, in each case to the extent deducted in the calculation of such
Consolidated Net Income for such period: (i) depreciation and amortization
(including, but not limited to, imputed interest and deferred compensation) of
such Person for such period, all in accordance with GAAP, plus (ii) the
Interest Expense of such Person for such period, plus (iii) provision for
income taxes of such Person determined in accordance with GAAP for such period.

 

“Eligible Accounts” shall
mean an Account which arises in the ordinary course of business from the sale
of Inventory by a Borrower, is payable in U.S. Dollars, is owned by a Borrower
free and clear of all Liens except for Permitted Liens, is subject at all times
to Agent’s duly perfected, first priority Lien, and is deemed by Agent, in the
exercise of its credit judgment, to be an Eligible Account.  Without limiting the generality of the
foregoing, no Account shall be an Eligible Account if:

 

(a)           it arises out
of a sale made to a Subsidiary or an Affiliate of such Borrower or to
a Person controlled by an Affiliate of such Borrower or to a Blocked
Person;

 

(b)           except with
respect to an Account subject to clause (c) of this definition below, it
is unpaid for more than 60 days after the original due date shown on the
invoice or is either due or unpaid more than 120 days after the original
invoice date;

 

(c)           (i) it has
dated terms of more than 270 days, or (ii) with respect to any
Account which does not have dated terms of more than 270 days, (A) the
aggregate amount of all Accounts with dated terms of 121 days to 270 days after
invoice date that are not past due in excess of $40,000,000 of availability
under the Borrowing Base and, (B) within such $40,000,000 limit, the
aggregate amount of all Accounts with dated terms of 181 and 270 days after
invoice date that are not past due in excess of $10,000,000 of availability
under the Borrowing Base, in the case of each of (A) and (B) shall be
ineligible to the extent of such excess;

 

(d)           fifty percent
(50%) or more of the Accounts from the Account Debtor are not deemed Eligible
Accounts hereunder;

 

9

 

(e)           the aggregate amount
of such Accounts owing by a single account debtor (other than Wal-Mart Stores, Inc.,
Dick’s Sporting Goods, Inc. and Sports South, LLC) do not constitute more
than ten percent (10%) of the aggregate amount of all otherwise Eligible
Accounts and such Accounts owing by Wal-Mart Stores, Inc., Dick’s Sporting
Goods, Inc. and Sports South, LLC do not constitute more than forty
percent (40%), thirty percent (30%) and twenty percent (20%) (or with respect
to Accounts owing by Sports South such higher percentage as may be acceptable
to Agent from time to time, up to thirty percent (30%)), respectively, of the
aggregate amount of all otherwise Eligible Accounts (but the portion of the
Accounts not in excess of the applicable percentages may be deemed Eligible
Accounts); provided that there will be no overall concentration limit
with respect to Eligible U.S. Federal Government Accounts or Eligible Foreign
Government Accounts;

 

(f)            any covenant,
representation or warranty contained in this Agreement with respect to
such Account has been breached;

 

(g)           the Account Debtor
is also such Borrower’s creditor or supplier, or the Account Debtor has
disputed liability with respect to such Account or has made any claim with
respect to any other Account due from such Account Debtor to such Borrower, or
the Account otherwise is or may become subject to any right of setoff,
counterclaim, recoupment, reserve or chargeback (including advertising
allowances and earned volume rebates), provided that the
Accounts of such Account Debtor shall be ineligible only to the extent of such
offset, counterclaim, disputed amount, reserve or chargeback (including
advertising allowances and earned volume rebates) as calculated by the Agent;

 

(h)           an Insolvency
Proceeding has been commenced by or against the Account Debtor or the Account
Debtor has suspended business or ceased to be Solvent;

 

(i)            it arises from a
sale to an Account Debtor with its principal office, assets or place of
business outside the United States or Canada, other than (a) any such
Account that arises from a sale that is backed by an irrevocable letter of
credit that is issued or confirmed by a bank acceptable to Agent that is in
form and substance acceptable to Agent and payable in the full amount of the
Account in freely convertible U.S. Dollars at a place of payment within the
United States, and, if requested by Agent, such letter of credit, or amounts
payable thereunder, is collaterally assigned to Agent;

 

(j)            it arises from a
sale to the Account Debtor on a bill-and-hold, guaranteed sale, sale-or-return,
sale-on-approval, consignment or any other repurchase or return basis;

 

(k)           the Account Debtor
is a Governmental Authority unless such Account is an Eligible Government
Account;

 

(l)            the Account Debtor
is located in any state imposing conditions on the right of a creditor to
collect accounts receivable unless such Borrower has either qualified to
transact business in such state as a foreign entity or filed a Notice of
Business Activities Report or other required report with the appropriate
officials in such state for the then current year;

 

(m)          the Account Debtor is
located in a state or other jurisdiction in which such Borrower is deemed to be
doing business under the laws of such state or other jurisdiction and which
denies creditors access to its courts in the absence of qualification to
transact business in such state or of the filing of any reports with such
state, unless such Borrower has qualified as a foreign entity authorized to
transact business in such state or has filed all required reports;

 

10

 

(n)           the Account is
subject to a Lien other than a Permitted Lien;

 

(o)           the goods giving
rise to such Account have not been delivered to and accepted by the Account
Debtor or the Account otherwise does not represent a final sale;

 

(p)           the Account is
evidenced by Chattel Paper or an Instrument of any kind, or has been reduced to
judgment;

 

(q)           such Borrower has
made any agreement with the Account Debtor for any deduction therefrom, except
for discounts or allowances which are made in the ordinary course of business
of a Borrower for prompt payment and which discounts or allowances are
reflected in the calculation of the face value of each invoice related to such
Account;

 

(r)            such Borrower has
made an agreement with the Account Debtor to extend the time of payment thereof
unless otherwise approved by Agent in writing;

 

(s)           the Account Debtor’s
payment history, credit rating or creditworthiness is not deemed to be
acceptable to Agent, in the exercise of its credit judgment (provided, that,
Agent shall have given Borrowers at least ten (10) Business Days advance
written notice of any such determination of ineligibility (or three (3) Business
Days advance written notice if the Fixed Charge Coverage Testing Period is then
in effect or would be in effect after Agent’s determination that such Account
are ineligible));

 

(t)            the Account Debtor
has made a partial payment with respect to such Account;

 

(u)           it represents, in
whole or in part, a billing for interest, fees or late charges, provided that
such Account shall be ineligible only to the extent of the amount of
such billing;

 

(v)           it arises from the
sale of any Inventory held by such Borrower on consignment from, or subject to
any guaranteed sale, sale-or-return, sale-on-approval or repurchase agreement
with, any supplier;

 

(w)          it arises from a
retail sale of Inventory to a Person who is purchasing the same primarily for
personal, family or household purposes; or

 

(x)            neither the account
debtor nor any officer or employee of the account debtor with respect to such
Accounts is an officer, employee, agent or other Affiliate of any Borrower or
Guarantor.

 

The criteria for Eligible Accounts set forth above
may only be changed and any new criteria for Eligible Accounts may only be
established by Agent in good faith based on either: (i) an event,
condition or other circumstance arising after the date hereof, or (ii) an
event, condition or other circumstance existing on the date hereof to the
extent Agent has no written notice thereof from a Borrower prior to the date
hereof, in either case under clause (i) or (ii) which adversely
affects or could reasonably be expected to adversely affect the Accounts in the
good faith determination of Agent.  Any
Accounts that are not Eligible Accounts shall nevertheless be part of the
Collateral.

 

“Eligible Foreign Government
Accounts” shall mean Accounts owing by any Governmental Authority to which the
applicable Borrower has been specifically licensed to export firearms by the
United States government, such accounts satisfying each of the following
conditions: (i) such Accounts are not unpaid more than 60 days after
the original due date or more than 180 days after the original 

 

11

 

invoice date, (ii) the original due date of
such Accounts is not more than 180 days after the original invoice date, (iii) the
applicable Borrower is not prohibited from assigning and the applicable
Borrower does assign its right to payment of such Accounts to Agent, in a
manner satisfactory to Agent, and (iv) such Accounts are supported by one
or more
irrevocable letters of credit  in form
and substance acceptable to Agent, issued or confirmed by a bank acceptable to
Agent, and payable in Dollars at a place of payment within the United States
that is acceptable to Agent, which letters of credit are assigned to Agent
(with such assignment acknowledged by the issuing or confirming bank) or, if so
requested by Agent, duly transferred to Agent (together with sufficient
documentation to permit direct draws under any such letter of credit by Agent).

 

“Eligible Government
Accounts” shall mean Accounts that would constitute Eligible Accounts but for
the fact that the account debtors with respect to such Accounts are any
Governmental Authority, and that are Eligible U.S. Federal Government Accounts,
Eligible U.S. Local Government Accounts or Eligible Foreign Government
Accounts.

 

“Eligible Inventory” shall
mean Inventory (other than labels, supplies, packaging, paint, gunpowder,
chemicals) which is owned by a Borrower and which Agent, in the exercise of its
credit judgment, deems to be Eligible Inventory.  Without limiting the generality of the
foregoing, no Inventory shall be Eligible Inventory unless:

 

(a)           it is Raw Materials,
Parts or Finished Goods;

 

(b)           it is not
work-in-process (other than Parts);

 

(c)           it is not held by
such Borrower on consignment from or subject to any guaranteed sale,
sale-or-return, sale-on-approval or repurchase agreement with any supplier, and
it is not the subject of a negotiable warehouse receipt or other negotiable
Document;

 

(d)           it is in a condition
that is suitable for sale without discount in the ordinary course of business
of such Borrower;

 

(e)           it is not
Slow-Moving Goods, obsolete or unmerchantable and is not goods returned to such
Borrower by or repossessed from an Account Debtor;

 

(f)            it meets all
standards imposed by any Governmental Authority;

 

(g)           it conforms in all
respects to the warranties and representations set forth in this Agreement;

 

(h)           it is at all times
subject to Agent’s duly perfected, first priority Lien and no other Lien except
a Permitted Lien;

 

(i)            it is in such
Borrower’s possession and control is situated at a location in compliance with
this Agreement and is not in transit or outside the continental United States
and is not consigned to any Person;

 

(j)            if such Inventory
is located at premises that are not owned by such Borrower, such Borrower has
procured from the owner or operator of such premises and delivered to Agent a
Collateral Access Agreement; and

 

12

 

(k)           it is not subject to
any License Agreement or other agreement that limits, conditions or restricts
such Borrower’s or Agent’s right to sell or otherwise dispose of such Inventory
unless the Licensor has entered into a Licensor/Lender Agreement with Agent.

 

The criteria for Eligible Inventory set forth above may only be changed
and any new criteria for Eligible Inventory may only be established by Agent in
good faith based on either: (i) an event, condition or other circumstance
arising after the date hereof, or (ii) an event, condition or other
circumstance existing on the date hereof to the extent Agent has no written
notice thereof from a Borrower prior to the date hereof, in either case under
clause (i) or (ii) which adversely affects or could reasonably
be expected to adversely affect the Inventory in the good faith determination
of Agent.  Any Inventory that is not
Eligible Inventory shall nevertheless be part of the Collateral.

 

“Eligible
Transferee” shall mean (a) a Person that is a Lender or a U.S. based
Affiliate of a Lender; (b) a commercial bank, finance company, insurance
company or other financial institution, in each case that is organized under
the laws of the United States or any state, has total assets in excess of
$5 billion, extends credit of the type contemplated herein in the ordinary
course of business and whose becoming an assignee would not constitute a
prohibited transaction under Section 4975 of ERISA or any other applicable
law and is reasonably acceptable to Agent (such approval not to be unreasonably
withheld), unless an Event of Default exists, is reasonably acceptable to
Administrative Borrower (such approval by Administrative Borrower, when
required, not to be unreasonably withheld or delayed and to be deemed given by
Administrative Borrower if no objection is received by the assigning Lender and
Agent from Administrative Borrower within the earlier to occur of (i) three
(3) Business Days after notice of such proposed assignment has been
provided by the assigning Lender as set forth in Section 13.7 of this Agreement and acknowledged by an
Administrative Borrower or (ii) seven (7) Business Days after such
notice has been sent to Administrative Borrower); (c) at any time that an
Event of Default exists, any Person acceptable to Agent in its sole discretion;
provided that no Person shall be an Eligible Transferee pursuant to this clause
(c) if such Person is a direct competitor of any Borrower or Guarantor
unless at the time of assignment there is in process a liquidation of all or
substantially all of the assets of a Borrower, whether conducted by a Borrower,
Agent, a trustee for a Borrower or a representative of creditors of a Borrower,
or is a Person identified as an ineligible transferee on a written list of such
Persons that is delivered by Administrative Borrower to Agent prior to the
closing date of the Credit Facility and that is acceptable to Agent; and (d) Sponsor,
provided that the Sponsor Permitted Holder Conditions are satisfied.  No natural person, Borrower or Guarantor
shall be an Eligible Transferee, and no Lender that holds any Indebtedness of a
Borrower or a Guarantor that is subordinated in right of payment to the
Obligations shall be an Eligible Transferee unless such assignment is approved
by Agent and, unless an Event of Default exists, is reasonably acceptable to
Administrative Borrower (such approval by Administrative Borrower, when
required, not to be unreasonably withheld or delayed and to be deemed given by
Administrative Borrower if no objection is received by the assigning Lender and
Agent from Administrative Borrower within the earlier to occur of (i) three
(3) Business Days after notice of such proposed assignment has been
provided by the assigning Lender as set forth in Section 13.7 of this Agreement and acknowledged by an
Administrative Borrower or (ii) seven (7) Business Days after such
notice has been sent to Administrative Borrower).

 

“Eligible U.S. Federal
Government Accounts” shall mean Accounts owing by the United States government
or any department, agency or instrumentality of the United States government,
which  Accounts satisfy each of the
following conditions: (i) such Accounts are not unpaid more than
60 days after the original due date or more than 120 days after the
original invoice date, (ii) the original due date of such Accounts is not
more than 120 days after the original invoice date, and (iii) the
applicable Borrower is not prohibited from assigning and, to the extent
required for such Accounts to constitute Eligible Government Accounts, the
applicable Borrower does assign its right to payment of such Accounts to Agent,
in a manner satisfactory to Agent, so as to comply with the requirements
of  the 

 

13

 

Federal Assignment of Claims Act; provided, that,
compliance with such assignment of claims act shall not be required with
respect to (A) U.S. federal government Accounts in an aggregate amount of
less than $5,000,000, or (B) any individual U.S. federal government
account debtor with less than $1,000,000 of Accounts then outstanding; provided,
however, that during the Fixed Charge Coverage Testing Period, compliance
with the applicable assignment of claims act will be required for all U.S.
federal government Accounts.

 

“Eligible U.S. Local
Government Accounts” shall mean Accounts owing by any Governmental Authority of
any state, municipal, local or other political subdivision located in the
United States which  Accounts satisfy
each of the following conditions: (i) such Accounts are not unpaid more
than 60 days after the original due date or more than 120 days after
the original invoice date, (ii) the original due date of such Accounts is
not more than 120 days after the original invoice date, and (iii) the
applicable Borrower is not prohibited from assigning and, to the extent
required for such Accounts to constitute Eligible Government Accounts, the
applicable Borrower does assign its right to payment of such Accounts to Agent,
in a manner satisfactory to Agent, so as to comply with the requirements of all
applicable assignment of claims acts; provided, that, compliance
with such assignment of claims act shall not be required with respect to (A) U.S.
local government Accounts in an aggregate amount of less than $5,000,000, or (B) any
individual U.S. local government account debtor with less than $1,000,000 of
Accounts then outstanding; provided, however, that during the
Fixed Charge Coverage Testing Period, compliance with the applicable assignment
of claims act will be required for all U.S. local government Accounts.

 

“Environmental
Laws” shall mean all foreign, Federal, State and local laws, legislation, rules and  codes, and all judicial or administrative
decisions, injunctions or agreements between any Borrower or Guarantor and any
Governmental Authority, (a) relating to pollution and the protection,
preservation or restoration of the environment (including air, water vapor,
surface water, ground water, drinking water, drinking water supply, surface
land and subsurface land, (b) relating to the exposure to, or the use,
storage, recycling, treatment, generation, manufacture, processing,
distribution, transportation, handling, labeling, production, release or
disposal, of Hazardous Materials, or (c) relating to all laws with regard
to recordkeeping, notification, disclosure and reporting requirements
respecting Hazardous Materials.  The term
“Environmental Laws” includes (i) the Federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Federal Superfund
Amendments and Reauthorization Act, the Federal Water Pollution Control Act of
1972, the Federal Clean Water Act, the Federal Clean Air Act, the Federal
Resource Conservation and Recovery Act of 1976 (including the Hazardous and
Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the
Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, and the Federal Safe Drinking Water Act of 1974, and (ii) applicable
state counterparts to such laws.

 

“Equipment”
shall, as to each Borrower and Guarantor, have the meaning ascribed to the term
“equipment” in the UCC and shall include all of such Borrower’s and Guarantor’s
now owned and hereafter acquired equipment, wherever located, including
machinery, data processing and computer equipment (whether owned or licensed
and including embedded software), vehicles, tools, furniture, fixtures, all attachments,
accessions and property now or hereafter affixed thereto or used in connection
therewith, and substitutions and replacements thereof, wherever located.

 

“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, together with
all rules, regulations and interpretations thereunder or related thereto.

 

“ERISA
Affiliate” shall mean any person required to be aggregated with any Borrower,
or any Guarantor under Sections 414(b), 414(c), 414(m) or 414(o) of
the Code.

 

14

 

“ERISA
Event” shall mean (a) any “reportable event”, as defined in Section 4043(c) of
ERISA or the regulations issued thereunder, with respect to a Pension Plan,
other than events as to which the requirement of notice has been waived in
regulations by the Pension Benefit Guaranty Corporation; (b) the adoption
of any amendment to a Pension Plan that would require the provision of security
pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c) a
complete or partial withdrawal by any Borrower, Guarantor or any ERISA
Affiliate from a Multiemployer Plan or a cessation of operations which is
treated as such a withdrawal under ERISA or notification that a Multiemployer
Plan is in reorganization; (d) the filing of a notice of intent to
terminate, the treatment of a Pension Plan amendment as a termination under Section 4041
or 4041A of ERISA, or the commencement of proceedings by the Pension Benefit
Guaranty Corporation to terminate a Pension Plan; (e) an event or condition
which might reasonably be expected to constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Pension Plan; (f) the imposition of any liability under Title IV
of ERISA, other than the Pension Benefit Guaranty Corporation premiums due but
not delinquent under Section 4007 of ERISA, upon any Borrower, Guarantor
or any ERISA Affiliate in excess of $3,000,000 and (g) any other event or
condition with respect to a Plan that could reasonably be expected to have a
Material Adverse Effect.

 

“Eurodollar
Rate Loans” shall mean any Loans or portion thereof on which interest is
payable based on the Adjusted Eurodollar Rate in accordance with the terms
hereof.

 

“Event
of Default” shall mean the occurrence or existence of any event or condition
described in Section 10.1 hereof.

 

“Excess
Availability” shall mean, the amount, as determined by Agent, calculated at any
date, equal to: (a) the lesser of:  (i) the
Borrowing Base and (ii) the Maximum Credit (in each case under (i) or
(ii) after giving effect to any Reserves other than any Reserves in
respect of Letter of Credit Obligations), plus (b) Qualified Cash, minus (c) the
sum of:  (i) the amount of all then
outstanding and unpaid Loans, plus (ii) the amount of all Reserves then
established in respect of Letter of Credit Obligations.

 

“Excluded
Assets” shall have the meaning set forth in Section 5.1.

 

“Exchange
Act” shall mean the Securities Exchange Act of 1934, together with all rules,
regulations and interpretations thereunder or related thereto.

 

“Executive
Order” shall have the meaning set forth in Section 9.20.

 

“Existing
Lenders” shall mean the lenders to Borrowers listed on Schedule 1.37
hereto (and including Wachovia Bank, National Association, in its capacity as
agent acting for such lenders) and their respective predecessors, successors
and assigns.

 

“Existing
Letters of Credit” shall mean, collectively, the letters of credit issued by a
Lender for the account of a Borrower or Guarantor, or for which such Borrower
or Guarantor is otherwise liable, listed on Schedule 1.38 hereto, as the
same now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.

 

“Existing
Remington Notes” shall mean Remington’s 10 1/2% Senior Notes in the aggregate
principal amount of $200,000,000, due 2011.

 

“Existing
Remington Notes Indenture” shall mean the Indenture dated as of January 24,
2003, pursuant to which, among other things, U. S. Bank and Trust, National
Association is appointed and serves as Indenture Trustee for the holders of the
Existing Remington Notes.

 

15

 

“Existing
Remington Notes Redemption Account” shall have the meaning set forth in Section 9.16(a).

 

“Existing
Remington Notes Redemption Amount” shall have the meaning set forth in Section 9.16(a).

 

“Federal
Funds Effective Rate” shall mean on any day, the rate per annum (rounded
upward, if necessary, to the next higher 1/100th of 1%) equal to the weighted
average of the rates on overnight federal funds transactions with members of
the Federal Reserve System arranged by federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided, that (i) if the day for which
such rate is to be determined is not a Business Day, the Federal Funds
Effective Rate for such day shall be such rate on such transactions on the next
succeeding Business Day, and (ii) if such rate is not so published for any
day, the Federal Funds Effective Rate for such day shall be the average rate
charged to Wachovia on such day on such transactions, as determined in good
faith by Wachovia.

 

“Fee
Letter” shall mean the Fee Letter agreement, dated July 8, 2009, by and
among Borrowers, Guarantors, Agent, BofA, Deutsche Bank and the Arrangers.

 

“Financing
Agreements” shall mean, collectively, this Agreement, the Intercreditor
Agreement, and all notes, guarantees, security agreements, deposit account
control agreements, investment property control agreements, other intercreditor
agreements and all other agreements, documents and instruments now or at any
time hereafter executed and/or delivered by any Borrower or Guarantor in
connection with this Agreement; provided, that Financing Agreements
shall not include documentation required by a Bank Product Provider and
delivered by a Borrower or Guarantor in relation solely to Bank Products.

 

“Finished
Goods” shall mean Inventory of a Borrower that is held for sale in the ordinary
course of business, including hunting/shooting sports products, ammunition,
firearm-related accessories, clay targets and powdered metal products.

 

“First Priority Collateral”
shall mean all Accounts, Inventory and Intellectual Property of any Obligor,
and all other assets required to realize upon such collateral, including,
without limitation, chattel paper, documents, instruments (including any
promissory notes), general intangibles, supporting obligations, letters of
credit, letter-of-credit rights, and deposit accounts, and the products and
proceeds thereof.

 

“Fixed Charge Coverage Ratio”
shall mean, with respect to Borrowers and Guarantors for any period, the ratio
of (i) EBITDA minus the sum of (A) Unfinanced Maintenance Capital
Expenditures, plus (B) all income taxes paid in cash, plus (C) actual
cash pension funding payments made with respect to pension funding obligations,
and any other pension funding obligations outside the ordinary course of
business of Borrowers, minus (D) the profit and loss statement charge (or
benefit) with respect to such pension funding obligations, to (ii) Fixed
Charges, for such period.

 

“Fixed Charge Coverage
Ratio-Recalibrated” shall mean, with respect to Borrowers and Guarantors for
any period, the ratio of (i) EBITDA minus the sum of (A) Unfinanced
Capital Expenditures, plus (B) all income taxes paid in cash, plus (C) dividends
or share repurchases with respect to Capital Stock, plus (D) distributions
or redemptions (excluding any one-time distribution to shareholders of a
Borrower or any one-time redemption of any Senior Notes that, in either case,
is paid with proceeds of any issuance of Capital Stock in an initial public
offering or a registered secondary offering by a Borrower), plus (E) actual
cash pension funding payments made with respect to pension funding obligations,
and any other pension funding obligations outside the ordinary course of
business of 

 

16

 

Borrowers, minus (F) the profit and loss
statement charge (or benefit) with respect to such pension funding obligations,
to (ii) Fixed Charges, in each case for such period.

 

“Fixed Charge Coverage
Testing Period” shall mean any period during which the Fixed Charge Coverage
Ratio or the Fixed Charge Coverage Ratio-Recalibrated is being tested.

 

“Fixed Charges” shall mean,
with respect to Borrowers and Guarantors for any period, the sum of, without
duplication, (a) all Interest Expense, plus (b) all scheduled
principal payments of Indebtedness for borrowed money  and Capital Leases (and without duplication
of items (a) and (b) of this definition, the interest component with
respect to Indebtedness under Capital Leases).

 

“Foreign Assets Control
Regulations” shall have the meaning set forth in Section 9.20.

 

“Foreign
Lender” shall mean any Lender that is organized under the laws of a
jurisdiction other than that in which a Borrower is resident for tax
purposes.  For purposes of this
definition, the United States of America, each State thereof and the District
of Columbia shall be deemed to constitute a single jurisdiction.

 

“Funding
Bank” shall have the meaning set forth in Section 3.3 hereof.

 

“GAAP”
shall mean generally accepted accounting principles in the United States of
America as in effect from time to time as set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board which are applicable to the circumstances
as of the date of determination consistently applied, provided, that,
in the event of any change in GAAP after the date hereof that affects the
covenant in Section 9.17 or Section 9.18 hereof, Administrative
Borrower may by notice to Agent, or Agent may, and at the request of Required
Lenders shall, by notice to Administrative Borrower require that such covenants
be calculated in accordance with GAAP as in effect, and as applied to Borrowers
and Guarantors, immediately before the applicable change in GAAP became effective,
until either the notice from the applicable party is withdrawn or such covenant
is amended in a manner satisfactory to Administrative Borrower, Agent and the
Required Lenders.  Administrative
Borrower shall deliver to Agent and upon Agent’s request, to each Lender at the
same time as the delivery of any financial statements given in accordance with
the provisions of Section 9.6 hereof (i) a description in reasonable
detail of any material change in the application of accounting principles
employed in the preparation of such financial statements from those applied in
the most recently preceding monthly, quarterly or annual financial statements
and (ii) a reasonable estimate of the effect on the financial statements
on account of such changes in application.

 

“Governmental
Authority” shall mean any nation or government, any state, provincial,
municipal, local or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, and any agency, authority or
instrumentality (including any bilateral or multilateral agency authority or
instrumentality formed by treaty) exercising executive, legislative, judicial,
regulatory, administrative, military, peacekeeping or police powers or
functions of or pertaining to government.

 

“Guarantor
Allocable Percentage” shall have the meaning set forth in Section 13.11(c) hereof.

 

“Guarantors”
shall mean, collectively, the following (together with their respective
successors and assigns): RACI Holding, Inc., a Delaware corporation,
Remington Steam, LLC, a New York limited liability company, and Bushmaster
Holdings, LLC, a Delaware limited liability company, and any other direct or
indirect domestic wholly owned Subsidiary of FGI that at any time after the
date hereof (i) becomes party to a guarantee in favor of Agent or any
Lender pursuant to a joinder agreement in form 

 

17

 

and substance reasonably
satisfactory to Agent and approved by FGI, in connection with an acquisition or
investment otherwise permitted under this Agreement, or (ii) otherwise
becomes liable on or with respect to the Obligations or who is the owner of any
property which is security for the Obligations (other than Borrowers).

 

“Guaranteed
Obligations” shall have the meaning set forth in Section 13.11(a) hereof.

 

“Gun
Control Laws” shall mean all present and future federal, state, local and
foreign laws, rules, regulations, judgments, orders and ordinances, including
the Gun Control Act, that in any manner regulate the production, sale,
distribution or possession of any firearms, ammunition or related products
manufactured, held for sale or sold by a Borrower or Guarantor.

 

“Hazardous
Materials” shall mean any hazardous, toxic or dangerous substances, materials
and wastes, including hydrocarbons (including naturally occurring or man-made
petroleum and hydrocarbons), in each case to the extent such substances,
materials or wastes are prohibited by or regulated under any Environmental Law
as hazardous or toxic under any Environmental Law.

 

“Hedge Agreement” shall mean
any interest rate protection agreement, foreign currency exchange agreement,
commodity price protection agreement or other interest or currency exchange
rate or commodity price hedging arrangement.

 

“Indebtedness”
shall mean, with respect to any Person, any liability, whether or not
contingent, (a) in respect of borrowed money (whether or not the recourse
of the lender is to the whole of the assets of such Person or only to a portion
thereof) or evidenced by bonds, notes, debentures or similar instruments; (b) representing
the balance deferred and unpaid of the purchase price of any property or
services (other than earn outs or an account payable to a trade creditor
(whether or not an Affiliate) incurred in the ordinary course of business of
such Person and payable in accordance with customary trade practices); (c) all
obligations as lessee under leases which have been, or should be, in accordance
with GAAP recorded as Capital Leases; (d) any contractual obligation,
contingent or otherwise, of such Person to pay or be liable for the payment of
any indebtedness described in this definition of another Person, including,
without limitation, any such indebtedness, directly or indirectly guaranteed,
or any agreement to purchase, repurchase, or otherwise acquire such
indebtedness, obligation or liability or any security therefor, or to provide
funds for the payment or discharge thereof, or to maintain solvency, assets,
level of income, or other financial condition; (e) all obligations with
respect to redeemable stock and redemption or repurchase obligations under any
Capital Stock or other equity securities issued by such Person; (f) all
reimbursement obligations and other liabilities of such Person with respect to
surety bonds (whether bid, performance or otherwise), letters of credit, banker’s
acceptances, drafts or similar documents or instruments issued for such Person’s
account; (g) all indebtedness of such Person in respect of indebtedness of
another Person for borrowed money or indebtedness of another Person otherwise
described in this definition which is secured by any consensual lien, security
interest, collateral assignment, conditional sale, mortgage, deed of trust,
deed to secure debt, or other encumbrance on any asset of such Person, whether
or not such obligations, liabilities or indebtedness are assumed by or are a
personal liability of such Person, all as of such time; (h) all
obligations, liabilities and indebtedness of such Person (marked to market)
arising under Hedge Agreements; (i) all obligations owed by such Person
under License Agreements with respect to non-refundable, advance or minimum
guarantee royalty payments; (j) indebtedness of any partnership or joint
venture in which such Person is a general partner or a joint venturer to the
extent such Person is liable therefor as a result of such Person’s ownership
interest in such entity, except to the extent that the terms of such
indebtedness expressly provide that such Person is not liable therefor or such
Person has no liability therefor as a matter of law and (k) the principal
and interest portions of all rental obligations of such Person under any
synthetic lease or similar off-balance 

 

18

 

sheet financing where such
transaction is considered to be borrowed money for tax purposes but is
classified as an operating lease in accordance with GAAP.

 

“Indemnitee”
shall have the meaning set forth in Section 11.5 hereof.

 

“Intellectual
Property” shall mean, as to each Borrower and Guarantor, such Borrower’s and
Guarantor’s now owned and hereafter arising or acquired:  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 Borrower’s or
Guarantor’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.

 

“Intercreditor
Agreement” shall mean an Intercreditor Agreement among Agent, the collateral
agent for the noteholders under the Senior Notes Indenture, Borrowers and
Guarantors, in form and substance satisfactory to Agent.

 

“Interest Expense” shall mean, for any period, as to
Borrowers and Guarantors, as determined in accordance with GAAP, (i) the
amount equal to total cash interest expense of Borrowers and Guarantors on a
consolidated basis for such period (including the interest component of any
Capital Lease for such period),  less (ii) any
cash interest income for such period.

 

“Interest
Period” shall mean for any Eurodollar Rate Loan, a period of approximately
one (1), two (2), or three (3) months duration as any Borrower
(or Administrative Borrower on behalf of such Borrower) may elect, the exact
duration to be determined in accordance with the customary practice in the
applicable Eurodollar Rate market; provided, that, such Borrower
(or Administrative Borrower on behalf of such Borrower) may not elect an
Interest Period which will end after the last day of the then-current term of
this Agreement.

 

“Interest
Rate” shall mean,

 

(a)           Subject to clause (b) of this definition below:

 

(i)            as to Base Rate
Loans and Swing Line Loans, a rate equal to the then Applicable Margin for Base
Rate Loans on a per annum basis plus the Base Rate, and

 

(ii)           as to Eurodollar
Rate Loans, a rate equal to the then Applicable Margin for Eurodollar Rate
Loans on a per annum basis plus the Adjusted Eurodollar Rate.

 

(b)           Notwithstanding
anything to the contrary contained herein, Agent may, at its option, and Agent
shall, at the direction of the Required Lenders, increase the Applicable Margin

 

19

 

otherwise
used to calculate the Interest Rate for Base Rate Loans and Eurodollar Rate
Loans, by two percent (2%) per annum, (i) with respect to any portion of
the Revolving Loans, Letters of Credit and other Obligations outstanding that
is not paid on the due date thereof (whether due at stated maturity, on demand,
upon acceleration or otherwise) until such amount due is paid in full; (ii) with
respect to the principal amount of all of the Revolving Loans, Letters of
Credit and other Obligations outstanding upon the earlier to occur of (x) a
Borrower’s receipt of notice from Agent of Agent’s or the Required Lenders’
election to charge such default rate based upon the existence of any Event of
Default, whether or not acceleration or demand for payment has been made, or (y) the
commencement by or against a Borrower or Guarantor of an insolvency proceeding;
and (iii) with respect to the principal amount of any Revolving Loans and
Letters of Credit outstanding in excess of the Borrowing Base, whether or not
such excess(es) are permitted by Agent or any Lender at any time, and whether
or not demand for payment has been made by Agent, and in each case including,
to the extent permitted by applicable law, all past due interest.

 

“Inventory”
shall, as to each Borrower and Guarantor, have the meaning ascribed to the term
“inventory” in the UCC and shall include all of such Borrower’s and Guarantor’s
now owned and hereafter existing or acquired goods, wherever located, which (a) are
leased by such Borrower or Guarantor as lessor; (b) are held by such
Borrower or Guarantor for sale or lease or to be furnished under a contract of
service; (c) are furnished by such Borrower or Guarantor under a contract
of service; or (d) consist of raw materials, work in process, finished
goods or materials used or consumed in its business.

 

“Inventory
Loan Limit” shall mean, at any time, the amount equal to fifty percent (50%) of
the Maximum Credit.

 

“Investment”
shall have the meaning set forth in Section 9.10 hereof.

 

“Investment
Property Control Agreement” shall mean an agreement in writing, in form and
substance reasonably satisfactory to Agent, by and among Agent, any Borrower or
Guarantor (as the case may be) and any securities intermediary, commodity
intermediary or other person who has custody, control or possession of any
investment property of such Borrower or Guarantor acknowledging that such
securities intermediary, commodity intermediary or other person has custody, control
or possession of such investment property on behalf of Agent, that it will
comply with entitlement orders originated by Agent with respect to such
investment property, or other instructions of Agent, and has such other terms
and conditions as Agent may require.

 

“Issuing
Bank” shall mean Wachovia or any Lender that shall issue a Letter of Credit for
the account of a Borrower and that shall have agreed in a manner reasonably
satisfactory to Agent to be subject to the terms hereof as an Issuing Bank.

 

“Lender
Group Indemnitees” shall have the meaning set forth in Section 12.5
hereof.

 

“Lenders”
shall mean the financial institutions who are signatories hereto as Lenders
(including Swing Line Lender) and other persons made a party to this Agreement
as a Lender in accordance with Section 13.7 hereof, and their respective
successors and assigns.

 

“Letter
of Credit Documents” shall mean, with respect to any Letter of Credit, such
Letter of Credit, any amendments thereto, any documents delivered in connection
therewith, any application therefor, and any agreements, instruments,
guarantees or other documents (whether general in application or applicable
only to such Letter of Credit) governing or providing for (a) the rights
and obligations of the parties concerned or at risk or (b) any collateral
security for such obligations.

 

20

 

“Letter of Credit Government
Sublimit” shall mean $50,000,000.

 

“Letter of Credit Limit”
shall mean $80,000,000.

 

“Letter of Credit
Non-Government Sublimit” shall mean $30,000,000.

 

“Letter of Credit
Obligations” shall mean, at any time, the sum (in U.S. Dollars) of (a) the
aggregate undrawn amount of all Letters of Credit outstanding at such time,
plus (b) the aggregate amount of all drawings under Letters of Credit for
which Issuing Bank has not at such time been reimbursed, plus (c) without
duplication, the aggregate amount of all payments made by each Lender to
Issuing Bank with respect to such Lender’s participation in Letters of Credit
as provided in Section 2.2 for which Borrowers have not at such time
reimbursed the Lenders, whether by way of a Revolving Loan or otherwise.

 

“Letter of Credit Reserve”
shall mean, at any date, the aggregate of all Letter of Credit Obligations
outstanding on such date, other than Letter of Credit Obligations that are
fully secured by cash collateral pledged to Agent.

 

“Letters of Credit” shall
mean all letters of credit (whether documentary or stand-by and whether for the
purchase of inventory, equipment or otherwise) issued by an Issuing Bank for
the account of any Borrower pursuant to this Agreement, and all amendments,
renewals, extensions or replacements thereof and including, but not limited to,
the Existing Letters of Credit.

 

“License Agreements” shall
have the meaning set forth in Section 8.11 hereof.

 

“Licensor” shall mean any
Person from whom a Borrower obtains the right to use (whether on an exclusive
or non-exclusive basis) any Intellectual Property in connection with such
Borrower’s manufacture, marketing, sale or other distribution of any Inventory.

 

“Licensor/Lender Agreement”
shall mean an agreement between Agent and a Licensor by which Agent is given
the unqualified right, vis-a-vis such Licensor, to enforce Agent’s Liens with
respect to, and to dispose of, a Borrower’s Inventory with the benefit of any
Intellectual Property applicable thereto, irrespective of a Borrower’s default
under any License Agreement with such Licensor, and which is otherwise in form
and substance satisfactory to Agent.

 

“Lien” shall mean any
interest in property securing an obligation owed to, or a claim by, a Person
other than the owner of the property, whether such interest is based on common
law, statute or contract.  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.  For
the purpose of this Agreement, each Person shall be deemed to be the owner of
any property that it has acquired or holds subject to a conditional sale
agreement or other arrangement pursuant to which title to the property has been
retained by or vested in some other Person for security purposes.  In no event shall the term “Lien” be deemed
to include any license of intellectual property unless such license contains a
grant of a security interest in such intellectual property.

 

“Loans” shall mean,
collectively, the Revolving Loans and the Swing Line Loans.

 

“London Interbank Offered Rate” shall mean, with
respect to any Eurodollar Rate Loan for the Interest Period applicable thereto,
the rate (rounded upwards, if necessary, to the nearest 1/100th of 1%) appearing on Reuters Screen LIBOR01 Page (or
on any successor or substitute page of such service, or any successor to
or substitute for such service, providing rate quotations comparable to those
currently provided on such page of such service, as determined by Agent
from time to time for purposes of 

 

21

 

providing quotations of interest rates applicable to eurodollar
deposits in dollars in the London interbank market) at approximately 11:00 a.m.
(London time) two (2) Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period; provided, that,
if more than one rate is specified on such Page for such comparable period,
the applicable rate shall be the arithmetic mean of all such rates.  In the event that such rate is not available
at such time for any reason, then the term “London Interbank Offered Rate”
shall mean, with respect to any Eurodollar Rate Loan for the Interest Period
applicable thereto, the rate of interest per annum at which dollar deposits of
$5,000,000 and for a term comparable to such Interest Period are offered by the
principal London office of Agent in immediately available funds in the London
interbank market at approximately 11:00 a.m. (London time) two (2) Business
Days prior to the commencement of such Interest Period.

 

“Losses” shall have the meaning set forth in Section 9.3(c).

 

“Material Adverse Effect”
shall mean the effect of any event or condition which, alone or when taken
together with other events or conditions occurring or existing concurrently
therewith, (i) has a material adverse effect upon the business,
properties, results of operations or financial condition of Borrowers (taken
together) or of all Borrowers or Guarantors (taken as a whole); (ii) has
or may be reasonably expected to have any material adverse effect whatsoever
upon the validity or enforceability of this Agreement or any of the other
Financing Agreements; (iii) has any material adverse effect upon the value
of the whole or any material part of the Collateral, the Liens of Agent with
respect to the Collateral or the priority of any such Liens; (iv) materially
impairs the ability of any Borrower or Guarantor to perform its obligations
under any of the Financing Agreements, including repayment of any of the
Obligations when due; or (v) materially impairs the ability of Agent or
any Lender to enforce or collect the Obligations or realize upon any of the
Collateral in accordance with the Financing Agreements and applicable law.

 

“Material Contract” shall
mean an agreement to which a Borrower or a Guarantor is a party (other than the
Financing Agreements) (i) which is deemed to be a material contract as
provided in Regulation S-K promulgated by the Securities and Exchange
Commission under the Securities Act of 1933 or (ii) for which breach,
termination, cancellation, nonperformance or failure to renew could reasonably
be expected to have a Material Adverse Effect.

 

“Maturity Date” shall have
the meaning set forth in Section 13.1 hereof.

 

“Maximum Credit” shall mean
the amount of $180,000,000, as adjusted in accordance with Section 2.3 and
Section 2.6 hereof.

 

“Meritage” means Meritage
Farms, LLC, a New York limited liability company.

 

“Moody’s” shall mean Moody’s
Investors Services, Inc.

 

“Multiemployer Plan” shall
mean a “multi-employer plan” as defined in Section 4001(a)(3) of
ERISA which is or was at any time during the current year or the immediately
preceding six (6) years contributed to by any Borrower, Guarantor or any
ERISA Affiliate or with respect to which any Borrower, Guarantor or any ERISA
Affiliate may incur any liability.

 

“Net Recovery Percentage”
shall mean the fraction, expressed as a percentage, (a) the numerator of
which is the amount equal to the amount of the recovery in respect of the
Inventory at such time on a “net orderly liquidation value” basis as set forth
in the most recent acceptable appraisal of Inventory received by Agent in
accordance with Section 7.3, and (b) the denominator of which is the
aggregate Value of the Eligible Inventory subject to such appraisal.

 

22

 

“Non-Consenting Lender”
shall have the meaning set forth in Section 11.3(c).

 

“Notes Priority Collateral”
shall have the meaning ascribed to such term in the Intercreditor Agreement.

 

“Notice of Default or
Failure of Condition” shall have the meaning set forth in Section 12.3(a).

 

“Obligations” shall mean (a) any
and all Loans, Swing Line Loans, Letter of Credit Obligations and all other
obligations, liabilities and indebtedness of every kind, nature and description
owing by any or all of Borrowers to Agent or any Lender or any Issuing Bank,
including principal, interest, charges, fees, costs and expenses, however
evidenced, whether as principal, surety, endorser, guarantor or otherwise,
arising under this Agreement or any of the other Financing Agreements or on
account of any Letter of Credit and all other Letter of Credit Obligations,
whether now existing or hereafter arising, whether arising before, during or
after the initial or any renewal term of this Agreement or after the
commencement of any case with respect to such Borrower under the United States
Bankruptcy Code or any similar statute (including the payment of interest and
other amounts which would accrue and become due but for the commencement of
such case, whether or not such amounts are allowed or allowable in whole or in
part in such case), whether direct or indirect, absolute or contingent, joint
or several, due or not due, primary or secondary, liquidated or unliquidated,
or secured or unsecured and (b) for purposes only of Section 5.1
hereof and subject to the priority in right of payment set forth in Section 6.4
hereof, all obligations, liabilities and indebtedness of every kind, nature and
description owing by any or all of Borrowers or Guarantors to Agent or any Bank
Product Provider arising under or pursuant to any Bank Products, whether now
existing or hereafter arising, provided, that, (i) as
to any such obligations, liabilities and indebtedness arising under or pursuant
to a Hedge Agreement constituting a Bank Product, the same shall only be
included within the Obligations if, upon Agent’s request, Agent shall have
entered into an agreement, in form and substance reasonably satisfactory to
Agent, with the Bank Product Provider that is a counterparty to such Hedge
Agreement, as acknowledged and agreed to by Borrowers and Guarantors, providing
for the delivery to Agent by such counterparty of information with respect to
the amount of such obligations and providing for the other rights of Agent and
such Bank Product Provider in connection with such arrangements, (ii) as
to any such obligations, liabilities and indebtedness arising under or pursuant
to a Bank Product (other than a Hedge Agreement if Agent has requested the
agreement referred to in clause (i) above), the same shall only be
included within the Obligations if the Bank Product Provider with respect
thereto shall have delivered written notice to Agent that (A) such Bank
Product Provider has entered into a transaction to provide Bank Products to a
Borrower and Guarantor and (B) the obligations arising pursuant to such
Bank Products provided to Borrowers and Guarantors constitute Obligations
entitled to the benefits of the security interest of Agent granted hereunder,
and Agent shall have accepted such notice in writing (provided, that,
no such notice or acceptance shall be required as to such obligations,
liabilities and indebtedness arising under or pursuant to a Bank Product
provided by or owing to Wachovia or any of its Affiliates), and (iii) in
no event shall any Bank Product Provider acting in such capacity to whom such
obligations, liabilities or indebtedness are owing be deemed a Lender for
purposes hereof to the extent of and as to such obligations, liabilities or
indebtedness except that each reference to the term “Lender” in
Sections 12.1, 12.2, 12.3(b), 12.6, 12.7, 12.9, 12.12 and 13.6 hereof
shall be deemed to include such Bank Product Provider and in no event shall the
approval of any such person in its capacity as Bank Product Provider be
required in connection with the release or termination of any security interest
or Lien of Agent.

 

“Obligor” shall mean each
Borrower, each Guarantor and any other Person that is at any time liable for
the payment of the whole or any part of the Obligations.

 

“Other Taxes” shall have the
meaning set forth in Section 6.5(c) hereof.

 

23

 

“Participant” shall mean any
financial institution that acquires and holds a participation in the interest
of any Lender in any of the Loans and Letters of Credit in conformity with the
provisions of Section 13.7 of this Agreement governing participations.

 

“Parts” shall mean
work-in-process consisting of parts that Agent determines in its reasonable
judgment are readily saleable in their current state of manufacturing.

 

“Paying Borrower” shall have
the meaning set forth in Section 2.5(d).

 

“Paying Guarantor” shall
have the meaning set forth in Section 13.11(c).

 

“Pension Plan” shall mean a
pension plan (as defined in Section 3(2) of ERISA) subject to
Title IV of ERISA which any Borrower or Guarantor sponsors, maintains, or
to which any Borrower, Guarantor or ERISA Affiliate makes, is making, or is
obligated to make contributions, other than a Multiemployer Plan.

 

“Permit” shall have the
meaning set forth in Section 8.7(b).

 

“Permitted
Acquisition/Merger” shall mean any transaction, or any series of transactions,
by which a Borrower or a Guarantor, directly or indirectly acquires any assets
or Capital Stock of a Person or merges with a Subsidiary that is not an
Obligor; provided that, in each case, each of the following
conditions is satisfied:

 

(a)           immediately before and after giving effect to such
acquisition or merger, as applicable, no Default or Event of Default shall have
occurred and be continuing or would result therefrom;

 

(b)           at the time of, and after giving pro forma effect to
the consummation of such acquisition or merger, as applicable, Borrowers shall
maintain Excess Availability of not less than $30,000,000 or 16.7% of the
Maximum Credit, whichever is greater, and Borrowers shall have delivered to
Agent written notice of such acquisition or merger not fewer than five (5) Business
Days prior to the acquisition or merger, as applicable, which notice shall
include a certificate from the chief financial officer of Administrative
Borrower certifying satisfaction of this condition;

 

(c)           the acquisition or merger, as applicable, shall not
be hostile:

 

(d)           the business of the Person that is the subject of
the projected acquisition or merger, as applicable, shall be related or
substantially similar to the business of Borrowers;

 

(e)           contemporaneously with the closing of (A) any
asset acquisition by a Borrower or Guarantor, Agent shall have received such
documents and instruments as may be necessary to grant or confirm to Agent a
first priority perfected Lien on and security interest in all of the assets so
acquired which constitute First Priority Collateral (and a perfected Lien on
and security interest in all other Collateral having the priority for such
Collateral required hereunder), and (B) any acquisition of Capital Stock
by a Borrower or Guarantor, or any merger, as applicable, such Person (I) in
the case of an acquisition, becomes a Subsidiary of a Borrower or Guarantor and
Administrative Borrower requests that such acquired Person be joined to this
Agreement as a Borrower or Guarantor, pursuant to a joinder agreement in form
and substance reasonably satisfactory to Agent whereby such Person shall become
a Borrower or a guaranty of the Obligations and a security agreement (together
in each case with applicable UCC financing 

 

24

 

statements), as applicable, in each case executed by such Person,
together with such other collateral documents and opinions of counsel relating
to the validity, legality and enforceability of the legal documentation
described in this clause (B) and the creation of a perfected Lien on such
assets or Capital Stock as may be reasonably requested by Agent; or (II) such
Person shall be merged with and into an existing Borrower or Guarantor, with
such existing Borrower or Guarantor being the surviving entity of such merger);
and

 

(f)            with respect to any acquisition or any merger, as
applicable, with a purchase price, or in the case of a merger, the value of
other consideration payable by the acquiring Obligor, including any proceeds of
Revolving Loans used to repay Indebtedness of the acquired or merged Person
(any such purchase price or other consideration, as applicable, collectively,
referred to as the “Consideration”)), equals or exceeds $15,000,000, Agent
shall have received copies of (A) the definitive documents, (B) lien
search reports, if any, obtained by or provided to Borrowers, (C) historical
financial statements of the Person to be acquired or merged, as applicable, and
other financial information, and (D) such other documents and information
as Agent may reasonably request; and

 

(g)           with respect to any acquisition or merger, as
applicable, during any Covenant Recalibration Period, if the Consideration for
any such individual acquisition or merger is $15,000,000 or more, or if the
aggregate Consideration for all such acquisitions and mergers during any
consecutive 12-month period is $25,000,000 or more, then Borrowers shall (A) have
maintained Average Excess Availability for the 12-month period immediately
preceding the closing date of such acquisition or merger of not less than
$25,000,000, (B) project Average Excess Availability on a pro forma basis
for the 12-month period immediately following the closing date of such
acquisition or merger of not less than $25,000,000, (C) have maintained a
Fixed Charge Coverage Ratio-Recalibrated for the 12-month period immediately
preceding the closing date of such acquisition or merger of not less than 1.10
to 1.0, and (D) project a Fixed Charge Coverage Ratio-Recalibrated on a
pro forma basis for the 12-month period immediately following the closing date
of such acquisition or merger of not less than1.10 to 1.0; provided that,
if Borrowers propose an acquisition or merger the Consideration with respect to
which would cause the aggregate Consideration for all such acquisitions and
mergers in the 12-month period through the closing of the proposed acquisition
or merger to exceed $25,000,000 when the aggregate Consideration payable by the
acquiring Obligor for acquisitions and mergers by Borrowers in the immediately
preceding 12-month period did not otherwise equal or exceed $15,000,000
individually or $25,000,000 in the aggregate, then the period for which the
Average Excess Availability the Fixed Charge Coverage Ratio-Recalibrated and of
the Person acquired or merged will be measured will be only from the date of
acquisition or merger of such Person while the period for such measurements of
the Borrowers will remain the trailing 12-month period; provided, that
in connection with any of the foregoing acquisitions or mergers permitted under
this clause (g), Borrowers shall deliver to Agent Excess Availability
projections that demonstrate satisfaction with the applicable Excess
Availability requirement.

 

Until a field exam and audit of the Person to be acquired or merged, in
scope and with results reasonably acceptable to Agent, are conducted by Agent’s
examiners, no Accounts or Inventory of such Person to be acquired or merged
shall be included in the Borrowing Base, and no such Accounts or Inventory will
be included in any event unless and until such Person becomes a Borrower
hereunder.

 

“Permitted Indebtedness” shall have the meaning set forth in Section 9.9
hereof.

 

“Permitted Investments”
shall mean each of the following:

 

25

 

(i)            the endorsement of
instruments for collection or deposit in the ordinary course of business;

 

(ii)           investments in
cash or Cash Equivalents; provided, that, (A) at any
time that a Cash Management Event has occurred or exists (or would occur or
exist after giving effect to such investments), no Loans are then outstanding;
except that notwithstanding that any Loans are outstanding at any time such
Cash Management Event exists, Borrowers and Guarantors may from time to time in
the ordinary course of business consistent with their current practices as of
the date hereof make deposits of cash or other immediately available funds in
operating accounts used for disbursements to the extent required to provide
funds for amounts drawn or anticipated to be drawn shortly on such accounts and
such funds may be held in Cash Equivalents consisting of overnight investments
until so drawn (so long as such funds and Cash Equivalents are not held more
than three (3) Business Days from the date of the initial deposit thereof)
and (B) the terms and conditions of Section 5.2 hereof shall have
been satisfied with respect to the deposit account, investment account or other
account in which such cash or Cash Equivalents are held;

 

(iii)          the existing
equity investments of each Borrower and Guarantor as of the date hereof in its
Subsidiaries; provided, that, at any time that a Default or
Event of Default shall exist or have occurred and be continuing, or Excess
Availability is less than (or would be less than, after giving effect to such
investments) the greater of $30,000,000 or 16.7% of the Maximum Credit, no
Borrower or Guarantor shall make any capital contributions or other additional
investments or other payments to or in or for the benefit of any of such
Subsidiaries;

 

(iv)          loans and
advances by any Borrower or Guarantor to employees of any Borrower or Guarantor
not in excess of $5,000,000 outstanding at any one time in the aggregate;

 

(v)           stock or
obligations issued to any Borrower or Guarantor by any Person (or the
representative of such Person) in respect of Indebtedness of such Person owing
to such Borrower or Guarantor in connection with the insolvency, bankruptcy,
receivership or reorganization of such Person or a composition or readjustment
of the debts of such Person; provided, that, the original of
any such stock or instrument evidencing such obligations shall be promptly
delivered to Agent, upon Agent’s request, together with such stock power,
assignment or endorsement by such Borrower or Guarantor as Agent may request;

 

(vi)          obligations of
account debtors to any Borrower or Guarantor arising from Accounts which are
past due evidenced by a promissory note made by such account debtor payable to
such Borrower or Guarantor; provided, that, promptly upon
the receipt of the original of any such promissory note by such Borrower or
Guarantor, such promissory note shall be endorsed to the order of Agent by such
Borrower or Guarantor and promptly delivered to Agent as so endorsed;

 

(vii)         the loans and
advances set forth on Schedule 9.10 to this Agreement; provided, that, as to
such loans and advances, at any time that Excess Availability is less than (or
would be less than, after giving effect to such loans and advances) the greater
of $30,000,000 or 16.7% of the Maximum Credit, Borrowers and Guarantors shall
not, directly or indirectly, amend, modify, alter or change the terms of such
loans and advances or any agreement, document or instrument related thereto and
Borrowers and Guarantors shall furnish to Agent all notices or demands in
connection with such loans and advances either received by any Borrower or
Guarantor or on its behalf, promptly after the receipt thereof, or sent by any
Borrower or Guarantor or on its behalf, concurrently with the sending thereof,
as the case may be;

 

26

 

(viii)        loans by a Borrower or
Guarantor to another Borrower or Guarantor after the date hereof, provided, that,
at any time that a Default or Event of Default shall exist or have occurred and
be continuing, or Excess Availability is less than (or would be less than,
after giving effect to such investments) the greater of $30,000,000 or 16.7% of
the Maximum Credit, (A) within thirty (30) days after the end of each
fiscal month, Borrowers shall provide to Agent a report in form and substance
satisfactory to Agent of the outstanding amount of such loans as of the last
day of the immediately preceding month and indicating any loans made and
payments received during the immediately preceding month, (B) the
Indebtedness arising pursuant to any such loan shall not be evidenced by a
promissory note or other instrument, unless the single original of such note or
other instrument is promptly delivered to Agent upon its request to hold as
part of the Collateral, with such endorsement and/or assignment by the payee of
such note or other instrument as Agent may require, and (C) no Borrower
may make any further loans to any Guarantor; and

 

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

 

(a)           no Event of Default shall
exist as of the date, or after giving effect to, such investment;

 

(b)           at any time that Excess
Availability is less than (or would be less than, after giving effect to such
Investment) the greater of $30,000,000 or 16.7% of the Maximum Credit, no
Borrower or Guarantor shall make any such Investment to or in any such
Subsidiary; and

 

(c)           at any time during a
Covenant Recalibration Period, no Borrower or Guarantor shall make any such
Investment if such Investment is made in connection with or to facilitate such
Subsidiary’s acquisition of assets or Capital Stock of another Person, unless
each of the following conditions is satisfied: (1) if the amount of such
Investment in any such  Subsidiary for
any individual acquisition is $15,000,000 or more, or if the sum of the
aggregate amount of such Investments for all such acquisitions by all such
Subsidiaries under this clause (ix)(b) plus all other acquisitions by
Borrowers and Guarantors during any consecutive 12-month period is $25,000,000
or more, then Borrowers shall (A) have maintained Average Excess
Availability for the 12-month period immediately preceding the closing date of
such acquisition of not less than $25,000,000, (B) project Average Excess
Availability on a pro forma basis for the 12-month period immediately following
the closing date of such acquisition of not less than $25,000,000, (C) have
maintained a Fixed Charge Coverage Ratio-Recalibrated for the 12-month period
immediately preceding the closing date of such acquisition of not less than
1.10 to 1.0, and (D) project a Fixed Charge Coverage Ratio-Recalibrated on
a pro forma basis for the 12-month period immediately following the closing
date of such acquisition of not less than 1.10 to 1.0.

 

(x)            Investments
(other than the Investments described in the foregoing clauses of this
definition) after the date hereof by any Borrower or Guarantor in or to any
Person; provided, that, as to any such Investment, each of
the following conditions is satisfied:

 

(i)            no Event of Default shall
exist as of the date of, or after giving effect to, such Investment;

 

27

 

(ii)           if, as of the date of such
Investment and after giving effect thereto Excess Availability shall be less
than the greater of $30,000,000 or 16.7% of the Maximum Credit, each of the
following additional conditions is satisfied:

 

(A)                              the sum of the
aggregate amount of such Investments pursuant to this clause (x), plus the
aggregate amount of payments made pursuant to Section 9.12(b)(ii) hereof
shall not exceed $4,000,000 at any time outstanding;

 

(B)           in the case of any
Investment in an amount in excess of $500,000, Agent shall have received not
less than five (5) Business Days’ prior written notice of the proposed
Investment and such information with respect thereto as Agent may reasonably
request, in each case with such information to include (A) parties to such
Investment, (B) the proposed date and amount of the Investment, and (C) the
total amount of the Investment; and

 

(C)           promptly upon Agent’s
request, Agent shall have received true, correct and complete copies of all
material agreements, documents and instruments relating to such Investment.

 

“Permitted Liens” shall have
the meaning set forth in Section 9.8 hereof.

 

“Permitted Indebtedness”
shall have the meaning set forth in Section 9.9.

 

“Person” or “person” shall
mean any individual, sole proprietorship, partnership, corporation (including
any corporation which elects subchapter S status under the Code), limited
liability company, limited liability partnership, business trust,
unincorporated association, joint stock corporation, trust, joint venture or
other entity or any government or any agency or instrumentality or political
subdivision thereof.

 

“Plan” shall mean an
employee benefit plan (as defined in Section 3(3) of ERISA) which any
Borrower or Guarantor sponsors, maintains, or to which it makes, is making, or
is obligated to make contributions, other than a Multiemployer Plan.

 

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

 

“Pro Rata Share” shall mean
as to any Lender, the fraction (expressed as a percentage) the numerator of
which is such Lender’s Commitment and the denominator of which is the aggregate
amount of all of the Commitments of Lenders, as adjusted from time to time in
accordance with the provisions of Section 13.7 hereof; provided, that,
if the Commitments have been terminated, the numerator shall be the unpaid
amount of such Lender’s Loans and its interest in the Swing Line Loans, Special
Agent Advances and Letter of Credit Obligations and the denominator shall be
the aggregate amount of all unpaid Loans, including Swing Line Loans, Special
Agent Advances and Letter of Credit Obligations

 

“Provision for Taxes” shall
mean an amount equal to all taxes imposed on or measured by net income, whether
Federal, State, Provincial, county or local, and whether foreign or domestic,
that are paid or payable by any Person in respect of any period in accordance
with GAAP.

 

“Qualified Cash” shall mean
shall mean cash and Cash Equivalents of Borrowers and Guarantors that (a) are
maintained in one or more deposit accounts or investment accounts with one or
more financial 

 

28

 

institutions that are subject to the valid,
enforceable and first priority perfected security interest of Agent pursuant to
a Deposit Account Control Agreement or an Investment Property Control
Agreement, as the case may be, in form and substance reasonably satisfactory to
Agent (which will not prohibit withdrawal of such funds by such Borrower or
Guarantor in the absence of a Default or an Event of Default and subject to
such other terms as the Agent and the Administrative Borrower may agree), and (b) are
free and clear of any pledge, security interest, lien, claim or other
encumbrance (other than in favor of Agent); provided, that,
if at any time (and or so long as) Excess Availability (excluding Qualified
Cash) is less than $30,000,000, then only cash that is maintained in a deposit
account with Agent (and not at any other financial institution) and that is
otherwise in compliance with the terms set forth in the foregoing portion of
this definition sentence shall constitute Qualified Cash for purposes of determining
Excess Availability; and provided, further, that (i) cash
or Cash Equivalents held as cash collateral for any other purpose under any of
the Financing Agreements and (ii) the cash representing the Existing
Remington Notes Redemption Amount shall not constitute Qualified Cash.

 

“Quarterly Average Excess
Availability” shall mean, for any three (3) month period commencing on the
first day of the month of such period, the daily average of the Excess
Availability for such period.

 

“Raw Materials” shall mean materials
owned and used by a Borrower in the ordinary course of business in the
production of Parts and Finished Goods, including steel, lead, brass, powder,
plastics and wood.

 

“Real Property” shall mean
all now owned and hereafter acquired real property of each Borrower and
Guarantor, including leasehold interests, together with all buildings,
structures, and other improvements located thereon and all licenses, easements
and appurtenances relating thereto, wherever located.

 

“Receivables” shall mean all
of the following now owned or hereafter arising or acquired property of each
Borrower and Guarantor: (a) all Accounts; (b) all interest, fees,
late charges, penalties, collection fees and other amounts due or to become due
or otherwise payable in connection with any Account; (c) all payment
intangibles of such Borrower or Guarantor; (d) letters of credit,
indemnities, guarantees, security or other deposits and proceeds thereof issued
payable to any Borrower or Guarantor or otherwise in favor of or delivered to
any Borrower or Guarantor in connection with any Account; and (e) all
other accounts, contract rights, chattel paper, instruments, notes, general
intangibles and other forms of obligations owing to any Borrower or Guarantor,
whether from the sale and lease of goods or other property, licensing of any
property (including Intellectual Property or other general intangibles),
rendition of services or from loans or advances by any Borrower or Guarantor or
to or for the benefit of any third person (including loans or advances to any
Affiliates or Subsidiaries of any Borrower or Guarantor) or otherwise
associated with any Accounts, Inventory or general intangibles of any Borrower
or Guarantor (including, without limitation, choses in action, causes of
action, tax refunds, tax refund claims, any funds which may become payable to
any Borrower or Guarantor in connection with the termination of any Plan or
other employee benefit plan and any other amounts payable to any Borrower or
Guarantor from any Plan or other employee benefit plan, rights and claims
against carriers and shippers, rights to indemnification, business interruption
insurance and proceeds thereof, casualty or any similar types of insurance and
any proceeds thereof and proceeds of insurance covering the lives of employees
on which any Borrower or Guarantor is a beneficiary).

 

“Records” shall mean, as to
each Borrower and Guarantor, all of such Borrower’s and Guarantor’s present and
future books of account of every kind or nature, purchase and sale agreements,
invoices, ledger cards, bills of lading and other shipping evidence,
statements, correspondence, memoranda, credit files and other data relating to
the Collateral or any account debtor, together with the tapes, disks, diskettes
and other data and software storage media and devices, file cabinets or
containers in or on which 

 

29

 

the foregoing are stored (including any
rights of any Borrower or Guarantor with respect to the foregoing maintained
with or by any other person).

 

“Refinancing Indebtedness”
shall mean Indebtedness of a Borrower or Guarantor which serves to refund,
refinance or defease any Permitted Indebtedness incurred as permitted under
clauses (f), (g), and (n) of Section 9.9 or any Indebtedness incurred
to so refund or refinance such Indebtedness, including any Indebtedness
incurred to pay premiums, fees and expenses in connection therewith prior to
its respective maturity; provided, however, that such Refinancing Indebtedness:

 

(a)           has a Weighted Average Life
to Maturity at the time such Refinancing Indebtedness is incurred which is not
less than the remaining Weighted Average Life to Maturity of the Indebtedness
being refunded or refinanced;

 

(b)           has a Stated Maturity which
is no earlier than the Stated Maturity of the Indebtedness being refunded or
refinanced;

 

(c)           to the extent such
Refinancing Indebtedness refinances (x) Indebtedness junior to the
Obligations or (y) the Senior Notes or the guaranties by such Guarantor,
as applicable, such Refinancing Indebtedness is junior to the Senior Notes and
the Obligations or such guaranties, as applicable;

 

(d)           is incurred in an aggregate
principal amount (or if issued with original issue discount, an aggregate issue
price) that is equal to or less than the aggregate principal amount (or if
issued with original issue discount, the aggregate accreted value) then outstanding
of the Indebtedness being refinanced plus premium and fees incurred in connection
with such refinancing; and

 

(e)           shall not include (x) Indebtedness
of a Borrower or Guarantor that refinances Indebtedness of another Borrower or
Guarantor, or (y) Indebtedness of a Borrower or Guarantor that refinances
Indebtedness of a Person that is not a Borrower or Guarantor.

 

“Register” shall have the
meaning set forth in Section 13.7 hereof.

 

“Report” shall have the
meaning set forth in Section 12.10.

 

“Required Lenders” shall
mean, at any time, those Lenders whose Pro Rata Shares aggregate more than
fifty percent (50%) of the aggregate of the Commitments of all Lenders, or if
the Commitments shall have been terminated, Lenders to whom at least fifty
percent (50%) of the then outstanding Obligations are owing; provided, that,
at any time that there are three (3) or fewer Lenders, then Required Lenders
shall include Agent.

 

“Reserves” shall mean as of
any date of determination, such amounts as Agent may from time to time
establish and revise in good faith reducing the amount of Loans and Letters of
Credit that would otherwise be available to any Borrower under the lending
formulas provided for herein: (a) to reflect events, conditions,
contingencies or risks which, as determined by Agent in good faith, adversely
affect, or would have a reasonable likelihood of adversely affecting, either (i) the
Collateral or any other property which is security for the Obligations or its
value or (ii) the security interests and other rights of Agent or any
Lender in the Collateral (including the enforceability, perfection and priority
thereof) or (b) to reflect Agent’s good faith belief that any collateral
report or financial information furnished by or on behalf of any Borrower or
Guarantor to Agent is or may have been incomplete, inaccurate or misleading in
any material respect.  Without limiting
the generality of the foregoing, Reserves may, at 

 

30

 

Agent’s option, be established to
reflect:  on any date of determination
thereof, an amount equal to the sum of the following (without duplication) (i) any
amounts which any Borrower or Guarantor is obligated to pay pursuant to the
provisions of any of the Financing Agreements that Agent or any Lender elects
to pay for the account of such Borrower or Guarantor in accordance with
authority contained in any of the Financing Agreements; (ii) the Letter of
Credit Reserve; (iii) such reserves as may be established from time to
time by Agent in the exercise of its credit judgment to reflect changes in the
saleability of any Inventory or such other factors as may negatively affect the
value of any Inventory; (iv) with respect to any premises for which Agent
has not received a Collateral Access Agreement acceptable to Agent, a sum equal
to 3 months rent and for the aggregate amount of all other charges that
are past due and payable by any Borrower or Guarantor to the landlord,
warehouseman or other Person with respect to such premises (but only to the
extent such premises are in a jurisdiction in which applicable law provides
such Person with a Lien on any of the First Priority Collateral)); provided
that Agent will not establish such a reserve for Borrowers’ Memphis, Tennessee
location or Windham, Maine location unless Agent has not received a Collateral
Access Agreement acceptable to Agent for such location on or before September 15,
2009; and (v) such additional reserves as Agent, in its sole and
absolute discretion, may elect to impose from time to time as a result of
changes that Agent becomes aware of that have resulted or could reasonably be
expected to result in a diminution in the quantity, quality or value of any
Collateral or a dilution with respect to any of the Accounts.  The amount of any Reserve established by
Agent shall have a reasonable relationship to the event, condition or other
matter which is the basis for such reserve as determined by Agent in good faith
and to the extent that such Reserve is in respect of amounts that may be
payable to third parties Agent may, at its option, deduct such Reserve from the
Maximum Credit, at any time that such limit is less than the amount of the
Borrowing Base.

 

“Restricted Payment Event”
shall have the meaning set forth in Section 9.12(b).

 

“Restricted Subsidiaries”
shall have the meaning set forth in the Senior Notes Indenture as in effect on
the date hereof.

 

“Revolving Loans” shall mean
the loans now or hereafter made by or on behalf of any Lender or by Agent for
the account of any Lender on a revolving basis pursuant to the Credit Facility
(involving advances, repayments and readvances) as set forth in Section 2.1
hereof.

 

“S&P” shall mean
Standard & Poor’s Ratings Group, a division of The McGraw-Hill
Companies, Inc.

 

“SEC” shall mean the
Securities and Exchange Commission, or any Governmental Authority which may be
substituted therefor.

 

“Secured Parties” shall
mean, collectively, (a) Agent, (b) Lenders, (c) the Issuing Bank
and (d) any Bank Product Provider; provided, that, as
to any Bank Product Provider, only to the extent of the Obligations owing to
such Bank Product Provider.

 

“Securities Act” shall mean
the Securities Act of 1933, together with all rules, regulations and
interpretations thereunder or related thereto.

 

“Senior Notes” shall mean
FGI’s 101⁄4 % Senior Secured Notes due 2015 in the aggregate principal amount of
$200,000,000.

 

“Senior Notes Indenture”
shall mean the Indenture dated as of July 29, 2009, pursuant to which the
Senior Notes have been issued.

 

31

 

“Settlement Period” shall
have the meaning set forth in Section 6.11(b).

 

“Slow-Moving Goods” shall
mean, on any date of determination, (i) the amount of finished goods
Inventory of Borrowers in excess of the amount of such finished goods of the
same type that were sold by Borrowers during the immediately preceding 12
consecutive month period ending on the last day of the month completed prior to
such date or (ii) the amount of finished goods Inventory of the Borrowers
which has not been sold during the immediately preceding 12 consecutive months
ending on the last day of the month completed prior to such date (except for
goods consisting of a new product line introduced within such 12 consecutive
month period).

 

“Solvent” shall mean, at any
time with respect to any Person, that at such time such Person (a) is able
to pay its debts as they mature and has (and has a reasonable basis to believe
it will continue to have) sufficient capital (and not unreasonably small
capital) to carry on its business consistent with its practices as of the date
hereof, and (b) the assets and properties of such Person at a fair
valuation (and including as assets for this purpose at a fair valuation all
rights of subrogation, contribution or indemnification arising pursuant to any
guarantees given by such Person) are greater than the Indebtedness of such
Person, and including subordinated and contingent liabilities computed at the
amount which, such person has a reasonable basis to believe, represents an
amount which can reasonably be expected to become an actual or matured
liability (and including as to contingent liabilities arising pursuant to any
guarantee the face amount of such liability as reduced to reflect the
probability of it becoming a matured liability).

 

“Solvency Certificate” shall
mean a certificate in form and scope reasonably acceptable to Agent, that (i) is
executed by the chief financial officer of Borrowers and (ii) sets forth,
as of the date of such certificate, a pro forma GAAP consolidated balance
sheet, and projections showing Borrowers’ projected Availability and working
capital for the 12-month period following the date of the certificate, and
giving pro forma effect to the initial Loans hereunder, the issuance of the
Senior Notes and the consummation of the other transaction contemplated
hereunder as of the closing date of the Credit Facility.

 

“Special Agent Advances”
shall have the meaning set forth in Section 12.11 hereof.

 

“Sponsor” shall mean
Cerberus Capital Management, L.P., a Delaware limited partnership (“Cerberus”),
and any of its affiliates (other than FGI and its Subsidiaries) that directly
or indirectly through one or more intermediaries controls, is controlled by, or
is under common control with Cerberus.

 

“Sponsor Permitted Holder
Conditions” shall mean each of the following, all of which must be satisfied as
a condition to permit any assignment of Revolving Loans or Commitments to
Sponsor: (a) an Event of Default shall exist; (b) the Loans and
Commitments proposed to be assigned to Sponsor shall have been previously
offered to all Lenders and all Lenders shall have declined in writing to
purchase any of such Loans or Commitments: (c) the aggregate amount of all
Commitments held by Sponsor after giving effect to such assignment shall be no
more than thirty-five percent (35%) of the total Commitments; (d) Sponsor
shall have executed and delivered, in form satisfactory to Agent in its sole
and absolute discretion, an agreement with Agent for the benefit of Agent and
the Secured Parties in which Sponsor shall have agreed that: (i) Sponsor
will have no right to: (A) consent to any amendment, waiver or consent
with respect to any Financing Agreement; (B) otherwise vote on any matter
related to any Financing Agreement (and Sponsor’s Commitments shall not be
included in the determination of whether Required Lenders have agreed to any
such amendment, waiver, consent or vote); (C) require Agent or Lenders to
take, or refrain from taking, any action with respect to any Financing
Agreement; (D) attend any meeting or participate in any conference calls
with Agent or any Lender or receive any information from Agent or any Lender;
and (E) benefit from any advice of counsel to Agent or any Lender or
challenge the attorney-client privilege with respect to any communications
between counsel and Agent or any Lender; provided that,
notwithstanding the foregoing clauses (A) and (B), Sponsor’s consent shall
be 

 

32

 

required (and Sponsor’s Commitment shall be
included in the determination of Required Lenders) for any amendment, waiver or
consent that would increase the Commitment of Sponsor, reduce the amount of any
principal, interest or fees payable to Sponsor, extend the time for the payment
of principal, interest or fees payable to Sponsor, or modify any of the terms
and conditions of the Financing Agreements (other than provisions pertaining to
voting) in a manner that would deprive Sponsor of its pro rata share of any
payments to which Lenders as a group would be entitled or otherwise single out
or intentionally discriminate against Sponsor or deprive Sponsor of its
protections provided by this proviso; and (ii) Sponsor shall not contest,
protest or object to the exercise Agent of any of its rights or remedies with
respect to the Collateral or under the Financing Agreements, including any
rights, remedies and motions of Agent or any Lender during any insolvency
proceeding of any of Borrower or Guarantor, and will not propose or provide in
any insolvency proceeding of any Borrower or Guarantor debtor-in-possession
financing that is not consented to by the Required Lenders; and (e) Sponsor
and the assigning Lender shall have agreed in writing within three (3) Business
Days after the assigning Lender offers the assignment to Sponsor that Sponsor
accepts the assignment.

 

“Stated Maturity” shall mean,
with respect to any security, the date specified in such security as the fixed
date on which the final payment of principal of such security is due and
payable, including pursuant to any mandatory redemption provision (but
excluding any provision providing for the repurchase of such security at the
option of the holder thereof upon the happening of any contingency beyond the
control of the issuer unless such contingency has occurred).

 

“Subsidiary” or “subsidiary”
shall mean, with respect to any Person, any corporation, limited liability
company, limited liability partnership or other limited or general partnership,
trust, association or other business entity of which an aggregate of at least a
majority of the outstanding Capital Stock or other interests entitled to vote
in the election of the board of directors of such corporation (irrespective of
whether, at the time, Capital Stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency), managers, trustees or other controlling persons, or an
equivalent controlling interest therein, of such Person is, at the time,
directly or indirectly, owned by such Person and/or one or more subsidiaries of
such Person.

 

“Swing Line Lender” shall
mean Wachovia Bank, National Association, in its capacity as the lender of
Swing Line Loans, and its successors and assigns.

 

“Swing Line Loan Limit”
shall mean $25,000,000.

 

“Swing Line Loans” shall
have the meaning set forth in Section 2.1 hereof.

 

“Taxes” shall have the
meaning set forth in Section 6.5(a) hereof.

 

“Total Assets” shall mean
the total consolidated assets of FGI and its Restricted Subsidiaries, as shown
on the most recent financial statements of FGI that Agent has received in
accordance with Section 9.6 hereof.

 

“Trademark Appraisal” shall
mean a written appraisal of the net orderly liquidation value of the “Remington”
trademarks owned by Brands in form, scope and methodology reasonably acceptable
to Agent and by an appraiser selected and engaged by Agent, addressed to Agent
and upon which Agent is expressly permitted to rely.

 

“Trademark Value” shall mean
the aggregate net orderly liquidation value of the “Remington” trademarks owned
by Brands as reported in a Trademark Appraisal.

 

33

 

“Trading with the Enemy Act”
shall have the meaning set forth in Section 9.20.

 

“UCC” shall mean the Uniform
Commercial Code as in effect in the State of New York, and any successor
statute, as in effect from time to time (except that terms used herein which
are defined in the Uniform Commercial Code as in effect in the State of
New York on the date hereof shall continue to have the same meaning
notwithstanding any replacement or amendment of such statute except as Agent
may otherwise determine); provided, however, that at any
time, if by reason of mandatory provisions of law, any or all of the
perfections or priority of Agent’s security interest in any item or portion of
the Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the term “UCC” shall mean the
Uniform Commercial Code as in effect in such other jurisdictions and any
successor statute, as in effect from time to time, for purposes of the
provisions hereof relating to such perfection or priority or for purposes of
definitions relating to such provisions.

 

“Unfinanced Capital
Expenditures” shall mean Capital Expenditures made and not financed with the
proceeds of money borrowed (other than Revolving Loans) and not financed under
a capital lease or seller financing.

 

“Unfinanced Maintenance
Capital Expenditures” shall mean, on any date of determination with respect to
any period, an amount equal to the greater of (i) Unfinanced Capital
Expenditures for maintenance purposes as reported by Administrative Borrower to
Agent or (ii) $7,000,000.

 

“Value” shall mean, as
determined by Agent in good faith, with respect to Inventory, the lower of (a) cost
computed on a first-in first-out basis in accordance with GAAP or (b) market
value, provided, that, for purposes of the calculation of
the Borrowing Base, (i) the Value of the Inventory shall not include:  (A) the portion of the value of
Inventory equal to the profit earned by any Affiliate on the sale thereof to
any Borrower or (B) write-ups or write-downs in value with respect to
currency exchange rates and (ii) notwithstanding anything to the contrary
contained herein, the cost of the Inventory shall be computed in the same
manner and consistent with the most recent appraisal of the Inventory received
and accepted by Agent prior to the date hereof, if any.

 

“Voting Stock” shall mean
with respect to any Person, (a) one (1) or more classes of Capital
Stock of such Person having general voting powers to elect at least a majority
of the board of directors, managers or trustees of such Person, irrespective of
whether at the time Capital Stock of any other class or classes have or might
have voting power by reason of the happening of any contingency, and (b) any
Capital Stock of such Person convertible or exchangeable without restriction at
the option of the holder thereof into Capital Stock of such Person described in
clause (a) of this definition.

 

“Wachovia” shall mean
Wachovia Bank, National Association, in its individual capacity, and its
successors and assigns.

 

“Weighted Average Life to
Maturity” shall mean, when applied to any Indebtedness at any date, the
quotient obtained by dividing (i) the sum of the products of the number of
years from the date of determination to the date of each successive scheduled
principal payment of such Indebtedness multiplied by the amount of such
payment, by (ii) the sum of all such payments.

 

SECTION  2.        CREDIT
FACILITIES

 

2.1           Loans.

 

(a)           Subject to and upon the
terms and conditions contained herein:

 

34

 

(i)            each Lender severally (and
not jointly) agrees to make its Pro Rata Share of Revolving Loans to Borrowers
from time to time in amounts requested by any Borrower (or Administrative
Borrower on behalf of Borrowers), provided, that, after
giving effect to any such Revolving Loan, the principal amount of the Revolving
Loans, Swing Line Loans and Letter of Credit Obligations outstanding with
respect to all Borrowers shall not exceed the lesser of (A) the Borrowing
Base at such time or (B) the Maximum Credit at such time; and

 

(ii)           the Swing Line Lender agrees
that it will make loans (“Swing Line Loans”) to Borrowers from time to time in
amounts requested by any Borrower (or Administrative Borrower on behalf of
Borrowers) up to the aggregate amount outstanding equal to the Swing Line Loan
Limit, provided, that, after giving effect to any such Swing
Line Loan the aggregate principal amount of the Revolving Loans, Swing Line
Loans and Letter of Credit Obligations outstanding with respect to all
Borrowers shall not exceed the lesser of 
(A) the Borrowing Base at such time, or (B) the Maximum Credit
at such time.

 

(b)           On the terms and subject to
the conditions hereof, each Borrower (or Administrative Borrower on behalf of
Borrowers) may from time to time borrow, prepay and reborrow Revolving Loans
and Swing Line Loans.  No Lender shall be
required to make any Revolving Loan, if, after giving effect thereto the
aggregate outstanding principal amount of all Revolving Loans of such Lender,
together with such Lender’s Pro Rata Share of the aggregate amount of all Swing
Line Loans and Letter of Credit Obligations, would exceed such Lender’s
Commitment.  Swing Line Lender shall not
be required to make Swing Line Loans, if, after giving effect thereto, the
aggregate outstanding principal amount of all Swing Line Loans would exceed the
then existing Swing Line Loan Limit. 
Each Swing Line Loan shall be subject to all of the terms and conditions
applicable to other Base Rate Loans funded by the Lenders constituting
Revolving Loans, except that all payments thereon shall be payable to the Swing
Line Lender solely for its own account. 
All Revolving Loans and Swing Line Loans shall be subject to the
settlement among Lenders provided for in Section 6.11 hereof.

 

(c)           Upon the making of a Swing
Line Loan or any Revolving Loan by Agent as provided in Section 6.11,
without further action by any party hereto, each Lender shall be deemed to have
irrevocably and unconditionally purchased and received from the Swing Line
Lender or Agent, without recourse or warranty, an undivided interest and
participation to the extent of such Lender’s Pro Rata Share in such Swing Line
Loan or Revolving Loan.  To the extent
that there is no settlement in accordance with Section 6.11 below, the
Swing Line Lender or Agent, as the case may be, may at any time, require the
Lenders to fund their participations. 
From and after the date, if any, on which any Lender has funded its
participation in any Swing Line Loan, Special Agent Advance or Revolving Loan,
Agent shall promptly distribute to such Lender, such Lender’s Pro Rata Share of
all payments of principal and interest received by Agent in respect of such
Swing Line Loan, Special Agent Advance or Revolving Loan.

 

(d)           The aggregate amount of the
Revolving Loans, the Swing Line Loans and the Letter of Credit Obligations
outstanding at any time shall not exceed the least of (i) the Maximum
Credit, (ii) except in Agent’s discretion pursuant to Section 12.8,
the Borrowing Base or (iii) the amount that constitutes “Permitted Debt”
under clause (i) of the definition of that term in the Senior Notes
Indenture as in effect on the date hereof.

 

(e)           In the event that (i) the
aggregate amount of the Revolving Loans, the Swing Line Loans and the Letter of
Credit Obligations outstanding at any time exceed the Maximum Credit, or (ii) except
as otherwise provided herein, the aggregate principal amount of the Revolving
Loans, the Swing Line Loans and Letter of Credit Obligations outstanding exceed
the Borrowing Base, such event shall not limit, waive or otherwise affect any
rights of Agent or Lenders in such circumstances or on any future occasions and
Borrowers shall, upon demand by Agent, which may be made at any time or from 

 

35

 

time to time, immediately
repay to Agent the entire amount of any such excess(es) for which payment is
demanded.

 

(f)            Any Borrower (or
Administrative Borrower on behalf of such Borrower) may request a Revolving
Loan borrowing by written notice (or telephone notice promptly confirmed in
writing which confirmation may be by fax) to Agent not later than 12:00 p.m.
on the Business Day of the requested borrowing in the case of Base Rate Loans,
and on the third Business Day prior to the date of the requested borrowing in
the case of Eurodollar Rate Loans.  Each
such request for borrowing shall be irrevocable, and shall specify (i) that
a Revolving Loan is requested, (ii) the date of the requested borrowing
(which shall be a Business Day), (iii) the aggregate principal amount to
be borrowed, (iv) whether the borrowing shall be comprised of Base Rate
Loans, Eurodollar Rate Loans or a combination thereof, and if Eurodollar Rate
Loans are requested, the Interest Period(s) therefor.  If such Borrower shall fail to specify in any
such notice of borrowing (A) an applicable Interest Period in the case of
a Eurodollar Rate Loan, then such notice shall be deemed to be a request for an
Interest Period of one month, or (B) the type of Revolving Loan requested,
then such notice shall be deemed to be a request for a Base Rate Loan
hereunder.  Agent shall give notice to
each Lender promptly after receipt of such notice by the Agent, of each notice
of borrowing, the contents thereof and each such Lender’s share thereof.

 

(g)           Each Borrower (or
Administrative Borrower on behalf of such Borrower) may from time to time
request Eurodollar Rate Loans or may request that Base Rate Loans be converted
to Eurodollar Rate Loans or that any existing Eurodollar Rate Loans continue
for an additional Interest Period.  Such
request from a Borrower (or Administrative Borrower on behalf of such Borrower)
shall specify the amount of the Eurodollar Rate Loans or the amount of the Base
Rate Loans to be converted to Eurodollar Rate Loans or the amount of the
Eurodollar Rate Loans to be continued (subject to the limits set forth below)
and the Interest Period to be applicable to such Eurodollar Rate Loans (and if
it does not specify such Interest Period shall be deemed to be a one (1) month
period).  Subject to the terms and
conditions contained herein, three (3) Business Days after receipt by
Agent of such a request from a Borrower (or Administrative Borrower on behalf
of such Borrower), which may be telephonic (and followed by a confirmation in
writing if requested by Agent) such Eurodollar Rate Loans shall be made or Base
Rate Loans shall be converted to Eurodollar Rate Loans or such Eurodollar Rate
Loans shall continue, as the case may be; provided, that, (i) no
Default or Event of Default shall exist or have occurred and be continuing, (ii) no
Borrower or Administrative Borrower shall have sent any notice of termination
of this Agreement, (iii) such Borrower (or Administrative Borrower on
behalf of such Borrower) shall have complied with such customary procedures as
are established by Agent and specified by Agent to Administrative Borrower from
time to time for requests by Borrowers for Eurodollar Rate Loans, (iv) no
more than ten (10) Interest Periods may be in effect at any one time, (v) the
aggregate amount of the Eurodollar Rate Loans must be in an amount not less
than $1,000,000 or in integral multiples of $100,000 in excess thereof, and (vi) Agent
and each Lender shall have determined that the Interest Period or Adjusted
Eurodollar Rate is available to Agent and such Lender and can be readily
determined as of the date of the request for such Eurodollar Rate Loan by such
Borrower.  Any request by or on behalf of
a Borrower for Eurodollar Rate Loans or to convert Base Rate Loans to
Eurodollar Rate Loans or to continue any existing Eurodollar Rate Loans shall
be irrevocable.  All Swing Line Loans
shall be Base Rate Loans and shall not be entitled to be converted to
Eurodollar Rate Loans.

 

(h)           Any Eurodollar Rate Loans
shall automatically convert to Base Rate Loans upon the last day of the
applicable Interest Period, unless Agent has received a request to continue
such Eurodollar Rate Loan at least three (3) Business Days prior to such
last day for an Interest Period specified in such notice in accordance with the
terms hereof and Borrowers are entitled to such Eurodollar Rate Loan under the
terms hereof.  Any Eurodollar Rate Loans
shall, at Agent’s option, upon notice by Agent to Administrative Borrower, be
subsequently converted to Base Rate Loans in the event that this Agreement
shall terminate or shall not be renewed. 
Borrowers shall pay to Agent, for the benefit of 

 

36

 

Lenders, upon demand by
Agent (or Agent may, at its option, charge any loan account of any Borrower)
any amounts required to compensate any Lender or Participant for any loss
(excluding loss of anticipated profits), cost or expense incurred by such
person, as a result of the conversion of Eurodollar Rate Loans to Base Rate
Loans pursuant to any of the foregoing.

 

2.2           Letters of Credit.

 

(a)           Subject to and upon the
terms and conditions contained herein and in the Letter of Credit Documents, at
the request of a Borrower (or Administrative Borrower on behalf of such
Borrower), Agent agrees to cause Issuing Bank to issue, and Issuing Bank agrees
to issue, for the account of such Borrower one or more Letters of Credit, for
the ratable risk of each Lender according to its Pro Rata Share, containing
terms and conditions reasonably acceptable to Borrower Agent and Issuing Bank.

 

(b)           The Borrower requesting such
Letter of Credit (or Administrative Borrower on behalf of such Borrower) shall
give Agent and Issuing Bank not less than three (3) Business Days’ prior
written notice of such Borrower’s request for the issuance of a Letter of
Credit.  Such notice shall be irrevocable
and shall specify the original face amount of the Letter of Credit requested,
the effective date (which date shall be a Business Day and in no event shall be
a date less than ten (10) days prior to the end of the then current term
of this Agreement) of issuance of such requested Letter of Credit, whether such
Letter of Credit may be drawn in a single or in partial draws, the date on
which such requested Letter of Credit is to expire (which date shall be a
Business Day and shall not be more than one year from the date of issuance),
the purpose for which such Letter of Credit is to be issued, and the
beneficiary of the requested Letter of Credit. 
The Borrower requesting the Letter of Credit (or Administrative Borrower
on behalf of such Borrower) shall attach to such notice the proposed terms of
the Letter of Credit.  The renewal or
extension of any Letter of Credit shall, for purposes hereof be treated in all
respects the same as the issuance of a new Letter of Credit hereunder.

 

(c)           In addition to being subject
to the satisfaction of the applicable conditions precedent contained in Section 4
hereof and the other terms and conditions contained herein, no Letter of Credit
shall be available unless each of the following conditions precedent have been
satisfied in a manner reasonably satisfactory to Agent:  (i) the Borrower requesting such Letter
of Credit (or Administrative Borrower on behalf of such Borrower) shall have
delivered to Issuing Bank at such times and in such manner as Issuing Bank may
require, an application, in form and substance reasonably satisfactory to such
Borrower, Issuing Bank and Agent, for the issuance of the Letter of Credit and
such other Letter of Credit Documents as may be required pursuant to the terms
thereof, and the form and terms of the proposed Letter of Credit shall be
reasonably satisfactory to Agent and Issuing Bank, (ii) as of the date of
issuance, no order of any court, arbitrator or other Governmental Authority
shall purport by its terms to enjoin or restrain money center banks generally
from issuing letters of credit of the type and in the amount of the proposed
Letter of Credit, and no law, rule or regulation applicable to money
center banks generally and no request or directive (whether or not having the
force of law) from any Governmental Authority with jurisdiction over money
center banks generally shall prohibit, or request that Issuing Bank refrain
from, the issuance of letters of credit generally or the issuance of such
Letter of Credit, (iii) after giving effect to the issuance of such Letter
of Credit, the Letter of Credit Obligations shall not exceed the Letter of
Credit Limit, the Letter of Credit Obligations with respect to Letters of
Credit issued to Governmental Authorities shall not exceed the Letter of Credit
Government Sublimit, and the Letter of Credit Obligations with respect to
Letters of Credit issued to beneficiaries other than Governmental Authorities
shall not exceed the Letter of Credit Non-Government Sublimit, and (iv) the
Excess Availability, prior to giving effect to any Reserves with respect to
such Letter of Credit, on the date of the proposed issuance of any Letter of
Credit shall be equal to or greater than an amount equal to one hundred (100%)
percent of the Letter of Credit Obligations with respect thereto.  If there is a conflict between any Letter of
Credit Document (other than the Letter of Credit) and this Agreement, this 

 

37

 

Agreement shall
prevail.  Effective on the issuance of
each Letter of Credit, a Reserve shall be established in the applicable amount
set forth in Section 2.2(c)(iv).

 

(d)           Except in Agent’s
discretion, with the consent of Required Lenders, the amount of all outstanding
Letter of Credit Obligations shall not at any time exceed the Letter of Credit
Limit.

 

(e)           Each Borrower shall
reimburse immediately Issuing Bank for any draw under any Letter of Credit
issued for the account of such Borrower and pay Issuing Bank the amount of all
other charges and fees payable to Issuing Bank in connection with any Letter of
Credit issued for the account of such Borrower immediately when due,
irrespective of any claim, setoff, defense or other right which such Borrower
may have at any time against Issuing Bank or any other Person.  Each drawing under any Letter of Credit or
other amount payable in connection therewith when due shall constitute a
request by the Borrower for whose account such Letter of Credit was issued to
Agent for a Base Rate Loan in the amount of such drawing or other amount then
due, and shall be made by Agent on behalf of Lenders as a Revolving Loan (or
Special Agent Advance, as the case may be). The date of such Loan shall be the
date of the drawing or as to other amounts, the due date therefor.  Any payments made by or on behalf of Agent or
any Lender to Issuing Bank and/or related parties in connection with any Letter
of Credit shall constitute additional Revolving Loans to such Borrower pursuant
to this Section 2 (or Special Agent Advances as the case may be).

 

(f)            Borrowers and Guarantors
shall indemnify and hold Agent and Lenders harmless from and against any and
all losses, claims, damages, liabilities, costs and expenses which Agent or any
Lender may suffer or incur in connection with any Letter of Credit and any
documents, drafts or acceptances relating thereto, including any losses,
claims, damages, liabilities, costs and expenses due to any action taken by
Issuing Bank or correspondent with respect to any Letter of Credit, except for
such losses, claims, damages, liabilities, costs or expenses that are a direct
result of the gross negligence or willful misconduct of Agent or any Lender as
determined pursuant to a final non-appealable order of a court of competent
jurisdiction.  Each Borrower and Guarantor
assumes all risks with respect to the acts or omissions of the drawer under or
beneficiary of any Letter of Credit. 
Each Borrower and Guarantor hereby releases and holds Agent and Lenders
harmless from and against any acts, waivers, errors, delays or omissions with
respect to or relating to any Letter of Credit and any and  all foreign, Federal, State and local taxes,
duties and levies relating to any goods subject to any Letter of Credit or any
documents, drafts or acceptances thereunder, except for the gross negligence or
willful misconduct of Agent or any Lender as determined pursuant to a final,
non-appealable order of a court of competent jurisdiction (but without limiting
the obligations of Borrowers or Guarantors to any other Indemnitee).  The provisions of this Section 2.2(f) shall
survive the payment of Obligations and the termination of this Agreement.

 

(g)           In connection with Inventory
purchased pursuant to any Letter of Credit, Borrowers and Guarantors shall, at
Agent’s request, instruct all suppliers, carriers, forwarders, customs brokers,
warehouses or others receiving or holding cash, checks, Inventory, documents or
instruments in which Agent holds a security interest that upon Agent’s request,
such items are to be delivered to Agent and/or subject to Agent’s order, and if
they shall come into such Borrower’s or Guarantor’s possession, to deliver
them, upon Agent’s request, to Agent in their original form.  At the request of Agent, Borrowers and
Guarantors shall designate Issuing Bank as the consignee on all bills of lading
and other negotiable and non-negotiable documents.  Except as otherwise provided herein, Agent
shall not exercise such right to request such items described in this
clause (g) so long as no Default or Event of Default shall exist or
have occurred and be continuing.

 

(h)           Each Borrower and Guarantor
hereby irrevocably authorizes and directs Issuing Bank to name such Borrower or
Guarantor as the account party therein and to deliver to Agent all instruments,
documents and other writings and property received by Issuing Bank pursuant to
the Letter 

 

38

 

of Credit and to accept and
rely upon Agent’s instructions and agreements with respect to all matters
arising in connection with the Letter of Credit or the Letter of Credit
Documents with respect thereto.  Issuing
Bank shall not be required to deliver such instruments, documents and other
writings and property unless requested by Agent and so long as no Default or
Event of Default shall exist or have occurred and be continuing.  Nothing contained herein shall be deemed or
construed to grant any Borrower or Guarantor any right or authority to pledge
the credit of Agent or any Lender in any manner.  Borrowers and Guarantors shall be bound by
any reasonable interpretation made in good faith by Agent, or Issuing Bank
under or in connection with any Letter of Credit or any documents, drafts or
acceptances thereunder, notwithstanding that such interpretation may be
inconsistent with any instructions of any Borrower or Guarantor.

 

(i)            Immediately upon the
issuance or amendment of any Letter of Credit, each Lender shall be deemed to
have irrevocably and unconditionally purchased and received, without recourse
or warranty, an undivided interest and participation to the extent of such Lender’s
Pro Rata Share of the liability with respect to such Letter of Credit and the
obligations of Borrowers with respect thereto (including all Letter of Credit
Obligations with respect thereto).  Each
Lender shall absolutely, unconditionally and irrevocably assume, as primary
obligor and not as surety, and be obligated to pay to Issuing Bank therefor and
discharge when due, its Pro Rata Share of all of such obligations arising under
such Letter of Credit.  Without limiting
the scope and nature of each Lender’s participation in any Letter of Credit, to
the extent that Issuing Bank has not been reimbursed or otherwise paid as
required hereunder or under any such Letter of Credit, each such Lender shall
pay to Issuing Bank its Pro Rata Share of such unreimbursed drawing or other
amounts then due to Issuing Bank in connection therewith.

 

(j)            The obligations of Borrowers
to reimburse Issuing Bank for drawings under Letters of Credit and the
obligations of Lenders to make payments to Agent for the account of Issuing
Bank with respect to Letters of Credit shall be absolute, unconditional and
irrevocable and shall be performed strictly in accordance with the terms of
this Agreement under any and all circumstances, whatsoever, notwithstanding the
occurrence or continuance of any Default, Event of Default, the failure to
satisfy any other condition set forth in Section 4 or any other event or
circumstance. If such amount is not made available by a Lender when due, Agent
shall be entitled to recover such amount on demand from such Lender with
interest thereon, for each day from the date such amount was due until the date
such amount is paid to Agent at the interest rate then payable by any Borrower
in respect of Loans that are Base Rate Loans. 
Any such reimbursement shall not relieve or otherwise impair the
obligation of Borrowers to reimburse Issuing Bank under any Letter of Credit or
make any other payment in connection therewith.

 

(k)           The parties hereto
acknowledge and agree that, concurrently with the making of the initial Loans
hereunder, the Existing Letters of Credit shall constitute Letters of Credit
hereunder for all purposes as fully as if such Existing Letters of Credit had
been issued as Letters of Credit hereunder.

 

2.3           Increase in Maximum Credit.

 

(a)           Administrative Borrower may,
at any time, deliver a written request to Agent to increase the Maximum Credit.
Any such written request shall specify the amount of the requested increase in
the Maximum Credit that Administrative Borrower is requesting, provided, that,
(i)  in no event shall the aggregate amount of any increase in the Maximum
Credit cause the Maximum Credit to exceed $255,000,000, (ii) any such
request for an increase shall be for an increase of not less than $25,000,000, (iii) any
such request shall be irrevocable, and (iv) in no event shall there be
more than two (2) such increases during the term of this Agreement.

 

39

 

(b)           Upon the receipt by Agent of
a written request to increase the Maximum Credit, Agent shall notify each of
the Lenders of such request and each Lender shall have the option (but not the
obligation) to increase the amount of its Commitment by an amount up to its Pro
Rata Share of the amount of the increase in the Maximum Credit requested by
Administrative Borrower as set forth in the notice from Agent to such Lender.
Each Lender shall notify Agent within fifteen (15) days after the receipt of
such notice of a request for such increase from Agent whether it is willing to
so increase its Commitment, and if so, the amount of such increase; provided, that,
no Lender shall be obligated to provide such increase in its Commitment and the
determination to increase the Commitment of a Lender shall be within the sole
and absolute discretion of such Lender. 
If the aggregate amount of the increases in the Commitments received
from the Lenders does not equal or exceed the amount of the increase in the
Maximum Credit requested by Administrative Borrower, Agent may seek additional
increases from Lenders or Commitments from such Eligible Transferees as it may
determine, after consultation with Administrative Borrower.  In the event Lenders (or Lenders and any such
Eligible Transferees, as the case may be) have committed in writing to provide
increases in their Commitments or new Commitments in an aggregate amount in
excess of the increase in the Maximum Credit requested by Borrowers or
permitted hereunder, Agent shall then have the right to allocate such
Commitments, first to Lenders and then to Eligible Transferees, in such amounts
(not to exceed the aggregate increase in Commitments requested by Borrowers)
and in such manner as Agent may determine, after consultation with
Administrative Borrower.

 

(c)           In the event of a request to
increase the Maximum Credit, the Maximum Credit shall be increased by the
amount of the increase in Commitments from Lenders or new Commitments from
Eligible Transferees, in each case selected in accordance with Section 2.3(b),
for which Agent has received Assignment and Acceptances (or other agreements
acceptable to Agent) thirty (30) days after the date of the request by
Administrative Borrower for the increase or such earlier date as Agent and
Administrative Borrower may agree (but subject to the satisfaction of the
conditions set forth below), whether or not the aggregate amount of the
increase in Commitments and new Commitments, as the case may be, equal the
amount of the increase in the Maximum Credit requested by Administrative
Borrower in accordance with the terms hereof, effective on the date that each
of the following conditions has been satisfied:

 

(i)            Agent shall have received
from each Lender or Eligible Transferee that is providing an additional
Commitment as part of the increase in the Maximum Credit, an Assignment and
Acceptance (or another agreement acceptable to Agent) duly executed by such
Lender or Eligible Transferee and Administrative Borrower;

 

(ii)           the conditions precedent to
the making of Revolving Loans set forth in Section 4.2 hereof shall be
satisfied as of the date of the increase in the Maximum Credit, both before and
after giving effect to such increase;

 

(iii)          Agent shall have received (A) a
duly executed amendment to this Agreement reflecting the applicable increase in
the Commitments, the addition of any new Lenders and any new Commitments, (B) resolutions
and certificates from each Obligor authorizing the same, (C) legal
opinions from Obligors’ counsel regarding the non-violation of the Indenture
and other Material Contracts as a result of such increase in the Maximum Credit
and the Indebtedness incurred in connection therewith, and (D) such other
agreements, documents and instruments as Agent may reasonably request, in each
case in form and substance reasonably satisfactory to Agent;

 

(iv)          there shall have been paid
to each Lender and Eligible Transferee providing an additional Commitment in
connection with such increase in the Maximum Credit all 

 

40

 

fees (including any
additional commitment fees) due and payable to such Person on or before the
effectiveness of such increase; and

 

(v)           there shall have been paid
to Agent all costs and expenses (including reasonable fees and expenses of
counsel) due and payable to Agent pursuant to any of the Financing Agreements
on or before the effectiveness of such increase.

 

(d)           As of the effective date of
any such increase in the Maximum Credit, each reference to the term Maximum
Credit and Commitments herein and in any of the other Financing Agreements
shall be deemed amended to mean the amount of the Maximum Credit and
Commitments specified in the most recent written notice from Agent to
Administrative Borrower of the increase in the Maximum Credit and Commitments.

 

2.4           Commitments.  The aggregate amount of each Lender’s Pro
Rata Share of the Loans and Letter of Credit Obligations shall not exceed the
amount of such Lender’s Commitment, as the same may from time to time be
amended in accordance with the provisions hereof.

 

2.5           Nature and Extent of Each
Borrower’s Liability.

 

(a)           Each Borrower shall be
liable for, on a joint and several basis, and hereby guarantees the timely
payment by the other Borrower of, all of the Loans and other Obligations,
regardless of which Borrower actually may have received the proceeds of any
Loans or other extensions of credit hereunder or the amount of such Loans
received or the manner in which Agent or any Lender accounts for such Loans or
other extensions of credit on its books and records, it being acknowledged and
agreed that Loans to one Borrower inure to the mutual benefit of all Borrowers
and that Agent and Lenders are relying on the joint and several liability of
Borrowers in extending the Loans and other financial accommodations
hereunder.  Each Borrower hereby
unconditionally and irrevocably agrees that upon default in the payment when
due (whether at stated maturity, by acceleration or otherwise) of any principal
of, or interest owed on, any of the Loans or other Obligations, such Borrower
shall forthwith pay the same, without notice or demand.

 

(b)           Each Borrower’s joint and
several liability hereunder with respect to, and guaranty of, the Loans and
other Obligations shall, to the fullest extent permitted by applicable law, be
unconditional irrespective of (i) the validity, enforceability, avoidance
or subordination of any of the Obligations or of any promissory note or other
document evidencing all or any part of the Obligations, (ii) the absence
of any attempt to collect any of the Obligations from any other Obligor or any
Collateral or other security therefor, or the absence of any other action to
enforce the same, (iii) the waiver, consent, extension, forbearance or
granting of any indulgence by Agent or any Lender with respect to any provision
of any instrument evidencing or securing the payment of any of the Obligations,
or any other agreement now or hereafter executed by the other Borrower and
delivered to Agent or any Lender, (iv) the failure by Agent to take any
steps to perfect or maintain the perfected status of its security interest in
or Lien upon, or to preserve its rights to, any of the Collateral or other
security for the payment or performance of any of the Obligations or Agent’s
release of any Collateral or of its Liens upon any Collateral, (v) Agent’s
or Lenders’ election, in any proceeding instituted under the United States
Bankruptcy Code, for the application of Section 1111(b)(2) of the
United States Bankruptcy Code, (vi) any borrowing or grant of a security
interest by any other Borrower, as debtor-in-possession under Section 364
of the United States Bankruptcy Code, (vii) the release or compromise, in
whole or in part, of the liability of any Obligor for the payment of any of the
Obligations, (viii) any amendment or modification of any of the Financing
Agreements or waiver of any Default or Event of Default thereunder, (ix) any
increase in the amount of the Obligations beyond any limits imposed herein or
in the amount of any interest, fees or other charges payable in connection
therewith, or any decrease in the 

 

41

 

same, (x) the disallowance of all or any
portion of Agent’s or any Lender’s claims for the repayment of any of the
Obligations under Section 502 of the United States Bankruptcy Code, or
(xi) any other circumstance that might constitute a legal or equitable
discharge or defense of a Borrower. 
After the occurrence and during the continuance of any Event of Default,
Agent may proceed directly and at once, without notice to any Obligor, against
any or all of Obligors to collect and recover all or any part of the
Obligations, without first proceeding against any other Obligor or against any
Collateral or other security for the payment or performance of any of the
Obligations, and each Borrower, to the fullest extent permitted by applicable
law, waives any provision that might otherwise require Agent under applicable
law to pursue or exhaust its remedies against any Collateral or any other
Obligor before pursuing such Borrower. 
Each Borrower and each Guarantor consents and agrees that Agent shall be
under no obligation to marshal any assets in favor of any such Borrower or
Guarantor or against or in payment of any or all of the Obligations.

 

(c)           No payment or payments made
by an Obligor or received or collected by Agent from an Obligor or any other
Person by virtue of any action or proceeding or any setoff or appropriation or
application at any time or from time to time in reduction of or in payment of
the Obligations shall be deemed to modify, reduce, release or otherwise affect
the liability of any Borrower under this Agreement, each of which shall remain
jointly and severally liable for the payment and performance of all Loans and
other Obligations until the Obligations are paid in full and this Agreement is
terminated.

 

(d)           Each Borrower is
unconditionally obligated to repay the Obligations as a joint and several
obligor under this Agreement.  If, as of
any date, the aggregate amount of payments made by a Borrower on account of the
Obligations and proceeds of such Borrower’s Collateral that are applied to the
Obligations exceeds the aggregate amount of Loan proceeds actually used by such
Borrower in its business (such excess amount being referred to as an “Accommodation
Payment”), then each other Borrower (each, a “Contributing Borrower”) shall be
obligated to make contribution to such Borrower (the “Paying Borrower”) in an
amount equal to (i) the product derived by multiplying the sum of each
Accommodation Payment of the Paying Borrower by the Borrower Allocable
Percentage of such Contributing Borrower less (ii) the amount, if any, of
the then outstanding Accommodation Payment of such Contributing Borrower (such
last mentioned amount which is to be subtracted from the aforesaid product to
be increased by any amounts theretofore paid by such Contributing Borrower by
way of contribution hereunder, and to be decreased by any amounts theretofore
received by such Contributing Borrower by way of contribution hereunder);
provided, however, that a Paying Borrower’s recovery of contribution hereunder
from the other Borrowers shall be limited to that amount paid by the Paying
Borrower in excess of its Borrower Allocable Percentage of all Accommodation
Payments then outstanding of all Borrowers. 
As used herein, the term “Borrower Allocable Percentage” shall mean, on
any date of determination thereof, a fraction the denominator of which shall be
the number of Borrowers hereunder and the numerator of which shall be 1; provided, however,
that such percentages shall be modified in the event that contribution from a
Borrower is not possible by reason of insolvency, bankruptcy or otherwise by
reducing such Borrower Allocable Percentage equitably and by adjusting the
Borrower Allocable Percentage of the other Borrowers proportionately so that
the Borrower Allocable Percentages of all Borrowers at all times equal 100%.

 

(e)           Each Borrower hereby
subordinates any claims, including any right of payment, subrogation,
contribution and indemnity, that it may have from or against any other Obligor,
and any successor or assign of any other Obligor, including any trustee,
receiver or debtor-in-possession, with respect to payment of the Obligations of
any Obligor, to the payment in full of all of the Obligations.

 

2.6           Voluntary Reduction of Commitments.  Borrowers shall have the right to permanently
reduce the amount of the Commitments, on a pro rata basis for each Lender, at
any time and from time to time upon written notice to Agent of such reduction,
which notice shall specify the amount of such 

 

42

 

reduction, shall be
irrevocable once given, shall be given at least five (5) Business Days
prior to the end of a month and shall be effective only upon Agent’s receipt
thereof.  Agent shall promptly transmit
such notice to each Lender.  The
effective date of any voluntary reduction of the Commitments shall be the first
day of the month following the month in which such notice is timely received by
Agent.  If, on the effective date of any
such reduction in the Commitments and after giving effect thereto, the
aggregate principal amount of all Revolving Loans, Swing Line Loans and Letter
of Credit Obligations outstanding with respect to all Borrowers would exceed
the lesser of (A) the Borrowing Base, or (B) the Maximum Credit at
such time, then Borrowers shall jointly and severally pay the amount of such
excess to Agent for the pro rata benefit of Lenders immediately upon such
effective date without further notice to or demand upon Borrowers.  If the Commitments are reduced to zero, then
such reduction shall be deemed a termination of the Commitments by Borrowers
pursuant to Section 13.1. 
Notwithstanding anything to the contrary set forth above, pursuant to
this Section 2.6, (i) the Commitments may only be reduced by
Borrowers twice during the term of this Agreement, (ii) no single
reduction of the Commitments shall be in an amount less than $25,000,000, and (iii) the
Commitments, once reduced, may not be increased except pursuant to Section 2.3
or with the consent of the requisite Lenders set forth in Section 11.3(a)(ii) hereof.  Upon reduction of the Commitments pursuant to
this Section 2.6, the Maximum Credit shall be reduced pro tanto.

 

SECTION  3.        INTEREST
AND FEES

 

3.1           Interest.

 

(a)           Borrowers shall pay to Agent, for the benefit of
Lenders, interest on the outstanding principal amount of the Loans at the
Interest Rate.  All interest accruing
hereunder shall be payable on demand: (i) on and after the date of any
Event of Default, following the Agent’s election to increase the Interest Rate
pursuant to clause (b) of the definition thereof and from time to
time thereafter, and (ii) on and after the date of termination hereof.

 

(b)           Interest shall be payable by
Borrowers to Agent, for the account of Lenders, with respect to Base Rate Loans
monthly in arrears not later than the first day of each calendar month and
shall be calculated on the basis of a three hundred sixty (360) day year
and actual days elapsed, other than for Base Rate Loans which shall be calculated
on the basis of three hundred sixty-five (365) or three hundred sixty-six
(366) day year, as applicable, and actual days elapsed.  Interest shall be payable by Borrowers to
Agent, for the account of Lenders, with respect to any Eurodollar Rate Loans on
the last day of each applicable Interest Period with respect to such
Loans.  The interest rate on
non-contingent Obligations (other than Eurodollar Rate Loans) shall increase or
decrease by an amount equal to each increase or decrease in the Base Rate effective
on the date any change in such Base Rate is effective.  In no event shall charges constituting
interest payable by Borrowers to Agent and Lenders exceed the maximum amount or
the rate permitted under any applicable law or regulation, and if any such part
or provision of this Agreement is in contravention of any such law or
regulation, such part or provision shall be deemed amended to conform thereto.

 

3.2           Fees.

 

(a)           Borrowers shall pay to Agent, for the account of
Lenders, monthly an unused line fee at a rate equal to the applicable rate (on
a per annum basis) determined as provided below calculated upon the amount by
which the Maximum Credit exceeds the average daily principal balance of the
outstanding Revolving Loans and Letter of Credit Obligations during the
immediately preceding month (or part thereof) so long as any Obligations are
outstanding and this Agreement has not been terminated.  Such fees shall be payable on the first
Business Day of each month in arrears and calculated based on a three hundred
sixty (360) day year and actual days elapsed.

 

43

 

	
  Tier

  	
   

  	
  Quarterly Average Excess Availability

  	
   

  	
  Unused Line Fee

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  Greater than $70,000,000

  	
   

  	
  0.75

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  Less than or equal to
  $70,000,000 and greater than $30,000,000

  	
   

  	
  0.75

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  Less than or equal to
  $30,000,000

  	
   

  	
  0.50

  	
  %

  

 

The applicable rate shall be calculated on the first day of each
calendar quarter based upon the Quarterly Average Excess Availability for the
preceding calendar quarter based upon the Quarterly Average Excess Availability
for the preceding calendar quarter and shall remain in effect until so
calculated on the first day of the succeeding calendar quarter, provided, that,
in the event that Borrowers fail to provide any Borrowing Base Certificate or
other information with respect thereto for any period on the date required
hereunder, effective as of the date on which such Borrowing Base Certificate or
other information was otherwise required, at Agent’s option (or at the
direction of the Required Lenders if Agent has not exercised such option for
five (5) Business Days following such date), the unused line fee shall be
based on the highest rate above until the next Business Day after the Borrowing
Base Certificate or other information is provided for the applicable period at
which time the unused line fee shall be adjusted as otherwise provided herein; provided, further,
that notwithstanding anything to the contrary contained herein, the applicable
rate through December 31, 2009 shall be the rate for Tier 2 set forth
above.

 

(b)           Borrowers shall pay to Agent, for the benefit of
Lenders, monthly a fee at the LC Fee Rate determined as provided below (on a
per annum basis), on the average daily outstanding balance of the Letters of
Credit for the immediately preceding month (or part thereof), payable in
arrears as of the first day of each month, computed for each day from the date
of issuance to the date of expiration or cancellation.

 

	
  Tier

  	
   

  	
  Quarterly Average Excess Availability

  	
   

  	
  LC Fee Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  Greater than $70,000,000

  	
   

  	
  3.25

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  Less than or equal to
  $70,000,000 and greater than $30,000,000

  	
   

  	
  3.50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  Less than or equal to
  $30,000,000

  	
   

  	
  3.75

  	
  %

  

 

The applicable rate shall be calculated on the first day of each
calendar quarter based upon the Quarterly Average Excess Availability for the
preceding calendar quarter based upon the Quarterly Average Excess Availability
for the preceding calendar quarter and shall remain in effect until so
calculated on the first day of the succeeding calendar quarter, provided that
in the event that Borrowers fail to provide any Borrowing Base Certificate or
other information with respect thereto for any period on the date required
hereunder, effective as of the date on which such Borrowing Base Certificate or
other information was otherwise required, at Agent’s option (or at the
direction of the Required Lenders if Agent has not exercised such option for
five (5) Business Days following such date), such fees shall be based on
the highest rate above until the next Business Day after the Borrowing Base
Certificate or other information is provided for the applicable period at which
time such fees shall be adjusted as otherwise provided herein; provided, further,
that notwithstanding anything to the contrary contained herein, the applicable
rate through December 31, 2009 shall be the rate for Tier 2 set forth
above.  In addition, the Borrowers 

 

44

 

shall, at Agent’s option or at the written direction of the Required
Lenders, pay such fees at a rate two percent (2%) greater than the applicable
percentage rate for the period from and after the date of the occurrence of an
Event of Default for so long as such Event of Default is continuing.  Such letter of credit fees shall be
calculated on the basis of a three hundred sixty (360) day year and actual days
elapsed and the obligation of Borrowers to pay such fee shall survive the
termination or non-renewal of this Agreement. 
In addition to the letter of credit fees provided above, Borrowers shall
pay to the Issuing Bank for its own account (without sharing with Lenders) the
letter of credit fronting fee of one-eighth (0.125%) percent  per annum and the other customary charges
from time to time of Issuing Bank with respect to the issuance, amendment, transfer,
administration, cancellation and conversion of, and drawings under, such
Letters of Credit.

 

(c)           Borrowers shall pay to Agent and Wachovia the other
fees and amounts set forth in the Fee Letter in the amounts and at the times
specified therein or as has otherwise been agreed by or on behalf of
Borrowers.  To the extent payment in full
of the applicable fee is received by Agent from Borrowers on or about the date
hereof, Agent shall pay to each Lender its share of such fees in accordance
with the terms of the arrangements of Agent with such Lender.

 

3.3           Changes in Laws and
Increased Costs of Loans.

 

(a)           If after the date hereof,
either (i) with respect to Eurodollar Loans, any change in, or in the
interpretation of, any law or regulation is introduced, including, without
limitation, with respect to reserve requirements, applicable to any Lender or
any banking or financial institution from whom any Lender borrows funds or
obtains credit (a “Funding Bank”), or (ii) with respect to Eurodollar
Loans, a Funding Bank or any Lender complies with any future guideline or
request from any central bank or other Governmental Authority or (iii) a
Funding Bank, any Lender or Issuing Bank determines that the adoption of any
applicable law, rule or regulation regarding capital adequacy, or any
change therein, or any change in the interpretation or administration thereof
by any Governmental Authority, central bank or comparable agency charged with
the interpretation or administration thereof has or would have the effect
described below, or a Funding Bank, any Lender or Issuing Bank complies with
any request or directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable agency, and in
the case of any event set forth in this clause (iii), such adoption,
change or compliance has or would have the direct or indirect effect of
reducing the rate of return on any Lender’s or Issuing Bank’s capital as a
consequence of its obligations hereunder to a level below that which such
Lender or Issuing Bank could have achieved but for such adoption, change or
compliance (taking into consideration the Funding Bank’s or Lender’s or Issuing
Bank’s policies with respect to capital adequacy) by an amount deemed by such
Lender or Issuing Bank to be material, and the result of any of the foregoing
events described in clauses (i), (ii) or (iii) is an increase in
the cost to any Lender or Issuing Bank of funding or maintaining the Loans, the
Letters of Credit or its Commitment, then Borrowers and Guarantors shall from
time to time upon demand by Agent pay to Agent additional amounts sufficient to
indemnify such Lender or Issuing Bank, as the case may be, against such
increased cost on an after-tax basis (after taking into account applicable
deductions and credits in respect of the amount indemnified).  A certificate as to the amount of such
increased cost shall be submitted to Administrative Borrower by Agent or the
applicable Lender and shall be conclusive, absent manifest error.

 

(b)           If prior to the first day of
any Interest Period, (i) Agent shall have determined in good faith (which
determination shall be conclusive and binding upon Borrowers and Guarantors)
that, by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Adjusted Eurodollar Rate for
such Interest Period, or (ii) Agent has received notice from the Required
Lenders that the Adjusted Eurodollar Rate determined or to be determined for
such Interest Period will not adequately and fairly reflect the cost to Lenders
of making or maintaining Eurodollar Rate Loans during such Interest Period,
Agent shall give telecopy or telephonic notice thereof to 

 

45

 

Administrative Borrower as
soon as practicable thereafter, and will also give prompt written notice to
Administrative Borrower when such conditions no longer exist.  If such notice is given (A) any
Eurodollar Rate Loans requested to be made on the first day of such Interest
Period shall be made as Base Rate Loans, (B) any Loans that were to have
been converted on the first day of such Interest Period to or continued as
Eurodollar Rate Loans shall be converted to or continued as Base Rate Loans and
(C) each outstanding Eurodollar Rate Loan shall be converted, on the last
day of the then-current Interest Period thereof, to Base Rate Loans.  Until such notice has been withdrawn by
Agent, no further Eurodollar Rate Loans shall be made or continued as such, nor
shall any Borrower (or Administrative Borrower on behalf of any Borrower) have
the right to convert Base Rate Loans to Eurodollar Rate Loans.

 

(c)           Notwithstanding any other
provision herein, if the adoption of or any change in any law, treaty, rule or
regulation or final, non-appealable determination of an arbitrator or a court
or other Governmental Authority or in the interpretation or application thereof
occurring after the date hereof shall make it unlawful for Agent or any Lender
to make or maintain Eurodollar Rate Loans as contemplated by this Agreement, (i) Agent
or such Lender shall promptly give written notice of such circumstances to
Administrative Borrower (which notice shall be withdrawn whenever such
circumstances no longer exist), (ii) the commitment of such Lender
hereunder to make Eurodollar Rate Loans, continue Eurodollar Rate Loans as such
and convert Base Rate Loans to Eurodollar Rate Loans shall forthwith be
canceled and, until such time as it shall no longer be unlawful for such Lender
to make or maintain Eurodollar Rate Loans, such Lender shall then have a
commitment only to make a Base Rate Loan when a Eurodollar Rate Loan is
requested and (iii) such Lender’s Loans then outstanding as Eurodollar
Rate Loans, if any, shall be converted automatically to Base Rate Loans on the
respective last days of the then current Interest Periods with respect to such
Loans or within such earlier period as required by law.  If any such conversion of a Eurodollar Rate
Loan occurs on a day which is not the last day of the then current Interest
Period with respect thereto, Borrowers and Guarantors shall pay to such Lender
such amounts, if any, as may be required pursuant to Section 3.3(d) below.

 

(d)           Borrowers and Guarantors
shall indemnify Agent and each Lender and hold Agent and each Lender harmless
from any loss or expense which Agent or such Lender may sustain or incur as a
consequence of (i) default by any Borrower in making a borrowing of,
conversion into or extension of Eurodollar Rate Loans after such Borrower (or
Administrative Borrower on behalf of such Borrower) has given a notice
requesting the same in accordance with the provisions of this Agreement, (ii) default
by any Borrower in making any prepayment of a Eurodollar Rate Loan after such
Borrower has given a notice thereof in accordance with the provisions of this
Agreement, and (iii) the making of a prepayment of Eurodollar Rate Loans
on a day which is not the last day of an Interest Period with respect
thereto.  With respect to Eurodollar Rate
Loans, such indemnification may include an amount equal to the excess, if any,
of (A) the amount of interest which would have accrued on the amount so
prepaid, or not so borrowed, converted or extended, for the period from the
date of such prepayment or of such failure to borrow, convert or extend to the
last day of the applicable Interest Period (or, in the case of a failure to
borrow, convert or extend, the Interest Period that would have commenced on the
date of such failure) in each case at the applicable rate of interest for such
Eurodollar Rate Loans provided for herein (excluding the Applicable Margin)
over (B) the amount of interest (as determined by such Agent or such
Lender) which would have accrued to Agent or such Lender on such amount by
placing such amount on deposit for a comparable period with leading banks in
the interbank Eurodollar market.  This
covenant shall survive the termination or non-renewal of this Agreement and the
payment of the Obligations.

 

SECTION  4.        CONDITIONS
PRECEDENT

 

4.1           Conditions Precedent to
Initial Loans and Letters of Credit.  The obligation of Lenders to make the initial
Loans or of Issuing Bank to issue the initial Letters of Credit hereunder is
subject to the 

 

46

 

satisfaction of, or waiver
of, immediately prior to or concurrently with the making of such Loan or the
issuance of such Letter of Credit of each of the following conditions
precedent:

 

(a)           Agent shall have received,
in form and substance reasonably satisfactory to Agent, all releases,
terminations and such other documents as Agent may request to evidence and
effectuate the termination by the Existing Lenders of their respective
financing arrangements with Borrowers and Guarantors and the termination and
release by it or them, as the case may be, of any interest in and to any assets
and properties of each Borrower and Guarantor securing such financing
arrangements, duly authorized, executed and delivered by it or each of them,
including, but not limited to, (i) UCC termination statements for all UCC
financing statements relating to such interests previously filed by it or any
of them or their predecessors, as secured party and any Borrower or Guarantor,
as debtor; and (ii) satisfactions and discharges of any mortgages, deeds
of trust or deeds securing such financing arrangements by any Borrower or
Guarantor in favor of it or any of them, in form acceptable for recording with
the appropriate Governmental Authority;

 

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

 

(c)           no material adverse change
shall have occurred in the business, properties, results of operations or
financial condition of Borrowers and Guarantors (taken as a whole), since the
date of Agent’s latest field examination (not including for this purpose the
field review referred to in clause (d) below) or since December 31,
2008 (the date of the most recent audited financial statements);

 

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

 

(e)           the Excess Availability as
determined by Agent, as of the date hereof, shall be not less than $40,000,000
after giving effect to the initial Loans made or to be made and Letters of
Credit issued or to be issued in connection with the initial transactions
hereunder;

 

(f)            Agent shall have received,
in form and substance reasonably satisfactory to Agent, Deposit Account Control
Agreements by and among Agent, each Borrower and Guarantor, as the case may be
and each bank where such Borrower (or Guarantor) has a deposit account, in each
case, duly authorized, executed and delivered by such bank and Borrower or
Guarantor, as the case may be (or Agent shall be the bank’s customer with
respect to such deposit account as Agent may specify); provided, that,
with respect to Deposit Account Control Agreements from depository banks where
accounts are maintained as of the closing date of the Credit Facility, the
failure to deliver such Deposit Account Control Agreements, other than as to
the principal concentration accounts, shall not be a condition of closing so
long as Borrowers shall have used commercially reasonable efforts to obtain
such agreements prior to closing and to the extent not delivered prior to the
closing date of the Credit Facility, Agent shall 

 

47

 

receive the same within
thirty (30) days after the date of the closing of the Credit Facility (or such
later date as Agent may thereafter agree).

 

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

 

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

 

(i)            Agent shall have received
evidence of insurance and loss payee endorsements required hereunder and under
the other Financing Agreements, in form and substance satisfactory to Agent,
and certificates of insurance policies and/or endorsements naming Agent as loss
payee;

 

(j)            Agent shall have received (i) an
opinion of Milbank, Tweed, Hadley & McCloy LLP, (ii) an
opinion of Fredric E. Roth, Jr., General Counsel of FGI, and (iii) an
opinion from Butler, Norris & Gold, Connecticut local counsel to FGI,
each in form and substance satisfactory to Agent;

 

(k)           Agent shall have received
the Solvency Certificate and all financial statements attached thereto as exhibits;

 

(l)            Agent shall have received,
in form and substance reasonably satisfactory to Agent, (i) copies of
documentation for the Senior Notes, which documentation shall include the
Senior Notes Indenture and all exhibits and schedules thereto, and (ii) evidence
of all consents and approvals (if any) required pursuant to the terms of the
Senior Notes Indenture.

 

(m)          the Senior Notes will have
been issued in accordance with the terms and conditions of the Senior Notes
Indenture without any waiver, modification or consent thereunder that is
materially adverse to Lenders (as reasonably determined by Agent) unless
approved by Agent, and FGI shall have received the net proceeds from the Senior
Notes on the date of closing of the Credit Facility substantially contemporaneously
with the initial borrowing of Revolving Loans; and

 

(n)           the Intercreditor Agreement,
and the other Financing Agreements and all instruments and documents hereunder
and thereunder shall have been duly executed and delivered to Agent, in their
respective forms heretofore furnished to Agent or otherwise in form and
substance reasonably satisfactory to Agent.

 

4.2           Conditions Precedent to All
Loans and Letters of Credit.  The obligation of Lenders to make the Loans,
including the initial Loans, or of Issuing Bank to issue any Letter of Credit,
including the initial Letters of Credit, is subject to the further satisfaction
of, or waiver of, immediately prior to or concurrently with the making of each
such Loan or the issuance of such Letter of Credit of each of the following
conditions precedent:

 

(a)           all representations and
warranties contained herein and in the other Financing Agreements shall be true
and correct in all material respects (except where qualified by materiality, in
which case such representations and warranties that are qualified by
materiality shall be true and correct all respects) with the same effect as
though such representations and warranties had been made on and as 

 

48

 

of the date of the making of
each such Loan or providing each such Letter of Credit and after giving effect
thereto, except to the extent that such representations and warranties
expressly relate solely to an earlier date (in which case such representations
and warranties shall have been true and accurate on and as of such earlier
date);

 

(b)           No event shall have occurred
and no condition shall exist that has or may be reasonably be likely to have a
Material Adverse Effect; and

 

(c)           no Default or Event of
Default shall exist or have occurred and be continuing on and as of the date of
the making of such Loan or providing each such Letter of Credit and after
giving effect thereto.

 

SECTION  5.        GRANT
AND PERFECTION OF SECURITY INTEREST

 

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

 

(a)           all Accounts and other
Receivables;

 

(b)           all Additional Interests and
Pledged Shares;

 

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

 

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

 

(e)           all deposit accounts;

 

(f)            all documents;

 

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

 

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

 

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

 

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

 

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

 

(l)            all supporting obligations
and all present and future Liens, security interests, rights, remedies, title
and interest in, to and in respect of Receivables and other Collateral,
including (i) rights and remedies under or relating to guaranties,
contracts of suretyship, letters of credit and credit and other insurance
related to the Collateral, (ii) rights of stoppage in transit,
replevin, repossession, 

 

49

 

reclamation and other rights
and remedies of an unpaid vendor, lienor or secured party, (iii) goods
described in invoices, documents, contracts or instruments with respect to, or
otherwise representing or evidencing, Receivables or other Collateral,
including returned, repossessed and reclaimed goods, and (iv) deposits by
and property of account debtors or other persons securing the obligations of
account debtors;

 

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

 

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

 

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

 

Notwithstanding anything to the contrary in
this Agreement, and except for so long as a security interest in such
Collateral is then in effect to secure the Senior Notes, the Collateral shall
not include (collectively, the “Excluded Assets”): (i) any of the outstanding
voting Capital Stock of a “controlled foreign corporation” (as defined in Section 957
of the Code) in excess of 65% of the voting power of all classes of Capital
Stock of such controlled foreign corporation entitled to vote; (ii) any
interest of a Borrower or Guarantor in any contract, lease, license or other
agreement if the granting of a security interest therein is prohibited by, or
would cause a termination of all or any material rights of a Borrower or
Guarantor under applicable law or would cause a breach, default or invalidation
of, or create a right to terminate, the terms of the written agreement creating
such contract, lease, license or other agreement, to the extent such
prohibition, termination, breach, default or right to terminate is not rendered
unenforceable or ineffective under sections 9-406 through 9-409 of the UCC
or other applicable law, it being understood that, notwithstanding anything set
forth in this clause (ii) to the contrary, to the extent not
prohibited by applicable law, the Agent, for the benefit of the Secured
Parties, shall at all times have a security interest in all rights of such
Borrower or Guarantor to payments of money due or to become due under any such
contract, lease, license or other agreement, and all proceeds thereof, and if
and when the prohibition or event which prevents the granting of a security
interest in such property (or would cause such termination, breach or default)
is removed, terminated or otherwise becomes unenforceable as a matter of
applicable law, the Agent, for the benefit of the Secured Parties, will be
deemed to have, and at all times to have had, a security interest in such
property and Collateral, to the fullest extent permitted under applicable law,
will be deemed to include, and at all times to have included, such property; (iii) Capital
Stock of any Person which is not a Subsidiary to the extent and for so long as
the certificate of incorporation, bylaws, any shareholder agreement or similar
agreement governing the ownership of such Capital Stock by the applicable
Grantor prohibits the granting of a security interest therein; (iv) the
Capital Stock and other securities of any Person that is not required to be a
Guarantor (other than any Capital Stock or securities held in a securities account);
and (v) proceeds and products of any and all of the foregoing excluded
assets described in clause (i) through (iv) above only to the
extent such proceeds and products would constitute property or assets of the
type described in clause (i) through (iv) above.

 

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

 

50

 

such Borrower’s or Guarantor’s Capital Stock
or other securities of such Borrower or Guarantor secure the Obligations
affected thereby, then the Capital Stock and such other securities of such
Borrower or Guarantor will automatically be deemed not to be part of the
Collateral securing the Obligations affected thereby but only to the extent
necessary to not be subject to such requirement, only for so long as required
to not be subject to such requirement and only with respect to Obligations
affected thereby.

 

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

 

5.2           Perfection of Security
Interests.  The following
provisions, to the extent applicable to the delivery of tangible items of
Collateral that constitute Notes Priority Collateral under the Senior Notes
Indenture, are subject to the terms of the Intercreditor Agreement:

 

(a)           Each Borrower and Guarantor
irrevocably and unconditionally authorizes Agent (or its agent) to file at any
time and from time to time such financing statements with respect to the
Collateral naming Agent or its designee as the secured party and such Borrower
or Guarantor as debtor, as Agent may require, and including any other
information with respect to such Borrower or Guarantor or otherwise required by
part 5 of Article 9 of the Uniform Commercial Code of such
jurisdiction as Agent may determine, together with any amendment and continuations
with respect thereto, which authorization shall apply to all financing
statements filed on, prior to or after the date hereof.  Each Borrower and Guarantor hereby ratifies
and approves all financing statements naming Agent or its designee as secured
party and such Borrower or Guarantor, as the case may be, as debtor with
respect to the Collateral (and any amendments with respect to such financing
statements) filed by or on behalf of Agent prior to the date hereof and
ratifies and confirms the authorization of Agent to file such financing
statements (and amendments, if any). 
Each Borrower and Guarantor hereby authorizes Agent to adopt on behalf
of such Borrower and Guarantor any symbol required for authenticating any
electronic filing.  In the event that the
description of the collateral in any financing statement naming Agent or its
designee as the secured party and any Borrower or Guarantor as debtor includes
assets and properties of such Borrower or Guarantor that do not at any time
constitute Collateral, whether hereunder, under any of the other Financing
Agreements or otherwise, the filing of such financing statement shall not
create a security interest in such assets or properties not constituting
Collateral, but shall nonetheless be deemed authorized by such Borrower or
Guarantor to the extent of the Collateral included in such description and it
shall not render the financing statement ineffective as to any of the
Collateral or otherwise affect the financing statement as it applies to any of
the Collateral.  In no event shall any
Borrower or Guarantor at any time file, or permit or cause to be filed, any
correction statement or termination statement with respect to any financing
statement (or amendment or continuation with respect thereto) naming Agent or
its designee as secured party and such Borrower or Guarantor as debtor except
as permitted under Section 9-509(d)(2) of the UCC.

 

(b)           Each Borrower and Guarantor
does not have any chattel paper (whether tangible or electronic) or instruments
(including, without limitation, promissory notes) as of the date hereof (in
each case with a fair market value in excess of $1,000,000 in the aggregate),
except as set forth on Schedule 5.2 to this Agreement.  In the event that any Borrower or Guarantor
shall receive any chattel paper or instrument after the date hereof (in each
case with a fair market value in excess of $1,000,000 in the aggregate),
Borrowers and Guarantors shall promptly notify Agent thereof in writing.  Promptly upon 

 

51

 

the receipt thereof by or on
behalf of any Borrower or Guarantor (including by any agent or representative),
such Borrower or Guarantor shall deliver, or cause to be delivered to Agent,
all tangible chattel paper and instruments that such Borrower or Guarantor has
or may at any time acquire, accompanied by such instruments of transfer or
assignment duly executed in blank as Agent may from time to time specify, in
each case except as Agent may otherwise agree. 
At Agent’s option, each Borrower and Guarantor shall, or Agent may at
any time on behalf of any Borrower or Guarantor, cause the original of any such
instrument or chattel paper to be conspicuously marked in a form and manner
acceptable to Agent with the following legend referring to chattel paper or
instruments as applicable: “This [chattel paper][instrument] is subject to the
security interest of Wachovia Bank, National Association and any sale,
transfer, assignment or encumbrance of this [chattel paper][instrument] violates
the rights of such secured party.”

 

(c)           In the event that any
Borrower or Guarantor shall at any time hold or acquire an interest in any
electronic chattel paper or any “transferable record” (as such term is defined
in Section 201 of the Federal Electronic Signatures in Global and National
Commerce Act or in Section 16 of the Uniform Electronic Transactions Act
as in effect in any relevant jurisdiction), such Borrower or Guarantor shall
promptly notify Agent thereof in writing. 
Promptly upon Agent’s request, such Borrower or Guarantor shall take, or
cause to be taken, such actions as Agent may request to give Agent control of
such electronic chattel paper under Section 9-105 of the UCC and control
of such transferable record under Section 201 of the Federal Electronic
Signatures in Global and National Commerce Act or, as the case may be, Section 16
of the Uniform Electronic Transactions Act, as in effect in such jurisdiction.

 

(d)           Each Borrower and Guarantor
does not have any deposit accounts as of the date hereof, except as set forth
on Schedule 5.2 to this Agreement. 
Borrowers and Guarantors shall not, directly or indirectly, after the
date hereof open, establish or maintain any deposit account unless each of the
following conditions is satisfied:  (i) Agent
shall have received not less than five (5) Business Days prior written
notice of the intention of any Borrower or Guarantor to open or establish such
account which notice shall specify in reasonable detail and specificity
acceptable to Agent the name of the account, the owner of the account, the name
and address of the bank at which such account is to be opened or established,
the individual at such bank with whom such Borrower or Guarantor is dealing and
the purpose of the account, (ii) the bank where such account is opened or
maintained shall be acceptable to Agent, and (iii) on or before the
opening of such deposit account, such Borrower or Guarantor shall deliver to
Agent a Deposit Account Control Agreement with respect to such deposit account
duly authorized, executed and delivered by such Borrower or Guarantor and the
bank at which such deposit account is opened and maintained on terms and
conditions reasonably acceptable to Agent. 
The terms of this subsection (d) shall not apply to deposit
accounts specifically and exclusively used for payroll, payroll taxes and other
employee wage and benefit payments to or for the benefit of any Borrower’s or
Guarantor’s salaried employees.

 

(e)           (i)                                     In the event
that any Borrower or Guarantor shall be entitled to or shall at any time after
the date hereof hold or acquire any certificated securities, such Borrower or
Guarantor shall promptly endorse, assign and deliver the same to Agent,
accompanied by such instruments of transfer or assignment duly executed in blank
as Agent may from time to time specify. 
If any securities, now or hereafter acquired by any Borrower or
Guarantor are uncertificated and are issued to such Borrower or Guarantor or
its nominee directly by the issuer thereof, such Borrower or Guarantor shall
immediately notify Agent thereof and shall as Agent may specify, either (A) cause
the issuer to agree to comply with instructions from Agent as to such
securities, without further consent of any Borrower or Guarantor or such
nominee, or (B) arrange for Agent to become the registered owner of the
securities.

 

(ii)                                  Each Borrower
and Guarantor does not have any investment account, securities account,
commodity account or any other similar account as of the date hereof, except as
set 

 

52

 

forth on Schedule 5.2
to this Agreement.  Borrowers and
Guarantors shall not, directly or indirectly, after the date hereof open,
establish or maintain any investment account, securities account, commodity
account or any other similar account (other than a deposit account) with any
securities intermediary or commodity intermediary unless each of the following
conditions is satisfied: (A) Agent shall have received not less than five (5) Business
Days prior written notice of the intention of such Borrower or Guarantor to
open or establish such account which notice shall specify in reasonable detail
and specificity acceptable to Agent the name of the account, the owner of the
account, the name and address of the securities intermediary or commodity
intermediary at which such account is to be opened or established, the
individual at such intermediary with whom such Borrower or Guarantor is dealing
and the purpose of the account, (B) the securities intermediary or
commodity intermediary (as the case may be) where such account is opened or
maintained shall be acceptable to Agent, and (C) on or before the opening
of such investment account, securities account or other similar account with a
securities intermediary or commodity intermediary, such Borrower or Guarantor
shall execute and deliver, and cause to be executed and delivered to Agent, an
Investment Property Control Agreement with respect thereto duly authorized,
executed and delivered by such Borrower or Guarantor and such securities
intermediary or commodity intermediary on terms and conditions reasonably
acceptable to Agent.

 

(f)            Borrowers and Guarantors are
not the beneficiary or otherwise entitled to any right to payment under any
letter of credit, banker’s acceptance or similar instrument as of the date
hereof, in each case, with a face amount in excess of $1,000,000 in the
aggregate except as set forth on Schedule 5.2 to this Agreement.  In the event that any Borrower or Guarantor
shall be entitled to or shall receive any right to payment under any letter of
credit, banker’s acceptance or any similar instrument, whether as beneficiary
thereof or otherwise after the date hereof in each case, with a face amount in
excess of $1,000,000 in the aggregate, such Borrower or Guarantor shall
promptly notify Agent thereof in writing. 
Such Borrower or Guarantor shall immediately, as Agent may specify,
either (i) use its commercially reasonable efforts to deliver, or cause to
be delivered to Agent, with respect to any such letter of credit, banker’s
acceptance or similar instrument, the written agreement of the issuer and any
other nominated person obligated to make any payment in respect thereof
(including any confirming or negotiating bank), in form and substance
satisfactory to Agent, consenting to the assignment of the proceeds of the
letter of credit to Agent by such Borrower or Guarantor and agreeing to make
all payments thereon directly to Agent or as Agent may otherwise direct or (ii) cause
Agent to become, at Borrowers’ expense, the transferee beneficiary of the
letter of credit, banker’s acceptance or similar instrument (as the case may
be).

 

(g)           Borrowers and Guarantors do
not have any commercial tort claims as of the date hereof in excess of
$1,000,000, except as set forth on Schedule 5.2 to this Agreement.  In the event that any Borrower or Guarantor
shall at any time after the date hereof have any commercial tort claims (other
than, so long as no Default or Event of Default exists, commercial tort claims
for less than $1,000,000), such Borrower or Guarantor shall promptly notify
Agent thereof in writing, which notice shall (i) set forth in reasonable
detail the basis for and nature of such commercial tort claim and (ii) include
the express grant by such Borrower or Guarantor to Agent of a security interest
in such commercial tort claim (and the proceeds thereof).  In the event that such notice does not
include such grant of a security interest, the sending thereof by such Borrower
or Guarantor to Agent shall be deemed to constitute such grant to Agent. Upon
the sending of such notice, any commercial tort claim described therein shall
constitute part of the Collateral and shall be deemed included therein.  Without limiting the authorization of Agent
provided in Section 5.2(a) hereof or otherwise arising by the
execution by such Borrower or Guarantor of this Agreement or any of the other
Financing Agreements, Agent is hereby irrevocably authorized from time to time
and at any time to file such financing statements naming Agent or its designee
as secured party and such Borrower or Guarantor as debtor, or any amendments to
any financing statements, covering any such commercial tort claim as
Collateral. In addition, each Borrower and Guarantor shall promptly upon Agent’s
request, execute and deliver, or cause to be executed and delivered, to Agent
such 

 

53

 

other agreements, documents
and instruments as Agent may require in connection with such commercial tort
claim.

 

(h)           Borrowers and Guarantors do
not have any goods, documents of title or other Collateral in the custody,
control or possession of a third party as of the date hereof, except as set
forth on Schedule 5.2 to this Agreement and except for goods located in
the United States in transit to a location of a Borrower or Guarantor permitted
herein in the ordinary course of business of such Borrower or Guarantor in the
possession of the carrier transporting such goods.  In the event that any goods, documents of
title or other Collateral are at any time after the date hereof in the custody,
control or possession of any other person not referred to on Schedule 5.2
to this Agreement or such carriers, Borrowers and Guarantors shall promptly
notify Agent thereof in writing. 
Promptly upon Agent’s request, Borrowers and Guarantors shall deliver to
Agent a Collateral Access Agreement duly authorized, executed and delivered by
such person and the Borrower or Guarantor that is the owner of such Collateral.

 

(i)            Borrowers and Guarantors
shall take any other actions reasonably requested by Agent from time to time to
cause the attachment, perfection and priority required under this Agreement of,
and the ability of Agent to enforce, the security interest of Agent in any and
all of the Collateral, including, without limitation, (i) executing,
delivering and, where appropriate, filing financing statements and amendments
relating thereto under the UCC or other applicable law, to the extent, if any,
that any Borrower’s or Guarantor’s signature thereon is required therefor, (ii) causing
Agent’s name to be noted as secured party on any certificate of title for a
titled good if such notation is a condition to attachment, perfection or
priority of, or ability of Agent to enforce, the security interest of Agent in
such Collateral, (iii) complying with any provision of any statute,
regulation or treaty of the United States as to any Collateral if compliance
with such provision is a condition to attachment, perfection or priority of, or
ability of Agent to enforce, the security interest of Agent in such Collateral,
(iv) obtaining the consents and approvals of any Governmental Authority or
third party, including, without limitation, any consent of any licensor, lessor
or other person obligated on Collateral, and (v) taking all actions
required by any earlier versions of the UCC or by other law, as applicable in
any relevant jurisdiction.

 

(j)            Notwithstanding anything in
this Agreement to the contrary, Borrowers and Guarantors shall not be required
to take any action to perfect the security interest of Agent, other than the
filing of UCC-1 financing statements, in any of the following assets: (i) any
vehicles or equipment subject to certificate of title statutes, (ii) any
Real Property, (iii) assets located in any country other than the United
States of America, except Accounts owing by foreign account debtors and,
following the occurrence of an Event of Default, Intellectual Property
registered under foreign laws, (iv) Excluded Assets and (v) except as
set forth in clause (iii) above, Intellectual Property that is not
registered with the United States Copyright Office or the United States Patent
and Trademark Office, or any successor office thereto.

 

(k)           The Liens on Collateral
granted hereunder are given as security only and shall not subject Agent or any
other Secured Party to, or in any way modify, any obligations or liability of
any Borrower or Guarantor relating to any Collateral.

 

SECTION  6.        COLLECTION
AND ADMINISTRATION

 

6.1           Borrowers’ Loan Accounts.  Agent shall maintain one or more loan account(s) on
its books in which shall be recorded (a) all Loans, Letters of Credit and
other Obligations and the Collateral, (b) all payments made by or on
behalf of any Borrower or Guarantor and (c) all other appropriate debits
and credits as provided in this Agreement, including fees, charges, costs,
expenses and interest.  All 

 

54

 

entries in the loan account(s) shall
be made in accordance with Agent’s customary practices as in effect from time
to time.

 

6.2           Statements.  Agent shall render to Administrative Borrower
each month a statement setting forth the balance in the Borrowers’ loan account(s) maintained
by Agent for Borrowers pursuant to the provisions of this Agreement, including
principal, interest, fees, costs and expenses. 
Each such statement shall be subject to subsequent adjustment by Agent
but shall, absent manifest errors or omissions, be considered correct and
deemed accepted by Borrowers and Guarantors and conclusively binding upon
Borrowers and Guarantors as an account stated except to the extent that Agent
receives a written notice from Administrative Borrower of any specific
exceptions of Administrative Borrower thereto within thirty (30) days
after the date such statement has been received by Administrative
Borrower.  Until such time as Agent shall
have rendered to Administrative Borrower a written statement as provided above,
the balance in any Borrower’s loan account(s) shall be presumptive
evidence of the amounts due and owing to Agent and Lenders by Borrowers and
Guarantors.

 

6.3           Collection of Accounts.

 

(a)           Borrowers shall establish
and maintain, at their expense, blocked accounts or lockboxes and related
blocked accounts (in either case, “Blocked Accounts”), with such banks as are
reasonably acceptable to Agent into which, Borrowers shall promptly deposit and
direct their respective account debtors to directly remit all payments on
Receivables and all payments constituting proceeds of Inventory or other Collateral
in the identical form in which such payments are made, whether by cash, check
or other manner.  Borrowers shall
deliver, or cause to be delivered to Agent a Deposit Account Control Agreement
duly authorized, executed and delivered by each bank where a Blocked Account is
maintained as provided in Section 5.2 hereof.  Prior to the occurrence of a Cash Management
Event, Borrowers shall be permitted to transfer cash from the Blocked Accounts
and to use funds therein for working capital and general corporate purposes to
the extent permitted herein. Upon the occurrence of a Cash Management Event, (i) each
Borrower and Guarantor agrees that all payments made to such Blocked Accounts
or other funds received and collected by Agent or any Lender, whether in respect
of the Receivables, as proceeds of Inventory or other Collateral or otherwise
shall be treated as payments to Agent and Lenders in respect of the outstanding
Obligations and therefore shall constitute the property of Agent and Lenders to
the extent of the then outstanding Obligations, and (ii) Agent may
disregard Borrowers’ instructions with respect to the Blocked Accounts and
exercise exclusive dominion and control over the Blocked Accounts and apply
funds deposited therein as provided herein. 
Agent’s right to exercise exclusive dominion and control over the
Blocked Accounts shall continue in effect only until the occurrence of a Cash
Management Reinstatement Event, unless a subsequent Cash Management Event shall
occur, whereupon Agent shall have the rights of exclusive dominion and control
as described herein.

 

(b)           For purposes of calculating
the amount of the Loans available to each Borrower, such payments will be
applied (conditional upon final collection) to the Obligations on the Business
Day of receipt by Agent of immediately available funds in the Agent Payment
Account provided such payments and notice thereof are received in accordance
with Agent’s usual and customary practices as in effect from time to time and
within sufficient time to credit such Borrower’s loan account on such day, and
if not, then on the next Business Day. 
For the purposes of calculating interest on the Obligations, such
payments or other funds received will be applied (conditional upon final collection)
to the Obligations on the date of receipt of immediately available funds by
Agent in the Agent Payment Account provided such payments or other funds and
notice thereof are received in accordance with Agent’s usual and customary
practices as in effect from time to time and within sufficient time to credit
such Borrower’s loan account on such day, and if not, then on the next Business
Day.

 

55

 

(c)           Each Borrower
and Guarantor and their respective employees and agents shall, acting as
trustee for Agent, receive, as the property of Agent, any monies, checks,
notes, drafts or any other payment relating to and/or proceeds of Accounts or
other Collateral which come into their possession or under their control and
immediately upon receipt thereof, shall deposit or cause the same to be
deposited in the Blocked Accounts, or remit the same or cause the same to be
remitted, in kind, to Agent.  Borrowers
agree to reimburse Agent on demand for any amounts owed or paid to any bank or
other financial institution at which a Blocked Account or any other deposit
account or investment account is established or any other bank, financial
institution or other person involved in the transfer of funds to or from the
Blocked Accounts arising out of Agent’s payments to or indemnification of such
bank, financial institution or other person. 
The obligations of Borrowers to reimburse Agent for such amounts
pursuant to this Section 6.3 shall survive the termination of this
Agreement.

 

6.4           Payments.

 

(a)           All Obligations
shall be payable to the Agent Payment Account as provided in Section 6.3
or such other place as Agent (in its capacity as such) may designate from time
to time.  Subject to the other terms and
conditions contained herein, Agent shall apply payments received or collected
from any Borrower or Guarantor or for the account of any Borrower or Guarantor
(including following an Event of Default, or (in the case of cash) a Cash
Management Event, the monetary proceeds of collections or of realization upon
any Collateral) as follows: first, to the payment in full of any fees,
indemnities or expense reimbursements then due to Agent from any Borrower or
Guarantor; second, to the payment in full of any fees, indemnities or
expense reimbursements then due to Lenders and Issuing Bank from any Borrower
or Guarantor; third, to the payment in full of interest then due in
respect of any Loans (and including any Special Agent Advances) or Letter of
Credit Obligations; fourth, to the payment in full of principal then due
in respect of Special Agent Advances; fifth, to the payment in full of
principal then due in respect of any Swing Line Loans; sixth, to the
payment in full of principal due in respect of the Loans; seventh, to
pay or prepay any other Obligations (but not including for this purpose any
Obligations arising under or pursuant to any Bank Products) whether or not then
due, in such order and manner as Agent determines and, at any time an Event of
Default exists or has occurred and is continuing, to provide cash collateral
for any Letter of Credit Obligations or other contingent Obligations (but not
including for this purpose any Obligations arising under or pursuant to any Bank
Products); and eighth, to pay or prepay any Obligations arising under or
pursuant to any Bank Products owed to any Bank Product Provider and secured by
the Collateral, on a pro rata basis. 
Notwithstanding anything to the contrary contained in this Agreement, (i) unless
so directed by Administrative Borrower, or unless a Default or an Event of
Default shall exist or have occurred and be continuing, Agent shall not apply
any payments which it receives to any Eurodollar Rate Loans, except (A) on
the expiration date of the Interest Period applicable to any such Eurodollar
Rate Loans or (B) in the event that there are no outstanding Base Rate
Loans and (ii) to the extent any Borrower uses any proceeds of the Loans
or Letters of Credit to acquire rights in or the use of any Collateral or to
repay any Indebtedness used to acquire rights in or the use of any Collateral,
payments in respect of the Obligations shall be deemed applied first to the
Obligations arising from Loans and Letters of Credit that were not used for
such purposes and second to the Obligations arising from Loans and Letters of
Credit the proceeds of which were used to acquire rights in or the use of any
Collateral in the chronological order in which such Borrower acquired such
rights in or the use of such Collateral.

 

(b)           At Agent’s
option, all principal, interest, fees, costs, expenses and other charges
provided for in this Agreement or the other Financing Agreements may be charged
directly to the loan account(s) of any Borrower maintained by Agent.  If after receipt of any payment of, or
proceeds of Collateral applied to the payment of, any of the Obligations,
Agent, any Lender or Issuing Bank is required to surrender or return such
payment or proceeds to any Person for any reason, then the Obligations intended
to be satisfied by such payment or proceeds shall be reinstated and continue
and this 

 

56

 

Agreement
shall continue in full force and effect as if such payment or proceeds had not
been received by Agent or such Lender. 
Borrowers and Guarantors shall be liable to pay to Agent, and do hereby
indemnify and hold Agent and Lenders harmless for the amount of any payments or
proceeds surrendered or returned.  This Section 6.4(b) shall
remain effective notwithstanding any contrary action which may be taken by
Agent or any Lender in reliance upon such payment or proceeds.  This Section 6.4 shall survive the
payment of the Obligations and the termination of this Agreement.

 

(c)           In addition to
Borrowers’ obligation to pay the entire amount of the Obligations upon the
Maturity Date or any other effective date of termination of the Financing
Agreements to the extent required under Section 13.1, Borrowers shall also
be required to repay Revolving Loans, in amounts equal to (i) 100% of the
net proceeds of insurance and condemnation recoveries with respect to the First
Priority Collateral, or, at any time prior to the occurrence of a Cash
Management Event, if less, the amount of the Borrowing Base attributable to the
affected First Priority Collateral; (ii) 100% of the net proceeds from
asset sales of First Priority Collateral, or, at any time prior to the
occurrence of a Cash Management Event, if less, the amount of the Borrowing
Base attributable to the affected First Priority Collateral, other than
Inventory sold in the ordinary course of business; (iii) following the
occurrence of a Cash Management Event, the net proceeds remaining from asset
sales of Notes Priority Collateral following application thereof in accordance
with the Indenture; (iv) following the occurrence of a Cash Management
Event, 100% of the net proceeds of any issuance of equity securities or from
any capital contribution; and (v) following the occurrence of a Cash
Management Event, 100% of the net proceeds of the issuance or incurrence of
debt; provided that mandatory prepayments under clauses (iv) and (v) shall
be subject to the terms of the Intercreditor Agreement.

 

6.5           Taxes.

 

(a)           Any and all
payments by or on account of any of the Obligations shall be made free and
clear of and without deduction or withholding for or on account of, any setoff,
counterclaim, defense, duties, taxes, levies, imposts, fees, deductions,
charges, withholdings, liabilities, restrictions or conditions of any kind,
excluding, in the case of each Lender, Issuing Bank and Agent (A) taxes
imposed on or measured by its net income or overall gross income, and franchise
taxes imposed on it, in each case by the jurisdiction (or any political
subdivision thereof) under the laws of which such Lender, Issuing Bank or Agent
(as the case may be) is organized, in which it is resident for tax purposes or
with which it has a present or former connection (other than a connection
arising solely as a result of the transactions contemplated by the Financing
Agreements) and (B) any United States withholding taxes payable with
respect to payments under the Financing Agreements under laws (including any
statute, treaty or regulation) in effect on the date hereof (or, in the case of
an Eligible Transferee, the date of the Assignment and Acceptance) applicable
to such Lender, Issuing Bank or Agent, as the case may be, but not excluding
any United States withholding taxes payable as a result of any change in such
laws occurring after the date hereof (or, in the case of an Eligible
Transferee, after the date of such Assignment and Acceptance) (all such
non-excluded taxes, levies, imposts, fees, deductions, charges, withholdings
and liabilities being hereinafter referred to as “Taxes”).

 

(b)           If any Taxes
shall be required by law to be deducted from or in respect of any sum payable
in respect of the Obligations to any Lender, Issuing Bank or Agent (i) the
sum payable shall be increased as may be necessary so that after making all
required deductions for Taxes (including deductions applicable to additional
sums payable under this Section 6.5), such Lender, Issuing Bank or Agent
(as the case may be) receives an amount equal to the sum it would have received
had no such deductions of Taxes been made, (ii) the relevant Borrower or
Guarantor shall make such deductions, (iii) the relevant Borrower or
Guarantor shall pay the full amount deducted to the relevant taxing authority
or other authority in accordance with applicable law and (iv) the relevant
Borrower or Guarantor shall deliver to Agent evidence of such payment.

 

57

 

(c)           In addition,
each Borrower and Guarantor agrees to pay any present or future stamp or
documentary taxes or any other excise taxes, charges or similar levies of the
United States or any political subdivision thereof or any applicable foreign
jurisdiction, and all liabilities with respect thereto, in each case arising
from any payment made hereunder or under any of the other Financing Agreements
or from the execution, delivery or registration of, or otherwise with respect
to, this Agreement or any of the other Financing Agreements (collectively, “Other
Taxes”).

 

(d)           Each Borrower
and Guarantor shall indemnify each Lender, Issuing Bank and Agent for the full
amount of Taxes and Other Taxes (including any Taxes and Other Taxes imposed by
any jurisdiction on amounts payable under this Section 6.5) paid by such
Lender, Issuing Bank or Agent (as the case may be) and any liability (including
for penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted.  This indemnification shall be
made within thirty (30) days from the date such Lender, Issuing Bank or
Agent (as the case may be) makes written demand therefor.  A certificate as to the amount of such
payment or liability delivered to Administrative Borrower by a Lender, Issuing
Bank (with a copy to Agent) or by Agent on its own behalf or on behalf of a
Lender or Issuing Bank, shall be conclusive absent manifest error.  Each Lender agrees that upon request of the
Borrower, it will reasonably cooperate with the Borrower (at the Borrower’s
sole expense) in seeking a refund of Taxes as to which it has received an
indemnity payment hereunder if in such Lender’s sole discretion it can do so
without prejudice to its commercial or legal position, provided that nothing in
this section shall be construed to require a Lender to provide access to its
tax returns or other information considered to be confidential or to rearrange
its tax affairs other than as it sees fit.

 

(e)           As soon as
practicable after any payment of Taxes or Other Taxes by any Borrower or
Guarantor, such Borrower or Guarantor shall furnish to Agent, at its address
referred to herein, the original or a certified copy of a receipt evidencing
payment thereof.

 

(f)            Without
prejudice to the survival of any other agreements of any Borrower or Guarantor
hereunder or under any of the other Financing Agreements, the agreements and
obligations of such Borrower or Guarantor contained in this Section 6.5
shall survive the termination of this Agreement and the payment in full of the
Obligations.

 

(g)           Any Foreign
Lender that is entitled to an exemption from or reduction of withholding tax
under the law of the jurisdiction in which the applicable Borrower is resident
for tax purposes, or any treaty to which such jurisdiction is a party, with
respect to payments hereunder or under any of the other Financing Agreements
shall deliver to Administrative Borrower (with a copy to Agent), at the time or
times prescribed by applicable law or reasonably requested by Administrative
Borrower or Agent (in such number of copies as is reasonably requested by the
recipient), whichever of the following is applicable (but only if such Foreign
Lender is legally entitled to do so):  (i) duly
completed copies of Internal Revenue Service Form W-8BEN claiming
exemption from, or a reduction to, withholding tax under an income tax treaty,
or any successor form, (ii) duly completed copies of Internal Revenue
Service Form W-8ECI claiming exemption from withholding because the income
is effectively connection with a U.S. trade or business or any successor form, (iii) in
the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under Sections 871(h) or 881(c) of the Code, (A) a
certificate of the Lender to the effect that such Lender is not a “bank” within
the meaning of Section 881(c)(3)(A) of the Code, a “10 percent
shareholder” of a Borrower within the meaning of Section 881(c)(3)(B) of
the Code or a “controlled foreign corporation” described and Section 881(c)(3)(C) of
the Code and (B) duly completed copies of Internal Revenue Service Form W-8BEN
claiming exemption from withholding under the portfolio interest exemption or
any successor form or (iv) any other applicable form, certificate or
document prescribed by applicable law as a basis for claiming exemption from or
a reduction in United States withholding tax duly completed together with such
supplementary documentation as may be 

 

58

 

prescribed
by applicable law to permit a Borrower to determine the withholding or
deduction required to be made.  Unless
Administrative Borrower and Agent have received forms or other documents
satisfactory to them indicating that a payment hereunder or under any of the
other Financing Agreements to or for a Foreign Lender are not subject to United
States withholding tax or are subject to such tax at a rate reduced by an
applicable tax treaty, Borrowers or Agent shall withhold amounts required to be
withheld by applicable requirements of law from such payments at the applicable
statutory rate.

 

(h)           Any Lender
claiming any additional amounts payable pursuant to this Section 6.5 shall
use its reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions) to change the jurisdiction of its applicable lending
office if the making of such a change would avoid the need for, or reduce the
amount of, any such additional amounts that would be payable or may thereafter
accrue and would not, in the sole determination of such Lender, be otherwise
disadvantageous to such Lender.

 

(i)            If the Lender,
Issuing Bank or Agent determines, in its sole discretion, that it has received
a refund of any Taxes or Other Taxes as to which it has been indemnified by the
Borrower or with respect to which the Borrower has paid additional amounts
pursuant to this Section 6.5, it shall pay over such refund to the
Borrower (but only to the extent of indemnity payments made, or additional
amounts paid, by the Borrower under this Section 6.5 with respect to the
Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Lender, Issuing Bank or Agent and without interest (other than
any interest paid by the relevant Government Authority with respect to such
refund); provided that the Borrower, upon the request of the Lender, Issuing
Bank or Agent, agrees to repay the amount paid over to the Borrower (plus any
penalties, interest or other charges imposed by the relevant Government
Authority) to the Lender, Issuing Bank or Agent in the event the Lender,
Issuing Bank or Agent is required to repay such refund to such Government
Authority.  This Section 6.5 shall
not be construed to require the Lender, Issuing Bank or Agent to make available
its tax returns (or any other information relating to its taxes which it deems
confidential) to the Borrower or any other Person.

 

6.6           Authorization
to Make Loans.  Agent and
Lenders are authorized to make the Loans based upon telephonic or other
instructions received from anyone purporting to be an officer of Administrative
Borrower or any Borrower or other authorized person or, at the discretion of
Agent, if such Loans are necessary to satisfy any Obligations.  All requests for Loans or Letters of Credit
hereunder shall specify the date on which the requested advance is to be made
(which day shall be a Business Day) and the amount of the requested Loan.  Requests received after 11:00 a.m.
(Charlotte, North Carolina time) on any day shall be deemed to have been made
as of the opening of business on the immediately following Business Day.  All Loans and Letters of Credit under this
Agreement shall be conclusively presumed to have been made to, and at the
request of and for the benefit of, any Borrower or Guarantor when deposited to
the credit of any Borrower or Guarantor or otherwise disbursed or established
in accordance with the instructions of any Borrower or Guarantor or in
accordance with the terms and conditions of this Agreement.

 

6.7           Use of
Proceeds.  Borrowers
shall use the initial proceeds of the Loans and Letters of Credit hereunder
only for: (a) payments to each of the persons listed in the disbursement
direction letter furnished by Borrowers to Agent on or about the date hereof,
and (b) costs, expenses and fees in connection with the preparation,
negotiation, execution and delivery of this Agreement and the other Financing
Agreements.  All other Loans made or
Letters of Credit provided to or for the benefit of any Borrower pursuant to
the provisions hereof shall be used by such Borrower only for general
operating, working capital and other proper corporate purposes of such Borrower
including, without limitation, acquisitions and investments, dividends and
other restricted payments not otherwise prohibited by the terms hereof.  None of the proceeds will be used, directly
or indirectly, for the purpose of purchasing or carrying any margin security or
for the purposes of reducing or retiring any indebtedness which was 

 

59

 

originally
incurred to purchase or carry any margin security or for any other purpose
which might cause any of the Loans to be considered a “purpose credit” within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System, as amended.

 

6.8           Appointment of
Administrative Borrower as Agent for Requesting Loans and Receipts of Loans and
Statements.

 

(a)           Each Borrower
hereby irrevocably appoints and constitutes Administrative Borrower as its
agent and attorney-in-fact to request and receive Loans and Letters of Credit
pursuant to this Agreement and the other Financing Agreements from Agent or any
Lender in the name or on behalf of such Borrower.  Agent and Lenders may disburse the Loans to
such bank account of Administrative Borrower or a Borrower or otherwise make
such Loans to a Borrower and provide such Letters of Credit to a Borrower as
Administrative Borrower may designate or direct, without notice to any other
Borrower or Guarantor.  Notwithstanding
anything to the contrary contained herein, Agent may at any time and from time
to time require that Loans to or for the account of any Borrower be disbursed
directly to an operating account of such Borrower.

 

(b)           Administrative
Borrower hereby accepts the appointment by Borrowers to act as the agent and
attorney-in-fact of Borrowers pursuant to this Section 6.8. Administrative
Borrower shall ensure that the disbursement of any Loans to each Borrower
requested by or paid to or for the account of Administrative Borrower, or the
issuance of any Letter of Credit for a Borrower hereunder, shall be paid to or
for the account of such Borrower.

 

(c)           Each Borrower
and other Guarantor hereby irrevocably appoints and constitutes Administrative
Borrower as its agent to receive statements on account and all other notices
from Agent and Lenders with respect to the Obligations or otherwise under or in
connection with this Agreement and the other Financing Agreements.

 

(d)           Any notice,
election, representation, warranty, agreement or undertaking by or on behalf of
any other Borrower or any Guarantor by Administrative Borrower shall be deemed
for all purposes to have been made by such Borrower or Guarantor, as the case
may be, and shall be binding upon and enforceable against such Borrower or
Guarantor to the same extent as if made directly by such Borrower or Guarantor.

 

(e)           No purported
termination of the appointment of Administrative Borrower as agent as aforesaid
shall be effective, except after ten (10) days’ prior written notice to
Agent.

 

6.9           Pro Rata
Treatment.  Except to
the extent otherwise provided in this Agreement or as otherwise agreed by
Lenders:  (a) the making and
conversion of Loans shall be made among the Lenders based on their respective
Pro Rata Shares as to the Loans and (b) each payment on account of any
Obligations to or for the account of one or more of Lenders in respect of any
Obligations due on a particular day shall be allocated among the Lenders
entitled to such payments based on their respective Pro Rata Shares and shall
be distributed accordingly.

 

6.10         Sharing of
Payments, Etc.

 

(a)           Each Borrower
and Guarantor agrees that, in addition to (and without limitation of) any right
of setoff, banker’s Lien or counterclaim Agent or any Lender may otherwise
have, each Lender shall be entitled, at its option (but subject, as among Agent
and Lenders, to the provisions of Section 12.3(b) hereof), to offset
balances held by it for the account of such Borrower or Guarantor at any of its
offices, in dollars or in any other currency, against any principal of or
interest on any Loans owed to 

 

60

 

such
Lender or any other amount payable to such Lender hereunder, that is not paid
when due (regardless of whether such balances are then due to such Borrower or
Guarantor), in which case it shall promptly notify Administrative Borrower and
Agent thereof; provided, that, such Lender’s failure to give such
notice shall not affect the validity thereof.

 

(b)           If any Lender
(including Agent) shall obtain from any Borrower or Guarantor payment of any
principal of or interest on any Loan owing to it or payment of any other amount
under this Agreement or any of the other Financing Agreements through the
exercise of any right of setoff, banker’s Lien or counterclaim or similar right
or otherwise (other than from Agent as provided herein), and, as a result of
such payment, such Lender shall have received more than its Pro Rata Share of
the principal of the Loans or more than its share of such other amounts then
due hereunder or thereunder by any Borrower or Guarantor to such Lender than
the percentage thereof received by any other Lender, it shall promptly pay to
Agent, for the benefit of Lenders, the amount of such excess and simultaneously
purchase from such other Lenders a participation in the Loans or such other
amounts, respectively, owing to such other Lenders (or such interest due
thereon, as the case may be) in such amounts, and make such other adjustments
from time to time as shall be equitable, to the end that all Lenders shall
share the benefit of such excess payment (net of any expenses that may be
incurred by such Lender in obtaining or preserving such excess payment) in
accordance with their respective Pro Rata Shares or as otherwise agreed by
Lenders.  To such end all Lenders shall
make appropriate adjustments among themselves (by the resale of participation
sold or otherwise) if such payment is rescinded or must otherwise be restored.

 

(c)           Each Borrower
and Guarantor agrees that any Lender purchasing a participation (or direct
interest) as provided in this Section may exercise, in a manner consistent
with this Section, all rights of setoff, banker’s lien, counterclaim or similar
rights with respect to such participation as fully as if such Lender were a
direct holder of Loans or other amounts (as the case may be) owing to such
Lender in the amount of such participation.

 

(d)           Nothing
contained herein shall require any Lender to exercise any right of setoff,
banker’s lien, counterclaims or similar rights or shall affect the right of any
Lender to exercise, and retain the benefits of exercising, any such right with
respect to any other Indebtedness or obligation of any Borrower or
Guarantor.  If, under any applicable
bankruptcy, insolvency or other similar law, any Lender receives a secured
claim in lieu of a setoff to which this Section applies, such Lender
shall, to the extent practicable, assign such rights to Agent for the benefit
of Lenders and, in any event, exercise its rights in respect of such secured
claim in a manner consistent with the rights of Lenders entitled under this Section to
share in the benefits of any recovery on such secured claim.

 

6.11         Settlement Procedures.

 

(a)           In order to
administer the Credit Facility in an efficient manner and to minimize the
transfer of funds between Agent and Lenders, Agent may, at its option, subject
to the terms of this Section, make available, on behalf of Lenders, including
the Swing Line Lender, the full amount of the Loans requested or charged to any
Borrower’s loan account(s) or otherwise to be advanced by Lenders pursuant
to the terms hereof, without requirement of prior notice to Lenders of the
proposed Loans.

 

(b)           With respect to
all Revolving Loans made by Agent on behalf of Lenders as provided in this
Section, or any Swing Line Loans made by Swing Line Lender or Agent on behalf
of Swing Line Lender, the amount of each Lender’s Pro Rata Share of the
outstanding Loans shall be computed weekly, and shall be adjusted upward or
downward on the basis of the amount of the outstanding Loans as of 5:00 p.m.
(Charlotte, North Carolina time) on the Business Day immediately preceding the
date of each settlement computation; provided, that, Agent
retains the absolute right at any time or from time to time to make the above
described adjustments at intervals more frequent than 

 

61

 

weekly,
but in no event more than twice in any week. 
Agent shall deliver to each of the Lenders after the end of each week,
or at such lesser period or periods as Agent shall determine, a summary
statement of the amount of outstanding Loans for such period (such week or
lesser period or periods being hereinafter referred to as a “Settlement Period”).  If the summary statement is sent by Agent and
received by a Lender prior to 12:00 p.m. (Charlotte, North Carolina time),
then such Lender shall make the settlement transfer described in this Section by
no later than 3:00 p.m. (Charlotte, North Carolina time), on the same
Business Day and if received by a Lender after 12:00 p.m. (Charlotte,
North Carolina time), then such Lender shall make the settlement transfer by not
later than 3:00 p.m. (Charlotte, North Carolina time) on the next Business
Day following the date of receipt.  If,
as of the end of any Settlement Period, the amount of a Lender’s Pro Rata Share
of the outstanding Loans is more than such Lender’s Pro Rata Share of the
outstanding Loans as of the end of the previous Settlement Period, then such
Lender shall forthwith (but in no event later than the time set forth in the
preceding sentence) transfer to Agent by wire transfer in immediately available
funds the amount of the increase. 
Alternatively, if the amount of a Lender’s Pro Rata Share of the
outstanding Loans in any Settlement Period is less than the amount of such
Lender’s Pro Rata Share of the outstanding Loans for the previous Settlement
Period, Agent shall forthwith transfer to such Lender by wire transfer in
immediately available funds the amount of the decrease.  The obligation of each of the Lenders to
transfer such funds and effect such settlement shall be irrevocable and
unconditional and without recourse to or warranty by Agent.  Agent and each Lender agrees to mark its
books and records at the end of each Settlement Period to show at all times the
dollar amount of its Pro Rata Share of the outstanding Loans and Letters of
Credit.  Each Lender shall only be
entitled to receive interest on its Pro Rata Share of the Loans to the extent
such Loans have been funded by such Lender. 
Because the Agent on behalf of Lenders may be advancing and/or may be
repaid Loans prior to the time when Lenders will actually advance and/or be
repaid such Loans, interest with respect to Loans shall be allocated by Agent
in accordance with the amount of Loans actually advanced by and repaid to each
Lender and the Agent and shall accrue from and including the date such Loans
are so advanced to but excluding the date such Loans are either repaid by
Borrowers or actually settled with the applicable Lender as described in this
Section.

 

(c)           To the extent
that Agent has made any such amounts available and the settlement described
above shall not yet have occurred, upon repayment of any Loans by a Borrower,
Agent may apply such amounts repaid directly to any amounts made available by
Agent pursuant to this Section.  In lieu
of weekly or more frequent settlements, Agent may, at its option, at any time
require each Lender to provide Agent with immediately available funds
representing its Pro Rata Share of each Loan, prior to Agent’s disbursement of
such Loan to Borrower.  In such event,
all Loans under this Agreement shall be made by the Lenders simultaneously and
proportionately to their Pro Rata Shares. 
No Lender shall be responsible for any default by any other Lender in
the other Lender’s obligation to make a Loan requested hereunder nor shall the
Commitment of any Lender be increased or decreased as a result of the default
by any other Lender in the other Lender’s obligation to make a Loan hereunder.

 

(d)           If Agent is not
funding a particular Loan to a Borrower (or Administrative Borrower for the
benefit of such Borrower) pursuant to Sections 6.11(a) and 6.11(b) above
on any day, but is requiring each Lender to provide Agent with immediately
available funds on the date of such Loan as provided in Section 6.11(c) above,
Agent may assume that each Lender will make available to Agent such Lender’s
Pro Rata Share of the Loan requested or otherwise made on such day and Agent
may, in its discretion, but shall not be obligated to, cause a corresponding
amount to be made available to or for the benefit of such Borrower on such day.  If Agent makes such corresponding amount
available to a Borrower and such corresponding amount is not in fact made
available to Agent by such Lender, Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest thereon
for each day from the date such payment was due until the date such amount is
paid to Agent at the Federal Funds Rate for each day during such period (as
published by the Federal Reserve Bank of New York or at Agent’s option based on
the arithmetic mean determined by Agent of the rates for 

 

62

 

the
last transaction in overnight Federal funds arranged prior to 9:00 a.m.
(Charlotte, North Carolina time) on that day by each of the three leading
brokers of Federal funds transactions in New York City selected by Agent) and
if such amounts are not paid within three (3) days of Agent’s demand, at
the highest Interest Rate provided for in Section 3.1 hereof applicable to
Base Rate Loans.  During the period in
which such Lender has not paid such corresponding amount to Agent,
notwithstanding anything to the contrary contained in this Agreement or any of
the other Financing Agreements, the amount so advanced by Agent to or for the
benefit of any Borrower shall, for all purposes hereof, be a Loan made by Agent
for its own account.  Upon any such
failure by a Lender to pay Agent, Agent shall promptly thereafter notify
Administrative Borrower of such failure and Borrowers shall pay such
corresponding amount to Agent for its own account within five (5) Business
Days of Administrative Borrower’s receipt of such notice.  A Lender who fails to pay Agent its Pro Rata
Share of any Loans made available by the Agent on such Lender’s behalf, or any
Lender who fails to pay any other amount owing by it to Agent, Swing Line
Lender or Issuing Bank is a “Defaulting Lender”.  Agent shall not be obligated to transfer to a
Defaulting Lender any payments received by Agent for the Defaulting Lender’s
benefit, nor shall a Defaulting Lender be entitled to the sharing of any
payments hereunder (including any principal, interest or fees).  Amounts payable to a Defaulting Lender shall
instead be paid to or retained by Agent with the exception of any fees paid by
Borrowers to Agent for the account of the Defaulting Lender pursuant to Section 3.2(a),
which fees shall be credited to Borrowers. 
Agent may hold and, in its discretion, relend to a Borrowers the amount
of all such payments received or retained by it for the account of such
Defaulting Lender.  For purposes of
voting or consenting to matters with respect to this Agreement and the other
Financing Agreements (except as provided in Section 11.3(f)(ii)) and
determining Pro Rata Shares, such Defaulting Lender shall be deemed not to be a
“Lender” and such Lender’s Commitment shall be deemed to be zero (0).  This Section shall remain effective with
respect to a Defaulting Lender until such default is cured.  The operation of this Section shall not
be construed to increase or otherwise affect the Commitment of any Lender, or
relieve or excuse the performance by any Borrower or Guarantor of their duties
and obligations hereunder.

 

(e)           Nothing in this
Section or elsewhere in this Agreement or the other Financing Agreements
shall be deemed to require Agent to advance funds on behalf of any Lender or to
relieve any Lender from its obligation to fulfill its Commitment hereunder or
to prejudice any rights that any Borrower may have against any Lender as a
result of any default by any Lender hereunder in fulfilling its Commitment.

 

6.12         Obligations
Several; Independent Nature of Lenders’ Rights.  The obligation of each Lender hereunder is
several, and no Lender shall be responsible for the obligation or commitment of
any other Lender hereunder.  Nothing contained
in this Agreement or any of the other Financing Agreements and no action taken
by the Lenders pursuant hereto or thereto shall be deemed to constitute the
Lenders to be a partnership, an association, a joint venture or any other kind
of entity.  The amounts payable at any
time hereunder to each Lender shall be a separate and independent debt, and
subject to Section 12.3 hereof, each Lender shall be entitled to protect
and enforce its rights arising out of this Agreement and it shall not be
necessary for any other Lender to be joined as an additional party in any
proceeding for such purpose.

 

6.13         Bank Products.  Borrowers and Guarantors may (but no such
Person is required to) request that the Bank Product Providers provide or
arrange for such Person to obtain Bank Products from Bank Product Providers,
and each Bank Product Provider may, in its sole discretion, provide or arrange
for such Person to obtain the requested Bank Products.  Borrowers and Guarantors that obtain Bank
Products shall indemnify and hold Agent, each Lender and their respective
Affiliates harmless from any and all obligations now or hereafter owing to any
other Person by any Bank Product Provider in connection with any Bank Products
other than for gross negligence or willful misconduct on the part of any such
indemnified Person.  This Section 6.13
shall survive the payment of the Obligations and the 

 

63

 

termination
of this Agreement.  Borrowers and
Guarantors acknowledge and agree that the obtaining of Bank Products from Bank
Product Providers (a) is in the sole discretion of such Bank Product
Provider, and (b) is subject to all rules and regulations of such
Bank Product Provider.

 

SECTION  7.        COLLATERAL REPORTING AND
COVENANTS

 

7.1           Collateral
Reporting.  Borrowers
shall provide Agent with the following documents in a form satisfactory to
Agent:

 

(a)           on a regular
basis as required by Agent, schedules of sales made, credits issued and cash
received, and on or before the 15th day of each month (or if a Default or an
Event of Default exists or if Excess Availability is at any time less than the
greater of $30,000,000 or 16.7% of the Maximum Credit, weekly), a Borrowing
Base Certificate including a report of Qualified Cash and evidence thereof as
reasonably requested by Agent (which may include current bank account or
investment account statements) and, in the event the outstanding Obligations at
any time exceed $180,000,000, a certification of the calculation of the “Borrowing
Base” under (and as defined in) the Senior Notes Indenture;

 

(b)           on the day of
delivery of the Borrowing Base Certificate referred to in Section 7.1(a), (A) perpetual
inventory reports (together with a reconciliation to the general ledger and
financial statements for each Borrower), (B) inventory reports by location
and category (and including the amounts of Inventory and the value thereof at
any leased locations and at premises of warehouses, processors or other third
parties and identifying by Borrower Inventory that is in excess of a 12-month
supply, wherever located), (C) detailed aged trial balance by Borrower of
its Accounts, specifying the names, country, face value, dates of invoices and
due dates for each Account Debtor obligated on an Account so listed, agings of
accounts receivable (together with a reconciliation to the previous month’s
aging and general ledger), (D) detailed listing of unbilled accounts
receivable, if any, for each Borrower, (E) listing of Eligible U.S.
Government Accounts, Eligible U.S. Local Government Accounts and Eligible
Foreign Government Accounts for each Borrower, and (F) a detailed general
ledger trial balance by Borrower; and

 

(iii)          such other statements,
orders, invoices, memos, advices, reports and other documents as to the Collateral
as Agent shall reasonably request from time to time.

 

7.2           Accounts Covenants.

 

(a)           Records and
Schedules of Accounts.  Each Borrower shall keep accurate and
complete records of its Accounts and all payments and collections thereon.  In addition, if Accounts of a Borrower in an
aggregate face amount in excess of $1,000,000 cease to be Eligible Accounts, in
whole or in part, Borrowers shall notify Agent of such occurrence promptly (and
in any event within 2 Business Days) after a Borrower’s having obtained
knowledge of such occurrence and the Borrowing Base shall thereupon be adjusted
to reflect such occurrence.

 

(b)           Discounts,
Disputes and Returns.  If a Borrower grants any discounts, allowances or credits (including
co-operative advertising and volume rebates) that are not shown on the face of
the invoice for the Account involved, Borrowers shall report such discounts,
allowances or credits, as the case may be to Agent as part of the next required
schedule of accounts.  If any amounts due
and owing in excess of $1,000,000 are in dispute between a Borrower and any
account debtor, or if any returns are made in excess of $1,000,000 with respect
to any Accounts owing from an account debtor, such Borrower shall provide Agent
with written notice thereof at the time of submission of the next schedule of
accounts, explaining in detail the reason for the dispute or return, all claims
related thereto and the amount in 

 

64

 

controversy.  Upon and after the
occurrence of an Event of Default, Agent shall have the right to settle or
adjust all disputes and claims directly with the account debtor and to
compromise the amount or extend the time for payment of any Accounts of a
Borrower upon such terms and conditions as Agent may deem advisable, and to
charge the deficiencies, costs and expenses thereof, including attorney’s fees,
to Borrowers.

 

7.3           Inventory
Covenants.

 

(a)           Records and
Reports of Inventory.  Each Borrower shall keep accurate and complete records of its Inventory.

 

(b)           Returns of
Inventory.  No Borrower shall return any of its Inventory to a supplier or vendor
thereof, or any other Person, whether for cash, credit against future purchases
or then existing payables, or otherwise, unless (i) such return is in the ordinary
course of business of such Borrower; (ii) no Default or Event of Default
exists at the time of such return or would result therefrom; and (iv) any
payments received by a Borrower in connection with any such return are promptly
turned over to Agent for application to the Obligations.

 

7.4           Equipment
Covenants.  With respect
to the Equipment: (a) Borrowers and Guarantors shall keep the Equipment in
good order, repair, running and marketable condition (ordinary wear and tear
excepted); (b) Borrowers and Guarantors shall use the Equipment with all
reasonable care and caution and in accordance with applicable standards of any
insurance and in conformity with all applicable laws; (c) the Equipment is
and shall be used in the business of Borrowers and Guarantors and not for
personal, family, household or farming use; and (d) the Equipment is now
and shall remain personal property and Borrowers and Guarantors shall not
permit any of the Equipment to be or become a part of or affixed to real
property.

 

7.5           Power of
Attorney.  Each
Borrower and Guarantor hereby irrevocably designates and appoints Agent (and
all persons designated by Agent) as such Borrower’s and Guarantor’s true and
lawful attorney-in-fact, and authorizes Agent, in such Borrower’s, Guarantor’s
or Agent’s name, to: (a) at any time an Event of Default exists or has
occurred and is continuing (i) demand payment on Receivables or other
Collateral, (ii) enforce payment of Receivables by legal proceedings or
otherwise, (iii) exercise all of such Borrower’s or Guarantor’s rights and
remedies to collect any Receivable or other Collateral, (iv) sell or
assign any Receivable upon such terms, for such amount and at such time or
times as the Agent deems advisable, (v) settle, adjust, compromise, extend
or renew an Account, (vi) discharge and release any Receivable, (vii) prepare,
file and sign such Borrower’s or Guarantor’s name on any proof of claim in
bankruptcy or other similar document against an account debtor or other obligor
in respect of any Receivables or other Collateral, (viii) notify the post
office authorities to change the address for delivery of remittances from
account debtors or other obligors in respect of Receivables or other proceeds
of Collateral to an address designated by Agent, and open and dispose of all
mail addressed to such Borrower or Guarantor and handle and store all mail
relating to the Collateral; and (ix) do all acts and things which are
necessary, in Agent’s determination, to fulfill such Borrower’s or Guarantor’s
obligations under this Agreement and the other Financing Agreements, and (b) at
any time following a Cash Management Event to (i) take control in any
manner of any item of payment in respect of Receivables or constituting
Collateral or otherwise received in or for deposit in the Blocked Accounts or
otherwise received by Agent or any Lender, (ii) have access to any lockbox
or postal box into which remittances from account debtors or other obligors in
respect of Receivables or other proceeds of Collateral are sent or received, (iii) endorse
such Borrower’s or Guarantor’s name upon any items of payment in respect of
Receivables or constituting Collateral or otherwise (including proceeds of
insurance) received by Agent and any Lender and deposit the same in Agent’s
account for application to the Obligations, (iv) endorse such Borrower’s
or Guarantor’s name upon any chattel paper, document, instrument, invoice, or
similar 

 

65

 

document
or agreement relating to any Receivable or any goods pertaining thereto or any
other Collateral, including any warehouse or other receipts, or bills of lading
and other negotiable or non-negotiable documents, (v) clear Inventory the
purchase of which was financed with a Letter of Credit through U.S. Customs or
foreign export control authorities in such Borrower’s or Guarantor’s name,
Agent’s name or the name of Agent’s designee, and to sign and deliver to
customs officials powers of attorney in such Borrower’s or Guarantor’s name for
such purpose, and to complete in such Borrower’s or Guarantor’s or Agent’s
name, any order, sale or transaction, obtain the necessary documents in
connection therewith and collect the proceeds thereof, and (vi) sign such
Borrower’s or Guarantor’s name on any verification of Receivables and notices
thereof to account debtors or any secondary obligors or other obligors in
respect thereof.  Each Borrower and
Guarantor hereby releases Agent and Lenders and their respective officers, employees
and designees from any liabilities arising from any act or acts under this
power of attorney and in furtherance thereof, whether of omission or
commission, except as a result of Agent’s or any Lender’s own gross negligence
or willful misconduct as determined pursuant to a final non-appealable order of
a court of competent jurisdiction.

 

7.6           Right to Cure.  Agent may, at its option, upon notice to
(and, so long as no Default or Event of Default exists, consultation with)
Administrative Borrower, (a) cure any default by any Borrower or Guarantor
under any material agreement with a third party that affects the Collateral,
its value or the ability of Agent to collect, sell or otherwise dispose of the
Collateral or the rights and remedies of Agent or any Lender therein or the
ability of any Borrower or Guarantor to perform its obligations hereunder or
under any of the other Financing Agreements, (b) pay or bond on appeal any
judgment entered against any Borrower or Guarantor, (c) discharge taxes,
Liens, security interests or other encumbrances at any time levied on or
existing with respect to the Collateral and (d) pay any amount, incur any
expense or perform any act which, in Agent’s judgment, is necessary or
appropriate to preserve, protect, insure or maintain the Collateral and the
rights of Agent and Lenders with respect thereto.  Agent may add any amounts so expended to the
Obligations and charge any Borrower’s account therefor, such amounts to be
repayable by Borrowers on demand.  Agent
and Lenders shall be under no obligation to effect such cure, payment or
bonding and shall not, by doing so, be deemed to have assumed any obligation or
liability of any Borrower or Guarantor. 
Any payment made or other action taken by Agent or any Lender under this
Section shall be without prejudice to any right to assert an Event of
Default hereunder and to proceed accordingly.

 

7.7           Access to
Premises.  From time to
time as requested by Agent, at the cost and expense of Borrowers, (a) Agent
or its designee shall have reasonable access to all of each Borrower’s and
Guarantor’s premises during normal business hours and after reasonable prior
notice to Administrative Borrower, or at any time and without notice to
Administrative Borrower if an Event of Default exists or has occurred and is
continuing, for the purposes of inspecting, verifying and auditing the
Collateral and all of each Borrower’s and Guarantor’s books and records,
including the Records, and (b) each Borrower and Guarantor shall promptly
furnish to Agent such copies of such books and records or extracts therefrom as
Agent may request, and Agent or any Lender or Agent’s designee may use during
normal business hours such of any Borrower’s and Guarantor’s personnel,
equipment, supplies and premises as may be reasonably necessary for the
foregoing and if an Event of Default exists or has occurred and is continuing
for the collection of Receivables and realization of other Collateral.  Without limiting the number of occasions on
which Agent and Lenders shall be authorized to conduct inspections and audits of
any Borrower’s or Guarantor’s books and records or any of Collateral, Borrowers
shall not be obligated to reimburse Agent and Lenders for costs and expenses
incurred associated with more than four (4) field examinations or more
than two (2) Inventory appraisals in any calendar year, unless in each
case an Event of Default then exists, in which case there shall be no limit on
the number of field examinations and appraisals for which Borrowers shall be
obligated to reimburse Agent and Lenders.

 

66

 

7.8                                 Trademark
Appraisals.  Upon Agent’s
request, Borrowers shall, at their expense, no more than two (2) times
during the term of this Agreement, and no more than one (1) time in any 12
month period (but at any time or times as Agent may request on or after an
Event of Default) deliver or cause to be delivered to Agent a Trademark
Appraisal.

 

SECTION  8.                         REPRESENTATIONS
AND WARRANTIES

 

Each Borrower and Guarantor
hereby represents and warrants to Agent, Lenders and Issuing Bank the following
(which shall survive the execution and delivery of this Agreement):

 

8.1                                 Corporate Existence, Power
and Authority.  Each
Borrower and Guarantor is a corporation or limited liability company duly
organized and in good standing under the laws of its jurisdiction of organization
and is duly qualified as a foreign corporation or limited liability company and
in good standing in all states or other
jurisdictions where the nature and extent of the business transacted by it or
the ownership of assets makes such qualification necessary, except for those
jurisdictions in which the failure to so qualify would not have a Material
Adverse Effect.  The execution, delivery
and performance of this Agreement, the other Financing Agreements and the transactions
contemplated hereunder and thereunder (a) are all within each Borrower’s
and Guarantor’s corporate or limited liability company powers, (b) have
been duly authorized, (c) are not in contravention of law or the terms of
any Borrower’s or Guarantor’s certificate of incorporation, by laws,
certificate of organization, operating agreement or other organizational
documentation, (d) will not result in a breach of or constitute a default
under any indenture or loan or credit agreement or any other agreement, lease
or instrument to which any Borrower or Guarantor is a party or by which such
Borrower or Guarantor or its properties may be bound or affected (other than a
default under the Existing Remington Notes Indenture (which shall not
constitute an Event of Default under (and as defined in) the Existing Remington
Notes Indenture before the passage of 30 days after Remington’s receipt of
a notice of default thereunder without a cure by Remington) that will occur as
a result of Remington’s incurrence of Indebtedness evidenced by the Senior Notes
and the incurrence of the Indebtedness under this Agreement prior to payment or
redemption of the Existing Remington Notes); and (e) will not result in
the creation or imposition of, or require or give rise to any obligation to
grant, any lien, security interest, charge or other encumbrance upon any
property of any Borrower or Guarantor (other than Permitted Liens).  This Agreement and the other Financing
Agreements to which any Borrower or Guarantor is a party constitute legal,
valid and binding obligations of such Borrower and Guarantor enforceable in
accordance with their respective terms.

 

8.2                                 Name; State of
Organization; Chief Executive Office; Collateral Locations.

 

(a)                                  The exact legal name of each
Borrower and Guarantor is on the date hereof as set forth on the signature page of
this Agreement and on Schedule 8.2 to this Agreement.  No Borrower or Guarantor has, during the five
years prior to the date of this Agreement, been known by or used any other
entity or fictitious name or been a party to any merger or consolidation, or
acquired all or substantially all of the assets of any Person, or acquired any
of its property or assets out of the ordinary course of business, except as set
forth on Schedule 8.2 to this Agreement.

 

(b)                                 Each Borrower
and Guarantor is an organization of the type and organized in the jurisdiction
set forth on Schedule 8.2 to this Agreement.  Schedule 8.2 to this Agreement
accurately sets forth on the date hereof the organizational identification
number of each Borrower and Guarantor or accurately states that such Borrower
or Guarantor has none and accurately sets forth the federal employer
identification number of each Borrower and Guarantor.

 

(c)                                  The chief
executive office and mailing address of each Borrower and Guarantor and each
Borrower’s and Guarantor’s Records concerning Accounts are, on the date hereof,
located only at 

 

67

 

the
address identified as such on Schedule 8.2 to this Agreement and its only
other places of business and the only other locations of Collateral, if any, on
the date hereof are the addresses set forth on Schedule 8.2 to this
Agreement, subject to the rights of any Borrower or Guarantor to establish new
locations in accordance with Section 9.2 below.  Schedule 8.2 to this Agreement correctly
identifies any of such locations which on the date hereof are not owned by a
Borrower or Guarantor and sets forth the owners and/or operators thereof.

 

8.3                                 Financial
Statements.  All
financial statements relating to any Borrower or Guarantor which have been or
may hereafter be delivered by any Borrower or Guarantor to Agent and Lenders
have been prepared in accordance with GAAP (except as to any interim financial
statements, to the extent such statements are subject to normal year-end
adjustments and do not include any notes) and fairly present in all material
respects the financial condition and the results of operations of such Borrower
and Guarantor as at the dates and for the periods set forth therein.  The projections dated July 1, 2009 for
the fiscal years ending 2009 through 2013 that have been delivered to Agent or
any projections hereafter delivered to Agent have been prepared in light of the
past operations of the businesses of Borrowers and Guarantors and are based
upon estimates and assumptions stated therein, all of which Borrowers and
Guarantors have determined to be reasonable and fair in light of the then
current conditions and current facts and reflect the good faith and reasonable
estimates of Borrowers and Guarantors of the future financial performance of
Borrowers and Guarantors and of the other information projected therein for the
periods set forth therein.

 

8.4                                 Priority of
Liens; Title to Properties.  The security interests and Liens granted to
Agent under this Agreement and the other Financing Agreements constitute valid
and, except to the extent perfection is expressly not required pursuant to Section 5.2(j),
perfected first priority Liens and security interests in and upon the First
Priority Collateral (and valid and, except to the extent perfection is
expressly not required pursuant to Section 5.2(j), perfected Liens and
security interests in and upon all other Collateral) subject only to the Liens
indicated on Schedule 8.4 to this Agreement and the other Liens permitted
under Section 9.8 hereof to have priority over Agent’s Liens.  Each Borrower and Guarantor has good and
marketable fee simple title to or valid leasehold interests in all of its Real
Property and good, valid and merchantable title to all of its other properties
and assets subject to no Liens, mortgages, pledges, security interests,
encumbrances or charges of any kind, except those granted to Agent and such
others as are specifically listed on Schedule 8.4 to this Agreement or
permitted under Section 9.8 hereof.

 

8.5                                 Tax Returns.  Each Borrower and Guarantor has filed, or
caused to be filed, in a timely manner all tax returns, reports and
declarations which are required to be filed by it.  All information in such tax returns, reports
and declarations is complete and accurate in all material respects.  Each Borrower and Guarantor has paid or
caused to be paid all taxes due and payable or claimed due and payable in any
assessment received by it, except taxes the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to such Borrower or Guarantor and with respect to which adequate
reserves have been set aside on its books. 
Adequate provision has been made for the payment of all accrued and
unpaid Federal, State, county, local, foreign and other taxes whether or not
yet due and payable and whether or not disputed.

 

8.6                                 Litigation.  Except as set forth on Schedule 8.6 to
this Agreement, as of the date hereof, (a) there is no investigation by
any Governmental Authority pending, or to the best of any Borrower’s or
Guarantor’s knowledge threatened, against or affecting any Borrower or
Guarantor, its or their assets or business and (b) there is no action,
suit, proceeding or claim by any Person pending, or to the best of any Borrower’s
or Guarantor’s knowledge threatened, against any Borrower or Guarantor or its
or their assets or goodwill, or against or affecting any transactions
contemplated by this Agreement, in each case, which 

 

68

 

if
adversely determined against such Borrower or Guarantor has or would reasonably
be expected to have a Material Adverse Effect.

 

8.7                                 Compliance with
Other Agreements and Applicable Laws.

 

(a)                                  Borrowers and
Guarantors are in compliance with the requirements of all applicable laws,
rules, regulations and orders of any Governmental Authority relating to their
respective businesses, including, without limitation, those set forth in or
promulgated pursuant to the Occupational Safety and Health Act of 1970 and the
Code except where non-compliance therewith could not reasonably be expected to
have a Material Adverse Effect.  No
Inventory has been produced, stored, distributed or sold in violation of the
Fair Labor Standards Act of 1938, or any Gun Control Laws.

 

(b)                                 Borrowers and
Guarantors have obtained all material permits, licenses, approvals, consents,
certificates, orders or authorizations of any Governmental Authority required
for the lawful conduct of its business (the “Permits”) except where failure to
obtain such Permits would not reasonably be expected to have a Material Adverse
Effect.  All of the Permits are valid and
subsisting and in full force and effect. 
There are no actions, claims or proceedings pending or to the best of
any Borrower’s or Guarantor’s knowledge, threatened that seek the revocation,
cancellation, suspension or modification of any of the Permits.

 

8.8                                 Environmental
Compliance.

 

(a)                                  Except as could
not reasonably be expected to have a Material Adverse Effect (i) no
Borrower or Guarantor has generated, used, stored, treated, transported,
manufactured, handled, produced or disposed of any Hazardous Materials, on or
off its premises (whether or not owned by it) in any manner which at any time violates
any applicable Environmental Law or Permit, and (ii) the operations of
Borrowers and Guarantors comply in all material respects with all Environmental
Laws and all Permits required under any Environmental Laws.

 

(b)                                 Except as could
not reasonably be expected to have a Material Adverse Effect, there has been no
investigation by any Governmental Authority or any proceeding, complaint,
order, directive, claim, citation or notice by any Governmental Authority or
any other person nor is any pending or to the best of any Borrower’s or
Guarantor’s knowledge threatened, with respect to any noncompliance with or
violation of the requirements of any Environmental Law by any Borrower or
Guarantor or the release, spill or discharge, threatened or actual, of any
Hazardous Material or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials or any
other environmental, health or safety matter.

 

(c)                                  Except as could
not reasonably be expected to have a Material Adverse Effect, Borrowers and
Guarantors have no material liability (contingent or otherwise) in connection
with a release, spill or discharge, threatened or actual, of any Hazardous
Materials or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials.

 

(d)                                 Borrowers and
Guarantors have all Permits required to be obtained or filed in connection with
the operations of Borrowers and Guarantors under any Environmental Law and all
of such Permits are valid and in full force and effect except for any failure
to obtain, file or maintain as valid and in full force and effect that could
not reasonably be expected to have a Material Adverse Effect.

 

69

 

8.9                                 Employee
Benefits.

 

(a)                                  Each Plan is in
compliance in all material respects with the applicable provisions of ERISA,
the Code and other Federal or State law. 
Each Plan which is intended to qualify under Section 401(a) of
the Code has received a favorable determination letter from the Internal
Revenue Service and to the best of any Borrower’s or Guarantor’s knowledge,
nothing has occurred which would cause the loss of such qualification.  Except as could not reasonably be expected to
have a Material Adverse Effect, each Borrower and its ERISA Affiliates have
made all required contributions to any Plan subject to Section 412 of the
Code, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with
respect to any Plan.

 

(b)                                 Except as could
not reasonably be expected to have a Material Adverse Effect (i) there are
no pending, or to the best of any Borrower’s or Guarantor’s knowledge,
threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan and (ii) there has been no prohibited
transaction or violation of the fiduciary responsibility rules with
respect to any Plan.

 

(c)                                  (i) Except
as could not reasonably be expected to have a Material Adverse Effect, no ERISA
Event has occurred or is reasonably expected to occur; (ii) based on the
latest valuation of each Pension Plan and on the actuarial methods and
assumptions employed for such valuation (determined in accordance with the
assumptions used for funding such Pension Plan pursuant to Section 412 of
the Code), the aggregate current value of accumulated benefit liabilities of
such Pension Plan did not, as of the most recent actuarial valuations, exceed
the aggregate current value of the assets of such Pension Plan by more than
$48,000,000; (iii) each Borrower and Guarantor, and their ERISA
Affiliates, have not incurred and do not reasonably expect to incur, any
liability under Title IV of ERISA with respect to any Plan (other than
premiums due and not delinquent under Section 4007 of ERISA); (iv) each
Borrower and Guarantor, and their ERISA Affiliates, have not incurred and do
not reasonably expect to incur, any liability (and no event has occurred which,
with the giving of notice under Section 4219 of ERISA, would result in
such liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) each Borrower and Guarantor, and their ERISA
Affiliates, have not engaged in a transaction that would be subject to Section 4069
or 4212(c) of ERISA.

 

8.10                           Bank Accounts.  All of the deposit accounts, investment
accounts or other accounts in the name of or used by any Borrower or Guarantor
maintained at any bank or other financial institution are set forth on
Schedule 5.2 to this Agreement, or are such other deposit accounts which
each Borrower and Guarantor has established pursuant to Section 5.2
hereof.

 

8.11                           Intellectual
Property.  Each
Borrower and Guarantor owns or licenses or otherwise has the right to use all
Intellectual Property necessary for the operation of its business as presently
conducted, except as would not reasonably be expected to have a Material
Adverse Effect.  As of the date hereof,
Borrowers and Guarantors do not have any Intellectual Property registered, or
subject to pending applications, in the United States Patent and Trademark
Office or any similar office or agency in the United States, any State thereof,
any political subdivision thereof or in any other country, other than those described
on Schedule 8.11 to this Agreement and has not granted any material
licenses with respect thereto other than in the ordinary course of its
business.  To the best of any Borrower’s
and Guarantor’s knowledge, no slogan or other advertising device, product,
process, method, substance or other Intellectual Property or goods bearing or
using any Intellectual Property presently contemplated to be sold by or
employed by any Borrower or Guarantor infringes any patent, trademark,
servicemark, tradename, copyright or other Intellectual Property owned by any
other Person in a manner that would reasonably be expected to have a Material
Adverse Effect.  To the best of any
Borrower’s or Guarantor’s knowledge, no claim or litigation is pending or
threatened against or affecting any Borrower or Guarantor contesting its right
to sell or use any such Intellectual Property that would reasonably be expected
to have a Material Adverse Effect. 
Except for any agreement or other arrangement entered into in the
ordinary course of business, Schedule 8.11 to this Agreement sets forth
all of the material agreements or other material 

 

70

 

arrangements
of each Borrower and Guarantor pursuant to which such Borrower or Guarantor has
a license or other right to use any trademarks, logos, designs, representations
or other Intellectual Property owned by another person as in effect on the date
hereof and the dates of the expiration of such agreements or other arrangements
of such Borrower or Guarantor as in effect on the date hereof (collectively,
together with such agreements or other arrangements as may be entered into by
any Borrower or Guarantor after the date hereof, collectively, the “License
Agreements” and individually, a “License Agreement”).  No trademark, servicemark, copyright or other
Intellectual Property at any time used by any Borrower or Guarantor which is
owned by another person, or owned by such Borrower or Guarantor subject to any
security interest, lien, collateral assignment, pledge or other encumbrance in
favor of any person other than Agent, is affixed to any Eligible Inventory,
except (a) to the extent permitted under the term of the license
agreements listed on Schedule 8.11 to this Agreement (b) to the
extent the sale of Inventory to which such Intellectual Property is affixed is
permitted to be sold by such Borrower or Guarantor under applicable law
(including the United States Copyright Act of 1976) and (c) Permitted
Liens.

 

8.12                           Subsidiaries;
Affiliates; Capitalization; Solvency.

 

(a)                                  As of the date
hereof, each Borrower and Guarantor does not have any direct or indirect
Subsidiaries or Affiliates and is not engaged in any joint venture or
partnership except as set forth on Schedule 8.12 to this Agreement.

 

(b)                                 As of the date
hereof, each Borrower and Guarantor is the record and beneficial owner of all
of the issued and outstanding shares of Capital Stock of each of the
Subsidiaries listed on Schedule 8.12 to this Agreement as being owned by
such Borrower or Guarantor and there are no proxies, irrevocable or otherwise,
with respect to such Capital Stock and no Capital Stock of any of the
Subsidiaries are or may become required to be issued by reason of any options,
warrants, rights to subscribe to, calls or commitments of any kind or nature
and there are no contracts, commitments, understandings or arrangements by
which any Subsidiary is or may become bound to issue additional shares of its
Capital Stock or securities convertible into or exchangeable for such Capital
Stock.

 

(c)                                  The issued and
outstanding shares of Capital Stock of each Borrower and Guarantor are directly
and beneficially owned and held by the persons indicated on Schedule 8.2
to this Agreement, and in each case all of such Capital Stock has been duly
authorized and is fully paid and non-assessable, free and clear of all claims,
Liens, pledges and encumbrances of any kind, other than Permitted Liens and
except as disclosed in writing to Agent prior to the date hereof.

 

(d)                                 Each Borrower
and Guarantor is Solvent and will continue to be Solvent after the creation of
the Obligations, the Liens of Agent and the other transactions contemplated
hereunder.

 

(e)                                  Except as set
forth on Schedule 8.12 to this Agreement, as of the date hereof, no Borrower or
Guarantor is a party to or bound by any agreement or arrangement (whether oral
or written) to which any Affiliate of such Borrower or Guarantor is a party
except (a) the transactions contemplated by the Financing Agreements; (b) payment
of customary directors’ fees and indemnities; (c) transactions with
Affiliates that were consummated prior to the date hereof and have been
disclosed to Agent in writing prior to the date of this Agreement; (d) loans
and other advances to Affiliates and officers and directors of Affiliates that
are expressly permitted hereunder; (e) the Senior Notes Indenture and
related documents, and (f) in the ordinary course of business and upon
fair and reasonable terms and are no less favorable to such Borrower or
Guarantor than would obtain in a comparable arm’s length transaction with a
Person not an Affiliate of such Borrower.

 

71

 

8.13                           Labor Disputes.

 

(a)                                  Set forth on
Schedule 8.13 to this Agreement is a list (including dates of termination)
of all collective bargaining or similar agreements between or applicable to
each Borrower and Guarantor and any union, labor organization or other
bargaining agent in respect of the employees of any Borrower or Guarantor on
the date hereof.

 

(b)                                 There is (i) no
unfair labor practice complaint pending against any Borrower or Guarantor or,
to the best of any Borrower’s or Guarantor’s knowledge, threatened against it,
before the National Labor Relations Board, and no grievance or arbitration
proceeding arising out of or under any collective bargaining agreement is
pending on the date hereof against any Borrower or Guarantor or, to best of any
Borrower’s or Guarantor’s knowledge, threatened against it, and (ii) no
strike, labor dispute, slowdown or stoppage is pending against any
Borrower or Guarantor or, to the best of any Borrower’s or Guarantor’s
knowledge, threatened against any Borrower or Guarantor, in each case, except
where such grievance, arbitration proceeding, or strike, labor dispute or
slowdown or stoppage would not reasonably be expected to have a Material
Adverse Effect.

 

8.14                           Reserved.

 

8.15                           Material
Contracts. 
Schedule 8.15 to this Agreement sets forth all Material Contracts
to which any Borrower or Guarantor is a party or is bound as of the date
hereof.  Borrowers and Guarantors have
delivered true, correct and complete copies of such Material Contracts to Agent
on or before the date hereof.  Borrowers
and Guarantors are not in breach or in default in any material respect of or
under any Material Contract and have not received any notice of the intention
of any other party thereto to terminate any Material Contract.

 

8.16                           Payable
Practices.  Each
Borrower and Guarantor have not made any material change in the historical
accounts payable practices from those in effect immediately prior to the date
hereof.

 

8.17                           Investment
Company Act.  No Borrower
or Guarantor is an “investment company” within the meaning of the Investment
Company Act of 1940.

 

8.18                           Accuracy and
Completeness of Information.  All information, other than financial
projections, pro forma information and forward looking statements, which has
been or is hereafter made available to Agent or any of Lenders by or on behalf
of any Borrower or any of their representatives in connection with this Agreement,
when taken as a whole with Borrowers’ public filings with the SEC, is and will
be complete and correct in all material respects as of the date made available
to Agent or any Lender and does not and will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements contained therein not materially misleading and (ii) all
financial projections, estimates, pro forma information and forward
looking statements concerning Borrowers and Guarantors that have been or are
hereafter made available to Agent or any Lender have been or will be prepared
in good faith based upon reasonable assumptions.

 

8.19                           Survival of
Warranties; Cumulative.  All
representations and warranties contained in this Agreement or any of the other
Financing Agreements shall survive the execution and delivery of this Agreement
and shall be deemed to have been made again to Agent and Lenders on the date of
each additional borrowing or other credit accommodation hereunder and shall be
conclusively presumed to have been relied on by Agent and Lenders regardless of
any investigation made or information possessed by Agent or any Lender.  The representations and warranties set forth
herein shall be cumulative and in addition to any other representations or
warranties which any Borrower or Guarantor shall now or hereafter give, or
cause to be given, to Agent or any Lender.

 

72

 

SECTION  9.                         AFFIRMATIVE
AND NEGATIVE COVENANTS

 

For so long as there are any
Commitments outstanding and thereafter until payment in full of the Obligations
(except for contingent obligations of Obligors under indemnifications that
survive terminations of the Commitments), each Borrower and Guarantor covenants
and agrees that:

 

9.1                                 Maintenance of
Existence.

 

(a)                                  Each Borrower
and Guarantor shall at all times preserve, renew and keep in full force and
effect its entity existence and rights and franchises with respect thereto and
maintain in full force and effect all licenses, trademarks, tradenames,
approvals, authorizations, leases, contracts and Permits necessary to carry on
the business as presently or proposed to be conducted, except as to any
Guarantor as permitted in Section 9.7 hereto.

 

(b)                                 No Borrower or
Guarantor shall change its name unless each of the following conditions is
satisfied: (i) Agent shall have received not less than fifteen
(15) days prior written notice from Administrative Borrower of such
proposed change in such Borrower’s or Guarantor’s corporate name, which notice
shall accurately set forth the new name; and (ii) Agent shall have
received a copy of the amendment to the Certificate of Incorporation of such
Borrower or Guarantor providing for the name change certified by the Secretary
of State of the jurisdiction of incorporation or organization of such Borrower
or Guarantor as soon as it is available.

 

(c)                                  No Borrower or
Guarantor shall change its chief executive office or its mailing address or
organizational identification number (or if it does not have one, shall not
acquire one) unless Agent shall have received not less than fifteen
(15) days’ prior written notice from Administrative Borrower of such
proposed change, which notice shall set forth such information with respect
thereto as Agent may reasonably require and Agent shall have received such
agreements as Agent may reasonably require in connection therewith.  No Borrower or Guarantor shall change its
type of organization, jurisdiction of organization or other legal structure.

 

9.2                                 New Collateral
Locations.  Each
Borrower and Guarantor may only open any new location within the continental
United States provided such Borrower or Guarantor (a) gives Agent fifteen
(15) days prior written notice of the intended opening of any such new
location and (b) executes and delivers, or causes to be executed and
delivered, to Agent such agreements, documents, and instruments as Agent may
deem reasonably necessary or desirable to protect its interests in the
Collateral at such location.

 

9.3                                 Compliance with
Laws, Regulations, Etc.

 

(a)                                  Each Borrower
and Guarantor shall at all times, (i) comply in all material respects with
all Gun Control Laws and the Fair Labor Standards Act, and (ii) except for
any such failure to comply or observe that would not reasonably be expected to
have a Material Adverse Effect, comply with all other laws, rules, regulations,
licenses, approvals, orders and other Permits applicable to it, and duly
observe all requirements of any foreign, federal, state or local Governmental
Authority.

 

(b)                                 Borrowers and
Guarantors shall give written notice to Agent promptly upon any Borrower’s or
Guarantor’s receipt of any notice of, or any Borrower’s or Guarantor’s
otherwise obtaining actual knowledge of, any investigation, proceeding,
complaint, order, claims, citation or notice with respect to: (A) any
non-compliance with or violation of any Environmental Law by any Borrower or
Guarantor or (B) the release, spill or discharge, of any Hazardous
Material other than in the ordinary course of business and other than as
permitted under any applicable Environmental Law.  Each Borrower 

 

73

 

and
Guarantor shall take prompt action to respond to any material non-compliance
with any of the Environmental Laws and shall regularly report to Agent on such
response.

 

(c)                                  Each Borrower
and Guarantor shall indemnify and hold harmless the Indemnitees, from and
against any and all losses, claims, damages, liabilities, costs, and expenses
(including reasonable attorneys’ fees and expenses) (collectively, “Losses”)
directly or indirectly arising out of or attributable to the use, generation,
manufacture, reproduction, storage, release, threatened release, spill,
discharge, disposal or presence of a Hazardous Material, including the costs of
any required or necessary repair, cleanup or other remedial work with respect
to any property of any Borrower or Guarantor and the preparation and
implementation of any closure, remedial or other required plans except, as to
each Indemnitee, to the extent any such Losses arise from the gross negligence
or willful misconduct of such Indemnitee. 
All indemnifications in this Section 9.3 shall survive the payment
of the Obligations and the termination of this Agreement.

 

9.4                                 Payment of
Taxes and Claims.  Each
Borrower and Guarantor shall duly pay and discharge all taxes, assessments,
contributions and governmental charges upon or against it or its properties or
assets, except for taxes the validity of which are being contested in good
faith by appropriate proceedings diligently pursued and available to such
Borrower, Guarantor or Subsidiary, as the case may be, and with respect to
which adequate reserves have been set aside on its books to the extent required
by GAAP.

 

9.5                                 Insurance.  Each Borrower and Guarantor shall at all
times, maintain with financially sound and reputable insurers insurance with
respect to the Collateral against loss or damage and all other insurance of the
kinds and in the amounts customarily insured against or carried by corporations
of established reputation engaged in the same or similar businesses and
similarly situated.  Said policies of
insurance shall be reasonably satisfactory to Agent as to form, amount and
insurer.  Borrowers and Guarantors shall
furnish certificates, and certified copies of policies or endorsements to Agent
as Agent shall reasonably require as proof of such insurance, and, if any
Borrower or Guarantor fails to do so, Agent is authorized, but not required, to
obtain such insurance at the expense of Borrowers.  All policies shall provide for at least
thirty (30) days prior written notice to Agent of any cancellation or
reduction of coverage and that Agent may act as attorney for each Borrower and
Guarantor in obtaining, and at any time an Event of Default exists or has
occurred and is continuing, adjusting, settling, amending and canceling such
insurance.  Borrowers and Guarantors
shall cause Agent to be named as a loss payee and an additional insured (but
without any liability for any premiums) under such insurance policies and
Borrowers and Guarantors shall obtain non-contributory lender’s loss payable
endorsements to all insurance policies in form and substance satisfactory to
Agent.  Such lender’s loss payable
endorsements shall specify that the proceeds of such insurance shall be,
subject to the provisions of the Intercreditor Agreement, payable to Agent as
its interests may appear and further specify that Agent and Lenders shall be
paid regardless of any act or omission by any Borrower, Guarantor or any of its
or their Affiliates.

 

9.6                                 Financial
Statements and Other Information.

 

(a)                                  Each Borrower
and Guarantor shall keep proper books and records in which true and complete
entries shall be made of all dealings or transactions of or in relation to the
Collateral and the business of such Borrower or Guarantor in accordance with
GAAP.  Borrowers and Guarantors shall
promptly furnish to Agent and Lenders all such financial and other information
as Agent shall reasonably request relating to the Collateral and the assets,
business and operations of Borrowers and Guarantors , and Borrowers shall
notify the auditors and accountants of Borrowers and Guarantors that Agent is
authorized to obtain such information directly from them after Agent has
requested such direct information from such Borrower or Guarantor and such
Borrower or Guarantor has not provided the same to Agent within a reasonable
period of time after such request. 
Without limiting the foregoing, Borrowers 

 

74

 

shall
furnish or cause to be furnished to Agent (and Agent shall promptly furnish or
otherwise make available to each Lender), the following:

 

(i)                                     within thirty
(30) days after the end of each fiscal month, monthly unaudited consolidated financial
statements and unaudited consolidating financial statements (including in each
case balance sheets, statements of income and loss, and statements of cash
flow), all in reasonable detail, fairly presenting in all material respects the
financial position and the results of the operations of FGI and its
Subsidiaries (and, if any Subsidiaries of FGI are not Obligors, of Borrowers
and Guarantors) in each case as of the end of and through such fiscal month,
certified to be correct by the chief financial officer of FGI, subject to
normal year-end adjustments and accompanied by a compliance certificate
substantially in the form of Exhibit B hereto, along with a schedule in
form reasonably satisfactory to Agent of the calculations used in determining,
as of the end of such month, whether Borrowers and Guarantors were in
compliance with the covenants set forth in Sections 9.17 and 9.18 of this
Agreement for such month, and

 

(ii)                                  within one
hundred twenty (120) days after the end of each fiscal year, audited consolidated
financial statements and unaudited consolidating financial statements of FGI
and its Subsidiaries, and of Borrowers and Guarantors (including in each case
balance sheets, statements of income and loss, and statements of cash flow),
and the accompanying notes thereto, all in reasonable detail, fairly presenting
in all material respects the financial position and the results of the
operations of FGI and its Subsidiaries (and, if any Subsidiaries of FGI are not
Obligors, of Borrowers and Guarantors (unaudited) and without footnotes) in
each case as of the end of and for such fiscal year, together with the
unqualified opinion of independent certified public accountants with respect to
the audited consolidated and consolidating financial statements, which
accountants shall be an independent accounting firm selected by Administrative
Borrower and acceptable to Agent, that such audited consolidated and
consolidating financial statements have been prepared in accordance with GAAP,
and present fairly in all material respects the results of operations and
financial condition of FGI and its Subsidiaries, and of Borrowers and
Guarantors, in each case as of the end of and for the fiscal year then ended,
and

 

(iii)                               at such time as
available, but in no event later than sixty (60) days after the first day of
each fiscal year (commencing with the fiscal year of Borrowers ending December 31,
2009), projected consolidated financial statements (including in each case,
forecasted balance sheets and statements of income and loss, and statements of
cash flow) of FGI and its Subsidiaries (and, if any Subsidiaries of FGI are not
Obligors, of Borrowers and Guarantors) in each case for the next fiscal year,
all in reasonable detail, in a format reasonably acceptable to Agent, together
with such supporting information as Agent may reasonably request.  Such projected financial statements shall be
prepared on a monthly basis for the next succeeding year. Such projections
shall represent the reasonable best estimate by Borrowers and Guarantors of the
future financial performance of FGI and its Subsidiaries, and of Borrowers and
Guarantors, in each case for the periods set forth therein and shall have been
prepared on the basis of the assumptions set forth therein which Borrowers and
Guarantors believe are fair and reasonable as of the date of preparation in
light of current and reasonably foreseeable business conditions (it being
understood that actual results may differ from those set forth in such
projected financial statements).  Borrowers
shall provide to Agent, at its request, periodic updates with respect to such
projections at any time a Default or Event of Default exists or has occurred
and is continuing.

 

(b)                                 Borrowers and
Guarantors shall promptly notify Agent in writing of the details of (i) any
loss, damage, investigation, action, suit, proceeding or claim relating to
Collateral having a value

 

75

 

of
more than $2,500,000 or which if adversely determined could reasonably be expected
to have a Material Adverse Effect, (ii) any material default under any
Material Contract or any note, indenture, credit agreement, mortgage, lease,
deed, guaranty or similar agreement relating to any Indebtedness payable by a
Borrower or Guarantor in an amount exceeding $2,500,000, or any Material
Contract being terminated or amended or any new Material Contract entered into
(in which event Borrowers and Guarantors shall provide Agent with a copy of
such Material Contract), (iii) any order, judgment or decree in excess of
$2,500,000 shall have been entered against any Borrower or Guarantor any of its
or their properties or assets, (iv) any notification of a material
violation of laws or regulations received by any Borrower or Guarantor, (v) any
ERISA Event, and (vi) the occurrence of any Default or Event of Default.

 

(c)                                  Promptly, and
in any event within fifteen (15) days after the sending or filing thereof, as
the case may be, Borrowers shall send to Agent copies of (i) any regular,
periodic and special reports or registration statements which FGI or any of the
other Borrowers or Guarantors files with the SEC, or any national securities
exchange.

 

(d)                                 Agent is hereby
authorized to deliver a copy of any financial statement or any other
information relating to the business of Borrowers and Guarantors to any court
or other Governmental Authority or to any Lender or Participant or prospective
Lender or Participant or any Affiliate of any Lender or Participant.  Any documents, schedules, invoices or other
papers delivered to Agent or any Lender may be destroyed or otherwise disposed
of by Agent or such Lender one (1) year after the same are delivered to
Agent or such Lender, except as otherwise designated by Administrative Borrower
to Agent or such Lender in writing.

 

9.7                                 Sale of Assets,
Consolidation, Merger, Dissolution, Etc.  Each Borrower and Guarantor shall not
directly or indirectly,

 

(a)                                  merge into or
with or consolidate with any other Person or permit any other Person to merge
into or with or consolidate with it except that

 

(i)                                     any Borrower or Guarantor
may merge with and into or consolidate with any other Borrower or Guarantor, provided,
that each of the following conditions is satisfied as determined by
Agent in good faith:  (A) Agent
shall have received not less than ten (10) Business Days’ prior written
notice of the intention of such Persons to so merge or consolidate, which
notice shall set forth in reasonable detail satisfactory to Agent, the Persons
that are merging or consolidating, which person will be the surviving entity,
the locations of the assets of the persons that are merging or consolidating,
and the material agreements and documents relating to such merger or
consolidation, (B) Agent shall have received such other information with
respect to such merger or consolidation as Agent may reasonably request, (C) as
of the effective date of the merger or consolidation and after giving effect
thereto, no Default or Event of Default shall exist or have occurred, (D) Agent
shall have received, true, correct and complete copies of all agreements,
documents and instruments relating to such merger or consolidation, including,
but not limited to, the certificate or certificates of merger to be filed with
each appropriate Secretary of State (with a copy as filed promptly after such
filing), (E) the surviving legal entity shall expressly confirm, ratify
and assume the Obligations and the Financing Agreements to which it is a party
in writing, in form and substance reasonably satisfactory to Agent, and (F) Borrowers
and Guarantors shall execute and deliver such other agreements, documents and
instruments as Agent may request in connection therewith;

 

(ii)                                  any Borrower or Guarantor
may merge with any Subsidiary that is not an Obligor, provided, that
such merger constitutes a Permitted Acquisition/Merger;

 

76

 

(b)                                 sell, issue,
assign, lease, license, transfer, abandon or otherwise dispose of any Capital
Stock or Indebtedness to any other Person or any of its assets to any other
Person, except for

 

(i)                                     sales of
Inventory in the ordinary course of business,

 

(ii)                                  other than
during any Covenant Recalibration Period, the sale or other disposition of
assets (other than First Priority Collateral or Capital Stock of any of its
Subsidiaries to the extent such sale or disposition would result in a Change of
Control) if at the time of and after giving effect to such sale or disposition,
Excess Availability shall be not less than $30,000,000 (or 16.7% of the Maximum
Amount);

 

(iii)                               during any
Covenant Recalibration Period, the sale or other disposition of assets (other
than First Priority Collateral or Capital Stock of any of its Subsidiaries to
the extent such sale or disposition would result in a Change of Control) in an
aggregate book value in excess of $70,000,000; provided, that,
at the time of and after giving effect to such sale or disposition:

 

(A)                              Excess
Availability shall be not less than $30,000,000 (or 16.7% of the Maximum
Credit); and

 

(B)                                the Borrowers
shall (1) have maintained Average Excess Availability for the 12-month
period immediately preceding the closing date of such sale of not less than
$30,000,000, (2) project Average Excess Availability on a pro forma basis
for the 12-month period immediately following the closing date of such sale of
not less than $30,000,000, (3) have maintained a Fixed Charge Coverage
Ratio-Recalibrated for the 12-month period immediately preceding the closing
date of such sale of not less than 1.10 to 1.0, and (4) project a Fixed
Charge Coverage Ratio-Recalibrated on a pro forma basis for the 12-month period
immediately following the closing date of such sale of not less than1.10 to
1.0;

 

(iv)                              the issuance
and sale by any Borrower or Guarantor of Capital Stock of such Borrower or
Guarantor after the date hereof; provided, that, (A) except
as Agent may otherwise agree in writing, all of the proceeds of the sale and
issuance of such Capital Stock shall be paid to Agent for application to the
Obligations, whether pursuant to Section 6.4(c) or otherwise, in such
order and manner as Agent may determine or at Agent’s option, to be held as cash
collateral for the Obligations and (B) as of the date of such issuance and
sale and after giving effect thereto, no Default or Event of Default shall
exist or have occurred;

 

(c)                                  wind up,
liquidate or dissolve; or

 

(d)                                 agree to do any
of the foregoing.

 

9.8                                 Encumbrances.  Each Borrower and Guarantor shall not create,
incur, assume or suffer to exist any security interest, mortgage, pledge, lien,
charge or other encumbrance of any nature whatsoever on any of the Collateral,
or file or permit the filing of, or permit to remain in effect, any financing
statement or other similar notice of any security interest or Lien with respect
to any Collateral, except the following (“Permitted Liens”):

 

(a)                                  the security
interests and Liens granted to Agent for itself and the benefit of the Secured
Parties and the rights of setoff of Secured Parties provided for herein or
under applicable law;

 

77

 

(b)                                 Liens securing
the payment of taxes, assessments or other governmental charges or levies
either not yet overdue or the validity of which are being contested in good
faith by appropriate proceedings diligently pursued and available to such
Borrower, or Guarantor, as the case may be, and with respect to which adequate
reserves have been set aside on its books;

 

(c)                                  non-consensual
statutory Liens (other than Liens securing the payment of taxes) arising in the
ordinary course of such Borrower’s, Guarantor’s business to the extent: (i) such
Liens secure Indebtedness which is not overdue or (ii) such Liens secure
Indebtedness relating to claims or liabilities which are fully insured and
being defended at the sole cost and expense and at the sole risk of the insurer
or being contested in good faith by appropriate proceedings diligently pursued
and available to such Borrower or Guarantor in each case prior to the
commencement of foreclosure or other similar proceedings and with respect to
which adequate reserves have been set aside on its books;

 

(d)                                 zoning
restrictions, easements, licenses, covenants and other restrictions affecting
the use of Real Property which do not interfere in any material respect with
the use of such Real Property or ordinary conduct of the business of such
Borrower or Guarantor as presently conducted thereon or materially impair the
value of the Real Property which may be subject thereto;

 

(e)                                  purchase money
security interests in Equipment (including Capital Leases) to secure
Indebtedness permitted under Section 9.9(b) hereof;

 

(f)                                    pledges and
deposits of cash by any Borrower or Guarantor after the date hereof in the
ordinary course of business in connection with workers’ compensation,
unemployment insurance and other types of social security benefits consistent
with the current practices of such Borrower or Guarantor as of the date hereof;

 

(g)                                 pledges and
deposits of cash by any Borrower or Guarantor after the date hereof to secure
the performance of tenders, bids, leases, trade contracts (other than for the
repayment of Indebtedness), statutory obligations and other similar obligations
in each case in the ordinary course of business consistent with the current
practices of such Borrower or Guarantor as of the date hereof; provided, that,
in connection with any performance bonds issued by a surety or other person,
the issuer of such bond shall have waived in writing any rights in or to, or
other interest in, any of the Collateral in an agreement or shall have entered
into an intercreditor agreement with Agent, in either case, in form and
substance satisfactory to Agent;

 

(h)                                 Liens arising
from (i) operating leases and the precautionary UCC financing statement
filings in respect thereof and (ii) equipment or other materials which are
not owned by any Borrower or Guarantor located on the premises of such Borrower
or Guarantor (but not in connection with, or as part of, the financing thereof)
from time to time in the ordinary course of business and consistent with
current practices of such Borrower or Guarantor and the precautionary UCC
financing statement filings in respect thereof;

 

(i)                                     judgments and
other similar Liens arising in connection with court proceedings that do not
constitute an Event of Default, provided, that, (i) such
Liens are being contested in good faith and by appropriate proceedings
diligently pursued, (ii) adequate reserves or other appropriate provision,
if any, as are required by GAAP have been made therefor, (iii) a stay of
enforcement of any such Liens is in effect and (iv) Agent may establish a
Reserve with respect thereto; and

 

(j)                                     Liens securing
the Senior Notes in the Notes Priority Collateral, and in the First Priority
Collateral (subject to Agent’s prior Lien therein), in each case subject to the
provisions of the Intercreditor Agreement; and

 

78

 

(k)                                  the security
interests and Liens set forth on Schedule 8.4 to this Agreement.

 

9.9                                 Indebtedness.  Each Borrower and Guarantor shall not on or
after the date hereof (i) incur, create or assume any Indebtedness, or (ii) guarantee,
assume, endorse, or otherwise become responsible for (directly or indirectly),
the Indebtedness, performance, obligations or dividends of any other Person,
except (the following, being referred to as “Permitted Indebtedness”):

 

(a)                                  the
Obligations;

 

(b)                                 guarantees by
any Borrower or Guarantor of the Obligations of the other Borrowers or
Guarantors in favor of Agent for the benefit of Lenders and the other Secured
Parties;

 

(c)                                  the
Indebtedness of any Borrower or Guarantor to any other Borrower or Guarantor
arising after the date hereof pursuant to loans by any Borrower or Guarantor
permitted under clause (viii) of the definition of Permitted Investments;

 

(d)                                 Indebtedness of
any Borrower or Guarantor entered into in the ordinary course of business
pursuant to a Hedge Agreement; provided, that, (i) such
arrangements are not for speculative purposes, and (ii) such Indebtedness
shall be unsecured, except to the extent such Indebtedness constitutes part of
the Obligations arising under or pursuant to Hedge Agreements with a Bank
Product Provider that are secured under the terms hereof or are secured by
assets of such Borrower or Guarantor that are not part of the Collateral;

 

(e)                                  unsecured
subordinated Indebtedness of any Borrower or Guarantor arising after the date
hereof to any third person (but not to any other Borrower or Guarantor), that
qualifies as Permitted Indebtedness under any other clause of this Section 9.9;
provided, that, each of the following conditions is
satisfied as reasonably determined by Agent: (i) such Indebtedness shall
be on terms and conditions acceptable to Agent and shall be subject and
subordinate in right of payment to the right of Agent and Lenders to receive
the prior indefeasible payment and satisfaction in full payment of all of the
Obligations pursuant to the terms of an intercreditor agreement between Agent
and such third party, in form and substance satisfactory to Agent, (ii) Agent
shall have received not less than ten (10) days prior written notice of
the intention of such Borrower or Guarantor to incur such Indebtedness, which
notice shall set forth in reasonable detail satisfactory to Agent the amount of
such Indebtedness, the person or persons to whom such Indebtedness will be
owed, the interest rate, the schedule of repayments and maturity date with
respect thereto and such other information as Agent may request with respect
thereto, (iii) Agent shall have received true, correct and complete copies
of all agreements, documents and instruments evidencing or otherwise related to
such Indebtedness, (iv) except as Agent may otherwise agree in writing,
all of the proceeds of the loans or other accommodations giving rise to such
Indebtedness shall be paid to Agent for application to the Obligations, to the
extent and in the manner provided in Section 6.4(c), (v) as of the
date of incurring such Indebtedness and after giving effect thereto, no Default
or Event of Default shall exist or have occurred, (vi) such Borrower and
Guarantor shall not, directly or indirectly, (A) amend, modify, alter or
change the terms of such Indebtedness or any agreement, document or instrument
related thereto, except, that, such Borrower or Guarantor may, after
prior written notice to Agent, amend, modify, alter or change the terms thereof
so as to extend the maturity thereof, or defer the timing of any payments in
respect thereof, or to forgive or cancel any portion of such Indebtedness
(other than pursuant to payments thereof), or to reduce the interest rate or
any fees in connection therewith, or (B) redeem, retire, defease, purchase
or otherwise acquire such Indebtedness (except pursuant to regularly scheduled
payments permitted herein), or set aside or otherwise deposit or invest any
sums for such purpose, and (vii) Borrowers and Guarantors shall furnish to
Agent all notices or demands in connection with such Indebtedness either
received by any Borrower or 

 

79

 

Guarantor
or on its behalf promptly after the receipt thereof, or sent by any Borrower or
Guarantor or on its behalf concurrently with the sending thereof, as the case
may be;

 

(f)                                    Indebtedness
represented by the Senior Notes (not including any additional notes) and any
guarantee of the obligations of FGI as “the Issuer” under (and as defined in)
the Senior Notes Indenture and the Senior Notes by any Borrower or Guarantor in
accordance with the provisions of the Senior Notes Indenture as in effect on
the date hereof, as applicable (and any exchange notes and guarantees thereof);

 

(g)                                 Indebtedness
(including obligations under Capital Leases) incurred by any Borrower or
Guarantor to finance the purchase, lease, construction or improvement of
property (real or personal) or equipment (whether through the direct purchase
of assets or the Capital Stock of any Person owning such assets (but no other
material assets)) in an aggregate principal amount which, when aggregated with
the principal amount of all other Indebtedness then outstanding that was
incurred pursuant to this clause (h), does not exceed the greater of (x) $25,000,000
and (y) 3% of Total Assets, at the time of incurrence;

 

(h)                                 Indebtedness
incurred by any Borrower or Guarantor constituting reimbursement obligations
with respect to letters of credit and bank guarantees issued in the ordinary
course of business, including without limitation letters of credit in respect
of workers’ compensation claims, health, disability or other employee benefits
(whether current or former) or property, casualty or liability insurance or
self-insurance, or other Indebtedness with respect to reimbursement-type
obligations regarding workers’ compensation claims; provided, however,
that upon the drawing of such letters of credit, such obligations are
reimbursed within thirty (30) days following such drawing;

 

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

 

(j)                                     obligations
(including reimbursement obligations with respect to letters of credit and bank
guarantees) in respect of performance, bid, appeal and surety bonds and
completion guarantees provided by a Borrower or Guarantor in the ordinary
course of business;

 

(k)                                  any guarantee
by a Borrower or Guarantor of Indebtedness or other obligations of any other
Borrower or Guarantor so long as the incurrence of such Indebtedness or other
obligations by such Borrower or Guarantor is permitted under the terms of this
Agreement and the Senior Notes Indenture; provided that if
such Indebtedness is by its express terms subordinated in right of payment to
the Obligations hereunder or to the Senior Notes or the guarantee of such
Borrower or Guarantor, as applicable, any such guarantee of such Guarantor with
respect to such Indebtedness shall be subordinated in right of payment to such
Guarantor’s guarantee with respect to the Obligations hereunder or the Senior
Notes substantially to the same extent as such Indebtedness is subordinated to
the Obligations hereunder or the Senior Notes or the guarantee of such Borrower
or Guarantor, as applicable;

 

(l)                                     Refinancing
Indebtedness;

 

(m)                               Indebtedness of
Persons that are acquired by a Borrower or Guarantor or merged into a Borrower
or Guarantor in accordance with the terms of this Agreement or the Senior Notes
Indenture; provided, however, that such Indebtedness  is not incurred in contemplation of such
acquisition 

 

80

 

or
merger or to provide all or a portion of the funds or credit support required
to consummate such acquisition or merger; provided, further,
however, that after giving effect to such acquisition and the incurrence of
such Indebtedness either:

 

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

 

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

 

(n)                                 Indebtedness
arising from the honoring by a bank or other financial institution of a check,
draft or similar instrument drawn against insufficient funds in the ordinary
course of business, provided that such Indebtedness is extinguished within five
(5) Business Days of its incurrence;

 

(o)                                 Contribution
Indebtedness (as defined in the Senior Notes Indenture as in effect on the date
hereof);

 

(p)                                 Indebtedness of
a Borrower or Guarantor consisting of (x) the financing of insurance
premiums or (y) take-or-pay obligations contained in supply arrangements,
in each case, in the ordinary course of business;

 

(q)                                 other
Indebtedness in an aggregate principal amount which when aggregated with the
principal amount of all other Indebtedness then outstanding and incurred
pursuant to this clause (s) does not exceed the greater of (x) $20,000,000
and (y) 2.5% of Total Assets at the time of such incurrence, at any one
time outstanding; and

 

(r)                                    Indebtedness
not described in the foregoing subparagraphs of this Section 9.9 if the
Fixed Charge Coverage Ratio, or the Fixed Charge Coverage Ratio-Recalibrated,
as applicable, for the most recently ended four (4) full fiscal quarters
for which  financial statements are
available immediately preceding the date on which such additional Indebtedness
is incurred would have been at least 2.00 to 1.00 determined on a pro forma
basis (including a pro forma application of the net proceeds therefrom), as if
the additional Indebtedness had been incurred and the application of proceeds
therefrom had occurred at the beginning of such four-quarter period.

 

Notwithstanding the foregoing, no Borrower or
Guarantor may incur any Indebtedness pursuant to clause (r) if the
proceeds thereof are used, directly or indirectly, to repay, prepay, redeem,
defease, retire, refund or refinance any Indebtedness that is subordinated to
the Obligations or the Senior Notes unless such Indebtedness will be
subordinated to the Senior Notes or such Guarantor’s guaranty of the
Obligations or the Senior Notes, as applicable, to at least the same extent as
such subordinated Indebtedness.

 

For purposes of determining compliance with this
covenant, in the event that an item of Indebtedness meets the criteria of more
than one of the categories of Permitted Indebtedness or is entitled to be
incurred pursuant to Section 9.9(r), the Administrative Borrower shall, in
its sole discretion, divide, classify or reclassify, or later divide, classify
or reclassify, such item of Indebtedness in any manner that complies with this
covenant and in a manner consistent with the classification of such
Indebtedness under the Senior Notes Indenture and such item of Indebtedness
will be treated as having been incurred pursuant to only one of the clauses of
this Section 9.9.

 

81

 

For purposes of determining compliance with any U.S.
dollar-denominated restriction on the incurrence of Indebtedness, the U.S.
dollar-equivalent principal amount of Indebtedness denominated in a foreign
currency shall be calculated based on the relevant currency exchange rate in
effect on the date such Indebtedness was incurred, in the case of term debt, or
first committed or first incurred (whichever yields the lower U.S. dollar
equivalent), in the case of revolving credit debt; provided that if such Indebtedness is
incurred to refinance other Indebtedness denominated in a foreign currency, and
such refinancing would cause the applicable U.S. dollar-denominated restriction
to be exceeded if calculated at the relevant currency exchange rate in effect
on the date of such refinancing, such U.S. dollar-denominated restriction shall
be deemed not to have been exceeded so long as the principal amount of such
refinancing Indebtedness does not exceed the principal amount of such
Indebtedness being refinanced.

 

9.10                           Loans and
Investments; Repayment of Indebtedness.  Each Borrower and Guarantor shall not
directly or indirectly make any loans or advance money or property to any
person, or invest in (by capital contribution, dividend or otherwise) or
purchase or repurchase the Capital Stock or Indebtedness or all or a
substantial part of the assets or property of any person, or acquire any
Subsidiaries, or agree to do any of the foregoing (each of the foregoing, an “Investment”),
except:

 

(a)                                  Permitted
Investments;

 

(b)                                 Permitted
Acquisitions;

 

(c)                                  Borrowers may
purchase, repurchase or prepay Indebtedness (other than the Existing Remington
Notes) at any time that Excess Availability is more than (and would be more
than, after giving effect to such purchase, 
repurchase or prepayment) the greater of $30,000,000 or 16.7% of the
Maximum Credit; provided, that, during any Covenant
Recalibration Period, Borrowers may purchase, repurchase or prepay Indebtedness
only at any time that Excess Availability is more than (and would be more than
after giving effect thereto) the greater of $30,000,000 or 16.7% of the Maximum
Credit, and to the extent that the aggregate amount of all such purchases,
repurchases and prepayments by Borrowers and Guarantors does not exceed
$100,000,000 during any 24 consecutive month period, and provided that no Event
of Default exists at the time of, or after giving effect to, such purchase,
repurchase or prepayment, and

 

(d)                                 Borrowers may
redeem the Existing Remington Notes subject to the terms and conditions of Section 9.16.

 

9.11                           Dividends and
Redemptions of Capital Stock.  Each Borrower and Guarantor shall not,
directly or indirectly, declare or pay any dividends on account of any Capital
Stock of such Borrower or Guarantor now or hereafter outstanding, or set aside
or otherwise deposit or invest any sums for such purpose, or redeem, retire,
defease, purchase or otherwise acquire any Capital Stock (or set aside or
otherwise deposit or invest any sums for such purpose) for any consideration or
apply or set apart any sum, or make any other distribution (by reduction of
capital or otherwise) in respect of any such Capital Stock or agree to do any
of the foregoing, except that:

 

(a)                                  any Borrower or
Guarantor may declare and pay such dividends or redeem, retire, defease,
purchase or otherwise acquire any shares of any class of Capital Stock for
consideration in the form of shares of common stock (so long as after giving
effect thereto no Change of Control or other Default or Event of Default shall
exist or occur);

 

(b)                                 Borrowers and
Guarantors may declare, make and pay dividends, distributions, redemptions and
repurchases of Capital Stock of a Borrower or Guarantor at any time that no
Default or Event of Default exists or has occurred and is continuing and that
Borrowers shall (i) have (and, after 

 

82

 

giving
effect to such dividend, distribution, redemption or repurchase, would have)
Excess Availability of more than 
$30,000,000, or 16.7% of the Maximum Credit, whichever is greater, and (ii) have
maintained a Fixed Charge Coverage Ratio of greater than 1.10 to 1.0 for the
12-month period immediately preceding the date of the applicable dividend,
distribution, redemption or repurchase; provided, that, the
payment of dividends on FGI’s common stock of up to 6.0% per annum of the net
proceeds received by FGI from any public offering of common stock will be
permitted so long as Excess Availability is not less than $30,000,000 or 16.7%
of the Maximum Credit, whichever is greater, or would be at least $30,000,000
or 16.7% of the Maximum Credit, whichever is greater, after giving effect
thereto, without requiring compliance with the Fixed Charge Coverage Ratio set
forth in clause (ii) of this Section 9.11(b); provided that,
in all cases, such dividend, distribution, redemption or repurchase is not
violative of any applicable law relating to such  dividend, distribution, redemption or
repurchase generally and the dividend, distribution, redemption or repurchase,
either individually or when added to the aggregate amount of all other such
dividends, distributions, redemptions or repurchases, is permitted under the
Senior Notes Indenture by its terms or by requisite consent or waiver
thereunder;

 

(c)                                  any Subsidiary
of a Borrower or Guarantor may pay dividends to a Borrower; and

 

(d)                                 Borrowers and
Guarantors may repurchase Capital Stock consisting of common stock held by
employees pursuant to any employee stock ownership plan thereof upon the
termination, retirement or death of any such employee in accordance with the
provisions of such plan, provided, that, as to any such
repurchase, each of the following conditions is satisfied: (i) as of the
date of the payment for such repurchase and after giving effect thereto, no
Default or Event of Default shall exist or have occurred and be continuing, (ii) such
repurchase shall be paid with funds legally available therefor, (iii) such
repurchase shall not violate any law or regulation or the terms of any
indenture, agreement or undertaking to which such Borrower or Guarantor is a
party or by which such Borrower or Guarantor or its or their property are
bound, and (iv) if Excess Availability is less than $30,000,000 or 16.7%
of the Maximum Credit, whichever is greater, the aggregate amount of all
payments for such repurchases in any calendar year shall not exceed $2,000,000.

 

9.12                           Transactions
with Affiliates.  Each
Borrower and Guarantor shall not, directly or indirectly:

 

(a)                                  purchase,
acquire or lease any property from, or sell, transfer or lease any property to,
any officer, director or other Affiliate of such Borrower or Guarantor, except
in the ordinary course of and pursuant to the reasonable requirements of such
Borrower’s or Guarantor’s business (as the case may be) and upon fair and
reasonable terms no less favorable to such Borrower or Guarantor than such
Borrower or Guarantor would obtain in a comparable arm’s length transaction
with an unaffiliated person; or

 

(b)                                 make any
payments (whether by dividend, loan or otherwise) of management, consulting or
other fees for management or similar services, or of any Indebtedness owing to
any officer, employee, shareholder, director or any other Affiliate of such
Borrower or Guarantor, except (i) payments by any such Borrower or
Guarantor to FGI for the payment of cash taxes by or on behalf of FGI, or to
any other Obligor for the payment of cash taxes (other than federal taxes) by
or on behalf such Obligor, and (ii) the following payments described in
each of clauses (A), (B), (C), and (D) below, provided, that
at any time that an Event of Default exists or Excess Availability is less than
$30,000,000 or 16.7% of the Maximum Credit, whichever is greater (each, a “Restricted
Payment Event”), then the sum of the aggregate amount of such payments made
pursuant to such clauses (A), (B), (C) and (D) in any fiscal year
plus the aggregate amount of Investments made pursuant to clause (x) of
the definition of “Permitted Investments” shall not exceed $4,000,000 in the
aggregate:

 

83

 

(A)                              the payment of
reasonable and customary fees paid to, and indemnity provided on behalf of, officers,
directors, employees or consultants of the Borrowers or Guarantors or any
direct or indirect parent company of the Borrowers or Guarantors; or

 

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

 

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

 

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

 

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

 

(c)                                  make, declare or pay
dividends, distributions, redemptions or repurchases of Capital Stock except as
permitted in Section 9.11.

 

9.13                           Reserved

 

9.14                           End of Fiscal
Years; Fiscal Quarters.  From
and after March 31, 2010, each Borrower and Guarantor shall, for financial
reporting purposes, cause its (a) fiscal years to end on December 31
of each year and (b) fiscal quarters to end on March 31, June 30,
September 30 and December 31 of each year.   Prior to March 31, 2010, no Borrower or
Guarantor shall change its fiscal year or fiscal quarter from those in effect
on the date of this Agreement.

 

9.15                           Change in
Business.  Each
Borrower and Guarantor shall not engage in any business other than the business
of such Borrower or Guarantor on the date hereof and any business reasonably
related, ancillary or complimentary to the business in which such Borrower or
Guarantor is engaged on the date hereof.

 

9.16                           Redemption of
Existing Remington Notes. 
Borrowers hereby covenant and agree with Agent and Lenders as follows
with respect to the redemption of the Existing Remington Notes:

 

(a)                                  Upon Borrowers’
receipt of the proceeds of the issuance of the New Senior Notes on the closing
date of the Credit Facility, Borrowers shall deposit on such closing date all
such proceeds, together with other monies from Borrowers’ cash on hand (and not
from proceeds of Loans) so that the total amount deposited shall not be in an
amount less than $195,000,000 (the “Deposit Amount”) in a deposit account or
investment account at Wachovia in the name of Agent for the benefit of
Remington 

 

84

 

and subject to Agent’s
exclusive dominion and control (such account, the “Existing Remington Notes
Redemption Account”), and shall provide Agent with evidence in form and
substance satisfactory to Agent of such deposit;

 

(b)                                 Borrowers shall
maintain the full amount of the Deposit Amount in such Existing Remington Notes
Redemption Account, and such funds shall not be withdrawn therefrom, until August 5,
2009, at which time the Deposit Amount shall be transferred to a deposit
account subject to a Deposit Account Control Agreement in favor of Agent and
Borrowers shall provide Agent with evidence in form and substance satisfactory
to Agent of such deposit.  If any Cash
Management Event shall occur or exist on or before August 6, 2009, Agent
shall be authorized (but not obligated) to exercise exclusive dominion and
control over such deposit account and shall be authorized (but not obligated)
to cause the payment of the Deposit Amount to the trustee under the Existing
Remington Notes Indenture on or before August 7, 2009; and

 

(c)                                  On August 6,
2009, Borrowers shall cause the Deposit Amount to be paid to the trustee under
the Existing Remington Notes Indenture, together with other monies of Borrowers
in an amount sufficient to redeem the Existing Remington Notes thereunder in
accordance with the terms of the Existing Notes Indenture on August 7,
2009, and Borrowers shall provide Agent with evidence in form and substance
satisfactory to Agent of the trustee’s receipt of such funds and of the trustee’s
acknowledgment of the redemption of the Existing Remington Notes in accordance
with the Existing Remington Notes Indenture.

 

9.17                           Fixed Charge Coverage Ratios.

 

(a)                                  At any time
that Excess Availability is less than $30,000,000 or 16.7% of the Maximum
Credit, whichever is greater, the Fixed Charge Coverage Ratio of Borrowers and
Guarantors (on a consolidated basis) determined as of the end of the fiscal
quarter most recently ended for which Agent has received financial statements
in accordance with Section 9.6 hereof, shall be not less than 1.10 to 1.00
for the period of the immediately preceding four (4) consecutive fiscal
quarters ending on the last day of such fiscal quarter (or such lesser number
of fiscal quarters as shall have elapsed since the date of closing of the
Credit Facility until four (4) full fiscal quarters shall have elapsed);
and

 

(b)           As measured during a Covenant Recalibration Period, the
Fixed Charge Coverage Ratio-Recalibrated of Borrowers and Guarantors (on a
consolidated basis) determined as of the end of the fiscal month most recently
ended for which Agent has received financial statements in accordance with Section 9.6
hereof, shall be not less than 1.10 to 1.00 for the period of the immediately
preceding 12 consecutive fiscal months ending on the last day of such fiscal
month (or such lesser number of fiscal months as shall have elapsed since the
end of the fiscal month most recently ended for which Agent has received
financial statements in accordance with Section 9.6 hereof, until 12
fiscal months shall have elapsed).

 

9.18                           Minimum Excess
Availability.  At all times
during a Covenant Recalibration Period, Borrowers and Guarantors shall maintain
Excess Availability of not less than $15,000,000.

 

9.19                           License
Agreements.  Each
Borrower and Guarantor shall (i) observe and perform all of the material
terms, covenants, conditions and provisions of those License Agreements
requiring royalty payments in an aggregate annual amount in excess of
$2,500,000 to which it is a party to be observed and performed by it, at the
times set forth therein, if any, (ii) not do, permit, suffer or refrain
from doing anything that could reasonably be expected to result in a default
under or breach of any of the terms of any such License Agreement, (iii) not
cancel, surrender, modify, amend, waive or release any such License Agreement
in any material respect or any term, provision or right of the licensee
thereunder in 

 

85

 

any
material respect, or consent to or permit to occur any of the foregoing,
except, that, so long as no Default or Event of Default exists and such cancellation,
surrender, modification, amendment or release would not reasonably be expected
to have a Material Adverse Effect; such Borrower or Guarantor may cancel,
surrender, modify, amend, waive or release any such License Agreement in the
ordinary course of the business of such Borrower or Guarantor; and (iv) furnish
to Agent, promptly upon the request of Agent, such information and evidence as
Agent may reasonably require from time to time concerning the observance,
performance and compliance by such Borrower or Guarantor or the other party or
parties thereto with the material terms, covenants or provisions of any such
License Agreement.

 

9.20                           Foreign Assets
Control Regulations, Etc.  None
of the requesting or borrowing of the Loans or the requesting or issuance,
extension or renewal of any Letter of Credit or the use of the proceeds of any
thereof will violate the Trading With the Enemy Act (50 USC §1 et seq., as
amended) (the “Trading With the Enemy Act”) or any of the foreign assets
control regulations of the United States Treasury Department (31 C.F.R.,
Subtitle B, Chapter V, as amended) (the “Foreign Assets Control Regulations”)
or any enabling legislation or executive order relating thereto (including, but
not limited to (a) Executive order 13224 of September 21, 2001
Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) (the “Executive
Order”) and (b) the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
(Public Law 107-56) (the “PATRIOT Act”). 
None of Borrowers or any of their Subsidiaries or other Affiliates is or
will become a “blocked person” as described in the Executive Order, the Trading
with the Enemy Act or the Foreign Assets Control Regulations (a “Blocked Person”)
or  engages or will engage in any
dealings or transactions, or be otherwise associated, with any such “blocked
person”.

 

9.21                           Costs and
Expenses.  Borrowers
and Guarantors shall pay to Agent (and with respect to costs and expenses
incurred prior to the date hereof, Lenders) on demand all the reasonable
out-of-pocket expenses and customary administrative charges incurred by Agent
(and with respect to costs and expenses incurred prior to the date hereof,
Lenders) including, without limitation, legal costs and expenses, filing and
search charges, recording taxes and field examination charges and expenses for
the examiners of Agent in the field and in the office, plus other out-of-pocket
expenses (including due diligence and audit and appraisal expenses and legal
fees) paid or payable in connection with the preparation, negotiation,
execution, delivery, recording, syndication, administration, collection,
liquidation, enforcement and defense of the Obligations, Agent’s rights in the
Collateral, this Agreement, the other Financing Agreements and all other
documents related hereto or thereto, including any amendments, supplements or
consents which may hereafter be contemplated (whether or not executed) or
entered into in respect hereof and thereof, including:  (a) all costs and expenses of filing or
recording (including Uniform Commercial Code financing statement filing taxes
and fees, documentary taxes, intangibles taxes and mortgage recording taxes and
fees, if applicable); (b)  costs and expenses and fees for insurance
premiums, appraisal fees (subject to the limitations set forth in this
Agreement) and search fees, background checks, costs and expenses of remitting
loan proceeds, collecting checks and other items of payment, and establishing
and maintaining the Blocked Accounts, together with Agent’s customary charges
and fees with respect thereto; (c) charges, fees or expenses charged by
any Issuing Bank in connection with any Letter of Credit; (d) costs and
expenses of preserving and protecting the Collateral; (e) costs and
expenses paid or incurred in connection with obtaining payment of the
Obligations, enforcing the security interests and Liens of Agent, selling or
otherwise realizing upon the Collateral, and otherwise enforcing the provisions
of this Agreement and the other Financing Agreements or defending any claims
made or threatened against Agent or any Lender arising out of the transactions
contemplated hereby and thereby (including preparations for and consultations
concerning any such matters); (f) all reasonable out-of-pocket expenses
and costs heretofore and from time to time hereafter incurred by Agent during
the course of periodic field examinations of the Collateral and such Borrower’s
or Guarantor’s operations subject to Section 7.7 hereof, plus a per diem
charge at Agent’s then standard rate for Agent’s examiners in the field 

 

86

 

and
office (which rate as of the date hereof is $1,000 per person per day); and (g) the
fees and disbursements of counsel (including legal assistants) to Agent in
connection with any of the foregoing, provided that, the
aggregate amount of such reimbursement payable by Obligors to Agent and its
counsel for their fees and expenses incurred prior to the closing date of the
Credit Facility shall be limited to the sum of (i) $400,000 plus (ii) the
amount of all legal fees and expenses.

 

9.22                           Further
Assurances.  At the
request of Agent at any time and from time to time, Borrowers and Guarantors
shall, at their expense, duly execute and deliver, or cause to be duly executed
and delivered, such further agreements, documents and instruments, and do or
cause to be done such further acts as may be necessary or proper to evidence,
perfect, maintain and enforce the security interests and the priority thereof
in the Collateral and to otherwise effectuate the provisions or purposes of
this Agreement or any of the other Financing Agreements.  Without limiting the generality of the
foregoing, in connection with the joinder of any Person as a Borrower or a
Guarantor hereunder, whether pursuant to a Permitted Acquisition, a Permitted
Investment, or otherwise, such Borrower or Guarantor, together with the other
Obligors, shall deliver to Agent a joinder agreement providing for the joinder
of the such Person as a Borrower or Guarantor, as applicable, in each case
conforming to the requirements of this Agreement, along with a security
agreement, and such other Financing Agreements (including, without limitation,
any intellectual property security agreements or supplements), opinion letters,
certificates and other documents as may be required by Agent, each executed by
a duly authorized officer of each Obligor, and pursuant to which such Person
shall become a Borrower or Guarantor hereunder, and such new Borrower or
Guarantor shall grant a security interest in all or substantially all of its
Collateral to secure the Obligations (or Guaranteed Obligations, as applicable)
of such Person hereunder as a Borrower or Guarantor.

 

SECTION  10.                  EVENTS
OF DEFAULT AND REMEDIES

 

10.1                           Events of
Default.  The
occurrence or existence of any one or more of the following events are referred
to herein individually as an “Event of Default”, and collectively as “Events of
Default”:

 

(a)                                  (i) any
Borrower fails to pay any of the Obligations when due or (ii) any Borrower
or Guarantor fails to perform any of the covenants contained in Sections 9.3,
9.4, 9.14 and 9.15 of this Agreement and such failure shall continue for twenty
(20) days; provided, that, such twenty (20) day period
shall not apply in the case of: (A) any failure to observe any such
covenant which is not capable of being cured at all or within such twenty (20)
day period or which has been the subject of a prior failure within a six (6) month
period or (B) an intentional breach by any Borrower or Guarantor of any
such covenant or (iii) any Borrower or Guarantor fails to perform any of
the terms, covenants, conditions or provisions contained in this Agreement or
any of the other Financing Agreements other than those described in
Sections 10.1(a)(i) and 10.1(a)(ii) above;

 

(b)                                 any
representation, warranty or statement of fact made by any Borrower or Guarantor
to Agent in this Agreement, the other Financing Agreements or any other written
agreement, schedule, confirmatory assignment or otherwise shall when made or
deemed made be false or misleading in any material respect;

 

(c)                                  any Guarantor
revokes or terminates or purports to revoke or terminate or fails to perform
any of the terms, covenants, conditions or provisions of any guarantee,
endorsement or other agreement of such party in favor of Agent or any Lender;

 

(d)                                 any judgment
for the payment of money is rendered against any Borrower or Guarantor in
excess of $2,500,000 in the aggregate (to the extent not covered by insurance
where the 

 

87

 

insurer
has assumed responsibility in writing for such judgment) and shall remain
undischarged or unvacated for a period in excess of thirty (30) days or
execution shall at any time not be effectively stayed, or any judgment other
than for the payment of money, or injunction, attachment, garnishment or
execution is rendered against any Borrower or Guarantor or any of the
Collateral having a value in excess of $2,500,000 (to the extent not covered by
insurance where the insurer has assumed responsibility in writing for such
judgment);

 

(e)                                  (i) any
Guarantor (being a natural person or a general partner of an Guarantor which is
a partnership) dies, or (ii) any Borrower or Guarantor which is a
partnership, limited liability company, limited liability partnership or a
corporation, dissolves or there is a cessation of any substantial part of any
Obligor’s business for a period of time which would reasonably be expected to
have a Material Adverse Effect;

 

(f)                                    any Borrower or
Guarantor makes an assignment for the benefit of creditors, makes or sends
notice of a bulk transfer or calls a meeting of its creditors or principal
creditors in connection with a moratorium or adjustment of the Indebtedness due
to them;

 

(g)                                 a case or
proceeding under the bankruptcy laws of the United States of America now or
hereafter in effect or under any insolvency, reorganization, receivership,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction now or hereafter in effect (whether at law or in equity) is filed
against any Borrower or Guarantor or all or any part of its properties and such
petition or application is not dismissed within sixty (60) days after the date
of its filing or any Borrower or Guarantor shall file any answer admitting or
not contesting such petition or application or indicates its consent to,
acquiescence in or approval of, any such action or proceeding or the relief
requested is granted sooner;

 

(h)                                 a case or
proceeding under the bankruptcy laws of the United States of America now or
hereafter in effect or under any insolvency, reorganization, receivership,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction now or hereafter in effect (whether at a law or equity) is filed
by any Borrower or Guarantor or for all or any part of its property;

 

(i)                                     any default in
respect of any Indebtedness of any Borrower or Guarantor (other than
Indebtedness owing to Agent and Lenders hereunder), or any default under any
Material Contract, in either case in an amount in excess of $2,500,000
(including any required mandatory prepayment or “put” of such Indebtedness to
such Borrower or Guarantor), which default continues for more than the
applicable cure period, if any, with respect thereto and/or is not waived in
writing by the other parties thereto, or any acceleration or demand for payment
with respect to any Indebtedness or payment owing under any Material Contract
in an amount less than or equal to $2,500,000 provided; that,
this clause (i) shall not apply to any default of any indebtedness under
clause (o);

 

(j)                                     any material
provision hereof or of any of the other Financing Agreements shall for any
reason cease to be valid, binding and enforceable with respect to any party
hereto or thereto (other than Agent) in accordance with its terms, or any such
party shall challenge the enforceability hereof or thereof, or shall assert in
writing, or take any action or fail to take any action based on the assertion
that any provision hereof or of any of the other Financing Agreements has
ceased to be or is otherwise not valid, binding or enforceable in accordance
with its terms, or any security interest provided for herein or in any of the
other Financing Agreements shall cease to be a valid and perfected first
priority security interest in any of the First Priority Collateral (or a valid
and perfected security interest in any other Collateral having the priority for
such Collateral required hereunder) purported to be subject thereto (except as
otherwise permitted herein or therein);

 

88

 

(k)                                  an ERISA Event
shall occur which results in or could reasonably be expected to result in
liability of any Borrower in an aggregate amount in excess of $3,000,000;

 

(l)                                     any Change of
Control;

 

(m)                               the indictment
by any Governmental Authority as to which there is a reasonable possibility of
an adverse determination, in the good faith determination of Agent, under any
criminal statute, or commencement of criminal or civil proceedings against such
Borrower or Guarantor, pursuant to which statute or proceedings the penalties
or remedies sought or available include forfeiture of any of the Collateral or
any other property of any Borrower or Guarantor which is necessary or material
to the conduct of its business; or

 

(n)                                 any loss,
theft, damage or destruction of any of the Collateral not fully covered
(subject to such deductibles as Agent shall have permitted) by insurance if the
amount not covered by insurance exceeds $2,500,000.

 

(o)                                 any Borrower or
Guarantor shall be in default of any of its obligations under the Senior Notes
or the Senior Notes Indenture or with respect to any Permitted Pari Passu
Obligations permitted under (and as defined in) the Senior Notes Indenture and,
as a consequence of which the payment or maturity of the Senior Notes or such
Permitted Pari Passu Obligations could be accelerated or demand for payment
thereof made or other rights or remedies exercised by or on behalf of the
holders of the Senior Notes or such Permitted Pari Passu Obligations.

 

10.2                           Remedies.

 

(a)                                  At any time an Event of
Default exists or has occurred and is continuing, Agent and Lenders shall have
all rights and remedies provided in this Agreement, the other Financing
Agreements, the UCC and other applicable law, all of which rights and remedies
may be exercised without notice to or consent by any Borrower or Guarantor, except
as such notice or consent is expressly provided for hereunder or required by
applicable law.  All rights, remedies and
powers granted to Agent and Lenders hereunder, under any of the other Financing
Agreements, the UCC or other applicable law, are cumulative, not exclusive and
enforceable, in Agent’s discretion, alternatively, successively, or
concurrently on any one or more occasions, and shall include, without
limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by any Borrower or Guarantor of this
Agreement or any of the other Financing Agreements.  Subject to Section 12 hereof, Agent may,
and at the direction of the Required Lenders shall, at any time or times,
proceed directly against any Borrower or Guarantor to collect the Obligations
without prior recourse to the Collateral.

 

(b)                                 Without
limiting the generality of the foregoing, at any time an Event of Default
exists or has occurred and is continuing, Agent may, at its option and shall
upon the direction of the Required Lenders, (i) upon notice to
Administrative Borrower, accelerate the payment of all Obligations and demand
immediate payment thereof to Agent for itself and the benefit of Lenders (provided,
that, upon the occurrence of any Event of Default described in
Sections 10.1(g) and 10.1(h), all Obligations shall automatically
become immediately due and payable), and (ii) terminate the Commitments
whereupon the obligation of each Lender to make any Loan and Issuing Bank to
issue any Letter of Credit shall immediately terminate (provided, that,
upon the occurrence of any Event of Default described in Sections 10.1(g) and
10.1(h), the Commitments and any other obligation of the Agent or a Lender
hereunder shall automatically terminate).

 

(c)                                  Without
limiting the foregoing, at any time an Event of Default exists or has occurred
and is continuing, Agent may, in its discretion (i) with or without
judicial process or the aid or 

 

89

 

assistance
of others, enter upon any premises on or in which any of the Collateral may be
located and take possession of the Collateral or complete processing,
manufacturing and repair of all or any portion of the Collateral, (ii) require
any Borrower or Guarantor, at Borrowers’ expense, to assemble and make
available to Agent any part or all of the Collateral at any place and time
designated by Agent, (iii) collect, foreclose, receive, appropriate,
setoff and realize upon any and all Collateral, (iv) enter upon, and store
or remove any or all of the Collateral from any premises on or in which the
same may be located for the purpose of effecting the sale, foreclosure or other
disposition thereof or for any other purpose, (v) sell, lease, transfer,
assign, deliver or otherwise dispose of any and all Collateral in its then
condition, or after any further manufacturing or processing thereof (including
entering into contracts with respect thereto, public or private sales at any
exchange, broker’s board, at any office of Agent or elsewhere) at such prices
or terms as Agent may deem reasonable, for cash, upon credit or for future
delivery, with Agent having the right to purchase the whole or any part of the
Collateral at any such public sale, all of the foregoing being free from any
right or equity of redemption of any Borrower or Guarantor, which right or
equity of redemption is hereby expressly waived and released by Borrowers and
Guarantors and/or (vi) terminate this Agreement.  If any of the Collateral is sold or leased by
Agent upon credit terms or for future delivery, the Obligations shall not be
reduced as a result thereof until payment therefor is finally collected by
Agent.  If notice of disposition of
Collateral is required by law, ten (10) days prior notice by Agent to Administrative
Borrower designating the time and place of any public sale or the time after
which any private sale or other intended disposition of Collateral is to be
made, shall be deemed to be reasonable notice thereof and Borrowers and
Guarantors waive any other notice.  Agent
shall have the right to (but shall be under no obligation to any Secured Party
or any Borrower or Guarantor to) conduct such sales on any Borrower’s or
Guarantor’s premises, without charge, and such sales may be adjourned from time
to time in accordance with applicable law. 
Agent shall have the right to (but shall be under no obligation to any
Secured Party or any Borrower or Guarantor to) sell, lease or otherwise dispose
of any Collateral for cash, credit or any combination thereof, and Agent may
purchase any Collateral at public or, if permitted by law, private sale and, in
lieu of actual payment of the purchase price, may set off the amount of such
price against the Obligations.  In the
event Agent institutes an action to recover any Collateral or seeks recovery of
any Collateral by way of prejudgment remedy, each Borrower and Guarantor waives
the posting of any bond which might otherwise be required. At any time an Event
of Default exists or has occurred and is continuing, upon Agent’s request,
Borrowers will either, as Agent shall specify, furnish cash collateral to
Issuing Bank to be used to secure and fund the reimbursement obligations to
Issuing Bank in connection with any Letter of Credit Obligations or furnish
cash collateral to Agent for the Letter of Credit Obligations.  Such cash collateral shall be in the amount
equal to one hundred five (105%) percent of the amount of the Letter of Credit
Obligations.

 

(d)                                 At any time or
times that an Event of Default exists or has occurred and is continuing, Agent
may, in its discretion, enforce the rights of any Borrower or Guarantor against
any account debtor, secondary obligor or other obligor in respect of any of the
Accounts or other Receivables.  Without
limiting the generality of the foregoing, Agent may, in its discretion, at such
time or times (i) notify any or all account debtors, secondary obligors or
other obligors in respect thereof that the Receivables have been assigned to
Agent and that Agent has a security interest therein and Agent may direct any
or all account debtors, secondary obligors and other obligors to make payment
of Receivables directly to Agent, (ii) extend the time of payment of,
compromise, settle or adjust for cash, credit, return of merchandise or
otherwise, and upon any terms or conditions, any and all Receivables or other
obligations included in the Collateral and thereby discharge or release the
account debtor or any secondary obligors or other obligors in respect thereof
without affecting any of the Obligations, (iii) demand, collect or enforce
payment of any Receivables or such other obligations, but without any duty to
do so, and Agent and Lenders shall not be liable for any failure to collect or
enforce the payment thereof nor for the negligence of its agents or attorneys
with respect thereto and (iv) take whatever other action Agent may deem
necessary or desirable for the protection of its interests and the interests of
Lenders.  At any time that an Event of
Default exists or has occurred and is continuing, at Agent’s request, 

 

90

 

all
invoices and statements sent to any account debtor shall state that the
Accounts and such other obligations have been assigned to Agent and are payable
directly and only to Agent and Borrowers and Guarantors shall deliver to Agent
such originals of documents evidencing the sale and delivery of goods or the
performance of services giving rise to any Accounts as Agent may require.  In the event any account debtor returns Inventory
when an Event of Default exists or has occurred and is continuing, Borrowers
shall, upon Agent’s request, hold the returned Inventory in trust for Agent,
segregate all returned Inventory from all of its other property, dispose of the
returned Inventory solely according to Agent’s instructions, and not issue any
credits, discounts or allowances with respect thereto without Agent’s prior
written consent.

 

(e)                                  To the extent
that applicable law imposes duties on Agent or any Lender to exercise remedies
in a commercially reasonable manner (which duties cannot be waived under such
law), each Borrower and Guarantor acknowledges and agrees that it is not
commercially unreasonable for Agent or any Lender (i) to fail to incur
expenses reasonably deemed significant by Agent or any Lender to prepare
Collateral for disposition or otherwise to complete raw material or work in
process into finished goods or other finished products for disposition, (ii) to
fail to obtain third party consents for access to Collateral to be disposed of,
or to obtain or, if not required by other law, to fail to obtain consents of
any Governmental Authority or other third party for the collection or
disposition of Collateral to be collected or disposed of, (iii) to fail to
exercise collection remedies against account debtors, secondary obligors or
other persons obligated on Collateral or to remove Liens or encumbrances on or
any adverse claims against Collateral, (iv) to exercise collection
remedies against account debtors and other persons obligated on Collateral
directly or through the use of collection agencies and other collection
specialists, (v) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral is
of a specialized nature, (vi) to contact other persons, whether or not in
the same business as any Borrower or Guarantor, for expressions of interest in
acquiring all or any portion of the Collateral, (vii) to hire one or more
professional auctioneers to assist in the disposition of Collateral, whether or
not the collateral is of a specialized nature, (viii) to dispose of
Collateral by utilizing Internet sites that provide for the auction of assets
of the types included in the Collateral or that have the reasonable capability
of doing so, or that match buyers and sellers of assets, (ix) to dispose
of assets in wholesale rather than retail markets, (x) to disclaim
disposition warranties, (xi) to purchase insurance or credit enhancements
to insure Agent or Lenders against risks of loss, collection or disposition of
Collateral or to provide to Agent or Lenders a guaranteed return from the
collection or disposition of Collateral, or (xii) to the extent deemed
appropriate by Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist Agent in the collection
or disposition of any of the Collateral. Each Borrower and Guarantor
acknowledges that the purpose of this Section is to provide non-exhaustive
indications of what actions or omissions by Agent or any Lender would not be
commercially unreasonable in the exercise by Agent or any Lender of remedies
against the Collateral and that other actions or omissions by Agent or any
Lender shall not be deemed commercially unreasonable solely on account of not
being indicated in this Section. Without limitation of the foregoing, nothing
contained in this Section shall be construed to grant any rights to any
Borrower or Guarantor or to impose any duties on Agent or Lenders that would
not have been granted or imposed by this Agreement or by applicable law in the
absence of this Section.

 

(f)                                    For the purpose
of enabling Agent to exercise the rights and remedies hereunder, each Borrower
and Guarantor hereby grants to Agent, to the extent assignable, an irrevocable,
non-exclusive license (exercisable at any time an Event of Default shall exist
or have occurred and for so long as the same is continuing) without payment of
royalty or other compensation to any Borrower or Guarantor, to use, assign, license
or sublicense any of the trademarks, service-marks, trade names, business
names, trade styles, designs, logos and other source of business identifiers
and other Intellectual Property and general intangibles now owned or hereafter
acquired by any Borrower or Guarantor, wherever the same maybe located,
together with computer hardware and software, trade secrets, 

 

91

 

brochures,
customer lists, promotional and advertising materials, labels, packaging materials
and other property, in advertising for sale, marketing, selling, collecting,
completing manufacture of, or otherwise exercising any rights or remedies with
respect to, any Collateral including in such license reasonable access to all
media in which any of the licensed items may be recorded or stored and to all
computer programs used for the compilation or printout thereof.

 

(g)                                 At any time an
Event of Default exists or has occurred and is continuing, Agent may apply the
cash proceeds of Collateral actually received by Agent from any sale, lease,
foreclosure or other disposition of the Collateral to payment of the
Obligations, in whole or in part and in accordance with the terms hereof,
whether or not then due or may hold such proceeds as cash collateral for the
Obligations.  Borrowers and Guarantors
shall remain liable to Agent and Lenders for the payment of any deficiency with
interest at the highest rate provided for herein and all costs and expenses of
collection or enforcement, including attorneys’ fees and expenses.

 

(h)                                 Without
limiting the foregoing, upon the occurrence of a Default or an Event of
Default, (i) Agent and Lenders may, at Agent’s option, and upon the
occurrence of an Event of Default at the direction of the Required Lenders,
Agent and Lenders shall, without notice, (A) cease making Loans or
arranging for Letters of Credit or reduce the lending formulas or amounts of
Loans and Letters of Credit available to Borrowers and/or (B) terminate
any provision of this Agreement providing for any future Loans to be made by
Agent and Lenders or Letters of Credit to be issued by Issuing Bank and (ii) Agent
may, at its option, establish such Reserves as Agent determines, without
limitation or restriction, notwithstanding anything to the contrary contained
herein.

 

SECTION  11.                  JURY
TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW

 

11.1                           Governing Law;
Choice of Forum; Service of Process; Jury Trial Waiver.

 

(a)                                  The validity,
interpretation and enforcement of this Agreement and the other Financing
Agreements (except as otherwise provided therein) and any dispute arising out
of the relationship between the parties hereto, whether in contract, tort,
equity or otherwise, shall be governed by the internal laws of the State of New
York but excluding any principles of conflicts of law or other rule of law
that would cause the application of the law of any jurisdiction other than the
laws of the State of New York.

 

(b)                                 Borrowers,
Guarantors, Agent, Lenders and Issuing Bank irrevocably consent and submit to
the non-exclusive jurisdiction of the courts of the State of New York and the
United States District Court for the Southern District of New York, whichever
Agent may elect, and waive any objection based on venue or forum non conveniens
with respect to any action instituted therein arising under this Agreement or
any of the other Financing Agreements or in any way connected with or related
or incidental to the dealings of the parties hereto in respect of this
Agreement or any of the other Financing Agreements or the transactions related
hereto or thereto, in each case whether now existing or hereafter arising, and
whether in contract, tort, equity or otherwise, and agree that any dispute with
respect to any such matters shall be heard only in the courts described above
(except that Agent and Lenders shall have the right to bring any action or
proceeding against any Borrower or Guarantor or its or their property in the
courts of any other jurisdiction which Agent deems necessary or appropriate in
order to realize on the Collateral or to otherwise enforce its rights against
any Borrower or Guarantor or its or their property).

 

(c)                                  Each Borrower
and Guarantor hereby waives personal service of any and all process upon it and
consents that all such service of process may be made by certified mail (return
receipt 

 

92

 

requested)
directed to its address set forth herein and service so made shall be deemed to
be completed five (5) days after the same shall have been so deposited in
the U.S. mails, or, at Agent’s option, by service upon any Borrower or
Guarantor (or Administrative Borrower on behalf of such Borrower or Guarantor)
in any other manner provided under the rules of any such courts.

 

(d)                                 BORROWERS,
GUARANTORS, AGENT, LENDERS AND ISSUING BANK EACH HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER
THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT
OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS
RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.  BORROWERS, GUARANTORS, AGENT, LENDERS AND
ISSUING BANK EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND
THAT ANY BORROWER, ANY GUARANTOR, AGENT, ANY LENDER OR ISSUING BANK MAY FILE
AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.

 

(e)                                  Agent and
Secured Parties shall not have any liability to any Borrower or Guarantor
(whether in tort, contract, equity or otherwise) for losses suffered by such
Borrower or Guarantor in connection with, arising out of, or in any way related
to the transactions or relationships contemplated by this Agreement, or any act,
omission or event occurring in connection herewith, unless it is determined by
a final and non-appealable judgment or court order of competent jurisdiction
binding on Agent, or such Secured Party or Secured Parties, that the losses
were the result of acts or omissions constituting gross negligence or willful
misconduct.  Each Borrower and
Guarantor:  (i) certifies that
neither Agent, any Lender, any Issuing Bank nor any representative, agent or
attorney acting for or on behalf of Agent, any Lender or Issuing Bank has
represented, expressly or otherwise, that Agent, Lenders and each Issuing Bank
would not, in the event of litigation, seek to enforce any of the waivers
provided for in this Agreement or any of the other Financing Agreements and (ii) acknowledges
that in entering into this Agreement and the other Financing Agreements, Agent,
Lenders and each Issuing Bank are relying upon, among other things, the waivers
and certifications set forth in this Section 11.1 and elsewhere herein and
therein.

 

11.2                           Waiver of
Notices.  Each
Borrower and Guarantor hereby expressly waives demand, presentment, protest and
notice of protest and notice of dishonor with respect to any and all
instruments and chattel paper, included in or evidencing any of the Obligations
or the Collateral, and any and all other demands and notices of any kind or
nature whatsoever with respect to the Obligations, the Collateral and this
Agreement, except such as are expressly provided for herein.  No notice to or demand on any Borrower or
Guarantor which Agent or any Lender may elect to give shall entitle such
Borrower or Guarantor to any other or further notice or demand in the same,
similar or other circumstances.

 

11.3                           Amendments and
Waivers.

 

(a)                                  Neither this
Agreement nor any other Financing Agreement nor any terms hereof or thereof may
be amended, waived, discharged or terminated unless such amendment, waiver,
discharge or termination is in writing signed by (x) the Required Lenders
and Agent (acting at the direction of the Required Lenders), (y) at Agent’s
option, by Agent with the authorization or consent of the Required Lenders, or (z) pursuant
to Section 2.3 in order to give effect to an increase in the Commitments,
by

 

93

 

Agent
and each Lender making a new Commitment or increasing its existing Commitment
and as to amendments to any of the Financing Agreements (other than with
respect to any provision of Section 12 hereof), by Administrative Borrower
and such amendment, waiver, discharge or termination shall be effective and
binding as to all Lenders and Issuing Bank only in the specific instance and
for the specific purpose for which given; except, that, no such amendment,
waiver, discharge or termination shall:

 

(i)                                     reduce the
interest rate or any fees or extend the time of payment of principal, interest
or any fees or reduce the principal amount of any Loan or Letters of Credit, in
each case without the consent of each Lender directly affected thereby,

 

(ii)                                  increase the Commitment
of any Lender over the amount thereof then in effect or provided hereunder, in
each case without the consent of the Lender directly affected thereby,

 

(iii)                               amend, modify
or waive any terms of Section 13.9 hereof, in each case without the
consent of each Lender directly affected thereby,

 

(iv)                              release any
First Priority Collateral (except as expressly required hereunder or under any
of the other Financing Agreements or applicable law and except as permitted
under Section 12.11(b) hereof), without the consent of all Lenders,

 

(v)                                 amend
the definitions of “Pro Rata Share,” “Required Lenders,” “Reserve” or “Borrowing
Base” (and the other defined terms used in such definitions), if the
effect would be to increase the amount available for borrowing by Borrowers
hereunder or the amount of Excess Availability, or any provision of
this Agreement obligating Agent to take certain actions at the direction
of the Required Lenders, or any provision of any of the Financing
Agreements regarding the pro rata treatment or obligations of Lenders,
without the consent of all Lenders,

 

(vi)                              consent to the
assignment or transfer by any Borrower or Guarantor of any of their rights and
obligations under this Agreement, or release any Borrower or Guarantor from
liability for any of the Obligations, without the consent of all Lenders,

 

(vii)                           amend, modify
or waive any terms of this Section 11.3, without the consent of all
Lenders,

 

(viii)                        amend, modify
or waive any terms of Sections 3.3, 6.4, 11.5 or 12 hereof, in each case without
the consent of all Lenders,

 

(ix)                                increase the
advance rates constituting part of the Borrowing Base or increase the Inventory
Loan Limit, the Letter of Credit Limit, the Letter of Credit Government
Sublimit or the Letter of Credit Non-Government Sublimit without the consent of
all Lenders,

 

(x)                                   amend, modify
or waive any terms of Section 2.1(d) hereof without the consent of
all Lenders, or

 

(xi)                                subordinate
the priority of any Liens granted to Agent under any of the Financing
Agreements with respect to any material part of the Collateral to Liens granted
to any other Person, except as currently provided in or contemplated by the
Financing Agreements and except for Liens granted by a Borrower or
Guarantor to financial institutions with respect to amounts on deposit with
such financial institutions to cover returned items, processing and 

 

94

 

analysis
charges and other charges in the ordinary course of business that relate to
deposit accounts with such financial institutions, in each case without the
consent of all Lenders.

 

(b)                                 Agent, Lenders
and Issuing Bank shall not, by any act, delay, omission or otherwise be deemed
to have expressly or impliedly waived any of its or their rights, powers and/or
remedies unless such waiver shall be in writing and signed as provided
herein.  Any such waiver shall be
enforceable only to the extent specifically set forth therein.  A waiver by Agent, any Lender or Issuing Bank
of any right, power and/or remedy on any one occasion shall not be construed as
a bar to or waiver of any such right, power and/or remedy which Agent, any
Lender or Issuing Bank would otherwise have on any future occasion, whether
similar in kind or otherwise.

 

(c)                                  Notwithstanding
anything to the contrary contained in Section 11.3(a) above, in
connection with any amendment, waiver, discharge or termination for which the
consent of all Lenders was required, in the event that any Lender shall fail to
consent or fail to consent in a timely manner (each such Lender being referred
to herein as a “Non-Consenting Lender”), but the consent of the Required
Lenders to such amendment, waiver, discharge or termination is obtained, then
Agent or Administrative Borrower shall have the right, but not the obligation,
at any time thereafter, and upon the exercise by Agent or Administrative
Borrower of such right to require each such Non-Consenting Lender, and each
such Non-Consenting Lender shall have the obligation, to sell, assign and
transfer to Agent or such Eligible Transferee as Agent or Administrative
Borrower may specify, all of such Non-Consenting Lender’s Commitments and all
rights and interests of such Non-Consenting Lender pursuant thereto.  Agent or Administrative Borrower shall
provide each such Non-Consenting Lender with prior written notice of its intent
to exercise its right under this Section, which notice shall specify on the
date on which such purchase and sale shall occur, which date shall be within
thirty (30) days after such notice. 
Each such purchase and sale shall be pursuant to the terms of an
Assignment and Acceptance (whether or not executed by the Non-Consenting
Lender), except that on the date of such purchase and sale, Agent, or such
Eligible Transferee specified by Agent or Administrative Borrower, shall pay to
the Non-Consenting Lender (except as Agent or Administrative Borrower and such
Non-Consenting Lender(s) may otherwise agree) the amount equal to: (i) the
principal balance of the Loans held by the Non-Consenting Lender outstanding as
of the close of business on the business day immediately preceding the
effective date of such purchase and sale, plus (ii) amounts accrued and
unpaid in respect of interest and fees payable to the Non-Consenting Lender to
the effective date of the purchase (including amounts payable under Section 3.3(c) as
if the Eurodollar Rate Loans of such Non-Consenting Lender were being prepaid
on the purchase date but in no event shall the Non-Consenting Lender be deemed
entitled to any early termination fee). 
Such purchase and sale shall be effective on the date of the payment of
such amount to the Non-Consenting Lender and the Commitment of the
Non-Consenting Lender shall terminate on such date.

 

(d)                                 The consent of
Agent shall be required for any amendment, waiver or consent affecting the
rights or duties of Agent hereunder or under any of the other Financing
Agreements, in addition to the consent of the Lenders otherwise required by
this Section and the exercise by Agent of any of its rights hereunder with
respect to Reserves or Eligible Accounts or Eligible Inventory shall not be
deemed an amendment to the advance rates provided for in this Section 11.3.  The consent of Issuing Bank shall be required
for any amendment, waiver or consent affecting the rights or duties of Issuing
Bank hereunder or under any of the other Financing Agreements, in addition to
the consent of the Lenders otherwise required by this Section, provided,
that, the consent of Issuing Bank shall not be required for any other
amendments, waivers or consents.  The
consent of Swing Line Lender shall be required for any amendment, waiver or
consent affecting the rights or duties of Swing Line Lender hereunder or under
any of the other Financing Agreements, in addition to the consent of the
Lenders otherwise required by this Section. 
Notwithstanding anything to the contrary contained in Section 11.3(a) above,
(i) in the event that Agent shall agree that any items otherwise required
to be delivered to Agent as a condition of the initial 

 

95

 

Loans
and Letters of Credit hereunder may be delivered after the date hereof, Agent
may, in its discretion, agree to extend the date for delivery of such items or
take such other action as Agent may deem appropriate as a result of the failure
to receive such items as Agent may determine or may waive any Event of Default
as a result of the failure to receive such items, in each case without the
consent of any Lender and (ii) Agent may consent to any change in the type
of organization, jurisdiction of organization or other legal structure of any
Borrower or Guarantor and amend the terms hereof or of any of the other
Financing Agreements as may be necessary or desirable to reflect any such
change, in each case without the approval of any Lender.

 

(e)                                  The consent of
Agent and a Bank Product Provider that is providing Bank Products and has
outstanding any such Bank Products at such time that are secured hereunder
shall be required for any amendment to the priority of payment of Obligations
arising under or pursuant to any Bank Products of a Borrower or Guarantor as
set forth in Section 6.4(a) hereof.

 

(f)                                    Notwithstanding
anything to the contrary herein, (i) the Fee Letter may be amended, or
rights or privileges thereunder waived, in a writing executed only by the
parties thereto, and (ii) no Defaulting Lender shall have any right to
approve or disapprove any amendment, waiver or consent hereunder, except that
the Commitment of such Lender may not be increased or extended without the
consent of such Lender.

 

11.4                           Waiver of
Counterclaims.  Each
Borrower and Guarantor waives all rights to interpose any claims, deductions,
setoffs or counterclaims of any nature (other then compulsory counterclaims) in
any action or proceeding with respect to this Agreement, the Obligations, the
Collateral or any matter arising therefrom or relating hereto or thereto.

 

11.5                           Indemnification.  Each Borrower and Guarantor shall, jointly
and severally, indemnify and hold Agent, each Lender and Issuing Bank, and
their respective officers, directors, agents, employees, advisors and counsel
and their respective Affiliates (each such person being an “Indemnitee”),
harmless from and against any and all losses, claims, damages, liabilities,
costs or expenses (including attorneys’ fees and expenses) imposed on, incurred
by or asserted against any of them in connection with any litigation,
investigation, claim or proceeding commenced or threatened related to the
negotiation, preparation, execution, delivery, enforcement, performance or
administration of this Agreement, any other Financing Agreements, or any
undertaking or proceeding related to any of the transactions contemplated
hereby or any act, omission, event or transaction related or attendant thereto,
including amounts paid in settlement, court costs, and the fees and expenses of
counsel except that Borrowers and Guarantors shall not have any obligation
under this Section 11.5 to indemnify an Indemnitee with respect to a
matter covered hereby resulting from the gross negligence or willful misconduct
of such Indemnitee as determined pursuant to a final, non-appealable order of a
court of competent jurisdiction (but without limiting the obligations of
Borrowers or Guarantors as to any other Indemnitee).   To the extent that the undertaking to
indemnify, pay and hold harmless set forth in this Section may be
unenforceable because it violates any law or public policy, Borrowers and
Guarantors shall pay the maximum portion which it is permitted to pay under
applicable law to Agent and Lenders in satisfaction of indemnified matters
under this Section.  To the extent
permitted by applicable law, no Borrower or Guarantor shall assert, and each
Borrower and Guarantor hereby waives, any claim against any Indemnitee, on any theory
of liability for special, indirect, consequential or punitive damages (as
opposed to direct or actual damages) arising out of, in connection with, or as
a result of, this Agreement, any of the other Financing Agreements or any
undertaking or transaction contemplated hereby. 
No Indemnitee referred to above shall be liable for any damages arising
from the use by unintended recipients of any information or other materials
distributed by it through telecommunications, electronic or other information
transmission systems in connection with this Agreement or any of the other
Financing Agreements or the transaction contemplated hereby or 

 

96

 

thereby.  All amounts due under this Section shall
be payable upon demand. The foregoing indemnity shall survive the payment of
the Obligations and the termination or non-renewal of this Agreement.

 

SECTION 
12.                  THE AGENT

 

12.1                           Appointment,
Powers and Immunities.  Each
Secured Party and Issuing Bank irrevocably designates, appoints and authorizes
Wachovia to act as Agent hereunder and under the other Financing Agreements
with such powers as are specifically delegated to Agent by the terms of this
Agreement and of the other Financing Agreements, together with such other powers
as are reasonably incidental thereto. 
Agent (a) shall have no duties or responsibilities except those
expressly set forth in this Agreement and in the other Financing Agreements,
and shall not by reason of this Agreement or any other Financing Agreement be a
trustee or fiduciary for any Secured Party; (b) shall not be responsible
to Secured Parties for any recitals, statements, representations or warranties
contained in this Agreement or in any of the other Financing Agreements, or in
any certificate or other document referred to or provided for in, or received
by any of them under, this Agreement or any other Financing Agreement, or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement or any other Financing Agreement or any other document
referred to or provided for herein or therein or for any failure by any
Borrower or any Guarantor or any other Person to perform any of its obligations
hereunder or thereunder; and (c) shall not be responsible to Secured Parties
for any action taken or omitted to be taken by it hereunder or under any other
Financing Agreement or under any other document or instrument referred to or
provided for herein or therein or in connection herewith or therewith, except
for its own gross negligence or willful misconduct as determined by a final
non-appealable judgment of a court of competent jurisdiction.  Agent may employ agents and attorneys in fact
and shall not be responsible for the negligence or misconduct of any such
agents or attorneys in fact selected by it in good faith.  Agent may deem and treat the payee of any
note as the holder thereof for all purposes hereof unless and until the
assignment thereof pursuant to an agreement (if and to the extent permitted
herein) in form and substance satisfactory to Agent shall have been delivered
to and acknowledged by Agent.

 

12.2                           Reliance by
Agent.  Agent shall be entitled to rely
upon any certification, notice or other communication (including any thereof by
telephone, telecopy, telex, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by Agent.  As to any matters not expressly provided for
by this Agreement or any other Financing Agreement, Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder or
thereunder in accordance with instructions given by the Required Lenders or all
of Lenders as is required in such circumstance, and such instructions of such
Agents and any action taken or failure to act pursuant thereto shall be binding
on all Lenders.

 

12.3                           Events of
Default.

 

(a)                                  Agent shall not
be deemed to have knowledge or notice of the occurrence of a Default or an
Event of Default or other failure of a condition precedent to the Loans and
Letters of Credit hereunder, unless and until Agent has received written notice
from a Lender, or Borrower specifying such Event of Default or any unfulfilled
condition precedent, and stating that such notice is a “Notice of Default or
Failure of Condition”.  In the event that
Agent receives such a Notice of Default or Failure of Condition, Agent shall
give prompt notice thereof to the Lenders. 
Agent shall (subject to Section 12.7) take such action with respect
to any such Event of Default or failure of condition precedent as shall be
directed by the Required Lenders to the extent provided for herein; provided,
that, unless and until Agent shall have received such directions, Agent
may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to or by reason of such Event of Default or failure
of condition precedent, as it shall deem advisable in the best interest of
Lenders.  Without limiting the foregoing,
and 

 

97

 

notwithstanding
the existence or occurrence and continuance of an Event of Default or any other
failure to satisfy any of the conditions precedent set forth in Section 4
of this Agreement to the contrary, unless and until otherwise directed by the
Required Lenders, Agent may, but shall have no obligation to, continue to make
Loans and Issuing Bank may, but shall have no obligation to, issue or cause to
be issued any Letter of Credit for the ratable account and risk of Lenders from
time to time if Agent believes making such Loans or issuing or causing to be
issued such Letter of Credit is in the best interests of Lenders.

 

(b)                                 Except with the
prior written consent of Agent, no Lender or Issuing Bank may assert or
exercise any enforcement right or remedy in respect of the Loans, Letter of
Credit Obligations or other Obligations, as against any Borrower or Guarantor
or any of the Collateral or other property of any Borrower or Guarantor.

 

12.4                           Wachovia in its
Individual Capacity.  With respect
to its Commitment and the Loans made and Letters of Credit issued or caused to
be issued by it (and any successor acting as Agent), so long as Wachovia shall
be a Lender hereunder, it shall have the same rights and powers hereunder as
any other Lender and may exercise the same as though it were not acting as
Agent, and the term “Lender” or “Lenders” shall, unless the context otherwise
indicates, include Wachovia in its individual capacity as Lender
hereunder.  Wachovia (and any successor
acting as Agent) and its Affiliates may (without having to account therefor to
any Lender) lend money to, make investments in and generally engage in any kind
of business with Borrowers (and any of its Subsidiaries or Affiliates) as if it
were not acting as Agent, and Wachovia and its Affiliates may accept fees and
other consideration from any Borrower or Guarantor and any of its Subsidiaries
and Affiliates for services in connection with this Agreement or otherwise
without having to account for the same to Lenders.

 

12.5                           Indemnification.  Lenders agree to indemnify Agent, Arrangers,
Syndication Agent, Documentation Agent and each Issuing Bank and to their
respective present and future officers, directors and agents (collectively, the
“Lender Group Indemnitees”) (to the extent not reimbursed by Borrowers
hereunder and without limiting any obligations of Borrowers hereunder) ratably,
in accordance with their Pro Rata Shares, for any and all claims of any kind
and nature whatsoever that may be imposed on, incurred by or asserted against
Agent (including by any Lender) arising out of or by reason of any
investigation in or in any way relating to or arising out of this Agreement or
any other Financing Agreement or any other documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or
thereby (including the costs and expenses that Agent is obligated to pay
hereunder) or the enforcement of any of the terms hereof or thereof or of any
such other documents, provided, that, no Lender shall be liable
for any of the foregoing to the extent it arises from the gross negligence or
willful misconduct of the party to be indemnified as determined by a final
non-appealable judgment of a court of competent jurisdiction.  The foregoing indemnity shall survive the
payment of the Obligations and the termination or non-renewal of this
Agreement.

 

12.6                           Non-Reliance on
Agent and Other Lenders.  Each
Lender agrees that it has, independently and without reliance on Agent or other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of Borrowers and Guarantors and has
made its own decision to enter into this Agreement and that it will,
independently and without reliance upon Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not taking action
under this Agreement or any of the other Financing Agreements.  Agent shall not be required to keep itself
informed as to the performance or observance by any Borrower or Guarantor of
any term or provision of this Agreement or any of the other Financing
Agreements or any other document referred to or provided for herein or therein
or to inspect the properties or books of any Borrower or Guarantor.  Agent will use reasonable efforts to provide
Lenders with any information received by Agent from any Borrower or Guarantor
which is required to be provided to Lenders or deemed to be requested by
Lenders 

 

98

 

hereunder
and with a copy of any Notice of Default or Failure of Condition received by
Agent from any Borrower or any Lender; provided, that, Agent
shall not be liable to any Lender for any failure to do so, except to the
extent that such failure is attributable to Agent’s own gross negligence or
willful misconduct as determined by a final non-appealable judgment of a court
of competent jurisdiction.  Except for
notices, reports and other documents expressly required to be furnished to
Lenders by Agent or deemed requested by Lenders hereunder, Agent shall not have
any duty or responsibility to provide any Lender with any other credit or other
information concerning the affairs, financial condition or business of any
Borrower or Guarantor that may come into the possession of Agent.

 

12.7                           Failure to Act.  Except for action expressly required of Agent
hereunder and under the other Financing Agreements, Agent shall in all cases be
fully justified in failing or refusing to act hereunder and thereunder unless
it shall receive further assurances to its satisfaction from Lenders of their
indemnification obligations under Section 12.5 hereof against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.

 

12.8                           Additional
Loans.  Agent and Swing Line Lender (or
Agent on behalf of Swing Line Lender) shall not make any Loans or Issuing Bank
provide any Letter of Credit on behalf of Lenders intentionally and with actual
knowledge that such Loans or Letter of Credit would cause the aggregate amount
of the total outstanding Loans and Letters of Credit to exceed the Borrowing
Base, without the prior consent of all Lenders, except, that, Agent may make
such additional Revolving Loans or Issuing Bank may provide such additional
Letter of Credit on behalf of Lenders, intentionally and with actual knowledge
that such Loans or Letter of Credit will cause the total outstanding Loans and
Letters of Credit to exceed the Borrowing Base, as Agent may deem necessary or
advisable in its discretion, provided, that: (a) the total
principal amount of the additional Loans or additional Letters of Credit which
Agent may make or provide after obtaining such actual knowledge that the
aggregate principal amount of the Loans equal or exceed the Borrowing Bases,
plus the amount of Special Agent Advances made pursuant to Section 12.11(a)(ii) hereof
then outstanding, shall not exceed the aggregate amount equal to five percent
(5%) of the Maximum Credit and shall not cause the total principal amount of
the Loans and Letters of Credit to exceed the Maximum Credit and (b) no
such additional Loan or Letter of Credit shall be outstanding more than sixty
(60) days after the date such additional Loan or Letter of Credit is made
or issued (as the case may be), except as the Required Lenders may otherwise
agree.  Each Lender shall be obligated to
pay Agent the amount of its Pro Rata Share of any such additional Loans or
Letters of Credit.

 

12.9                           Concerning the
Collateral and the Related Financing Agreements.  Each Secured Party authorizes and directs
Agent to enter into this Agreement and the other Financing Agreements.  Each Secured Party agrees that any action
taken by Agent or Required Lenders (or such greater percentage as may be
required hereunder) in accordance with the terms of this Agreement or the other
Financing Agreements and the exercise by Agent or Required Lenders (or such
greater percentage as may be required hereunder) of their respective powers set
forth therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all Secured Parties.  Without limiting the generality of the
foregoing, Agent shall have the sole and exclusive right and authority to (a) act
as the disbursing and collecting agent for Secured Parties with respect to all
payments and collections arising in connection with this Agreement and the
other Financing Agreements; (b) execute and deliver as Agent each
Financing Agreement (including the Intercreditor Agreement, each Deposit Account Control
Agreement, and each Collateral Access Agreement) and accept delivery of
each such agreement by any Obligor or any other Person; and (c) bind each
Secured Party to the terms of the Intercreditor Agreement as if such Secured
Party was a direct signatory thereto (including the terms of the Intercreditor
Agreement relating to the priority, enforcement and release of Agent’s Liens
described therein).

 

12.10                     Field Audit,
Examination Reports and other Information; Disclaimer by Lenders.  By signing this Agreement, each Lender:

 

99

 

(a)                                  is deemed to
have requested that Agent furnish such Lender, promptly after it becomes
available, a copy of each field audit or examination report and report with
respect to the Borrowing Base prepared or received by Agent (each field audit
or examination report and report with respect to the Borrowing Base being
referred to herein as a “Report” and collectively, “Reports”), appraisals with
respect to the Collateral and financial statements with respect to Borrowers
and their Subsidiaries received by Agent;

 

(b)                                 expressly
agrees and acknowledges that Agent (i) does not make any representation or
warranty as to the accuracy of any Report, appraisal or financial statement or (ii) shall
not be liable for any information contained in any Report, appraisal or
financial statement;

 

(c)                                  expressly
agrees and acknowledges that the Reports are not comprehensive audits or
examinations, that Agent or any other party performing any audit or examination
will inspect only specific information regarding Borrowers and Guarantors and
will rely significantly upon Borrowers’ and Guarantors’ books and records, as
well as on representations of Borrowers’ and Guarantors’ personnel; and

 

(d)                                 agrees to keep
all Reports confidential and strictly for its internal use in accordance with
the terms of Section 13.5 hereof, and not to distribute or use any Report
in any other manner.

 

12.11                     Collateral
Matters.

 

(a)                                  Agent may, at its option,
from time to time, at any time on or after an Event of Default and for so long
as the same is continuing or upon any other failure of a condition precedent to
the Loans and Letters of Credit hereunder, make such disbursements and advances
(“Special Agent Advances”) which Agent, in its sole discretion, (i) deems
necessary or desirable either to preserve or protect the Collateral or any
portion thereof or (ii) to enhance the likelihood or maximize the amount
of repayment by Borrowers and Guarantors of the Loans and other Obligations, provided,
that, (A) the aggregate principal amount of the Special Agent
Advances pursuant to this clause (ii) outstanding at any time, plus
the then outstanding principal amount of the additional Loans and Letters of
Credit which Agent may make or provide as set forth in Section 12.8
hereof, shall not exceed the amount equal to five percent (5%) of the Maximum
Credit and (B) the aggregate principal amount of the Special Agent
Advances pursuant to this clause (ii) outstanding at any time, plus
the then outstanding principal amount of the Loans and Letters of Credit, shall
not exceed the Maximum Credit, except at Agent’s option, provided, that,
to the extent that the aggregate principal amount of Special Agent Advances
plus the then outstanding principal amount of the Loans and Letters of Credit
exceed the Maximum Credit the Special Agent Advances that are in excess of the
Maximum Credit shall be for the sole account and risk of Agent and
notwithstanding anything to the contrary set forth below, no Lender shall have
any obligation to provide its share of such Special Agent Advances in excess of
the Maximum Credit, or (iii) to pay any other amount chargeable to any
Borrower or Guarantor pursuant to the terms of this Agreement or any of the
other Financing Agreements consisting of (A) costs, fees and expenses and (B) payments
to Issuing Bank in respect of any Letter of Credit Obligations.  The Special Agent Advances shall be repayable
on demand and together with all interest thereon shall constitute Obligations
secured by the Collateral.  Special Agent
Advances shall not constitute Loans but shall otherwise constitute Obligations
hereunder.  Interest on Special Agent
Advances shall be payable at the Interest Rate then applicable to Base Rate
Loans and shall be payable on demand. 
Without limitation of its obligations pursuant to Section 6.11,
each Lender agrees that it shall make available to Agent, upon Agent’s demand,
in immediately available funds, the amount equal to such Lender’s Pro Rata
Share of each such Special Agent Advance. 
If such funds are not made available to Agent by such Lender, such Lender
shall be deemed a Defaulting Lender and Agent shall be entitled to recover such
funds, on demand from such Lender together with interest thereon for each day
from the date such payment was due until the date such amount is paid to Agent
at 

 

100

 

the Federal Funds Rate for each day during such period (as published by
the Federal Reserve Bank of New York or at Agent’s option based on the
arithmetic mean determined by Agent of the rates for the last transaction in
overnight Federal funds arranged prior to 9:00 a.m. (Charlotte, North
Carolina time) on that day by each of the three leading brokers of Federal
funds transactions in New York City selected by Agent) and if such amounts are
not paid within three (3) days of Agent’s demand, at the highest Interest
Rate provided for in Section 3.1 hereof applicable to Base Rate
Loans.  Required Lenders may at any time
revoke Agent’s authority to make any further Special Agent Advances by written
notice to Agent.  Absent such revocation,
Agent’s determination that funding of a Special Agent Advance is appropriate
shall be conclusive.

 

(b)                                 Lenders hereby
irrevocably authorize Agent, at its option and in its discretion to release any
security interest in, mortgage or Lien upon, any of the First Priority
Collateral (i) upon termination of the Commitments and payment and
satisfaction of all of the Obligations and delivery of cash collateral to the
extent required under Section 13.1 below, or (ii) constituting
property being sold or disposed of if Administrative Borrower or any Borrower
or Guarantor certifies to Agent that the sale or disposition is made in
compliance with Section 9.7 hereof (and Agent may rely conclusively on any
such certificate, without further inquiry), or (iii) constituting property
in which any Borrower or Guarantor did not own an interest at the time the
security interest, mortgage or Lien was granted or at any time thereafter, or (iv) having
a value in the aggregate in any twelve (12) month period of less than
$8,000,000, and to the extent Agent may release its security interest in and
Lien upon any such First Priority Collateral pursuant to the sale or other
disposition thereof, such sale or other disposition shall be deemed consented
to by Lenders, or (v) if required or permitted under the terms of any of
the other Financing Agreements, including the Intercreditor Agreement, or any
other intercreditor agreement, or (vi) approved, authorized or ratified in
writing by all of Lenders.  Except as
provided above, Agent will not release any security interest in, mortgage or
Lien upon, any of the First Priority Collateral without the prior written
authorization of all of Lenders. Upon request by Agent at any time, Lenders
will promptly confirm in writing Agent’s authority to release particular types
or items of Collateral pursuant to this Section.  In no event shall the consent or approval of
Issuing Bank to any release of Collateral be required. Further, Lenders hereby
irrevocably authorize Agent to release any security interest or Lien upon any
of the Notes Priority Collateral to the extent required or permitted under the
terms of the Intercreditor Agreement.

 

(c)                                  Without any
manner limiting Agent’s authority to act without any specific or further
authorization or consent by the Required Lenders, each Lender agrees to confirm
in writing, upon request by Agent, the authority to release Collateral
conferred upon Agent under this Section. 
Agent shall (and is hereby irrevocably authorized by Lenders to) execute
such documents as may be necessary to evidence the release of the security
interest, mortgage or Liens granted to Agent upon any Collateral to the extent
set forth above; provided, that, (i) Agent shall not be
required to execute any such document on terms which, in Agent’s opinion, would
expose Agent to liability or create any obligations or entail any consequence
other than the release of such security interest, mortgage or Liens without
recourse or warranty and (ii) such release shall not in any manner discharge,
affect or impair the Obligations or any security interest, mortgage or Lien
upon (or obligations of any Borrower or Guarantor in respect of) the Collateral
retained by such Borrower or Guarantor.

 

(d)                                 Agent shall
have no obligation whatsoever to any Lender, Issuing Bank or any other Person
to investigate, confirm or assure that the Collateral exists or is owned by any
Borrower or Guarantor or is cared for, protected or insured or has been
encumbered, or that any particular items of Collateral meet the eligibility
criteria applicable in respect of the Loans or Letters of Credit hereunder, or
whether any particular reserves are appropriate, or that the Liens and security
interests granted to Agent pursuant hereto or any of the Financing Agreements
or otherwise have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, 

 

101

 

any
of the rights, authorities and powers granted or available to Agent in this
Agreement or in any of the other Financing Agreements, it being understood and
agreed that in respect of the Collateral, or any act, omission or event related
thereto, subject to the other terms and conditions contained herein, Agent may
act in any manner it may deem appropriate, in its discretion, given Agent’s own
interest in the Collateral as a Lender and that Agent shall have no duty or
liability whatsoever to any other Secured Party.

 

12.12                     Agency for
Perfection.  Each Lender
and Issuing Bank hereby appoints Agent and each other Lender and Issuing Bank
as agent and bailee for the purpose of perfecting the security interests in and
Liens upon the Collateral of Agent in assets which, in accordance with Article 9
of the UCC can be perfected only by possession (or where the security interest
of a secured party with possession has priority over the security interest of
another secured party) and Agent and each Lender and Issuing Bank hereby
acknowledges that it holds possession of any such Collateral for the benefit of
Agent as secured party.  Should any
Lender or Issuing Bank obtain possession of any such Collateral, such Lender
shall notify Agent thereof, and, promptly upon Agent’s request therefor shall
deliver such Collateral to Agent or in accordance with Agent’s instructions.

 

12.13                     Successor
Agent.  Agent may resign as Agent upon
thirty (30) days’ prior written notice to Lenders and Administrative
Borrower.  If Agent resigns under this
Agreement, the Required Lenders, (without giving effect to the Pro Rata
Share of Agent in its capacity as a Lender and without requiring Agent’s
consent) shall appoint from among the Lenders a successor agent for Lenders
which successor agent shall be subject to the approval of Administrative
Borrower if no Default or Event of Default shall exist or have occurred and be
continuing, provided, that, (a) such approval shall not be unreasonably
withheld, conditioned or delayed and (b) unless Agent shall have received
written notice from Administrative Borrower that Administrative Borrower does
not approve such successor agent within five (5) Business Days after
receipt by Administrative Borrower of the notice from Agent that it is
resigning, Administrative Borrower shall be deemed to have given such
approval.  If no successor agent is
appointed prior to the effective date of the resignation of Agent (whether as a
result of the failure of Administrative Borrower to approve a successor agent
or otherwise), Agent may appoint, after consulting with Lenders and
Administrative Borrower, a successor agent from among Lenders (and the approval
of Administrative Borrower shall not be requested for such successor
agent).  Upon the acceptance by the
Lender so selected of its appointment as successor agent hereunder, such
successor agent shall succeed to all of the rights, powers and duties of the
retiring Agent and the term “Agent” as used herein and in the other Financing
Agreements shall mean such successor agent and the retiring Agent’s
appointment, powers and duties as Agent shall be terminated.  If Agent has materially breached or failed to
perform any material provision of this Agreement or of applicable law, the
Required Lenders may agree in writing to remove and replace Agent with a
successor Agent from among the Lenders with (so long as no Event of Default has
occurred and is continuing) the consent of the Administrative Borrower (such
consent not to be unreasonably withheld, delayed or conditioned).  In such
event, upon acceptance of its appointment as successor Agent hereunder, such
successor Agent shall succeed to all rights, powers and duties of the retiring
Agent and the term “Agent” shall mean such successor Agent and the retiring
Agent’s appointment, powers and duties as Agent shall be terminated.  After any retiring Agent’s resignation
hereunder as Agent, the provisions of this Section 12 shall inure to its
benefit as to any actions taken or omitted by it while it was Agent under this
Agreement.  If no successor agent has
accepted appointment as Agent by the date which is thirty (30) days after
the date of a retiring Agent’s notice of resignation, the retiring Agent’s
resignation shall nonetheless thereupon become effective and Lenders shall
perform all of the duties of Agent hereunder until such time, if any, as the
Required Lenders appoint a successor agent as provided for above.  Any resignation of Agent pursuant to this Section shall
also constitute the resignation of Agent or its successor as Swing Line Lender,
and any successor agent that is appointed pursuant to this Section shall,
upon its acceptance of such appointment, become the successor Swing Line Lender
for all purposes thereunder.  At the time
any such resignation or replacement shall become 

 

102

 

effective,
Borrowers shall pay the full outstanding principal amount of all Swing Line
Loans and all accrued and unpaid fees and expenses of the retiring Swing Line
Lender.

 

12.14                     Other Agent
Designations.  Agent may at
any time and from time to time determine that a Lender may, in addition, be a “Co-Agent”,
“Syndication Agent”, “Documentation Agent” or similar designation hereunder and
enter into an agreement with such Lender to have it so identified for purposes
of this Agreement.  Any such designation
shall be effective upon written notice by Agent to Administrative Borrower of
any such designation.  Any Lender that is
so designated as a Co-Agent, Syndication Agent, Documentation Agent or such
similar designation by Agent shall have no right, power, obligation, liability,
responsibility or duty under this Agreement or any of the other Financing
Agreements other than those applicable to all Lenders as such.  Without limiting the foregoing, the Lenders
so identified shall not have or be deemed to have any fiduciary relationship
with any Lender and no Lender shall be deemed to have relied, nor shall any
Lender  rely, on a Lender so identified
as a Co-Agent, Syndication Agent, Documentation Agent or such similar
designation in deciding to enter into this Agreement or in taking or not taking
action hereunder.

 

12.15                     Agent May File
Proofs of Claim.

 

(a)                                  In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to any Borrower or Guarantor, Agent (irrespective of
whether the principal of any Loan or Letter of Credit Obligation shall then be
due and payable as herein expressed or by declaration or otherwise and
irrespective of whether Agent shall have made any demand on Borrowers) shall be
entitled and empowered, by intervention in such proceeding or otherwise:

 

(i)                                     to file and prove a claim
for the whole amount of the principal and interest owing and unpaid in respect
of the Loans, Letter of Credit Obligations and all other Obligations (other
than obligations under Bank Products to which Agent is not a party) that are
owing and unpaid and to file such other documents as may be necessary or
advisable in order to have the claims of Lenders, Issuing Bank and Agent
(including any claim for the reasonable compensation, expenses, disbursements
and advances of Lenders, Issuing Bank and Agent and their respective agents and
counsel and all other amounts due Lenders, Issuing Bank and Agent allowed in
such judicial proceeding); and

 

(ii)                                  to collect and receive any
monies or other property payable or deliverable on any such claims and to
distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Lender and Issuing Bank to make such
payments to Agent and, in the event that Agent shall consent to the making of
such payments directly to Lenders and Issuing Bank, to pay to Agent any amount
due for the reasonable compensation, expenses, disbursements and advances of
Agent and its agents and counsel, and any other amounts due Agent.

 

(b)                                 Nothing
contained herein shall be deemed to authorize Agent to authorize or consent to
or accept or adopt on behalf of any Lender or Issuing Bank any plan of
reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender or to authorize Agent to vote in
respect of the claim of any Lender in any such proceeding.  In any insolvency proceeding of any Obligor,
no Lender shall be required to make or participate in any credit bid without
such Lender’s consent.

 

103

 

SECTION 
13.                  TERM OF AGREEMENT; MISCELLANEOUS

 

13.1                           Term.

 

(a)                                  This Agreement
and the other Financing Agreements shall become effective as of the date set
forth on the first page hereof and shall continue in full force and effect
for a term ending on the date four (4) years from the date hereof (the “Maturity
Date”), unless sooner terminated pursuant to the terms hereof.  In addition, Borrowers may terminate this
Agreement at any time upon ten (10) days prior written notice to Agent
subject to clause (b) below, (which notice shall be irrevocable) and
Agent may, at its option, and shall at the direction of Required Lenders,
terminate this Agreement at any time on or after an Event of Default.  Upon the Maturity Date or any other effective
date of termination of the Financing Agreements, Borrowers shall pay to Agent
all outstanding and unpaid Obligations and shall furnish cash collateral to
Agent (or at Agent’s option, a letter of credit issued for the account of
Borrowers and at Borrowers’ expense, in form and substance reasonably
satisfactory to Agent, by an issuer acceptable to Agent and payable to Agent as
beneficiary) in such amounts as Agent determines are reasonably necessary to
secure Agent, Lenders and Issuing Bank from loss, cost, damage or expense,
including attorneys’ fees and expenses, in connection with any contingent
Obligations, including issued and outstanding Letter of Credit Obligations and
checks or other payments provisionally credited to the Obligations and/or as to
which Agent or any Lender has not yet received final and indefeasible payment
and any continuing obligations of Agent or any Lender pursuant to any Deposit
Account Control Agreement and for any of the Obligations arising under or in
connection with any Bank Products in such amounts as the Bank Product Provider
providing such Bank Products may require (unless such Obligations arising under
or in connection with any Bank Products are paid in full in cash and terminated
in a manner satisfactory to such Bank Product Provider).  The amount of such cash collateral (or letter
of credit, as Agent may determine) as to any Letter of Credit Obligations shall
be in the amount equal to one hundred five (105%) percent of the amount of the
Letter of Credit Obligations.  Such
payments in respect of the Obligations and cash collateral shall be remitted by
wire transfer in Federal funds to the Agent Payment Account or such other bank
account of Agent, as Agent may, in its discretion, designate in writing to
Administrative Borrower for such purpose. 
Interest shall be due until and including the next Business Day, if the
amounts so paid by Borrowers to the Agent Payment Account or other bank account
designated by Agent are received in such bank account later than 12:00 noon
(Charlotte, North Carolina time).

 

(b)                                 No termination
of the Commitments, this Agreement or any of the other Financing Agreements
shall relieve or discharge any Borrower or Guarantor of its respective duties,
obligations and covenants under this Agreement or any of the other Financing
Agreements until all Obligations have been fully and finally discharged and
paid, and Agent’s continuing security interest in the Collateral and the rights
and remedies of Agent and Lenders hereunder, under the other Financing
Agreements and applicable law, shall remain in effect until all such
Obligations have been fully and finally discharged and paid.  Accordingly, each Borrower and Guarantor
waives any rights it may have under the UCC to demand the filing of termination
statements with respect to the Collateral and Agent shall not be required to
send such termination statements to Borrowers or Guarantors, or to file them
with any filing office, unless and until this Agreement shall have been
terminated in accordance with its terms and all Obligations paid and satisfied
in full in immediately available funds.

 

13.2                           Interpretative
Provisions.

 

(a)                                  All terms used
herein which are defined in Article 1, Article 8 or Article 9 of
the UCC shall have the meanings given therein unless otherwise defined in this
Agreement.

 

104

 

(b)                                 All references
to the plural herein shall also mean the singular and to the singular shall
also mean the plural unless the context otherwise requires.

 

(c)                                  All references
to any Borrower, Guarantor, Agent and Lenders pursuant to the definitions set
forth in the recitals hereto, or to any other person herein, shall include
their respective successors and permitted assigns.  All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations.  All references to any of
the Financing Agreements shall include any and all amendment or modifications
thereto and any and all restatements, extensions or renewals thereof.

 

(d)                                 The words “hereof”,
“herein”, “hereunder”, “this Agreement” and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not any
particular provision of this Agreement and as this Agreement now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.

 

(e)                                  The word “including”
when used in this Agreement shall mean “including, without limitation” and the
word “will” when used in this Agreement shall be construed to have the same
meaning and effect as the word “shall”.

 

(f)                                    All references
to the term “good faith” used herein when applicable to Agent or any Lender
shall mean, notwithstanding anything to the contrary contained herein or in the
UCC, honesty in fact in the conduct or transaction concerned.  Borrowers and Guarantors shall have the
burden of proving any lack of good faith on the part of Agent or any Lender
alleged by any Borrower or Guarantor at any time.

 

(g)                                 Any accounting
term used in this Agreement shall have, unless otherwise specifically provided
herein, the meaning customarily given in accordance with GAAP, and all
financial computations hereunder shall be computed, unless otherwise
specifically provided herein, in accordance with GAAP as consistently applied
and using the same method for inventory valuation as used in the preparation of
the financial statements of Borrowers and Guarantors most recently received by
Agent prior to the date hereof. 
Notwithstanding anything to the contrary contained in GAAP or any
interpretations or other pronouncements by the Financial Accounting Standards
Board or otherwise, the term “unqualified opinion” as used herein to refer to
opinions or reports provided by accountants shall mean an opinion or report
that is unqualified as to going concern or the scope of the audit.

 

(h)                                 In the
computation of periods of time from a specified date to a later specified date,
the word “from” means “from and including”, the words “to” and “until” each
mean “to but excluding” and the word “through” means “to and including”.

 

(i)                                     Unless
otherwise expressly provided herein, (i) references herein to any
agreement, document or instrument shall be deemed to include all subsequent
amendments, modifications, supplements, extensions, renewals, restatements or
replacements with respect thereto, but only to the extent the same are not
prohibited by the terms hereof or of any other Financing Agreement, and (ii) references
to any statute or regulation are to be construed as including all statutory and
regulatory provisions consolidating, amending, replacing, recodifying,
supplementing or interpreting the statute or regulation.

 

(j)                                     The captions
and headings of this Agreement are for convenience of reference only and shall
not affect the interpretation of this Agreement.

 

105

 

(k)                                  This Agreement
and other Financing Agreements may use several different limitations, tests or
measurements to regulate the same or similar matters.  All such limitations, tests and measurements
are cumulative and shall each be performed in accordance with their terms.

 

(l)                                     This Agreement
and the other Financing Agreements are the result of negotiations among and
have been reviewed by counsel to Agent and the other parties, and are the
products of all parties.  Accordingly,
this Agreement and the other Financing Agreements shall not be construed
against Agent or Lenders merely because of Agent’s or any Lender’s involvement
in their preparation.

 

13.3                           Notices.

 

(a)                                  All notices,
requests and demands hereunder shall be in writing and deemed to have been
given or made:  if delivered in person,
immediately upon delivery; if by telex, telegram or facsimile transmission,
immediately upon sending and upon confirmation of receipt; if by nationally
recognized overnight courier service with instructions to deliver the next Business
Day, one (1) Business Day after sending; and if by certified mail, return
receipt requested, five (5) days after mailing.  Notices delivered through electronic
communications shall be effective to the extent set forth in Section 13.3(b) below.  All notices, requests and demands upon the
parties are to be given to the following addresses (or to such other address as
any party may designate by notice in accordance with this Section):

 

	
  If
  to any Borrower or Guarantor:

  	
   

  	
  Freedom
  Group, Inc. 

  870 Remington Drive 

  Madison, North Carolina 27025 

  Attention: President 

  Telephone No.: (336) 548-8700 

  Telecopy No.: (336) 548-7801

  
	
   

  	
   

  	
   

  
	
  If
  to Agent:

  	
   

  	
  Wachovia
  Bank, National Association 

  301 South College Street 

  6th Floor 

  Charlotte, North Carolina 28288 

  Attention: Bruce K. Rhodes 

  Telephone No.: (704) 715-8596 

  Telecopy No.: (704) 374-2703

  

 

(b)                                 Notices and
other communications to Lenders and Issuing Bank hereunder may be delivered or
furnished by electronic communication (including e-mail and Internet or intranet
websites) pursuant to procedures approved by Agent or as otherwise determined
by Agent (and shall be considered to be in writing for such purposes), provided,
that, the foregoing shall not apply to notices to any Lender or Issuing
Bank pursuant to Section 2 hereof if such Lender or Issuing Bank, as
applicable, has notified Agent that it is incapable of receiving notices under
such Section by electronic communication. 
Unless Agent otherwise requires, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), provided, that, if such notice or other
communication is not given during the normal business hours of the recipient,
such notice shall be deemed to have been sent at the opening of business on the
next Business Day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or
communications is available and identifying the website address therefor.

 

106

 

13.4                           Partial
Invalidity.  If any
provision of this Agreement is held to be invalid or unenforceable, such
invalidity or unenforceability shall not invalidate this Agreement as a whole, but
this Agreement shall be construed as though it did not contain the particular
provision held to be invalid or unenforceable and the rights and obligations of
the parties shall be construed and enforced only to such extent as shall be
permitted by applicable law.

 

13.5                           Confidentiality.

 

(a)                                  Agent, each
Lender and Issuing Bank shall use all reasonable efforts to keep confidential,
in accordance with its customary procedures for handling confidential
information and safe and sound lending practices, any non-public information
supplied to it by any Borrower or Guarantor pursuant to this Agreement which is
clearly and conspicuously marked as confidential at the time such information
is furnished by such Borrower or Guarantor to Agent, such Lender or Issuing Bank,
provided, that, nothing contained herein shall limit the
disclosure of any such information: (i) to the extent required by statute,
rule, regulation, subpoena or court order, (ii) to bank examiners and
other regulators, auditors and/or accountants, in connection with any
litigation to which Agent, such Lender or Issuing Bank is a party, (iii) to
any Lender or Participant (or prospective Lender or Participant) or Issuing
Bank or to any Affiliate of any Lender so long as such Lender, Participant (or
prospective Lender or Participant), Issuing Bank or Affiliate shall have been
instructed to treat such information as confidential in accordance with this Section 13.5,
or (iv) to counsel for Agent, any Lender, Participant (or prospective
Lender or Participant) or Issuing Bank.

 

(b)                                 In the event
that Agent, any Lender or Issuing Bank receives a request or demand to disclose
any confidential information pursuant to any subpoena or court order, Agent or
such Lender or Issuing Bank, as the case may be, agrees (i) to the extent
permitted by applicable law or if permitted by applicable law, to the extent
Agent or such Lender or Issuing Bank determines in good faith that it will not
create any risk of liability to Agent or such Lender or Issuing Bank, Agent or
such Lender or Issuing Bank will promptly notify Administrative Borrower of
such request so that Administrative Borrower may seek a protective order or
other appropriate relief or remedy and (ii) if disclosure of such
information is required, disclose such information and, subject to
reimbursement by Borrowers of Agent’s or such Lender’s or Issuing Bank’s
expenses, cooperate with Administrative Borrower in the reasonable efforts to
obtain an order or other reliable assurance that confidential treatment will be
accorded to such portion of the disclosed information which Administrative
Borrower so designates, to the extent permitted by applicable law or if
permitted by applicable law, to the extent Agent or such Lender or Issuing Bank
determines in good faith that it will not create any risk of liability to Agent
or such Lender or Issuing Bank.  In no
event shall this Section 13.5 or any other provision of this Agreement,
any of the other Financing Agreements or applicable law be deemed: (iii) to
apply to or restrict disclosure of information that has been or is made public
by any Borrower, Guarantor or any third party or otherwise becomes generally
available to the public other than as a result of a disclosure in violation
hereof, (iv) to apply to or restrict disclosure of information that was or
becomes available to Agent, any Lender (or any Affiliate of any Lender) or
Issuing Bank on a non-confidential basis from a person other than a Borrower or
Guarantor, (v) to require Agent, any Lender or Issuing Bank to return any
materials furnished by a Borrower or Guarantor to Agent, a Lender or Issuing
Bank or  prevent Agent, a Lender or
Issuing Bank from responding to routine informational requests  in accordance with the Code of Ethics for the
Exchange of Credit Information promulgated by The Robert Morris Associates or
other applicable industry standards relating to the exchange of credit
information.  The obligations of Agent,
Lenders and Issuing Bank under this Section 13.5 shall supersede and
replace the obligations of Agent, Lenders and Issuing Bank under any
confidentiality letter signed prior to the date hereof or any other
arrangements concerning the confidentiality of information provided by any
Borrower or Guarantor to Agent or any Lender. 
Each of the Obligors acknowledges and agrees to the disclosure by Agent
and Lenders of information relating to the Credit Facility to Gold Sheets and
other publications or for its marketing 

 

107

 

materials,
with such information to consist of deal terms and other information
customarily found in such publications or marketing materials and that Agent
and Lenders may use the corporate name and logo of FGI and its Subsidiaries in “tombstones”
or other advertisements, marketing materials or public statements, provided
that all uses of the corporate name or logo of the FGI or any of its
Subsidiaries in information disclosed to Gold Sheets or other publications in “tombstones”
or public statements (other than Agent’s or any Lender’s advertising or
marketing materials) shall require the prior review and approval by FGI.

 

13.6                           Successors.  This Agreement, the other Financing
Agreements and any other document referred to herein or therein shall be
binding upon and inure to the benefit of and be enforceable by Agent, Lenders,
Issuing Bank, Borrowers, Guarantors and their respective successors and
assigns, except that Borrower may not assign its rights under this Agreement,
the other Financing Agreements and any other document referred to herein or
therein without the prior written consent of Agent and Lenders.  Any such purported assignment without such
express prior written consent shall be void. 
No Lender may assign its rights and obligations under this Agreement
without the prior written consent of Agent, except as provided in Section 13.7
below. The terms and provisions of this Agreement and the other Financing
Agreements are for the purpose of defining the relative rights and obligations
of Borrowers, Guarantors, Agent, Lenders and Issuing Bank with respect to the
transactions contemplated hereby and there shall be no third party
beneficiaries of any of the terms and provisions of this Agreement or any of
the other Financing Agreements.

 

13.7                           Assignments;
Participations.

 

(a)                                  Each Lender
may, with the prior written consent of Agent (which consent shall not be
unreasonably withheld or delayed), assign all or, if less than all, a portion
equal to at least $5,000,000 in the aggregate at any one time for the assigning
Lender, of such rights and obligations under this Agreement to one or more
Eligible Transferees (but not including for this purpose any assignments in the
form of a participation), each of which assignees shall become a party to this
Agreement as a Lender by execution of an Assignment and Acceptance; provided,
that, (i) such transfer or assignment will not be effective until
recorded by Agent on the Register and (ii) Agent shall have received for
its sole account payment of a processing fee from the assigning Lender or the
assignee in the amount of $5,000.

 

(b)                                 Agent shall
maintain a register of the names and addresses of Lenders, their Commitments
and the principal amount of their Loans (the “Register”).  Agent shall also maintain a copy of each
Assignment and Acceptance delivered to and accepted by it and shall modify the
Register to give effect to each Assignment and Acceptance.  The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and any
Borrowers, Guarantors, Agent and Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement.  The Register shall be
available for inspection by Administrative Borrower and any Lender at any
reasonable time and from time to time upon reasonable prior notice.

 

(c)                                  Upon such
execution, delivery, acceptance and recording, from and after the effective
date specified in each Assignment and Acceptance,  the assignee thereunder shall be a party
hereto and to the other Financing Agreements and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations (including, without limitation, the
obligation to participate in Letter of Credit Obligations) of a Lender
hereunder and thereunder and  the
assigning Lender shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement.

 

108

 

(d)                                 By execution
and delivery of an Assignment and Acceptance, the assignor and assignee
thereunder confirm to and agree with each other and the other parties hereto as
follows:  (i) other than as provided
in such Assignment and Acceptance, the assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any of the other Financing Agreements or the execution, legality,
enforceability, genuineness, sufficiency or value of this Agreement or any of
the other Financing Agreements furnished pursuant hereto, (ii) the
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Borrower or
Guarantor or the performance or observance by any Borrower or Guarantor of any
of the Obligations; (iii) such assignee confirms that it has received a
copy of this Agreement and the other Financing Agreements, together with such
other documents and information it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance, (iv) such
assignee will, independently and without reliance upon the assigning Lender,
Agent and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement and the other Financing Agreements, (v) such
assignee appoints and authorizes Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement and the other Financing
Agreements as are delegated to Agent by the terms hereof and thereof, together
with such powers as are reasonably incidental thereto, and (vi) such
assignee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement and the other Financing
Agreements are required to be performed by it as a Lender.  Agent and Lenders may furnish any information
concerning any Borrower or Guarantor in the possession of Agent or any Lender
from time to time to assignees (subject to such assignee executing and delivering
a confidentiality agreement in form and substance reasonably acceptable to
Agent and Administrative Borrower).

 

(e)                                  Each Lender may
sell participations to one or more banks or other entities in or to all or a
portion of its rights and obligations under this Agreement and the other
Financing Agreements (including, without limitation, all or a portion of its
Commitments and the Loans owing to it and its participation in the Letter of
Credit Obligations, without the consent of Agent or the other Lenders); provided,
that, (i) such Lender’s obligations under this Agreement
(including, without limitation, its Commitment hereunder) and the other
Financing Agreements shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, and Borrowers, Guarantors, the other Lenders and Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement and the other Financing
Agreements, and (iii) the Participant shall not have any rights under this
Agreement or any of the other Financing Agreements (the Participant’s rights
against such Lender in respect of such participation to be those set forth in
the agreement executed by such Lender in favor of the Participant relating
thereto) and all amounts payable by any Borrower or Guarantor hereunder shall
be determined as if such Lender had not sold such participation.

 

(f)                                    Nothing in this
Agreement shall prevent or prohibit any Lender from pledging its Loans hereunder
to a Federal Reserve Bank in support of borrowings made by such Lenders from
such Federal Reserve Bank; provided, that, no such pledge shall
release such Lender from any of its obligations hereunder or substitute any
such pledgee for such Lender as a party hereto.

 

(g)                                 Borrowers and
Guarantors shall assist Agent or any Lender permitted to sell assignments or
participations under this Section 13.7 in whatever manner reasonably
necessary in order to enable or effect any such assignment or participation, including
(but not limited to) the execution and delivery of any and all agreements,
notes and other documents and instruments as shall be requested and the
delivery of informational materials, appraisals or other documents for, and the
participation of relevant management in meetings and conference calls with,
potential Lenders or Participants. Borrowers shall certify the correctness,
completeness and accuracy, in all material respects, of all descriptions of 

 

109

 

Borrowers
and Guarantors and their affairs provided, prepared or reviewed by any Borrower
or Guarantor that are contained in any selling materials and all other
information provided by it and included in such materials.

 

(h)                                 Any Lender that
is an Issuing Bank may at any time assign all of its Commitments pursuant to
this Section 13.7.  If such Issuing
Bank ceases to be a Lender, it shall resign as Issuing Bank and such Issuing
Bank’s obligations to issue Letters of Credit shall terminate but it shall
retain all of the rights and obligations of Issuing Bank hereunder with respect
to Letters of Credit outstanding as of the effective date of its resignation
and all Letter of Credit Obligations with respect thereto (including the right
to require Lenders to make Revolving Loans or fund risk participations in
outstanding Letter of Credit Obligations), shall continue.

 

13.8                           Entire
Agreement.  This
Agreement, the other Financing Agreements, any supplements hereto or thereto,
and any instruments or documents delivered or to be delivered in connection
herewith or therewith represents the entire agreement and understanding
concerning the subject matter hereof and thereof between the parties hereto,
and supersede all other prior agreements, understandings, negotiations and
discussions, representations, warranties, commitments, proposals, offers and
contracts concerning the subject matter hereof, whether oral or written.  In the event of any inconsistency between the
terms of this Agreement and any schedule or exhibit hereto, the terms of this
Agreement shall govern.

 

13.9                           USA PATRIOT
Act.  Each Lender subject to the
PATRIOT Act hereby notifies Borrowers and Guarantors that pursuant to the
requirements of the Act, it is required to obtain, verify and record information
that identifies each person or corporation who opens an account and/or enters
into a business relationship with it, which information includes the name and
address of Borrowers and Guarantors and other information that will allow such
Lender to identify such person in accordance with the Act and any other
applicable law.  Borrowers and Guarantors
are hereby advised that any Loans or Letters of Credit hereunder are subject to
satisfactory results of such verification.

 

13.10                     Counterparts,
Etc.  This Agreement or any of the
other Financing Agreements may be executed in any number of counterparts, each
of which shall be an original, but all of which taken together shall constitute
one and the same agreement. Delivery of an executed counterpart of this Agreement
or any of the other Financing Agreements by telefacsimile or other electronic
method of transmission shall have the same force and effect as the delivery of
an original executed counterpart of this Agreement or any of such other
Financing Agreements.  Any party
delivering an executed counterpart of any such agreement by telefacsimile or
other electronic method of transmission shall also deliver an original executed
counterpart, but the failure to do so shall not affect the validity,
enforceability or binding effect of such agreement.

 

13.11                     Guarantee.

 

(a)                                  Guarantors
hereby jointly and severally, and unconditionally and absolutely, guarantee to
Secured Parties the due and punctual payment, performance and discharge
(whether upon stated maturity, demand, acceleration or otherwise in accordance
with the terms thereof) of all of the Obligations whether created directly to,
or acquired by assignment or otherwise by, any Secured Party, and whether
Borrowers may be liable individually or jointly with others, regardless of
whether recovery upon any of such Obligations becomes barred by any statute of
limitations, is void or voidable under any law, is or becomes invalid or
unenforceable for any other reason (collectively as to each Guarantor, the “Guaranteed
Obligations”).  Without limiting the
generality of the foregoing, the term “Guaranteed Obligations” as used herein
shall include interest, fees or other charges constituting Obligations accrued
in any such bankruptcy, whether or not any such interest, fees or other charges
are recoverable from such Borrower or its estate under 11 U.S.C.
§ 506.  Each Guarantor agrees that
its guarantee is a primary, 

 

110

 

immediate
and original obligation of such Guarantor and is an absolute, unconditional,
continuing and irrevocable guarantee of payment and not of collectability only,
and is not contingent upon the exercise or enforcement by Agent or any Lender
of any rights or remedies against any Borrower or others, or the enforcement of
any Lien or realization upon any Collateral or other security.

 

(b)                                 Each Guarantor
agrees that its guarantee shall continue in full force and effect until the
Guaranteed Obligations have been fully paid and discharged (or, in the case of
contingent obligations, such as those arising from Letters of Credit, cash
collateralized as required by this Agreement) and all Commitments have been
terminated.  Each Guarantor acknowledges
that there may be future advances by Agent or any Lender to Borrowers hereunder
(although Secured Parties may be under no obligation to make such advances) and
that the number and amount of the Guaranteed Obligations are unlimited and may
fluctuate from time to time hereafter, and its guarantee shall remain in force
at all times hereafter, whether there are any Guaranteed Obligations
outstanding from time to time or not. 
Guarantors’ obligations under this Agreement shall remain in full force
and effect without regard to future changes in conditions, including any change
of law or any invalidity or unenforceability of any Guaranteed Obligations or
agreements evidencing same.  Each
Guarantor agrees that its guarantee shall be in addition to any other present
or future guaranty or other security for any of the Guaranteed Obligations,
shall not be prejudiced or unenforceable by the invalidity of any such other
guaranty or security, and is not conditioned upon or subject to the execution
by any other Person of any other guaranty or suretyship agreement.

 

(c)                                  (i)                                     If a Guarantor
shall make a payment under a guarantee (a “Paying Guarantor”), then such Paying
Guarantor shall have the right to obtain contribution, in an amount determined
as set forth below, from each of the other Guarantors that have not made
payments under their respective guaranties at least proportionately equal (on
the basis of their respective Guarantor Allocable Percentages, as such term is
hereinafter defined) in amount to the payments made by the Paying Guarantor
seeking contribution.  The liability of
Guarantors hereunder to make contribution to any Paying Guarantor as aforesaid
shall be absolute and shall not be affected or impaired by (A) any
defense, counterclaim or setoff that any Borrower or any Guarantor may have or
assert against any Secured Party, (B) any failure, neglect or omission on
the part of any Secured Party to realize upon any Collateral or to enforce
payment of any of the Guaranteed Obligations from any Person, (C) the
release or discharge of any Collateral, (D) the release or discharge of
any Borrower from its obligations, or (E) the release or discharge of any
Guarantor from its obligations under its guarantee (whether, in any such event,
such release is agreed to by any Secured Party or occurs by operation of
applicable law).  Any proceeds received
by any Secured Party from any enforcement action with respect to any assets of
a Guarantor securing payment of the Guaranteed Obligations shall be deemed to
be a payment by such Guarantor for purposes hereof.

 

(ii)                                  Any Paying
Guarantor entitled to contribution hereunder shall be entitled to receive from
each of the other Guarantors an amount equal to (A) the product derived by
multiplying the sum of all payments made by all Guarantors to Agent or any
other Secured Party under the guaranties by the Guarantor Allocable Percentage
of the Guarantor from whom contribution is sought, less (B) the
amount, if any, actually paid to Agent or any other Secured Party by the
Guarantor from whom contribution is sought (said last mentioned amount which is
to be subtracted from the aforesaid product shall be decreased by any amount
theretofore paid by such Guarantor by way of contribution hereunder, and shall
be decreased by any amounts theretofore received by such Guarantor by way of
contribution); provided, however, that a Paying Guarantor’s
recovery of contribution from the other Guarantors hereunder shall be limited,
exclusive of interest, to that amount paid by the Paying Guarantor in excess of
the Guarantor Allocable Percentage of such Paying Guarantor of all payments made
by all Guarantors to Agent or any other Secured Party under the
guaranties.  Amounts due by way of
contribution hereunder 

 

111

 

shall bear interest, until
paid, at a variable rate of interest equal to the Base Rate in effect from time
to time.  As used herein, the term “Guarantor
Allocable Percentage” shall mean, on any date of determination thereof, a
fraction, the denominator of which shall be equal to the number of Guarantors
who are parties to this Agreement on such date and the numerator of which shall
be one; provided further, however, that such
percentages shall be modified in the event that contribution from a Guarantor
is not possible by reason of any insolvency proceeding involving such Guarantor
or otherwise by reducing the Guarantor Allocable Percentage of such Guarantor
to zero and by increasing the Guarantor Allocable Percentages of all remaining
Guarantors proportionately so that the Guarantor Allocable Percentages of all
remaining Guarantors at all times equals 100%. 
Each Guarantor liable to a Paying Guarantor for contribution, whether
pursuant to the provisions of this guarantee or under applicable law, hereby
assigns in favor of each Paying Guarantor any claim that such Guarantor liable
to make contribution has or hereafter may have against any Borrower, and
authorizes any payments that may be due on any such claim to be made to the
Paying Guarantor that is entitled to receive contribution for application to
the satisfaction of amounts due by way of contribution.

 

(iii)          Guarantors agree, jointly and
severally, absolutely and unconditionally, that each shall at all times
indemnify each of the other Guarantors and hold and save each of them harmless
from and against any and all actions and causes of actions, claims, demands,
liabilities, losses, damages or expenses of whatever kind and nature, including
attorneys’ fees, which any Guarantor may at any time sustain or incur in any
action, suit or other proceeding instituted to enforce the obligations of such
Guarantor under its guarantee in excess of the amount equal to the Guarantor
Allocable Percentage of such Guarantor of personal liability under the terms
hereof.

 

(iv)                              Each Guarantor acknowledges
that the right to contribution and indemnification hereunder shall each
constitute an asset in favor of the Guarantor to which such contribution or
indemnification is at any time owing.

 

(d)                                 (i)                                     If for any
reason any Borrower has no legal existence or is under no legal obligation to
discharge any of the Guaranteed Obligations, or if any of the Guaranteed
Obligations become unrecoverable from any Borrower by reason of such Borrower’s
insolvency, bankruptcy or reorganization or by other operation of law or for
any other reason, each Guarantor shall nevertheless be bound to the same extent
as if such Guarantor had at all times been the principal obligor on all such
Guaranteed Obligations.  If acceleration
of the time for payment of any of the Guaranteed Obligations is stayed upon the
insolvency, bankruptcy, dissolution or reorganization of debt or for any other
reason, all such amounts otherwise subject to acceleration under the terms of
any Financing Agreements or other instrument or agreement evidencing or
securing the payment of the Guaranteed Obligations shall nevertheless be
immediately due and payable by each Guarantor.

 

(ii)                                  If a Guarantor should
dissolve or become insolvent (within the meaning of the UCC), or if a petition
for an order for relief with respect to a Guarantor should be filed by or against
such Guarantor under any chapter of the United States Bankruptcy Code, or if a
receiver, trustee, conservator or other custodian should be appointed for a
Guarantor or any property of a Guarantor, or if any Event of Default shall
occur and be continuing, then, in any such event and whether or not any of the
Guaranteed Obligations are then due and payable or the maturity thereof has
been accelerated or demand for payment thereof has been made, Agent, on behalf
of Secured Parties, may, without notice to any Guarantor, make the Guaranteed
Obligations immediately due and payable hereunder as to any Guarantor and Agent
and Lenders shall be entitled to enforce the obligations of each Guarantor
hereunder as if the Guaranteed Obligations were then due and payable in
full.  If any of the Guaranteed
Obligations are collected by or through an attorney at law, Guarantors agree to
jointly and severally pay Secured Parties’ reasonable attorneys’ fees and court
costs.  Guarantors shall be obligated to
make multiple 

 

112

 

payments
under their guarantees to the extent necessary to cause full payment of the
Guaranteed Obligations.

 

(iii)                               If and to the extent Agent
or any Lender receives any payment on account of any of the Guaranteed
Obligations (whether from Borrowers, Guarantor or a third party obligor or from
the sale or other disposition of any Collateral) and such payment or any part
thereof is subsequently invalidated, declared to be fraudulent or preferential,
set aside or required to be repaid to a trustee, receiver or any other Person
under any state, federal or foreign bankruptcy or other insolvency law, common
law or equitable cause, then the part of the Guaranteed Obligations intended to
be satisfied shall be revived and continued in full force and effect as if said
payment had not been made.  The foregoing
provisions of this paragraph shall survive payment in full of the Obligations
and the termination of this Agreement.

 

(iv)                              Agent and Lenders shall have
the right to seek recourse against each Guarantor to the full extent provided
for herein and against Borrowers to the full extent provided for herein or in
any of the Financing Agreements.  No
election to proceed in one form of action or proceeding, or against any Person,
or on any obligation, shall constitute a waiver of Agent’s or any Lender’s
right to proceed in any other form of action or proceeding or against any other
Person.  Specifically, but without
limiting the generality of the foregoing, no action or proceeding by Agent or
any Lender against Borrowers under the Financing Agreements or any other
instrument or agreement evidencing or securing Guaranteed Obligations shall
serve to diminish the liability of any Guarantor for the balance of the
Guaranteed Obligations.

 

(v)                                 Each Guarantor acknowledges
that Agent is authorized and empowered to enforce such Guarantor’s guarantee
for the benefit of Secured Parties and to collect from such Guarantor the
amount of the Guaranteed Obligations from time to time, in Agent’s own name and
without the necessity of joining any other Secured Party in any action, suit or
other proceeding to enforce its guarantee.

 

(e)                                  To the fullest
extent permitted by applicable law, each Guarantor hereby waives and renounces
(for itself and its successors):

 

(i)                                     notice of each Secured Party’s
acceptance hereof and reliance hereon; notice of the extension of credit from
time to time by Secured Parties to any Borrower and the creation, existence or
acquisition of any Guaranteed Obligations; notice of the amount of Guaranteed
Obligations of Borrowers to Secured Parties from time to time (subject,
however, to Guarantor’s right to make inquiry of Agent to ascertain the amount
of Guaranteed Obligations at any reasonable time); notice of any adverse change
in any Borrower’s financial condition or of any other fact that might increase
such Guarantor’s risk; notice of presentment for payment, demand, protest and
notice thereof as to any instrument; notice of default or acceleration; all
other notices and demands to which such Guarantor might otherwise be entitled;
any right such Guarantor may have, by statute or otherwise, to require Secured
Parties to institute suit against any Borrower after notice or demand from such
Guarantor or to seek recourse first against Borrowers or otherwise, or to
realize upon any security for the Guaranteed Obligations, as a condition to
enforcing such Guarantor’s liability and obligations hereunder; any defense
that any Borrower may at any time have or assert based upon the statute of
limitations, the statute of frauds, failure of consideration, fraud,
bankruptcy, lack of legal capacity, usury, or accord and satisfaction; any
defense that other indemnity, guaranty, or security was to be obtained; any
defense or claim that any Person purporting to bind any Borrower to the payment
of any of the Guaranteed Obligations did not have actual or apparent authority
to do so; any right to contest the commercial reasonableness of the disposition
of any Collateral; any defense or claim that any 

 

113

 

other
act or failure to act by any Secured Party had the effect of increasing such
Guarantor’s risk of payment; and any other legal or equitable defense to
payment under this guarantee.

 

(ii)                                  any
and all rights or defenses arising by reason of any “one action” or “anti-deficiency”
law which would otherwise prevent Secured Parties from bringing any action,
including any claim for a deficiency, or exercising any other right or remedy
(including any right of setoff) against such Guarantor before or after any
Secured Party’s commencement or completion of any foreclosure action, whether
by judicial action, by exercise of power of sale or otherwise, or any other law
which in any other manner would otherwise require any election of remedies by
any Secured Party; and any right that such Guarantor may have to claim or
recover in any litigation arising out of this guarantee or any of the other
Financing Agreements, any special, exemplary, punitive or consequential damages
or any damages other than, or in addition to, actual damages.

 

(iii)                               any right that such
Guarantor may have to terminate or revoke its guarantee hereunder.  If, notwithstanding the foregoing waiver, any
Guarantor shall nevertheless have any right under applicable law to terminate
or revoke its guarantee hereunder, which right cannot be waived by such
Guarantor, such termination or revocation shall not be effective until a
written notice of such termination or revocation, specifically referring to
this guarantee and signed by such Guarantor, is actually received by an officer
of Agent who is familiar with Borrowers’ account and this guarantee; but any
such termination or revocation shall not affect the obligation of such
Guarantor or such Guarantor’s successors or assigns with respect to any of the
Guaranteed Obligations and existing at the time of the receipt by Agent of such
revocation or to arise out of or in connection with any transactions
theretofore entered into by Secured Parties with or for the account of
Borrowers.  If Agent or any Lender grants
loans or other extensions of credit to or for the benefit of any Borrower or
takes other action after the termination or revocation by any Guarantor but prior
to Agent’s receipt of such written notice of termination or revocation, then
the rights of such Secured Party hereunder with respect thereto shall be the
same as if such termination or revocation had not occurred.

 

(f)                                    (i)                                     Each Guarantor
consents and agrees that, without notice to or by such Guarantor and without
reducing, releasing, diminishing, impairing or otherwise affecting the
liability or obligations of such Guarantor under its guarantee, Secured Parties
may (with or without consideration) compromise or settle any of the Guaranteed
Obligations; accelerate the time for payment of any of the Guaranteed
Obligations; extend the period of duration or the time for the payment,
discharge or performance of any of the Guaranteed Obligations; increase the
amount of the Guaranteed Obligations; refuse to enforce, or release all or any
Persons liable for the payment of, any of the Guaranteed Obligations; increase,
decrease or otherwise alter the rate of interest payable with respect to the
principal amount of any of the Guaranteed Obligations or grant other
indulgences to Borrowers in respect thereof; amend, modify, terminate, release,
or waive any Financing Agreements or any other documents or agreements
evidencing, securing or otherwise relating to the Guaranteed Obligations (other
than this Agreement); release, surrender, exchange, modify or impair, or
consent to the sale, transfer or other disposition of, any Collateral or other
property at any time securing (directly or indirectly) any of the Guaranteed
Obligations or on which Secured Parties may at any time have a Lien; fail or
refuse to perfect (or to continue the perfection of) any Lien granted or
conveyed to any Secured Party with respect to any Collateral, or to preserve
rights to any Collateral, or to exercise care with respect to any Collateral in
any Secured Party’s possession; extend the time of payment of any Collateral
consisting of accounts, notes, chattel paper, payment intangibles or other
rights to the payment of money; refuse to enforce or forbear from enforcing its
rights or remedies with respect to any Collateral or any Person liable for any
of the Guaranteed Obligations or make any compromise or settlement or 

 

114

 

agreement
therefor in respect of any Collateral or with any party to the Guaranteed
Obligations; release or substitute any one or more of the endorsers or
guarantors of the Guaranteed Obligations, whether parties to this Agreement or
not; subordinate payment of any of the Guaranteed Obligations to the payment of
any other liability of any Borrower; or apply any payments or proceeds of
Collateral received to the liabilities of any Borrower to any Secured Party
regardless of whether such liabilities consist of Guaranteed Obligations and
regardless of the manner order or of any such application.

 

(ii)                                  Each Guarantor is fully
aware of the financial condition of each Borrower.  Each Guarantor delivers the guarantee set
forth in this Agreement based solely upon Guarantor’s own independent
investigation and in no part upon any representation or statement of any
Secured Party with respect thereto.  Each
Guarantor is in a position to and hereby assumes full responsibility for
obtaining any additional information concerning each Borrower’s financial
condition as such Guarantor may deem material to such Guarantor’s obligations
hereunder and such Guarantor is not relying upon, nor expecting any Secured
Party to furnish such Guarantor, any information in any Secured Party’s
possession concerning any Borrower’s financial condition.  If any Secured Party, in its sole discretion,
undertakes at any time or from time to time to provide any information to any
Guarantor regarding Borrowers, any of the Collateral or any transaction or
occurrence in respect of any of the Financing Agreements, such Secured Party
shall be under no obligation to update any such information or to provide any
such information to any Guarantor on any subsequent occasion.  Each Guarantor
hereby knowingly accepts the full range of risks encompassed within a contract
of “guaranty,” which risks include, without limitation, the possibility that
Borrowers will contract additional Guaranteed Obligations for which such
Guarantor may be liable hereunder after Borrowers’ financial condition or
ability to pay their lawful debts when they fall due has deteriorated.

 

(g)                                 (i)                                     Notwithstanding
any provision of this guarantee to the contrary, (a) all rights of each
Guarantor under clause (c) of this guarantee and all other rights of
indemnity, contribution, subrogation or exoneration with respect to the
Obligations shall be fully subordinated to the full payment of the Obligations
and (b) no such right shall be exercised until full payment of the
Guaranteed Obligations.  If any amount
shall be paid to any Paying Guarantor on account of any such indemnity,
contribution, exoneration or subrogation rights at any time that full payment
of the Guaranteed Obligation has not occurred, such amount shall be held in
trust for the benefit of Secured Parties and shall be forthwith paid to Agent
to be credited and applied to the Guaranteed Obligations (whether matured or
unmatured).  No failure on the part of
any Borrower or any Guarantor to make payments required pursuant to clause (c) (or
any other payments required under applicable law) shall in any respect limit or
otherwise affect the obligations or liabilities of any Guarantor under this
guarantee, and each Guarantor shall remain fully liable to Secured Parties for
all of the obligations of such Guarantor hereunder.

 

(iii)                               The provisions of this
Agreement shall be supplemental to and not in derogation of any rights and
remedies of any Secured Party or any affiliate of any Secured Party under any
separate subordination agreement that such Secured Party or such affiliate may
at any time or from time to time enter into with any Guarantor.

 

(h)                                 The execution
and delivery to any Secured Party and such Secured Party’s acceptance of any
guaranty in addition to each Guarantor’s guarantee hereunder shall not be
deemed in lieu of or to supersede, terminate or diminish any guarantee
hereunder, but shall be construed as an additional or supplementary guaranty
unless otherwise expressly provided in such additional or supplementary
guaranty; and if, prior to the date hereof, any Guarantor or any other Person
has given to any Secured Party a previous guaranty or guaranties, each
Guarantor’s guarantee hereunder shall be 

 

115

 

construed
to be an additional or supplementary guaranty and not  to be in lieu thereof or to supersede,
terminate or diminish such previous guaranty or guaranties.

 

(i)                                     Unless
otherwise required by applicable law or a specific agreement to the contrary,
all payments received by Secured Parties from Borrowers, Guarantors or any
other Person with respect to the Guaranteed Obligations or from proceeds of the
Collateral may be applied (or reversed and reapplied) by Secured Parties to the
Guaranteed Obligations in accordance with this Agreement, without affecting in
any manner any Guarantor’s liability hereunder.

 

(j)                                     To the extent
any performance of this guarantee would violate any applicable usury statute or
other applicable law, the obligation to be fulfilled shall be reduced to the
limit legally permitted, so that this guarantee shall not require any performance
in excess of the limit legally permitted, but such obligations shall be
fulfilled to the limit of legal validity.  Nothing in this guarantee shall
be construed to authorize Secured Parties to collect from Guarantors any
interest that has not yet accrued, is unearned or subject to rebate or is
otherwise not entitled to be collected by Secured Parties under applicable
law.  The provisions of this paragraph shall control every other provision
of this guarantee.

 

[Signatures begin on next page]

 

116

 

IN WITNESS WHEREOF, Agent,
Lenders, Borrowers and Guarantors have caused these presents to be duly
executed as of the day and year first above written.

 

	
   

  	
  BORROWERS

  
	
   

  	
   

  
	
   

  	
  FREEDOM
  GROUP, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  REMINGTON
  ARMS COMPANY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE
  MARLIN FIREARMS COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  H&R
  1871, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  

 

Signature Page to Loan and Security Agreement

 

 

	
   

  	
  BUSHMASTER
  FIREARMS INTERNATIONAL, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DPMS
  FIREARMS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  E-RPC,
  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DA
  ACQUISITIONS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  RA BRANDS, L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GUARANTORS

  
	
   

  	
   

  	
   

  
	
   

  	
  RACI
  HOLDING, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  REMINGTON
  STEAM, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

[Signatures continue on following page.]

 

Signature Page to Loan
and Security Agreement

 

 

	
   

  	
  BUSHMASTER
  HOLDINGS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  

 

Signature Page to Loan
and Security Agreement

 

 

	
  AGENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  WACHOVIA
  BANK, NATIONAL ASSOCIATION, as Agent and Issuing
  Bank

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  LENDERS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  WACHOVIA
  BANK, NATIONAL ASSOCIATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  

 

Commitment: $55,000,000.00

 

 

[Signatures continue on
following page.]

 

Signature Page to Loan
and Security Agreement

 

 

	
  BANK
  OF AMERICA, N.A.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  

 

Commitment: $40,000,000.00

 

[Signatures continue on
following page.]

 

Signature Page to Loan
and Security Agreement

 

 

	
  DEUTSCHE
  BANK TRUST COMPANY AMERICAS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  

 

Commitment: $20,000,000.00

 

 

[Signatures continue on
following page.]

 

Signature Page to Loan
and Security Agreement

 

 

	
  NATIONAL
  CITY BUSINESS CREDIT, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  

 

Commitment: $17,500,000.00

 

 

[Signatures continue on
following page.]

 

Signature Page to Loan
and Security Agreement

 

 

	
  RBS
  CITIZENS, NATIONAL ASSOCIATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  

 

Commitment: $17,500,000.00

 

 

[Signatures continue on
following page.]

 

Signature Page to Loan
and Security Agreement

 

 

	
  REGIONS
  BANK

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  

 

Commitment: $15,000,000.00

 

 

[Signatures continue on
following page.]

 

Signature Page to Loan
and Security Agreement

 

 

	
  BARCLAYS
  BANK PLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  

 

Commitment: $15,000,000.00

 

Signature Page to Loan
and Security Agreement

 

 

EXHIBIT A

to

LOAN AND SECURITY AGREEMENT

 

ASSIGNMENT AND ACCEPTANCE
AGREEMENT

 

This ASSIGNMENT AND
ACCEPTANCE AGREEMENT (this “Assignment and Acceptance”) dated as of
                          ,
20   is made between                                                 
(the “Assignor”) and
                                        
(the “Assignee”).

 

W I T N E S S E T H:

 

WHEREAS, Wachovia Bank,
National Association, in its capacity as agent pursuant to the Loan Agreement
(as hereinafter defined) acting for and on behalf of the financial institutions
which are parties thereto as lenders (in such capacity, “Agent”), and the
financial institutions which are parties to the Loan Agreement as lenders
(individually, each a “Lender” and collectively, “Lenders”) have entered or are
about to enter into financing arrangements pursuant to which Agent and Lenders
may make loans and advances and provide other financial accommodations to
Freedom Group, Inc. and the other Borrowers under (and as defined in) and
(collectively, “Borrowers”) in the Loan and Security Agreement, dated July 29,  2009, by and among Borrowers, certain of
their affiliates, Agent and Lenders (as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced, the “Loan
Agreement”), as set forth in the Loan Agreement and the other agreements,
documents and instruments referred to therein or at any time executed and/or
delivered in connection therewith or related thereto (all of the foregoing,
together with the Loan Agreement, as the same now exist or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced, being
collectively referred to herein as the “Financing Agreements”);

 

WHEREAS, as provided under
the Loan Agreement, Assignor committed to making Loans (the “Committed Loans”)
to Borrowers in an aggregate amount not to exceed
$                      
(the “Commitment”);

 

WHEREAS, Assignor wishes to
assign to Assignee [part of the] [all] rights and obligations of Assignor under
the Loan Agreement in respect of its Commitment in an amount equal to
$                            
(the “Assigned Commitment Amount”) on the terms and subject to the conditions
set forth herein and Assignee wishes to accept assignment of such rights and to
assume such obligations from Assignor on such terms and subject to such
conditions;

 

NOW, THEREFORE, in
consideration of the foregoing and the mutual agreements contained herein, the
parties hereto agree as follows:

 

1.                                       Assignment and
Acceptance.

 

(a)                                  Subject to the
terms and conditions of this Assignment and Acceptance,  Assignor hereby sells, transfers and assigns
to Assignee, and  Assignee hereby
purchases, assumes and undertakes from Assignor, without recourse and without
representation or warranty (except as provided in this Assignment and
Acceptance) an interest in (i) the Commitment and each of the Committed
Loans of Assignor and (ii) all related rights, benefits, obligations,
liabilities and indemnities of the Assignor under and in connection with the
Loan Agreement and the other Financing Agreements, so that after giving effect
thereto, the Commitment of Assignee shall be as set forth below and the Pro
Rata Share of Assignee shall be
              
(    %) percent.

 

A-1

 

(b)                                 With effect on
and after the Effective Date (as defined in Section 5 hereof), Assignee
shall be a party to the Loan Agreement and succeed to all of the rights and be
obligated to perform all of the obligations of a Lender under the Loan
Agreement, including the requirements concerning confidentiality and the
payment of indemnification, with a Commitment in an amount equal to the
Assigned Commitment Amount.  Assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Agreement are required to be
performed by it as a Lender.  It is the
intent of the parties hereto that the Commitment of Assignor shall, as of the
Effective Date, be reduced by an amount equal to the Assigned Commitment Amount
and Assignor shall relinquish its rights and be released from its obligations
under the Loan Agreement to the extent such obligations have been assumed by
Assignee; provided, that, Assignor shall not relinquish its
rights under Sections 2.2, 6.4, 6.9, 11.5 and 12.5 of the Loan Agreement
to the extent such rights relate to the time prior to the Effective Date.

 

(c)                                  After giving
effect to the assignment and assumption set forth herein, on the Effective Date
Assignee’s Commitment will be $                          .

 

(d)                                 After giving
effect to the assignment and assumption set forth herein, on the Effective Date
Assignor’s Commitment will be
$                            
(as such amount may be further reduced by any other assignments by Assignor on
or after the date hereof).

 

2.                                       Payments.

 

(a)                                  As
consideration for the sale, assignment and transfer contemplated in Section 1
hereof, Assignee shall pay to Assignor on the Effective Date in immediately
available funds an amount equal to
$                        ,
representing Assignee’s Pro Rata Share of the principal amount of all Committed
Loans.

 

(b)                                 Assignee shall
pay to Agent the processing fee in the amount specified in Section 13.7(a) of
the Loan Agreement.

 

3.                                       Reallocation of
Payments.  Any
interest, fees and other payments accrued to the Effective Date with respect to
the Commitment, Committed Loans and outstanding Letters of Credit shall be for
the account of Assignor.  Any interest,
fees and other payments accrued on and after the Effective Date with respect to
the Assigned Commitment Amount shall be for the account of Assignee.  Each of Assignor and Assignee agrees that it
will hold in trust for the other party any interest, fees and other amounts which
it may receive to which the other party is entitled pursuant to the preceding
sentence and pay to the other party any such amounts which it may receive
promptly upon receipt.

 

4.                                       Independent
Credit Decision. 
Assignee  acknowledges that it has
received a copy of the Loan Agreement and the Schedules and Exhibits thereto,
together with copies of the most recent financial statements of
                          
and its Subsidiaries, and such other documents and information as it has deemed
appropriate to make its own credit and legal analysis and decision to enter
into this Assignment and Acceptance and 
agrees that it will, independently and without reliance upon Assignor,
Agent or any Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit and legal
decisions in taking or not taking action under the Loan Agreement.

 

5.                                       Effective Date;
Notices.

 

(a)                                  As between
Assignor and Assignee, the effective date for this Assignment and Acceptance
shall be
                              ,
20    (the “Effective Date”); provided, that, the
following conditions precedent have been satisfied on or before the Effective
Date:

 

A-2

 

(i)                                     this Assignment
and Acceptance shall be executed and delivered by Assignor and Assignee;

 

(ii)                                  the consent of
Agent as required for an effective assignment of the Assigned Commitment Amount
by Assignor to Assignee shall have been duly obtained and shall be in full
force and effect as of the Effective Date;

 

(iii)                               written notice
of such assignment, together with payment instructions, addresses and related
information with respect to Assignee, shall have been given to Administrative
Borrower and Agent;

 

(iv)                              Assignee shall
pay to Assignor all amounts due to Assignor under this Assignment and
Acceptance; and

 

(v)                                 the processing
fee referred to in Section 2(b) hereof shall have been paid to Agent.

 

(b)                                 Promptly
following the execution of this Assignment and Acceptance, Assignor shall
deliver to Administrative Borrower and Agent for acknowledgment by Agent, a
Notice of Assignment in the form attached hereto as Schedule 1.

 

6.                                       Agent.  [INCLUDE ONLY IF ASSIGNOR IS AN AGENT]

 

(a)                                  Assignee hereby
appoints and authorizes Assignor in its capacity as Agent to take such action
as agent on its behalf to exercise such powers under the Loan Agreement as are
delegated to Agent by Lenders pursuant to the terms of the Loan Agreement.

 

(b)                                 Assignee shall
assume no duties or obligations held by Assignor in its capacity as Agent under
the Loan Agreement.

 

7.                                       Withholding Tax.  Assignee (a) represents and warrants to
Assignor, Agent and Borrowers that under applicable law and treaties no tax
will be required to be withheld by Assignee, Agent or Borrowers with respect to
any payments to be made to Assignee hereunder or under any of the Financing
Agreements, (b) agrees to furnish (if it is organized under the laws of
any jurisdiction other than the United States or any State thereof) to Agent
and Borrowers prior to the time that Agent or Borrowers are required to make
any payment of principal, interest or fees hereunder, duplicate executed
originals of either U.S. Internal Revenue Service Form W-8BEN or W-8ECI,
as applicable (wherein Assignee claims entitlement to the benefits of a tax
treaty that provides for a complete exemption from U.S. federal income
withholding tax on all payments hereunder) and agrees to provide new such forms
upon the expiration of any previously delivered form or comparable statements
in accordance with applicable U.S. law and regulations and amendments thereto,
duly executed and completed by Assignee, and (c) agrees to comply with all
applicable U.S. laws and regulations with regard to such withholding tax
exemption.

 

8.                                       Representations
and Warranties.

 

(a)                                  Assignor
represents and warrants that (i) it is the legal and beneficial owner of
the interest being assigned by it hereunder and that such interest is free and
clear of any security interest, lien, encumbrance or other adverse claim, (ii) it
is duly organized and existing and it has the full power and authority to take,
and has taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection 

 

A-3

 

with this Assignment and Acceptance and to fulfill
its obligations hereunder, (iii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than any already
given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance, and apart from any agreements or undertakings or
filings required by the Loan Agreement, no further action by, or notice to, or
filing with, any Person is required of it for such execution, delivery or
performance, and (iv) this Assignment and Acceptance has been duly
executed and delivered by it and constitutes the legal, valid and binding
obligation of Assignor, enforceable against Assignor in accordance with the
terms hereof, subject, as to enforcement, to bankruptcy, insolvency,
moratorium, reorganization and other laws of general application relating to or
affecting creditors’ rights and to general equitable principles.

 

(b)                                 Assignor makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Loan Agreement or any of the other Financing Agreements or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Loan Agreement or any other instrument or document furnished pursuant
thereto.  Assignor makes no
representation or warranty in connection with, and assumes no responsibility
with respect to, the solvency, financial condition or statements of Borrowers,
Guarantors or any of their respective Affiliates, or the performance or
observance by Borrowers, Guarantors or any other Person, of any of its
respective obligations under the Loan Agreement or any other instrument or
document furnished in connection therewith.

 

(c)                                  Assignee
represents and warrants that (i) it is duly organized and existing and it
has full power and authority to take, and has taken, all action necessary to
execute and deliver this Assignment and Acceptance and any other documents
required or permitted to be executed or delivered by it in connection with this
Assignment and Acceptance, and to fulfill its obligations hereunder, (ii) no
notices to, or consents, authorizations or approvals of, any Person are
required (other than any already given or obtained) for its due execution,
delivery and performance of this Assignment and Acceptance, and apart from any
agreements or undertakings or filings required by the Loan Agreement, no
further action by, or notice to, or filing with, any Person is required of it
for such execution, delivery or performance; and (iii) this Assignment and
Acceptance has been duly executed and delivered by it and constitutes the
legal, valid and binding obligation of Assignee, enforceable against Assignee
in accordance with the terms hereof, subject, as to enforcement, to bankruptcy,
insolvency, moratorium, reorganization and other laws of general application
relating to or affecting creditors’ rights to general equitable principles.

 

9.                                       Further
Assurances.  Assignor
and Assignee each hereby agree to execute and deliver such other instruments,
and take such other action, as either party may reasonably request in
connection with the transactions contemplated by this Assignment and
Acceptance, including the delivery of any notices or other documents or
instruments to Borrowers or Agent, which may be required in connection with the
assignment and assumption contemplated hereby.

 

10.                                 Miscellaneous.

 

(a)                                  Any amendment
or waiver of any provision of this Assignment and Acceptance shall be in
writing and signed by the parties hereto. 
No failure or delay by either party hereto in exercising any right,
power or privilege hereunder shall operate as a waiver thereof and any waiver
of any breach of the provisions of this Assignment and Acceptance shall be
without prejudice to any rights with respect to any other for further breach
thereof.

 

(b)                                 All payments
made hereunder shall be made without any set-off or counterclaim.

 

A-4

 

(c)                                  Assignor and
Assignee shall each pay its own costs and expenses incurred in connection with
the negotiation, preparation, execution and performance of this Assignment and
Acceptance.

 

(d)                                 This Assignment
and Acceptance may be executed in any number of counterparts and all of such
counterparts taken together shall be deemed to constitute one and the same
instrument.

 

(e)                                  THIS ASSIGNMENT
AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF
THE STATE OF
                          .  Assignor and Assignee each irrevocably
submits to the non-exclusive jurisdiction of any State or Federal court sitting
in the borough of Manhattan, New York County, New York over any suit,
action or proceeding arising out of or relating to this Assignment and Acceptance
and irrevocably agrees that all claims in respect of such action or proceeding
may be heard and determined in such New York State or Federal court.  Each party to this Assignment and Acceptance
hereby irrevocably waives, to the fullest extent it may effectively do so, the
defense of an inconvenient forum to the maintenance of such action or
proceeding.

 

(f)                                    ASSIGNOR AND
ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS
THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS ASSIGNMENT AND
ACCEPTANCE, THE LOAN AGREEMENT, ANY OF THE OTHER FINANCING AGREEMENTS OR ANY
RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
OR STATEMENTS (WHETHER ORAL OR WRITTEN).

 

IN WITNESS
WHEREOF, Assignor and Assignee have caused this Assignment and Acceptance to be
executed and delivered by their duly authorized officers as of the date first
above written.

 

	
   

  	
  [ASSIGNOR]

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [ASSIGNEE]

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  

 

A-5

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