Document:

Unassociated Document

    
      EXECUTION
        COPY

       

    

    
      

      

    

     

    

    ____________________________

    

    CREDIT
      AGREEMENT

    

    dated
      as
      of

    

    June
      24,
      2008

    

    among

    

    CLOPAY
      BUILDING PRODUCTS COMPANY, INC.,

    and

    CLOPAY
      PLASTIC PRODUCTS COMPANY, INC.,

    as
      Borrowers,

    

    The
      Lenders Party Hereto

    

    and

    

    JPMORGAN
      CHASE BANK, N.A.,

    as
      Administrative Agent,

    

    ____________________________

    

    J.P.
      MORGAN SECURITIES, INC.,

    as
      Bookrunner and Lead Arranger

     

    
      

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TABLE
      OF
      CONTENTS

     

    
      	 	 	
              Page

            
	 	
              ARTICLE
                I

            	 
	 	 	 
	 	
              Definitions

            	 
	 	 	 
	
              Section
                1.01.

            	
              Defined
                Terms

            	
              1

            
	
              Section
                1.02.

            	
              Classification
                of Loans and Borrowings

            	
              30

            
	
              Section
                1.03.

            	
              Terms
                Generally

            	
              30

            
	
              Section
                1.04.

            	
              Accounting
                Terms; GAAP

            	
              30

            
	 	
              ARTICLE
                II

            	 
	 	 	 
	 	
              The
                Credits

            	 
	 	 	 
	
              Section
                2.01.

            	
              Commitments

            	
              31

            
	
              Section
                2.02.

            	
              Loans
                and Borrowings

            	
              31

            
	
              Section
                2.03.

            	
              Requests
                for Revolving Borrowings

            	
              32

            
	
              Section
                2.04.

            	
              Protective
                Advances

            	
              33

            
	
              Section
                2.05.

            	
              Swingline
                Loans and Overadvances

            	
              33

            
	
              Section
                2.06.

            	
              Letters
                of Credit

            	
              35

            
	
              Section
                2.07.

            	
              Funding
                of Borrowings

            	
              39

            
	
              Section
                2.08.

            	
              Interest
                Elections

            	
              40

            
	
              Section
                2.09.

            	
              Termination
                and Reduction of Commitments; Increase in Revolving
                Commitments

            	
              41

            
	
              Section
                2.10.

            	
              Repayment and
                Amortization of Loans; Evidence of Debt

            	
              43

            
	
              Section
                2.11.

            	
              Prepayment
                of Loans

            	
              44

            
	
              Section
                2.12.

            	
              Fees

            	
              45

            
	
              Section
                2.13.

            	
              Interest

            	
              46

            
	
              Section
                2.14.

            	
              Alternate
                Rate of Interest

            	
              47

            
	
              Section
                2.15.

            	
              Increased
                Costs

            	
              47

            
	
              Section
                2.16.

            	
              Break
                Funding Payments

            	
              49

            
	
              Section
                2.17.

            	
              Taxes

            	
              49

            
	
              Section
                2.18.

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

            	
              51

            
	
              Section
                2.19.

            	
              Mitigation
                Obligations; Replacement of Lenders

            	
              54

            
	
              Section
                2.20.

            	
              Returned
                Payments

            	
              55

            
	 	
              ARTICLE
                III

            	 
	 	 	 
	 	
              Representations
                and Warranties

            	 
	 	 	 
	
              Section
                3.01.

            	
              Organization;
                Powers

            	
              55

            
	
              Section
                3.02.

            	
              Authorization;
                Enforceability

            	
              55

            
	
              Section
                3.03.

            	
              Governmental
                Approvals; No Conflicts

            	
              56

            

    

     

    
      
        
        

      

      
        -i-

        
          

        

      

      
        
        

      

    

    

    
      	
              Section
                3.04.

            	
              Financial
                Condition; No Material Adverse Effect

            	
              56

            
	
              Section
                3.05.

            	
              Properties

            	
              57

            
	
              Section
                3.06.

            	
              Litigation
                and Environmental Matters

            	
              57

            
	
              Section
                3.07.

            	
              Compliance
                with Laws and Contractual Obligations

            	
              58

            
	
              Section
                3.08.

            	
              Investment
                Company Status

            	
              58

            
	
              Section
                3.09.

            	
              Taxes

            	
              58

            
	
              Section
                3.10.

            	
              ERISA;
                Employee Benefit Plans

            	
              58

            
	
              Section
                3.11.

            	
              Disclosure

            	
              58

            
	
              Section
                3.12.

            	
              Use
                of Credit

            	
              59

            
	
              Section
                3.13.

            	
              Burdensome
                Agreements

            	
              59

            
	
              Section
                3.14.

            	
              Insurance

            	
              59

            
	
              Section
                3.15.

            	
              Capitalization
                and Subsidiaries

            	
              59

            
	
              Section
                3.16.

            	
              Labor
                Matters

            	
              59

            
	
              Section
                3.17.

            	
              Security
                Interest in Collateral

            	
              60

            
	
              Section
                3.18.

            	
              Holdings

            	
              60

            
	 	 	 
	 	
              ARTICLE
                IV

            	 
	 	 	 
	 	
              Conditions

            	 
	 	 	 
	
              Section
                4.01.

            	
              Closing

            	
              60

            
	
              Section
                4.02.

            	
              Each
                Credit Event

            	
              64

            
	 	 	 
	 	
              ARTICLE
                V

            	 
	 	 	 
	 	
              AFFIRMATIVE
                COVENANTS

            	 
	 	 	 
	
              Section
                5.01.

            	
              Financial
                Statements, Borrowing Base and Other Information

            	
              65

            
	
              Section
                5.02.

            	
              Notices
                of Material Events

            	
              71

            
	
              Section
                5.03.

            	
              Existence;
                Conduct of Business

            	
              72

            
	
              Section
                5.04.

            	
              Payment
                of Obligations

            	
              72

            
	
              Section
                5.05.

            	
              Maintenance
                of Properties

            	
              72

            
	
              Section
                5.06.

            	
              Maintenance
                of Insurance

            	
              72

            
	
              Section
                5.07.

            	
              Books
                and Records

            	
              72

            
	
              Section
                5.08.

            	
              Inspection
                Rights; Collateral Reports

            	
              73

            
	
              Section
                5.09.

            	
              Compliance
                with Laws and Contractual Obligations

            	
              73

            
	
              Section
                5.10.

            	
              Use
                of Proceeds

            	
              73

            
	
              Section
                5.11.

            	
              Casualty
                and Condemnation

            	
              74

            
	
              Section
                5.12.

            	
              Depository
                Banks

            	
              74

            
	
              Section
                5.13.

            	
              Collateral;
                Further Assurances

            	
              74

            
	
              Section
                5.14.

            	
              Collateral
                Access Agreements; Control Agreements

            	
              76

            
	
              Section
                5.15.

            	
              Post-closing
                Deliverables

            	
              76

            

    

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

     

    
      	 	
              ARTICLE
                VI

            	 
	 	 	 
	 	
              NEGATIVE
                COVENANTS

            	 
	 	 	 
	
              Section
                6.01.

            	
              Indebtedness;
                Guarantees

            	
              77

            
	
              Section
                6.02.

            	
              Liens

            	
              79

            
	
              Section
                6.03.

            	
              Mergers,
                Consolidations, Etc.

            	
              81

            
	
              Section
                6.04.

            	
              Dispositions

            	
              81

            
	
              Section
                6.05.

            	
              Lines
                of Business

            	
              83

            
	
              Section
                6.06.

            	
              Investments
                and Acquisitions

            	
              83

            
	
              Section
                6.07.

            	
              Restricted
                Payments

            	
              84

            
	
              Section
                6.08.

            	
              Transactions
                with Affiliates

            	
              86

            
	
              Section
                6.09.

            	
              Restrictive
                Agreements

            	
              86

            
	
              Section
                6.10.

            	
              Swap
                Agreements

            	
              87

            
	
              Section
                6.11.

            	
              Fixed
                Charge Coverage Ratio

            	
              87

            
	
              Section
                6.12.

            	
              Stock
                Issuance

            	
              87

            
	
              Section
                6.13.

            	
              Modifications
                of Certain Documents

            	
              88

            
	
              Section
                6.14.

            	
              Passive
                Holding Company Status

            	
              88

            
	
              Section
                6.15.

            	
              Sale
                and Leaseback Transactions

            	
              88

            
	
              Section
                6.16.

            	
              Capital
                Expenditures

            	
              88

            
	
              Section
                6.17.

            	
              Fiscal
                Year

            	
              89

            
	 	 	 
	 	
              ARTICLE
                VII

            	 
	 	 	 
	 	
              EVENTS
                OF DEFAULT

            	 
	 	 	 
	 	
              ARTICLE
                VIII

            	 
	 	 	 
	 	
              The
                Administrative Agent

            	 
	 	 	 
	 	
              ARTICLE
                IX

            	 
	 	 	 
	 	
              Miscellaneous

            	 
	 	 	 
	
              Section
                9.01.

            	
              Notices

            	
              94

            
	
              Section
                9.02.

            	
              Waivers;
                Amendments

            	
              95

            
	
              Section
                9.03.

            	
              Expenses;
                Indemnity; Damage Waiver

            	
              97

            
	
              Section
                9.04.

            	
              Successors
                and Assigns

            	
              98

            
	
              Section
                9.05.

            	
              Survival

            	
              101

            
	
              Section
                9.06.

            	
              Counterparts;
                Integration; Effectiveness

            	
              102

            
	
              Section
                9.07.

            	
              Severability

            	
              102

            
	
              Section
                9.08.

            	
              Right
                of Setoff

            	
              102

            
	
              Section
                9.09.

            	
              Governing
                Law; Jurisdiction; Consent to Service of Process

            	
              103

            
	
              Section
                9.10.

            	
              WAIVER
                OF JURY TRIAL

            	
              103

            
	
              Section
                9.11.

            	
              Headings

            	
              104

            
	
              Section
                9.12.

            	
              Confidentiality

            	
              104

            

    

     

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    

     

    
      	
              Section
                9.13.

            	
              Several
                Obligations; Nonreliance; Violation of Law

            	
              105

            
	
              Section
                9.14.

            	
              USA
                PATRIOT Act

            	
              105

            
	
              Section
                9.15.

            	
              Disclosure

            	
              105

            
	
              Section
                9.16.

            	
              Appointment
                for Perfection

            	
              105

            
	
              Section
                9.17.

            	
              Interest
                Rate Limitation

            	
              106

            
	 	 	 
	 	
              ARTICLE
                X

            	 
	 	 	 
	 	
              Guaranty

            	 
	 	 	 
	
              Section
                10.01.

            	
              Guaranty

            	
              106

            
	
              Section
                10.02.

            	
              Guaranty
                of Payment

            	
              106

            
	
              Section
                10.03.

            	
              No
                Discharge or Diminishment of Guaranty

            	
              106

            
	
              Section
                10.04.

            	
              Defenses
                Waived

            	
              107

            
	
              Section
                10.05.

            	
              Rights
                of Subrogation

            	
              108

            
	
              Section
                10.06.

            	
              Reinstatement;
                Stay of Acceleration

            	
              108

            
	
              Section
                10.07.

            	
              Information

            	
              108

            
	
              Section
                10.08.

            	
              [Reserved]

            	
              108

            
	
              Section
                10.09.

            	
              Maximum
                Liability

            	
              108

            
	
              Section
                10.10.

            	
              Contribution

            	
              109

            
	
              Section
                10.11.

            	
              Liability
                Cumulative

            	
              109

            
	 	 	 
	 	
              ARTICLE
                XI

            	 
	 	 	 
	 	
              The
                Borrower Representative

            	 
	 	 	 
	
              Section
                11.01.

            	
              Appointment;
                Nature of Relationship

            	
              110

            
	
              Section
                11.02.

            	
              Powers

            	
              110

            
	
              Section
                11.03.

            	
              Employment
                of Agents

            	
              110

            
	
              Section
                11.04.

            	
              Notices

            	
              110

            
	
              Section
                11.05.

            	
              Successor
                Borrower Representative

            	
              110

            
	
              Section
                11.06.

            	
              Execution
                of Loan Documents; Borrowing Base Certificate

            	
              111

            
	
              Section
                11.07.

            	
              Reporting

            	
              111

            

    

     

    SCHEDULES:

     

    Commitment
      Schedule

    Schedule
      1.01(a) – Account Debtors

    Schedule
      1.01(b) – Eligible Equipment

    Schedule
      1.01(c) –
      Griffon
      Letters of Credit

    Schedule
      3.05 – Properties

    Schedule
      3.06 –
      Disclosed Matters

    Schedule
      3.13 – Burdensome Agreements

    Schedule
      3.14 –
      Insurance

    Schedule
      3.15 – Capitalization and Subsidiaries 

    Schedule
      3.16 – Labor Matters

     

    
      
        
        

      

      
        iv

        
          

        

      

      
        
        

      

    

     

    Schedule
      3.17 – Perfection Schedule

    Schedule
      5.02 – Material Contracts

    Schedule
      5.15 – Post-closing Deliverables

    Schedule
      6.01(a) –
      Existing
      Indebtedness

    Schedule
      6.01(b) –
      Existing
      Guaranties

    Schedule
      6.02 –
      Existing
      Liens

    Schedule
      6.06 –
      Existing
      Investments

    Schedule
      6.09 –
      Existing
      Restrictive Agreements

    Schedule
      6.15 – Sale
      – Leaseback Transactions

    

    EXHIBITS:

     

    Exhibit
      A
–
      Form of
      Assignment and Assumption

    Exhibit
      B
–
      Form of
      Opinion of Borrower’s Counsel

    Exhibit
      C
–
      Form of
      Borrowing Base Certificate

    Exhibit
      D
–
      Form of
      Compliance Certificate

    Exhibit
      E
– Joinder Agreement

    Exhibit
      F
– Security Agreement

     

    
      
        
        

      

      
        v

        
          

        

      

      
        
        

      

    

    CREDIT
      AGREEMENT dated as of June 24, 2008 (as it may be amended or modified from
      time
      to time, this “Agreement”),
      among
      CLOPAY BUILDING PRODUCTS COMPANY, INC., a Delaware corporation, CLOPAY PLASTIC
      PRODUCTS COMPANY, INC., a Delaware corporation, as Borrowers, the other Loan
      Parties party hereto, the Lenders party hereto, and JPMORGAN CHASE BANK, N.A.,
      as Administrative Agent.

     

    The
      parties hereto agree as follows:

     

    ARTICLE
      I

    Definitions

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Alternate
      Base Rate”
means,
      for any day, a rate per annum equal to the greater of (a) the Prime Rate in
      effect on such day and (b) the Federal Funds Effective Rate in effect on
      such day plus 1⁄2 of 1%. Any change in the Alternate Base Rate due to a
      change in the Prime Rate or the Federal Funds Effective Rate shall be effective
      from and including the effective date of such change in the Prime Rate or the
      Federal Funds Effective Rate, respectively.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

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

     

    “Applicable
      Rate”
means,
      for any day, with respect to any ABR Loan or Eurodollar Loan, as the case may
      be, the applicable rate per annum set forth below under the caption “ABR Spread”
or “Eurodollar Spread”, as the case may be, based upon average Availability for
      the most recently completed fiscal quarter, provided
      that,
      the first such adjustment shall be made in respect of the second full fiscal
      quarter ended after the Effective Date and, until such adjustment is made,
      the
“Applicable Rate” shall be the applicable rate per annum set forth below in
      Category 2:

     

    
      	
              Average
                Availablity

            	 	
              ABR
                Spread

            	 	
              Eurodollar
                Spread

            
	
              Category
                1

              ≥75,000,000

            	 	
              0.75%

            	 	
              2.25%

            
	
              Category
                2

              ≥
                25,000,000 but

              <
                75,000,000

            	 	
              1.00%

            	 	
              2.50%

            
	
              Category
                3

              <$25,000,000 

            	 	
              1.25%

            	 	
              2.75%

            

    

    

    For
      purposes of the foregoing, (a) the Applicable Rate shall be determined
      as of the end of each fiscal quarter (commencing after the end of the second
      full fiscal quarter ended after the Effective Date) based upon the average
      Availability for such fiscal quarter and (b) each change in the Applicable
      Rate
      as determined by the Administrative Agent pursuant to clause (a) shall be
      effective on the first day of the next succeeding quarter (with such change
      to
      be effective until the next successive change) and the Administrative Agent
      shall promptly notify the Borrowers and the Lenders of the determination of
      the
      average Availability for the applicable quarter, provided
      that the
      average Availability shall be deemed to be in Category 3 (A) at any
      time that an Event of Default has occurred and is continuing or (B) at the
      option of the Administrative Agent or at the request of the Required Lenders
      if
      the Borrowers fail to deliver a Borrowing Base Certificate required to be
      delivered by them pursuant to Section
      5.01(j),
      during
      the period from the expiration of the time for delivery thereof until such
      Borrowing Base Certificate is delivered. 

     

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

     

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

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

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

     

    “Availability
      Block”
means
      an amount equal to 10% of the Revolving Commitments. 

     

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

     

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

     

    “Banking
      Services”
means
      each and any of the following bank services provided to any Loan Party by any
      Lender or any of its Affiliates: (a) commercial credit cards, (b) stored value
      cards and (c) treasury management services (including, without limitation,
      controlled disbursement, automated clearinghouse transactions, return items,
      overdrafts and interstate depository network services).

     

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

     

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

     

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

     

    “Borrower”
or
      “Borrowers”
means,
      individually or collectively, Clopay Building Products Company, Inc., a Delaware
      corporation, and Clopay Plastic Products Company, Inc., a Delaware
      corporation.

     

    “Borrower
      Representative”
means
      Clopay Plastic Products Company, Inc., in its capacity as contractual
      representative of the Borrowers pursuant to Article XI. 

     

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

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    “Borrowing
      Base”
means,
      at any time, the sum of (a) 85% of the Borrowers’ Eligible Accounts at such
      time, plus
      (b) the
      lesser of (i) 70% of the Borrowers’ Eligible Inventory, valued at the lower of
      cost or market value, determined on a first-in-first-out basis, at such time
      and
      (ii) the product of 85% multiplied
      by
      the Net
      Orderly Liquidation Value percentage identified in the most recent inventory
      appraisal ordered by the Administrative Agent multiplied
      by
      the
      Borrowers’ Eligible Inventory, valued at the lower of cost or market value,
      determined on a first-in-first-out basis, at such time, plus
      (c) 100% of cash and Permitted Investments in Controlled Accounts with the
      Administrative Agent, plus
      (d) the
      PP&E Component, minus
      (e)
      Reserves, minus
      (f) to
      the extent applicable pursuant to Section
      6.11,
      the
      Availability Block. The Administrative Agent may, in its Permitted Discretion,
      adjust Reserves, with any such changes to be effective two Business Days after
      delivery of notice thereof to the Borrower Representative and the Lenders.
      The
      Borrowing Base at any time shall be determined by reference to the most recent
      Borrowing Base Certificate delivered to the Administrative Agent pursuant to
      Section
      5.01(j)
      of the
      Agreement.

     

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

     

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

     

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

     

    “Capital
      Expenditures”
means,
      for any period, expenditures during such period for any purchase or other
      acquisition of any asset which would be classified as a fixed or capital asset
      on a consolidated balance sheet of the Group Members prepared in accordance
      with
      GAAP; provided
      that
      expenditures in respect of the sale and leaseback transactions described on
      Schedule
      6.15,
      and
      expenditures in respect of the payoff on the Effective Date of the synthetic
      lease with SunTrust Bank, as agent, in the approximate principal amount of
      $32,700,000, shall not be treated as “Capital Expenditures”. 

     

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

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    “Change
      of Control”
means:
      (a) Holdings shall cease to own, free and clear of all Liens or other
      encumbrances, directly or indirectly, at least 100% of the outstanding voting
      Equity Interests of each Borrower on a fully diluted basis; (b) occupation
      of a
      majority of the seats (other than vacant seats) on the board of directors of
      Holdings by Persons who were neither (i) nominated by the board of directors
      of
      Holdings nor (ii) appointed by directors so nominated; (c) the acquisition
      of
      direct or indirect Control of Holdings by any Person or group (within the
      meaning of the Securities Exchange Act of 1934 and the rules of the SEC
      thereunder as in effect on the date hereof) other than Griffon or the Parent;
      or
      (d) the acquisition of ownership, directly or indirectly, beneficially or of
      record, by any Person or group (within the meaning of the Securities Exchange
      Act of 1934 and the rules of the SEC thereunder as in effect on the date
      hereof), other than Griffon in the case of the Parent, of Equity Interests
      representing more than 35% of the aggregate ordinary voting power represented
      by
      the issued and outstanding Equity Interests of Griffon or the
      Parent.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Collateral
      Documents”
means,
      collectively, the Security Agreement, the Mortgages and any other documents
      granting a Lien upon the Collateral as security for payment of the Secured
      Obligations.

     

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

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

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

     

    “Consolidated
      Pre-tax Income”
means,
      for any period, net income of the Group Members for such period plus
      foreign,
      Federal, state and local income taxes deducted in determining net income for
      such period.

     

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

     

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

     

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

     

    “Controlled
      Accounts”
means
      deposit accounts maintained with the Administrative Agent or with respect to
      which a Control Agreement reasonably satisfactory to the Administrative Agent
      shall been executed and delivered by the applicable Loan Party and depositary
      institution. 

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

    “EBITDA”
means,
      for any period, the sum of (i) Net Income, (ii) Interest Expense, (iii)
      depreciation and amortization expense deducted in determining Net Income, (iv)
      foreign, Federal, state and local income taxes deducted in determining Net
      Income, in each case, for such period, computed in accordance with GAAP, and
      (v)
      to the extent deducted in determining Net Income, transaction costs, fees and
      expenses relating to the execution and delivery of this Agreement.

     

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

     

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

     

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

     

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

     

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

     

    (d) which
      is
      owing by an Account Debtor for which more than 50% of the aggregate amount
      of
      Accounts owing from such Account Debtor and its Affiliates are ineligible
      pursuant to clause (c) above;

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (e) which
      is
      owing by an Account Debtor to the extent the aggregate amount of Accounts owing
      from such Account Debtor and its Affiliates to such Borrowers exceeds, except
      as
      set forth on Schedule
      1.01(a),
      10% of
      the aggregate amount of Eligible Accounts of such Borrowers;

     

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

     

    (g) which
      (i)
      does not arise from the sale of goods or performance of services in the ordinary
      course of business, (ii) is not evidenced by an invoice or other documentation
      reasonably satisfactory to the Administrative Agent which has been sent to
      the
      Account Debtor, (iii) represents a progress billing, (iv) is contingent
      upon the applicable Borrower’s completion of any further performance, (v)
      represents a sale on a bill-and-hold, guaranteed sale, sale-and-return, sale
      on
      approval, consignment, cash-on-delivery or any other repurchase or return basis
      or (vi) relates to payments of interest;

     

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

     

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

     

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

     

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

     

    (l) which
      is
      owed by an Account Debtor which, (i) does not maintain its chief executive
      office in the U.S. or Canada, or (ii) is not organized under applicable law
      of
      the U.S., any state of the U.S., Canada or any province of Canada, unless,
      in
      either case, (x) such Account is backed by a Letter of Credit reasonably
      acceptable to the Administrative Agent which is in the possession of, has been
      assigned to and is directly drawable by the Administrative Agent or (y) such
      Account Debtor is either Proctor & Gamble International Operations S.A.,
      Kimberly Clark Argentina S.A. or Colombiana Kimberly Colpapel, S.A. but only
      to
      the extent to which the Eligible Accounts of such Account Debtors do not exceed
      in the aggregate $5,000,000 at any time;

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    “Eligible
      Equipment”
means
      the equipment owned by a Borrower described on Schedule
      1.01(b)
      and
      meeting each of the following requirements: 

     

    (a) the
      applicable Borrower has good title to such equipment;

     

    (b) the
      applicable Borrower has the right to subject such equipment to a Lien in favor
      of the Administrative Agent; such equipment is subject to a first priority
      perfected Lien in favor of the Administrative Agent and is free and clear of
      all
      other Liens of any nature whatsoever (except for Permitted Encumbrances which
      do
      not have priority over the Lien in favor of the Administrative
      Agent);

     

    (c) the
      full
      purchase price for such equipment has been paid by the applicable
      Borrower; 

     

    (d) such
      equipment is located on premises (i) owned by the applicable Borrower, which
      premises are subject to a first priority perfected Lien in favor of the
      Administrative Agent, or (ii) leased by the applicable Borrower where (x) the
      lessor has delivered to the Administrative Agent a Collateral Access Agreement
      or (y) a Reserve for rent, charges, and other amounts due or to become due
      with
      respect to such facility has been established by the Administrative Agent in
      its
      Permitted Discretion; provided
      that
      equipment shall not be excluded from Eligible Equipment pursuant to this clause
      (ii) prior to the day which is 90 days after the Effective Date; 

     

    (e) such
      equipment is in good working order and condition (ordinary wear and tear
      excepted) and is used or held for use by the applicable Borrower in the ordinary
      course of business of such Borrower; 

     

    (f) such
      equipment is not subject to any agreement which restricts in any material
      respect the ability of the applicable Borrower to use, sell, transport or
      dispose of such equipment or which restricts the Administrative Agent’s ability
      to take possession of, sell or otherwise dispose of such equipment;
      and

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (g) such
      equipment does not constitute “fixtures” under the applicable laws of the
      jurisdiction in which such equipment is located, except for “fixtures” located
      on Mortgaged Properties.

     

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

     

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

     

    (b) which
      is
      subject to any Lien other than (i) a Lien in favor of the Administrative Agent
      or (ii) a Permitted Encumbrance which does not have priority over the Lien
      in
      favor of the Administrative Agent;

     

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

     

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

     

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

     

    (f) which
      is
      not finished goods or which constitutes work-in-process, spare or replacement
      parts, subassemblies, packaging and shipping material, manufacturing supplies,
      samples, prototypes, displays or display items, bill-and-hold goods, goods
      that
      are returned or marked for return, repossessed goods, defective or damaged
      goods, goods held on consignment, or goods which are not of a type held for
      sale
      in the ordinary course of business; 

     

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

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    “Eligible
      Real Property”
means
      the real property listed on Schedule
      3.05
      owned by
      a Borrower, but no such real property shall be included in the Borrowing Base
      until (i) it has been accepted for inclusion in the Borrowing Base in the
      Permitted Discretion of the Administrative Agent, (ii) an appraisal report
      has
      been delivered to the Administrative Agent in form, scope and substance
      reasonably satisfactory to the Administrative Agent, (iii) the Administrative
      Agent is reasonably satisfied that all actions necessary or desirable in order
      to create a perfected first priority Lien on such real property have been taken,
      including, the filing and recording of Mortgages (it being understood that
      the
      Mortgages on the real property located in Nashville, Tennessee and Mason, Ohio,
      each as specified on Schedule
      3.05,
      shall
      be executed and delivered on the Effective Date and the Mortgage on the real
      property in Augusta, Kentucky, as specified on Schedule
      3.05,
      may be
      delivered on or prior to the day which is 90 days after the Effective Date),
      (iv) an environmental assessment report has been completed and delivered to
      the
      Administrative Agent in form and substance reasonably satisfactory to the
      Lenders and which does not indicate any material pending, threatened or existing
      Environmental Liability, or material non compliance with any Environmental
      Law
      (it being understood that the real property located in Augusta, Kentucky, as
      specified on Schedule
      3.05,
      shall
      not be included in Eligible Real Property unless (a) a Phase II environmental
      assessment report shall have been delivered to the Administrative Agent within
      180 days after the Effective Date, (b) such environmental report is satisfactory
      to the Administrative Agent (including any required remediation identified
      thereunder), and (c) the Administrative Agent shall have established, in its
      Permitted Discretion, a Reserve to cover any remediation identified in any
      such
      report), (v) such real property is adequately protected by fully-paid valid
      title insurance with endorsements and in amounts acceptable to the
      Administrative Agent, insuring that the Administrative Agent, for the benefit
      of
      the Secured Parties, shall have a perfected first priority Lien on such real
      property, evidence of which shall have been provided in form and substance
      reasonably satisfactory to the Administrative Agent, and (vi) if required by
      the
      Administrative Agent: (A) within 90 days after the Effective Date, an ALTA
      survey has been delivered for which all necessary fees have been paid and which
      is dated no more than 90 days prior to the date on which the applicable Mortgage
      is recorded, certified to Administrative Agent and the issuer of the title
      insurance policy in a manner reasonably satisfactory to the Administrative
      Agent
      by a land surveyor duly registered and licensed in the state in which such
      Eligible Real Property is located and acceptable to the Administrative Agent,
      and shows all buildings and other improvements, the location of any easements,
      parking spaces, rights of way, building setback lines and other dimensional
      regulations and the absence of encroachments, either by such improvements or
      on
      to such property, and other defects, other than encroachments and other defects
      which do not materially adversely affect the Property and which are otherwise
      reasonably acceptable to the Administrative Agent; (B) in respect of which
      local counsel for the applicable Borrower in states in which the Eligible Real
      Property is located have delivered a letter of opinion with respect to the
      enforceability and perfection of the Mortgages and any related fixture filings
      in form and substance reasonably satisfactory to the Administrative Agent;
      and
      (C) in respect of which the applicable Borrower shall have used its
      commercially reasonable efforts to obtain estoppel certificates executed by
      all
      tenants of such Eligible Real Property and such other consents, agreements
      and
      confirmations of lessors and third parties have been delivered as the
      Administrative Agent may reasonably deem necessary or desirable, together with
      evidence that all other actions that the Administrative Agent may reasonably
      deem necessary or desirable in order to create perfected first priority Liens
      on
      the property described in the Mortgages have been taken.

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

    “ERISA
      Event”
means
      (a) any Reportable Event; (b) the existence with respect to any Plan of a
      Prohibited Transaction; (c) any failure by any Plan to satisfy the minimum
      funding standards (within the meaning of Section 412 of the Code or Section
      302
      of ERISA), whether or not waived; (d) the filing pursuant to Section 412 of
      the
      Code or Section 303 of ERISA of an application for a waiver of the minimum
      funding standard with respect to any Plan, the failure to make by its due date
      a
      required installment under Section 414(m) of the Code with respect to any Plan
      or the failure by Holdings or any of its ERISA Affiliates to make any required
      contribution to a Multiemployer Plan; (e) the incurrence by Holdings or any
      of
      its ERISA Affiliates of any liability under Title IV of ERISA with respect
      to
      the termination of any Plan, including but not limited to the imposition of
      any
      Lien in favor of the PBGC or any Plan; (f) a determination that any Plan is,
      or
      is expected to be, in “at risk” status (within the meaning of Title IV of
      ERISA); (g) the receipt by Holdings or any of its ERISA Affiliates from the
      PBGC
      or a plan administrator of any notice relating to an intention to terminate
      any
      Plan or Plans or to appoint a trustee to administer any Plan under Section
      4042
      of ERISA; (h) the incurrence by Holdings or any of its ERISA Affiliates of
      any
      liability with respect to the withdrawal or partial withdrawal from any Plan
      or
      Multiemployer Plan; or (i) the receipt by Holdings or any ERISA Affiliate of
      any
      notice, or the receipt by any Multiemployer Plan from Holdings or any ERISA
      Affiliate of any notice, concerning the imposition of Withdrawal Liability
      or a
      determination that a Multiemployer Plan is, or is expected to be, Insolvent,
      in
      endangered or critical status, or in reorganization within the meaning of
      Section 432 of the Code or Section 305 or Title IV of ERISA.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

    “Fixed
      Charges”
means,
      with reference to any period, without duplication, cash Interest Expense,
plus
      prepayments and scheduled principal payments on Indebtedness (other than
      Indebtedness under this Agreement) made during such period, plus
      expense
      for taxes paid in
      cash,
plus
      dividends, distributions or management fees paid in cash, all calculated for
      the
      Loan Parties on a consolidated basis (excluding, for the avoidance of doubt,
      Subsidiaries which are not Loan Parties) in accordance with GAAP. 

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    “Fixed
      Charge Coverage Ratio”
means,
      the ratio, determined as of the end of each fiscal month of the Loan Parties
      for
      the most-recently ended twelve fiscal months (or, if less, the number of full
      fiscal months elapsed since the Effective Date), of (a) EBITDA minus
      Capital
      Expenditures paid in cash (excluding cash payments financed with Indebtedness
      other than Revolving Loans) to (b) Fixed Charges, all calculated for the Loan
      Parties on a consolidated basis (excluding, for the avoidance of doubt,
      Subsidiaries which are not Loan Parties) in accordance with GAAP.

     

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

     

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

     

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

     

    “GAAP”
means
      generally accepted accounting principles in the United States of
      America.

     

    “German
      Subsidiaries”
means,
      collectively, Clopay Europe GmbH, Clopay Dombühl GmbH, Clopay Aschersleben GmbH
& Co. KG and Clopay Advance Printing Aschersleben GmbH, and any of their
      Subsidiaries. 

     

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

     

    “Griffon”
means
      Griffon Corporation, a Delaware corporation. 

     

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

     

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

     

    “Guarantee”
of
      or
      by any Person (the “guarantor”)
      means
      any obligation, contingent or otherwise, of the guarantor guaranteeing or having
      the economic effect of guaranteeing any Indebtedness or other obligation of
      any
      other Person (the “primary
      obligor”)
      in any
      manner, whether directly or indirectly, and including any obligation of the
      guarantor, direct or indirect, (a) to purchase or pay (or advance or supply
      funds for the purchase or payment of) such Indebtedness or other obligation
      or
      to purchase (or to advance or supply funds for the purchase of) any security
      for
      the payment thereof, (b) to purchase or lease property, securities or
      services for the purpose of assuring the owner of such Indebtedness or other
      obligation of the payment thereof, (c) to maintain working capital, equity
      capital or any other financial statement condition or liquidity of the primary
      obligor so as to enable the primary obligor to pay such Indebtedness or other
      obligation or (d) as an account party in respect of any letter of credit or
      letter of guaranty issued to support such Indebtedness or obligation;
provided,
      that
      the term Guarantee shall not include endorsements for collection or deposit
      in
      the ordinary course of business.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

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

     

    “Guarantor”
means
      each Loan Party.

     

    “Guaranty”
means
      Article X of this Agreement.

     

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

     

    “Holdings”
means
      Clopay Holding Co., a Delaware corporation.

     

    “Immaterial
      Subsidiary”
means,
      as of any date, any Subsidiary with total assets of less than $250,000,
provided
      that the
      aggregate assets of all Immaterial Subsidiaries may not exceed $1,000,000,
      collectively, at any time (and the Borrowers will designate in writing to the
      Administrative Agent from time to time the Subsidiaries which will cease to
      be
      treated as “Immaterial Subsidiaries” in order to comply with the foregoing
      limitation).

     

    “Indebtedness”
of
      any
      Person means, without duplication, (a) all obligations of such Person for
      borrowed money or with respect to deposits or advances of any kind, (b) all
      obligations of such Person evidenced by bonds, debentures, notes or similar
      instruments, (c) all obligations of such Person under conditional sale or
      other title retention agreements relating to property acquired by such Person,
      (d) all obligations of such Person in respect of the deferred purchase
      price of property or services (excluding current accounts payable incurred
      in
      the ordinary course of business), (e) all Indebtedness of others secured by
      (or for which the holder of such Indebtedness has an existing right, contingent
      or otherwise, to be secured by) any Lien on property owned or acquired by such
      Person, whether or not the Indebtedness secured thereby has been assumed,
      (f) all Guarantees by such Person of Indebtedness of others, (g) all
      Capital Lease Obligations of such Person, (h) all obligations, contingent
      or otherwise, of such Person as an account party in respect of letters of credit
      and letters of guaranty and (i) all obligations, contingent or otherwise,
      of such Person in respect of bankers’ acceptances. The Indebtedness of any
      Person shall include the Indebtedness of any other entity (including any
      partnership in which such Person is a general partner) to the extent such Person
      is liable therefor as a result of such Person’s ownership interest in or other
      relationship with such entity, except to the extent the terms of such
      Indebtedness provide that such Person is not liable therefor.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    “Indemnified
      Taxes”
means
      Taxes other than Excluded Taxes.

     

    “Information
      Memorandum”
means
      the Confidential Information Memorandum, dated May 2008, relating to the
      Borrowers and the Transactions.

     

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

     

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

     

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

     

    “Interest
      Expense”
means,
      with reference to any period, total cash interest expense (including that
      attributable to Capital Lease Obligations) of the Loan Parties for such period
      with respect to all outstanding Indebtedness of the Loan Parties (including
      all
      commissions, discounts and other fees and charges owed with respect to letters
      of credit and bankers’ acceptance financing and net costs under Swap Agreements
      in respect of interest rates to the extent such net costs are allocable to
      such
      period in accordance with GAAP), calculated on a consolidated basis for the
      Loan
      Parties (excluding, for the avoidance of doubt, Subsidiaries which are not
      Loan
      Parties) for such period in accordance with GAAP.

     

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

     

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

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

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

     

    “Investment”
means,
      by any Person, (a) the amount paid or committed to be paid, or the value of
      property or services contributed or committed to be contributed, by such person
      for or in connection with the acquisition by such Person of any stock, bonds,
      notes, debentures, partnership or other ownership interests or other securities
      of any other Person and (b) the amount of any advance, loan or extension of
      credit by such Person, to any other Person, or guaranty or other similar
      obligation of such Person with respect to any Indebtedness of such other Person
      (other than Indebtedness constituting trade payables in the ordinary course
      of
      business), and (without duplication) any amount committed to be advanced, loans,
      or extended by such Person to any other Person, or any amount the payment of
      which is committed to be assured by a guaranty or similar obligation by such
      Person for the benefit of, such other Person.

     

    “Issuing
      Bank”
means
      Chase, in its capacity as the issuer of Letters of Credit hereunder, and its
      successors in such capacity as provided in Section
      2.06(i).
      The
      Issuing Bank may, in its discretion, arrange for one or more Letters of Credit
      to be issued by Affiliates of the Issuing Bank, in which case the term “Issuing
      Bank” shall include any such Affiliate with respect to Letters of Credit issued
      by such Affiliate.

     

    “Joinder
      Agreement”
has
      the
      meaning assigned to such term in Section
      5.13.

     

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

     

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

     

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

     

    “Lead
      Arranger”
means
      J.P. Morgan Securities Inc., in its capacity as the arranger of the Commitments.
      

     

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

     

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

     

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

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    “Loan
      Documents”
means
      this Agreement, any promissory notes issued pursuant to this Agreement, any
      Letter of Credit applications, the Collateral Documents, the Guaranty, and
      all
      other agreements, instruments, documents and certificates executed and delivered
      to, or in favor of, the Administrative Agent or any Lenders whether heretofore,
      now or hereafter executed by or on behalf of any Loan Party, or any employee
      of
      any Loan Party, and delivered to the Administrative Agent or any Lender in
      connection with the Agreement or the transactions contemplated thereby. Any
      reference in the Agreement or any other Loan Document to a Loan Document shall
      include all appendices, exhibits or schedules thereto, and all amendments,
      restatements, supplements or other modifications thereto, and shall refer to
      the
      Agreement or such Loan Document as the same may be in effect at any and all
      times such reference becomes operative. 

     

    “Loan
      Parties”
means
      Holdings, the Borrowers, the Borrowers’ domestic Subsidiaries, other than any
      Immaterial Subsidiaries, which are or become parties to this Agreement and
      any
      other Person who becomes a party to this Agreement pursuant to a Joinder
      Agreement and their successors and assigns.

     

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

     

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

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    “Material
      Indebtedness”
means
      Indebtedness (other than the Loans and Letters of Credit), or obligations in
      respect of one or more Swap Agreements, of Griffon, the Parent or any one or
      more Group Members in an aggregate principal amount exceeding $7,500,000. For
      purposes of determining Material Indebtedness, the “obligations” of Griffon, the
      Parent or any one or more Group Members in respect of any Swap Agreement at
      any
      time shall be the maximum aggregate amount (giving effect to any netting
      agreements) that Griffon, the Parent or any Group Member would be required
      to
      pay if such Swap Agreement were terminated at such time.

     

    “Maturity
      Date”
means
      June 24, 2013 or any earlier date on which the Commitments are reduced to zero
      or otherwise terminated pursuant to the terms hereof.

     

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

     

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

     

    “Mortgaged
      Properties”
means
      the owned real properties located in the United States of America and specified
      as “Mortgaged Properties” on Schedule
      3.05,
      as to
      which the Administrative Agent for the benefit of the Secured Parties shall
      be
      granted a Lien pursuant to the Mortgages.

     

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

     

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

     

    “Net
      Income”
means,
      for any period, the consolidated net income (or loss) of the Loan Parties,
      determined on a consolidated basis (excluding, for the avoidance of doubt,
      Subsidiaries which are not Loan Parties) in accordance with GAAP; provided
      that
      there shall be excluded (a) the income (or deficit) of any Person accrued prior
      to the date it becomes a Subsidiary or is merged into or consolidated with
      any
      Loan Party, (b) the income (or deficit) of any Person (other than a Subsidiary
      which is a Loan Party) in which any Loan Party has an ownership interest, except
      the income of such Person shall be included to the extent that any such income
      is actually received by such Loan Party in the form of dividends or similar
      distributions and (c) any extraordinary gains or losses in accordance with
      GAAP.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

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

     

    “Net
      Proceeds”
means,
      with respect to any event, (a) the cash proceeds received in respect of
      such event including (i) any cash received in respect of any non-cash
      proceeds (including any cash payments received by way of deferred payment of
      principal pursuant to a note or installment receivable or purchase price
      adjustment receivable or otherwise, but only as and when received and excluding
      any interest payments), but only as and when received, (ii) in the case of
      a casualty, insurance proceeds and (iii) in the case of a condemnation or
      similar event, condemnation awards and similar payments, net of (b) the sum
      of (i) all reasonable fees and out-of-pocket expenses paid to third parties
      (other than Affiliates) in connection with such event, (ii) in the case of
      a sale, transfer or other disposition of an asset (including pursuant to a
      sale
      and leaseback transaction or a casualty or a condemnation or similar
      proceeding), the amount of all payments required to be made as a result of
      such
      event to repay Indebtedness (other than Loans), including all interest thereon
      and all premiums and penalties, if any, secured by such asset or otherwise
      subject to mandatory prepayment as a result of such event, (iii) the amount
      of all taxes paid (or reasonably estimated to be payable) and the amount of
      any
      reserves established to fund contingent liabilities reasonably estimated to
      be
      payable, in each case during the year that such event occurred or the next
      succeeding year and that are directly attributable to such event (as determined
      reasonably and in good faith by a Financial Officer of the Borrower
      Representative), and (iv) reserves for purchase price adjustments reasonably
      expected to be payable in connection therewith (with any so reserved purchase
      price adjustments to be “Net Cash Proceeds” when such reserve is no longer
      required).

     

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

     

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

     

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

     

    “Obligations”
means
      all unpaid principal of and accrued and unpaid interest on the Loans, all LC
      Exposure, all accrued and unpaid fees and all expenses, reimbursements,
      indemnities and other obligations of the Loan Parties to the Lenders or to
      any
      Lender, the Administrative Agent, the Issuing Bank or any indemnified party
      arising under the Loan Documents. 

     

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

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

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

     

    “Parent”
means
      Clopay Corporation, a Delaware corporation. 

     

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

     

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

     

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

     

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

     

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

     

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

     

    (c) in
      the
      case of any acquisition of $5,000,000 or more (whether paid in cash, securities,
      the assumption of debt or otherwise), the Borrower Representative shall have
      delivered to Administrative Agent at least five Business Days prior to such
      proposed acquisition, a certificate evidencing compliance with Section
      6.06(e),
      together with a reasonably detailed description of such acquisition, including
      the aggregate consideration for such acquisition, and any other information
      reasonably required to demonstrate such compliance; 

     

    (d) such
      acquisition shall be consensual; and

     

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

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

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

     

    “Permitted
      Encumbrances”
      means:

     

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

     

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

     

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

     

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

     

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

     

    (f) easements,
      zoning restrictions, rights-of-way, licenses, covenants and similar encumbrances
      on real property imposed by law or arising in the ordinary course of business
      that do not secure any monetary obligations and do not materially detract from
      the value of the affected property or interfere with the ordinary conduct of
      business of any Borrower or any Subsidiary; 

     

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

     

    “Permitted
      Investments”
      means:

     

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

     

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

     

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

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

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

     

    “Permitted
      Subordinated Debt”
means
      unsecured Indebtedness which (a) matures no earlier than, and does not require
      any scheduled principal payments prior to, six months after the Maturity Date,
      (b) is not subject to any mandatory prepayment, redemption, repurchase, sinking
      fund or other similar obligation prior to six months after the Maturity Date,
      in
      each case that could require any payment on account of principal in respect
      thereof prior to six months after the Maturity Date, (c) is not guaranteed
      by
      any Subsidiary which is not a Guarantor and (d) is subordinated to the
      Obligations on terms and conditions reasonably satisfactory to the
      Administrative Agent in its Permitted Discretion.

     

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

     

    “Plan”
means
      any employee pension benefit plan, as defined in Section 3(2) of ERISA (other
      than a Multiemployer Plan), subject to the provisions of Title IV of ERISA
      or
      Section 412 of the Code or Section 302 of ERISA, and in respect of which
      Holdings or any ERISA Affiliate is (or, if such plan were terminated, would
      under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section
      3(5) of ERISA.

     

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

     

    “PP&E
      Component”
shall
      mean, at the time of any determination, an amount equal to the sum of (i) the
      lesser of (A) 70% of the fair market value of the Borrowers’ Eligible Real
      Property as of the Effective Date and (B) $12,500,000 (with the lesser of (A)
      and (B) to amortize monthly on a straight-line basis to zero over ten years)
      plus
      (ii) the
      lesser of (A) 80% of the Net Orderly Liquidation Value of the Borrowers’
Eligible Equipment as of the Effective Date and (B) $12,500,000 (with the lesser
      of (A) and (B) to amortize monthly on a straight-line basis to zero over five
      years).

     

    “Prepayment
      Event”
      means:

     

    (a) any
      sale,
      transfer or other disposition (including pursuant to a sale and leaseback
      transaction) of any property or asset of any Loan Party, other than dispositions
      described in Section
      6.04(a),
      (b),
      (c),
      (d),
      (f),
      (g),
      (k)
      or
(l),
      excluding such sales, transfers or other dispositions in an aggregate amount
      not
      exceeding $500,000 in any fiscal year; or

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    (b) any
      casualty or other insured damage to, or any taking under power of eminent domain
      or by condemnation or similar proceeding of, any property or asset of any Loan
      Party with a fair value immediately prior to such event equal to or greater
      than
      $750,000; or

     

    (c) the
      issuance by Holdings of any Equity Interests, other than any Equity Interest
      issued (i) in connection with a Permitted Acquisition, (ii) pursuant to Section
      Section
      6.07(a)(i)
      or
(iii)
      to any
      of its officers, directors, employees or consultants pursuant to any employee
      benefit plan, stock purchase plan or employment agreement approved by the Board
      of Directors of Holding in the ordinary course of business, or the receipt
      by
      Holdings of any capital contribution; or

     

    (d) the
      incurrence by any Loan Party of any Indebtedness, other than Indebtedness
      permitted under Section
      6.01
      or
      otherwise permitted by the Required Lenders pursuant to Section
      9.02.

     

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

     

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

     

    “Projections”
has
      the
      meaning assigned to such term in Section
      5.01(g).

     

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

     

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

     

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

     

    “Rent
      Reserve”
means,
      with respect to any leased location or storage facility not owned by any
      Borrower where any Inventory equal to or in excess of $500,000 is located,
      a
      reserve equal to three months’ rent (or, in the absence of rent, storage fees,
      if applicable) applicable to location or such storage facility.

     

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

     

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

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    “Restricted
      Payment”
means
      any dividend or other distribution (whether in cash, securities or other
      property) with respect to any Equity Interests in any Group Member, or any
      payment (whether in cash, securities or other property), including any sinking
      fund or similar deposit, on account of the purchase, redemption, retirement,
      acquisition, cancellation or termination of any such Equity Interests in any
      Group Member or any option, warrant or other right to acquire any such Equity
      Interests in any Group Member. 

     

    “Revolving
      Commitment”
means,
      with respect to each Lender, the commitment, if any, of such Lender to make
      Revolving Loans and to acquire participations in Letters of Credit, Overadvances
      and Swingline Loans hereunder, expressed as an amount representing the maximum
      possible aggregate amount of such Lender’s Revolving Exposure hereunder, as such
      commitment may be reduced or increased from time to time pursuant to (a)
Section
      2.09
      and
(b)
      assignments by or to such Lender pursuant to Section
      9.04.
      The
      initial amount of each Lender’s Revolving Commitment is set forth on the
Commitment
      Schedule,
      or in
      the Assignment and Assumption pursuant to which such Lender shall have assumed
      its Revolving Commitment, as applicable. The initial aggregate amount of the
      Lenders’ Revolving Commitments is $100,000,000. 

     

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

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

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

     

    “S&P”
means
      Standard & Poor’s Ratings Services, a division of The McGraw Hill Companies,
      Inc.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Transactions”
means
      the execution, delivery and performance by the Borrowers of this Agreement,
      the
      borrowing of Loans and other credit extensions, the use of the proceeds thereof
      and the issuance of Letters of Credit hereunder.

     

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

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

    Section
      1.04. Accounting
      Terms; GAAP.
      Except
      as otherwise expressly provided herein, all terms of an accounting or financial
      nature shall be construed in accordance with GAAP, as in effect from time to
      time; provided that, if the Borrower Representative notifies the Administrative
      Agent that the Borrowers request an amendment to any provision hereof to
      eliminate the effect of any change occurring after the date hereof in GAAP
      or in
      the application thereof on the operation of such provision (or if the
      Administrative Agent notifies the Borrower Representative that the Required
      Lenders request an amendment to any provision hereof for such purpose),
      regardless of whether any such notice is given before or after such change
      in
      GAAP or in the application thereof, then such provision shall be interpreted
      on
      the basis of GAAP as in effect and applied immediately before such change shall
      have become effective until such notice shall have been withdrawn or such
      provision amended in accordance herewith.

     

    
      
        
        

      

      
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    ARTICLE
      II

     

    The
      Credits

     

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

     

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

     

    Section
      2.02. Loans
      and Borrowings.
      (a)
      Each
      Loan (other than a Swingline Loan) shall be made as part of a Borrowing
      consisting of Loans of the same Class and Type made by the Lenders ratably
      in
      accordance with their respective Commitments of the applicable Class. Any
      Protective Advance, any Overadvance and any Swingline Loan shall be made in
      accordance with the procedures set forth in Section
      2.04
      and
Section
      2.05.
      

     

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

     

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

     

    
      
        
        

      

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

     

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

     

    (i) the
      name
      of the applicable Borrower; 

     

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

     

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

     

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

     

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

     

    If
      no
      election as to the Type of Revolving Borrowing is specified, then the requested
      Revolving Borrowing shall be an ABR Borrowing. If no Interest Period is
      specified with respect to any requested Eurodollar Revolving Borrowing, then
      the
      applicable Borrower(s) shall be deemed to have selected an Interest Period
      of
      one month’s duration. Promptly following receipt of a Borrowing Request in
      accordance with this Section, the Administrative Agent shall advise each Lender,
      as applicable, of the details thereof and of the amount of such Lender’s Loan to
      be made as part of the requested Borrowing.

     

    
      
        
        

      

      
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    Section
      2.04. Protective
      Advances.
      (a)
      Subject
      to the limitations set forth below, the Administrative Agent is authorized
      by
      the Borrowers and the Lenders, from time to time in the Administrative Agent’s
      sole discretion (but shall have absolutely no obligation to), to make Loans
      to
      the Borrowers, on behalf of all Lenders, which the Administrative Agent, in
      its
      Permitted Discretion, deems necessary or desirable (i) to preserve or protect
      the Collateral, or any portion thereof, (ii) to enhance the likelihood of,
      or
      maximize the amount of, repayment of the Loans and other Obligations, or (iii)
      to pay any other amount chargeable to or required to be paid by the Borrowers
      pursuant to the terms of this Agreement, including payments of reimbursable
      expenses (including costs, fees, and expenses as described in Section
      9.03)
      and
      other sums payable under the Loan Documents (any of such Loans are herein
      referred to as “Protective
      Advances”);
      provided
      that,
      the aggregate amount of Protective Advances outstanding at any time shall not
      at
      any time exceed $5,000,000; provided further
      that,
      the aggregate amount of outstanding Protective Advances plus the aggregate
      Revolving Exposure shall not exceed the aggregate Revolving Commitments.
      Protective Advances may be made even if the conditions precedent set forth
      in
Section
      4.02
      have not
      been satisfied. The Protective Advances shall be secured by the Liens in favor
      of the Administrative Agent in and to the Collateral and shall constitute
      Obligations hereunder. All Protective Advances shall be ABR Borrowings. The
      Administrative Agent’s authorization to make Protective Advances may be revoked
      at any time by the Required Lenders. Any such revocation must be in writing
      and
      shall become effective prospectively upon the Administrative Agent’s receipt
      thereof. At any time that there is sufficient Availability and the conditions
      precedent set forth in Section
      4.02
      have
      been satisfied, the Administrative Agent may request the Lenders to make a
      Loan
      to repay a Protective Advance. At any other time the Administrative Agent may
      require the Lenders to fund their risk participations described in Section
      2.04(b).
      

     

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

     

    Section
      2.05. Swingline
      Loans and Overadvances.
      (a)The
      Administrative Agent, the Swingline Lender and the Lenders agree that in order
      to facilitate the administration of this Agreement and the other Loan Documents,
      promptly after the Borrower Representative requests an ABR Borrowing, the
      Swingline Lender may elect to have the terms of this Section
      2.05(a)
      apply to
      such Borrowing Request by advancing, on behalf of the Lenders and in the amount
      requested, same day funds to the Borrowers, on the applicable Borrowing date
      to
      the Funding Account(s) (each such Loan made solely by the Swingline Lender
      pursuant to this Section
      2.05(a)
      is
      referred to in this Agreement as a “Swingline
      Loan”),
      with
      settlement among them as to the Swingline Loans to take place on a periodic
      basis as set forth in Section
      2.05(d).
      Each
      Swingline Loan shall be subject to all the terms and conditions applicable
      to
      other ABR Loans funded by the Lenders, except that all payments thereon shall
      be
      payable to the Swingline Lender solely for its own account. In addition, the
      Borrowers hereby authorize the Swingline Lender to, and the Swingline Lender
      shall, subject to the terms and conditions set forth herein (but without any
      further written notice required), not later than 1:00 p.m., Chicago time, on
      each Business Day, make available to the Borrowers by means of a credit to
      the
      Funding Account(s), the proceeds of a Swingline Loan. The Administrative Agent
      shall, upon request of the Borrower Representative, notify the Borrower
      Representative of the aggregate amount of Swingline Loans outstanding as of
      end
      of the immediately preceding day. The aggregate amount of Swingline Loans
      outstanding at any time shall not exceed $10,000,000. The Swingline Lender
      shall
      not make any Swingline Loan if the requested Swingline Loan exceeds the
      Availability (before giving effect to such Swingline Loan). All Swingline Loans
      shall be ABR Borrowings.

     

    
      
        
        

      

      
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    (b) Any
      provision of this Agreement to the contrary notwithstanding, at the request
      of
      the Borrower Representative, the Administrative Agent may in its sole discretion
      (but with absolutely no obligation), make Revolving Loans to the Borrowers,
      on
      behalf of the Lenders, in amounts that exceed the Availability (any such excess
      Revolving Loans are herein referred to collectively as “Overadvances”);
      provided
      that, no
      Overadvance shall result in a Default due to Borrowers’ failure to comply with
Section
      2.01
      for so
      long as such Overadvance remains outstanding in accordance with the terms of
      this paragraph, but solely with respect to the amount of such Overadvance.
      In
      addition, Overadvances may be made even if the condition precedent set forth
      in
Section
      4.02(c)
      has not
      been satisfied. All Overadvances shall constitute ABR Borrowings. The authority
      of the Administrative Agent to make Overadvances is limited to an aggregate
      amount not to exceed $5,000,000 at any time, no Overadvance may remain
      outstanding for more than thirty days and no Overadvance shall cause any
      Lender’s Revolving Exposure to exceed its Revolving Commitment; provided
      that,
      the Required Lenders may at any time revoke the Administrative Agent’s
      authorization to make Overadvances. Any such revocation must be in writing
      and
      shall become effective prospectively upon the Administrative Agent’s receipt
      thereof.

     

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

     

    (d) The
      Administrative Agent, on behalf of the Swingline Lender, shall request
      settlement (a “Settlement”)
      with
      the Lenders on at least a weekly basis or on any date that the Administrative
      Agent elects, by notifying the Lenders of such requested Settlement by
      facsimile, telephone, or e-mail no later than 12:00 noon, Chicago time, on
      the
      date of such requested Settlement (the “Settlement
      Date”).
      Each
      Lender (other than the Swingline Lender, in the case of the Swingline Loans)
      shall transfer the amount of such Lender’s Applicable Percentage of the
      outstanding principal amount of the applicable Loan with respect to which
      Settlement is requested to the Administrative Agent, to such account of the
      Administrative Agent as the Administrative Agent may designate, not later than
      2:00 p.m., Chicago time, on such Settlement Date. Settlements may occur during
      the existence of a Default and whether or not the applicable conditions
      precedent set forth in Section
      4.02
      have
      then been satisfied. Such amounts transferred to the Administrative Agent shall
      be applied against the amounts of the Swingline Lender’s Swingline Loans and,
      together with Swingline Lender’s Applicable Percentage of such Swingline Loan,
      shall constitute Revolving Loans of such Lenders, respectively. If any such
      amount is not transferred to the Administrative Agent by any Lender on such
      Settlement Date, the Swingline Lender shall be entitled to recover such amount
      on demand from such Lender together with interest thereon as specified in
Section
      2.07.

     

    
      
        
        

      

      
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    Section
      2.06. Letters
      of Credit.
      (a) General.
      Subject
      to the terms and conditions set forth herein, the Borrower Representative may
      request the issuance of Letters of Credit for its own account or for the account
      of another Borrower, in a form reasonably acceptable to the Administrative
      Agent
      and the Issuing Bank, at any time and from time to time during the Availability
      Period. In the event of any inconsistency between the terms and conditions
      of
      this Agreement and the terms and conditions of any form of letter of credit
      application or other agreement submitted by the Borrowers to, or entered into
      by
      the Borrowers with, the Issuing Bank relating to any Letter of Credit, the
      terms
      and conditions of this Agreement shall control. The Griffon Letters of Credit
      outstanding on the Effective Date shall, at the option of the Borrowers at
      any
      time on or before September 30, 2008 by written notice to such effect to the
      Administrative Agent, be deemed Letters of Credit issued under this Agreement
      for all purposes of this Agreement and the other Loan Documents, so long as
      the
      conditions to the issuance of Letters of Credit hereunder are satisfied at
      such
      time.

     

    (b) Notice
      of Issuance, Amendment, Renewal, Extension; Certain Conditions.
      To
      request the issuance of a Letter of Credit (or the amendment, renewal or
      extension of an outstanding Letter of Credit), the Borrower Representative
      shall
      hand deliver or facsimile (or transmit by electronic communication, if
      arrangements for doing so have been approved by the Issuing Bank) to the Issuing
      Bank and the Administrative Agent (prior to 9:00 am, Chicago time, at least
      three Business Days prior to the requested date of issuance, amendment, renewal
      or extension) a notice requesting the issuance of a Letter of Credit, or
      identifying the Letter of Credit to be amended, renewed or extended, and
      specifying the date of issuance, amendment, renewal or extension (which shall
      be
      a Business Day), the date on which such Letter of Credit is to expire (which
      shall comply with paragraph (c) of this Section), the amount of such Letter
      of Credit, the name and address of the beneficiary thereof and such other
      information as shall be necessary to prepare, amend, renew or extend such Letter
      of Credit. If requested by the Issuing Bank, the applicable Borrower also shall
      submit a letter of credit application on the Issuing Bank’s standard form in
      connection with any request for a Letter of Credit. A Letter of Credit shall
      be
      issued, amended, renewed or extended only if (and upon issuance, amendment,
      renewal or extension of each Letter of Credit the Borrowers shall be deemed
      to
      represent and warrant that), after giving effect to such issuance, amendment,
      renewal or extension (i) the LC Exposure shall not exceed $17,000,000 and
      (ii) the total Revolving Exposures shall not exceed the lesser of the total
      Revolving Commitments and the Borrowing Base.

     

    
      
        
        

      

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

     

    (d) Participations.
      By the
      issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing
      the amount thereof) and without any further action on the part of the Issuing
      Bank or the Lenders, the Issuing Bank hereby grants to each Lender, and each
      Lender hereby acquires from the Issuing Bank, a participation in such Letter
      of
      Credit equal to such Lender’s Applicable Percentage of the aggregate amount
      available to be drawn under such Letter of Credit. In consideration and in
      furtherance of the foregoing, each Lender hereby absolutely and unconditionally
      agrees to pay to the Administrative Agent, for the account of the Issuing Bank,
      such Lender’s Applicable Percentage of each LC Disbursement made by the Issuing
      Bank and not reimbursed by the Borrowers on the date due as provided in
      paragraph (e) of this Section, or of any reimbursement payment required to
      be
      refunded to the Borrowers for any reason. Each Lender acknowledges and agrees
      that its obligation to acquire participations pursuant to this paragraph in
      respect of Letters of Credit is absolute and unconditional and shall not be
      affected by any circumstance whatsoever, including any amendment, renewal or
      extension of any Letter of Credit or the occurrence and continuance of a Default
      or reduction or termination of the Commitments, and that each such payment
      shall
      be made without any offset, abatement, withholding or reduction
      whatsoever.

     

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

     

    
      
        
        

      

      
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    (f) Obligations
      Absolute.
      The
      Borrowers’ joint and several obligation to reimburse LC Disbursements as
      provided in paragraph (e) of this Section shall be absolute, unconditional
      and irrevocable, and shall be performed strictly in accordance with the terms
      of
      this Agreement under any and all circumstances whatsoever and irrespective
      of
      (i) any lack of validity or enforceability of any Letter of Credit or this
      Agreement, or any term or provision therein, (ii) any draft or other document
      presented under a Letter of Credit proving to be forged, fraudulent or invalid
      in any respect or any statement therein being untrue or inaccurate in any
      respect, (iii) payment by the Issuing Bank under a Letter of Credit against
      presentation of a draft or other document that does not comply with the terms
      of
      such Letter of Credit, or (iv) any other event or circumstance whatsoever,
      whether or not similar to any of the foregoing, that might, but for the
      provisions of this Section, constitute a legal or equitable discharge of, or
      provide a right of setoff against, the Borrowers’ obligations hereunder. Neither
      the Administrative Agent, the Lenders nor the Issuing Bank, nor any of their
      Related Parties, shall have any liability or responsibility by reason of or
      in
      connection with the issuance or transfer of any Letter of Credit or any payment
      or failure to make any payment thereunder (irrespective of any of the
      circumstances referred to in the preceding sentence), or any error, omission,
      interruption, loss or delay in transmission or delivery of any draft, notice
      or
      other communication under or relating to any Letter of Credit (including any
      document required to make a drawing thereunder), any error in interpretation
      of
      technical terms or any consequence arising from causes beyond the control of
      the
      Issuing Bank; provided
      that the
      foregoing shall not be construed to excuse the Issuing Bank from liability
      to
      the Borrowers to the extent of any direct damages (as opposed to consequential
      damages, claims in respect of which are hereby waived by the Borrowers to the
      extent permitted by applicable law) suffered by any Borrower that are caused
      by
      the Issuing Bank’s failure to exercise care when determining whether drafts and
      other documents presented under a Letter of Credit comply with the terms
      thereof. The parties hereto expressly agree that, in the absence of gross
      negligence or willful misconduct on the part of the Issuing Bank (as finally
      determined by a court of competent jurisdiction), the Issuing Bank shall be
      deemed to have exercised care in each such determination. In furtherance of
      the
      foregoing and without limiting the generality thereof, the parties agree that,
      with respect to documents presented which appear on their face to be in
      substantial compliance with the terms of a Letter of Credit, the Issuing Bank
      may, in its sole discretion, either accept and make payment upon such documents
      without responsibility for further investigation, regardless of any notice
      or
      information to the contrary, or refuse to accept and make payment upon such
      documents if such documents are not in strict compliance with the terms of
      such
      Letter of Credit. 

     

    
      
        
        

      

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

    (f) If
      the
      Borrower Representative fails to deliver a timely Interest Election Request
      with
      respect to a Eurodollar Revolving Borrowing prior to the end of the Interest
      Period applicable thereto, then, unless such Borrowing is repaid as provided
      herein, at the end of such Interest Period such Borrowing shall be converted
      to
      an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event
      of
      Default has occurred and is continuing and the Administrative Agent, at the
      request of the Required Lenders, so notifies the Borrower Representative, then,
      so long as an Event of Default is continuing (i) no outstanding Revolving
      Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii)
      unless repaid, each Eurodollar Revolving Borrowing shall be converted to an
      ABR
      Borrowing and, at the end of the Interest Period applicable
      thereto.

     

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

     

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

     

    (c) The
      Borrowers may from time to time reduce the Revolving Commitments; provided
      that (i)
      each reduction of the Revolving Commitments shall be in an amount that is an
      integral multiple of $100,000 and not less than $500,000 and (ii) the Borrowers
      shall not reduce the Revolving Commitments if, after giving effect to any
      concurrent prepayment of the Revolving Loans in accordance with Section
      2.10,
      the sum
      of the Revolving Exposures would exceed the lesser of the total Revolving
      Commitments and the Borrowing Base.

     

    
      
        
        

      

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

     

    (e) The
      Borrowers shall have the right to increase the Revolving Commitment up to an
      aggregate amount of $150,000,000 by obtaining additional Revolving Commitments,
      either from one or more of the Lenders or other lending institutions provided
      that (i) any such request for an increase shall be in a minimum amount of
      $10,000,000, (ii) the Borrower Representative, on behalf of the Borrowers,
      may
      make a maximum of five such requests, (iii) the Administrative Agent has
      approved the identity of any such new Lender, such approval not to be
      unreasonably withheld, (iv) any such new Lender assumes all of the rights and
      obligations of a “Lender” hereunder, and (v) the procedure described in
Section
      2.09(f)
      have
      been satisfied.

     

    (f) Any
      amendment hereto for such an increase or addition shall be in form and substance
      reasonably satisfactory to the Administrative Agent and shall only require
      the
      written signatures of the Administrative Agent, the Borrowers and the Lender(s)
      being added or increasing their Commitment, subject only to the approval of
      all
      Lenders if any such increase would cause the Revolving Commitment to exceed
      $150,000,000. As a condition precedent to such an increase, the Borrowers shall
      deliver to the Administrative Agent a certificate of each Loan Party (in
      sufficient copies for each Lender) signed by an authorized officer of such
      Loan
      Party (i) certifying and attaching the resolutions adopted by such Loan Party
      approving or consenting to such increase, and (ii) in the case of the Borrowers,
      certifying that, as of the effective date of such increase, before and after
      giving effect to such increase, (A) the representations and warranties contained
      in Article III and the other Loan Documents are true and correct in all material
      respects, except to the extent that such representations and warranties
      specifically refer to an earlier date, in which case they are true and correct
      in all material respects as of such earlier date, provided
      that any
      representation and warranty that is qualified as to “materiality,” “Material
      Adverse Effect” or similar language shall be true and correct in all respects on
      such date, and (B) no Default exists;.

     

    
      
        
        

      

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

     

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

     

    (b) At
      all
      times that full cash dominion is in effect pursuant to Section 7.3 of the
      Security Agreement, on each Business Day, the Administrative Agent shall apply
      all funds credited to the Collection Account the previous Business Day (whether
      or not immediately available) first
      to
      prepay any Protective Advances and Overadvances that may be outstanding, pro
      rata, and second
      to
      prepay the Revolving Loans (including Swingline Loans) and to cash collateralize
      outstanding LC Exposure, with any such prepayment of the Revolving Loans being
      ratable.

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

    (c) In
      the
      event and on each occasion that any Net Proceeds are received by or on behalf
      of
      any Group Member in respect of any Prepayment Event, the Borrowers shall,
      promptly after such Net Proceeds are received by such Group Member, prepay
      the
      Obligations as set forth in Section
      2.11(e)
      below in
      an aggregate amount equal to 100% of such Net Proceeds.

     

    (d) If
      a Loan
      is prepaid pursuant to Section
      2.11(a),
      (b)
      or
(c)
      on any
      day other than the last day of the Interest Period applicable thereto, the
      Borrower shall also pay any amounts owing pursuant to Section
      2.15.

     

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

     

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

     

    
      
        
        

      

      
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    Section
      2.12. Fees.
      (a)
      The
      Borrowers agree to pay to the Administrative Agent for the account of each
      Lender a commitment fee, which shall accrue at a rate equal to 0.375% on the
      average daily amount of the Available Revolving Commitment of such Lender during
      the period from and including the Effective Date to but excluding the date
      on
      which the Lenders’ Revolving Commitments terminate; provided
      that,
      if, on any day the Revolving Exposure is less than 50% of the Revolving
      Commitment, the commitment fee shall accrue at a rate equal to 0.50% on the
      average daily amount of the Available Revolving Commitment of such Lender for
      each such day during such period. Accrued commitment fees shall be payable
      in
      arrears on the first day of each calendar month and on the date on which the
      Revolving Commitments terminate, commencing on the first such date to occur
      after the date hereof. All commitment fees shall be computed on the basis of
      a
      year of 360 days and shall be payable for the actual number of days
      elapsed.

     

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

     

    
      
        
        

      

      
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    (c) The
      Borrowers agree to pay to the Administrative Agent, for its own account, fees
      payable in the amounts and at the times set forth in the Fee Letter, dated
      as of
      May 28, 2008, between the Borrowers, the Administrative Agent and the Lead
      Arranger. 

     

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

     

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

     

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

     

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

     

    (d) Notwithstanding
      the foregoing, during the occurrence and continuance of a Default, the
      Administrative Agent or the Required Lenders may, at their option, by notice
      to
      the Borrower Representative (which notice may be revoked at the option of the
      Required Lenders notwithstanding any provision of Section
      9.02
      requiring the consent of “each Lender affected thereby” for reductions in
      interest rates), declare that (i) all Loans shall bear interest at 2% plus
      the
      rate otherwise applicable to such Loans as provided in the preceding paragraphs
      of this Section or (ii) in the case of any other amount outstanding hereunder,
      2% plus the rate applicable to ABR Loans, as provided in paragraph (a) of this
      Section.

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

    (c) The
      Borrowers shall jointly and severally indemnify the Administrative Agent, the
      Lender and the Issuing Bank, within 10 days after written demand therefor,
      for
      the full amount of any Indemnified Taxes or Other Taxes paid by the
      Administrative Agent, such Lender or the Issuing Bank, as the case may be,
      on or
      with respect to any payment by or on account of any obligation of the Borrowers
      hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on
      or
      attributable to amounts payable under this Section) and any penalties, interest
      and reasonable expenses arising therefrom or with respect thereto, whether
      or
      not such Indemnified Taxes or Other Taxes were correctly or legally imposed
      or
      asserted by the relevant Governmental Authority. A certificate as to the amount
      of such payment or liability delivered to the Borrower Representative by a
      Lender or the Issuing Bank, or by the Administrative Agent on its own behalf
      or
      on behalf of a Lender or the Issuing Bank, shall be conclusive absent manifest
      error. 

     

    
      
        
        

      

      
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    (d) As
      soon
      as practicable after any payment of Indemnified Taxes or Other Taxes by the
      applicable Loan Party to a Governmental Authority, the Borrower Representative
      shall deliver to the Administrative Agent the original or a certified copy
      of a
      receipt issued by such Governmental Authority evidencing such payment, a copy
      of
      the return reporting such payment or other evidence of such payment reasonably
      satisfactory to the Administrative Agent.

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

    

    (f) If
      the
      Administrative Agent or a Lender determines, in its sole discretion, that it
      has
      received a refund of any Taxes or Other Taxes as to which it has been
      indemnified by a Loan Party or with respect to which a Loan Party has paid
      additional amounts pursuant to this Section
      2.17,
      it
      shall pay over such refund to the applicable Loan Party (but only to the extent
      of indemnity payments made, or additional amounts paid, by the applicable Loan
      Party under this Section
      2.17
      with
      respect to the Taxes or Other Taxes giving rise to such refund), net of all
      out-of-pocket expenses of the Administrative Agent or such Lender and without
      interest (other than any interest paid by the relevant Governmental Authority
      with respect to such refund); provided,
      that
      the Loan Parties, upon the request of the Administrative Agent or such Lender,
      agree to repay the amount paid over to the Borrowers (plus any penalties,
      interest or other charges imposed by the relevant Governmental Authority) to
      the
      Administrative Agent or such Lender in the event the Administrative Agent or
      such Lender is required to repay such refund to such Governmental Authority.
      This paragraph (f) shall not be construed to require the Administrative Agent
      or
      any Lender to make available its tax returns (or any other information relating
      to its taxes which it deems confidential) to any Loan Party or any other
      Person.

     

    Section
      2.18. Payments
      Generally; Allocation of Proceeds; Sharing of Set-offs.
      (a)
      The
      Borrowers shall make each payment required to be made by them hereunder (whether
      of principal, interest, fees or reimbursement of LC Disbursements, or of amounts
      payable under Section
      2.15,
      Section
      2.16
      or
Section
      2.17,
      or
      otherwise) prior to 2:00 p.m., Chicago time, on the date when due, in
      immediately available funds, without set-off or counterclaim. Any amounts
      received after such time on any date may, in the discretion of the
      Administrative Agent, be deemed to have been received on the next succeeding
      Business Day for purposes of calculating interest thereon. All such payments
      shall be made to the Administrative Agent at its offices at 120 South LaSalle
      Street, Chicago, Illinois, except payments to be made directly to the Issuing
      Bank or Swingline Lender as expressly provided herein and except that payments
      pursuant to Section
      2.15,
      Section
      2.16,
      Section
      2.17
      and 9.03
      shall be made directly to the Persons entitled thereto. The Administrative
      Agent
      shall distribute any such payments received by it for the account of any other
      Person to the appropriate recipient promptly following receipt thereof. If
      any
      payment hereunder shall be due on a day that is not a Business Day, the date
      for
      payment shall be extended to the next succeeding Business Day, and, in the
      case
      of any payment accruing interest, interest thereon shall be payable for the
      period of such extension. All payments hereunder shall be made in dollars.
      At
      all times that full cash dominion is in effect pursuant to Section 7.3 of the
      Security Agreement, solely for purposes of determining the amount of Loans
      available for borrowing purposes, checks (in addition to immediately available
      funds applied pursuant to Section
      2.10(b))
      from
      collections of items of payment and proceeds of any Collateral shall be applied
      in whole or in part against the Obligations, on the Business Day after receipt,
      subject to actual collection. 

     

    
      
        
        

      

      
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    (b) Any
      proceeds of Collateral received by the Administrative Agent (i) not constituting
      either (A) a specific payment of principal, interest, fees or other sum payable
      under the Loan Documents (which shall be applied as specified by the Borrowers),
      (B) a mandatory prepayment (which shall be applied in accordance with
Section
      2.11)
      or (C)
      amounts to be applied from the Collection Account when full cash dominion is
      in
      effect (which shall be applied in accordance with Section
      2.10(b))
      or (ii)
      after an Event of Default has occurred and is continuing and the Administrative
      Agent so elects or the Required Lenders so direct, such funds shall be applied
      ratably first, to pay any fees, indemnities, or expense reimbursements including
      amounts then due to the Administrative Agent and the Issuing Bank from the
      Borrowers (other than Banking Services Obligations or Swap Obligations), second,
      to pay any fees or expense reimbursements then due to the Lenders from the
      Borrowers (other than Banking Services Obligations or Swap Obligations), third,
      to pay interest due in respect of the Overadvances and Protective Advances,
      fourth, to pay the principal of the Overadvances and Protective Advances, fifth,
      to pay interest then due and payable on the Loans (other than the Overadvances
      and Protective Advances) ratably, sixth, to prepay principal on the Loans (other
      than the Overadvances and Protective Advances) and unreimbursed LC Disbursements
      ratably, seventh, to pay an amount to the Administrative Agent equal to one
      hundred three percent (103%) of the aggregate undrawn face amount of all
      outstanding Letters of Credit and the aggregate amount of any unpaid LC
      Disbursements, to be held as cash collateral for such Obligations, eighth,
      to
      payment of any amounts owing with respect to Banking Services Obligations and
      Swap Obligations, and ninth, to the payment of any other Secured Obligation
      due
      to the Administrative Agent or any Lender by the Borrowers. Notwithstanding
      anything to the contrary contained in this Agreement, unless so directed by
      the
      Borrower Representative, or unless a Default is in existence, neither the
      Administrative Agent nor any Lender shall apply any payment which it receives
      to
      any Eurodollar Loan of a Class, except (a) on the expiration date of the
      Interest Period applicable to any such Eurodollar Loan or (b) in the event,
      and
      only to the extent, that there are no outstanding ABR Loans of the same Class
      and, in any such event, the Borrowers shall pay the break funding payment
      required in accordance with Section
      2.16.
      The
      Administrative Agent and the Lenders shall have the continuing and exclusive
      right to apply and reverse and reapply any and all such proceeds and payments
      to
      any portion of the Secured Obligations. 

     

    
      
        
        

      

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

     

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

     

    (e) Unless
      the Administrative Agent shall have received notice from the Borrower
      Representative prior to the date on which any payment is due to the
      Administrative Agent for the account of the Lenders or the Issuing Bank
      hereunder that the Borrowers will not make such payment, the Administrative
      Agent may assume that the Borrowers have made such payment on such date in
      accordance herewith and may, in reliance upon such assumption, distribute to
      the
      Lenders or the Issuing Bank, as the case may be, the amount due. In such event,
      if the Borrowers have not in fact made such payment, then each of the Lenders
      or
      the Issuing Bank, as the case may be, severally agrees to repay to the
      Administrative Agent forthwith on demand the amount so distributed to such
      Lender or Issuing Bank with interest thereon, for each day from and including
      the date such amount is distributed to it to but excluding the date of payment
      to the Administrative Agent, at the greater of the Federal Funds Effective
      Rate
      and a rate determined by the Administrative Agent in accordance with banking
      industry rules on interbank compensation.

     

    
      
        
        

      

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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    Section
      2.20. Returned
      Payments.
      If
      after receipt of any payment which is applied to the payment of all or any
      part
      of the Obligations, the Administrative Agent or any Lender is for any reason
      compelled to surrender such payment or proceeds to any Person because such
      payment or application of proceeds is invalidated, declared fraudulent, set
      aside, determined to be void or voidable as a preference, impermissible setoff,
      or a diversion of trust funds, or for any other reason, then the Obligations
      or
      part thereof intended to be satisfied shall be revived and continued and this
      Agreement shall continue in full force as if such payment or proceeds had not
      been received by the Administrative Agent or such Lender. The provisions of
      this
Section
      2.20
      shall be
      and remain effective notwithstanding any contrary action which may have been
      taken by the Administrative Agent or any Lender in reliance upon such payment
      or
      application of proceeds. The provisions of this Section
      2.20
      shall
      survive the termination of this Agreement.

     

    ARTICLE
      III

     

    Representations
      and Warranties

     

    Each
      Loan
      Party represents and warrants to the Lenders that:

     

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

     

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

     

    
      
        
        

      

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

     

    Section
      3.04. Financial
      Condition; No Material Adverse Effect.

     

    (a) Griffon
      has heretofore furnished to the Lenders its consolidated balance sheet and
      statements of income, stockholders’ equity and cash flows as of and for the
      fiscal year ended September 30, 2007, reported on by Grant Thornton LLP, and
      its
      unaudited consolidated and consolidating balance sheet and the related unaudited
      consolidated and consolidating statements of income, stockholders’ equity and
      cash flows for the fiscal quarter and six-month period ended March 31, 2008.
      Such financial statements present fairly, in all material respects, the
      financial position and results of operations and cash flows of Griffon and
      its
      subsidiaries as of such dates and for such periods and in accordance with GAAP.
      As of the Effective Date, there are no liabilities of Griffon or any of its
      subsidiaries, fixed or contingent, which are material in relation to the
      consolidated financial condition of Griffon and its subsidiaries that are not
      reflected in such financial statements or in the notes thereto, other than
      liabilities arising in the ordinary course of business since September 30,
      2007
      or as disclosed in the quarterly report filed by Griffon with the SEC on Form
      10-Q with respect to the fiscal quarter ending March 31, 2008.

     

    (b) The
      Loan
      Parties have heretofore furnished to the Lenders their unaudited consolidated
      and consolidating balance sheet and related unaudited consolidated and
      consolidating statements of income, stockholders’ equity and cash flows as of
      and for the fiscal year ended September 30, 2007 and their unaudited
      consolidated and consolidating balance sheet and the related unaudited
      consolidated and consolidating statements of income, stockholders’ equity and
      cash flows for the fiscal quarter and the six-month period ended March 31,
      2008.
      Such financial statements present fairly, in all material respects and in
      accordance with GAAP, the financial position and results of operations and
      cash
      flows of the Loan Parties and their Subsidiaries as of such dates. As of the
      Effective Date, there are no liabilities of any Loan Party or any of its
      Subsidiaries, fixed or contingent, which are material in relation to the
      consolidated financial condition of the Loan Parties and their Subsidiaries
      that
      are not reflected in such financial statements or in the notes thereto, other
      than liabilities arising in the ordinary course of business since September
      30,
      2007.

     

    (c) Since
      September 30, 2007, there has not occurred any event, development or
      circumstance that has had or could reasonably be expected to have a Material
      Adverse Effect.

     

    
      
        
        

      

      
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      Section
        3.05. Properties.

       

      (a) As
        of the
        date of this Agreement, Schedule
        3.05
        sets
        forth the address of each parcel of real property that is located in the
        United
        States and is owned or leased by the Loan Parties. Each of such leases and
        subleases is valid and enforceable in all material respects in accordance
        with
        its terms and is in full force and effect in all material respects, and to
        the
        Loan Parties’ knowledge, no default by any party to any such lease or sublease
        exists. Each of the Loan Parties and its Subsidiaries has good title to,
        or
        valid leasehold interests in, all its real and personal property material
        to its
        business, subject only to Liens permitted by Section
        6.02
        and
        except for minor defects in title that do not interfere with its ability
        to
        conduct its business as currently conducted or to utilize such properties
        for
        their intended purposes. 

       

      (b) Each
        Loan
        Party and its Subsidiaries owns, or is licensed to use, all trademarks,
        tradenames, copyrights, patents and other intellectual property material
        to its
        business, and Schedule
        3.05
        sets
        forth a correct and complete list of all registrations and applications to
        register such intellectual property, as of the date of this Agreement, and,
        to
        such Loan Party’ knowledge, the use thereof by the Loan Parties and its
        Subsidiaries does not infringe upon the rights of any other Person except
        for
        any such infringements that, individually or in the aggregate, could not
        reasonably be expected to result in a Material Adverse Effect. 

       

      Section
        3.06. Litigation
        and Environmental Matters.

       

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

       

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

       

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

       

      
        
          
          

        

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

       

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

       

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

       

      Section
        3.10. ERISA;
        Employee Benefit Plans.
        

       

      (a) No
        ERISA
        Event has occurred or is reasonably expected to occur that, when taken together
        with all other such ERISA Events for which liability is reasonably expected
        to
        occur, could reasonably be expected to result in a Material Adverse Effect.
        The
        present value of all accumulated benefit obligations under each Plan (based
        on
        the assumptions used for purposes of Statement of Financial Accounting Standards
        No. 87) did not, as of the date of the most recent financial statements
        reflecting such amounts, exceed by more than $15,000,000 the fair market
        value
        of the assets of such Plan, and the present value of all accumulated benefit
        obligations of all underfunded Plans (based on the assumptions used for purposes
        of Statement of Financial Accounting Standards No. 87) did not, as of the
        date of the most recent financial statements reflecting such amounts, exceed
        by
        more than $15,000,000 the fair market value of the assets of all such
        underfunded Plans.

       

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

       

      Section
        3.11. Disclosure.
        Each
        Loan Party has disclosed to the Lenders all agreements, instruments and
        corporate or other restrictions to which it or any of its Subsidiaries is
        subject, and all other matters known to it, that, individually or in the
        aggregate, could reasonably be expected to result in a Material Adverse Effect.
        Neither the Information Memorandum nor any of the other reports, financial
        statements, certificates or other information furnished by or on behalf of
        any
        Loan Party to the Administrative Agent or any Lender in connection with the
        negotiation of this Agreement and the other Loan Documents or delivered
        hereunder or thereunder (as modified or supplemented by other information
        so
        furnished) contains any material misstatement of fact or omits to state any
        material fact necessary to make the statements therein, in the light of the
        circumstances under which they were made, not misleading; provided that,
        with
        respect to projected financial information, the Loan Parties represent only
        that
        such information was prepared in good faith based upon assumptions that were
        believed by the Loan Parties to be reasonable at the time made, it being
        understood that the actual results may vary from the results projected
        therein.

       

      
        
          
          

        

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

       

      Section
        3.13. Burdensome
        Agreements.
        Except
        as set forth on Schedule
        3.13,
        to such
        Loan Party’s knowledge, no Loan Party nor any of its Subsidiaries is a party to
        or bound by, nor are any of the properties or assets owned by any Group Member
        used in the conduct of their respective businesses affected by, any agreement,
        ordinance, resolution, decree, bond, note, indenture, order or judgment,
        including, without limitation, any of the foregoing relating to any
        Environmental Liability, that could reasonably be expected to result in a
        Material Adverse Effect.

       

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

       

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

       

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

       

      
        
          
          

        

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

       

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

       

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

       

      ARTICLE
        IV

       

      Conditions

       

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

       

      
        
          
          

        

        
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      (a) Credit
        Agreement and Loan Documents.
        The
        Administrative Agent (or its counsel) shall have received (i) from each party
        hereto either (A) a counterpart of this Agreement signed on behalf of such
        party or (B) written evidence reasonably satisfactory to the Administrative
        Agent (which may include facsimile transmission of a signed signature page
        of
        this Agreement) that such party has signed a counterpart of this Agreement
        and
        (ii) duly executed copies of the Loan Documents and such other certificates,
        documents, instruments and agreements as the Administrative Agent shall
        reasonably request in connection with the transactions contemplated by this
        Agreement and the other Loan Documents, including any promissory notes requested
        by a Lender pursuant to Section
        2.10
        payable
        to the order of each such requesting Lender and a written opinion of the
        Borrowers’ counsel, addressed to the Administrative Agent, the Issuing Bank and
        the Lenders in substantially the form of Exhibit
        B.

       

      (b) Financial
        Statements and Projections.
        The
        Lenders shall have received (i) audited consolidated financial statements
        of
        Griffon and its subsidiaries for the 2007 fiscal year, (ii) unaudited interim
        consolidated and consolidating financial statements of Griffon and its
        subsidiaries for the fiscal quarter and the six-month period ended March
        31,
        2008, (iii) unaudited consolidated and consolidating financial statements
        of the
        Loan Parties and their Subsidiaries for the 2007 fiscal year, (iv) unaudited
        interim consolidated and consolidating financial statements of the Loan Parties
        and their Subsidiaries for the fiscal quarter and the six-month period ended
        March 31, 2008 and (v) satisfactory projections of the Borrowers through
        2012.

       

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

       

      (d) No
        Default Certificate.
        The
        Administrative Agent shall have received a certificate, signed by the chief
        financial officer of each Borrower, on the initial Borrowing date (i) stating
        that no Default has occurred and is continuing, (ii) stating that the
        representations and warranties contained in Article III are true and correct
        as
        of such date, and (iii) certifying any other factual matters as may be
        reasonably requested by the Administrative Agent.

       

      
        
          
          

        

        
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      (e) Fees.
        The
        Lenders, the Lead Arranger and the Administrative Agent shall have received
        all
        fees required to be paid, and all expenses for which invoices have been
        presented (including the reasonable fees and expenses of legal counsels)
        at
        least two Business Days prior to the Effective Date. All such amounts will
        be
        paid with proceeds of Loans made on the Effective Date and will be reflected
        in
        the funding instructions given by the Borrower Representative to the
        Administrative Agent on or before the Effective Date.

       

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

       

      (g) Pay-Off
        Letter.
        The
        Administrative Agent shall have received reasonably satisfactory pay-off
        letters
        for all existing Indebtedness to be repaid from the proceeds the initial
        Borrowing, confirming that all Liens upon any of the property of any Loan
        Party
        constituting Collateral will be terminated concurrently with such payment
        and
        all letters of credit issued or guaranteed as part of such Indebtedness shall
        have been cash collateralized or supported by a Letter of Credit.

       

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

       

      (i) Customer
        List.
        The
        Administrative Agent shall have received a true and complete list of customers
        of each Loan Party.

       

      (j) Solvency.
        The
        Administrative Agent shall have received a solvency certificate from a Financial
        Officer of each Borrower.

       

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

       

      (l) Closing
        Availability.
        After
        giving effect to all Borrowings to be made on the Effective Date and the
        issuance of any Letters of Credit on the Effective Date and payment of all
        fees
        and expenses due hereunder, and with all of the Loan Parties’ indebtedness,
        liabilities, and obligations current (other than in the ordinary course of
        business), the Borrowers’ Availability shall not be less than
        $30,000,000.

       

      (m) Pledged
        Stock; Stock Powers; Pledged Notes.
        The
        Administrative Agent shall have received (i) the certificates representing
        the
        shares of Capital Stock pledged pursuant to the Security Agreement, together
        with an undated stock power for each such certificate executed in blank by
        a
        duly authorized officer of the pledgor thereof and (ii) each promissory note
        (if
        any) pledged to the Administrative Agent pursuant to the Security Agreement
        endorsed (without recourse) in blank (or accompanied by an executed transfer
        form in blank) by the pledgor thereof.

       

      
        
          
          

        

        
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      (n) Filings,
        Registrations and Recordings.
        Each
        document (including any Uniform Commercial Code financing
        statement) required by the Collateral Documents or under law or reasonably
        requested by the Administrative Agent to be filed, registered or recorded
        in
        order to create in favor of the Administrative Agent, for the benefit of
        Secured
        Parties, a perfected Lien on the Collateral described therein, prior and
        superior in right to any other Person (other than with respect to Liens
        expressly permitted by Section
        6.02),
        shall
        be in proper form for filing, registration or recordation.

       

      (o) Environmental
        Reports.
        The
        Administrative Agent shall have received environmental review reports with
        respect to the real properties of the Group Members and located in the United
        States of America specified by the Administrative Agent from firm(s) designated
        by the Borrowers, reasonably satisfactory to the Administrative Agent and
        with
        no direct or indirect interest, financial or otherwise, in the such real
        properties or the Transaction, which review reports shall be reasonably
        acceptable to the Administrative Agent; provided,
        that
        such reports shall be limited to Phase I Environmental Site Assessments and
        such
        further reports as are reasonably necessary to confirm any material
        environmental condition identified in such Phase I Report Environmental Site
        Assessment; provided further
        that,
        with respect to real property not owned by any Group Member, conducting an
        environmental assessment necessary to deliver such environmental review reports
        does not violate any contractual restrictions or any Requirement of Law
        applicable to such Group Member. Any such environmental review reports shall,
        or
        shall be supplemented to, indicate such Group Member’s plans with respect to any
        material environmental hazard or liability identified in any such environmental
        report and known to such Group Member, for which such Group Member is required
        to respond pursuant to applicable Environmental Laws. 

       

      (p) Mortgages,
        etc.
        The
        Administrative Agent shall have received, with respect to each Mortgaged
        Property (other than the real property located in Augusta, Kentucky, as
        specified on Schedule
        3.05),
        each
        of the following, in form and substance reasonably satisfactory to the
        Administrative Agent:

       

      (i) a
        Mortgage on such property;

       

      (ii) evidence
        that a counterpart of the Mortgage has been recorded in the place necessary,
        in
        the Administrative Agent’s reasonable judgment, to create a valid and
        enforceable first priority Lien in favor of the Secured Parties;

       

      (iii) ALTA
        or
        other mortgagee’s title insurance policy (each a “Title
        Policy”);

       

      (iv) an
        opinion of counsel in the state in which such parcel of real property is
        located
        in form and substance and from counsel reasonably satisfactory to the
        Administrative Agent; and

       

      (v) such
        other information, documentation, and certifications as may be reasonably
        required by the Administrative Agent.

       

      
        
          
          

        

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

       

      (r) Letter
        of Credit Application.
        The
        Administrative Agent shall have received a properly completed letter of credit
        application if the issuance of a Letter of Credit will be required on the
        Effective Date. The Borrowers shall have executed the Issuing Bank’s master
        agreement for the issuance of commercial Letters of Credit.

       

      (s) Approvals.
        The
        Administrative Agent shall have received on reasonably satisfactory terms
        all
        domestic and foreign governmental and third party approvals reasonably necessary
        in connection with the Transaction and the continuing operations of the
        Borrowers and their Subsidiaries (including shareholder approvals, if any).
        Such
        approvals shall be in full force and effect in all material respects.

       

      (t) Collateral
        Reports.
        The
        Administrative Agent shall have received asset appraisals of Inventory,
        Equipment and real property and field examinations of the Accounts, Inventory
        and related working capital matters and financial information of the Loan
        Parties and of the related data processing and other systems (which is
        reasonably satisfactory to the Administrative Agent) performed by the
        Administrative Agent or from firms and appraisers with no direct or indirect
        interest, financial or otherwise, in such property and the Transaction.

       

      (u) Other
        Documents.
        The
        Administrative Agent shall have received such other documents as the
        Administrative Agent, the Issuing Bank, any Lender or their respective counsel
        may have reasonably requested. 

       

      The
        Administrative Agent shall notify the Borrowers and the Lenders of the Effective
        Date, and such notice shall be conclusive and binding. Notwithstanding the
        foregoing, the obligations of the Lenders to make Loans and of the Issuing
        Bank
        to issue Letters of Credit hereunder shall not become effective unless each
        of
        the foregoing conditions is satisfied (or waived pursuant to Section
        9.02)
        at or
        prior to 2:00 p.m., Chicago time, on June 24, 2008 (and, in the event such
        conditions are not so satisfied or waived, the Commitments shall terminate
        at
        such time).

       

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

       

      (a) The
        representations and warranties of the Borrowers set forth in this Agreement
        shall be true and correct in all material respects on and as of the date
        of such
        Borrowing or the date of issuance, amendment, renewal or extension of such
        Letter of Credit, as applicable; provided
        that,
        any representation and warranty that is qualified as to “materiality,” “Material
        Adverse Effect” or similar language shall be true and correct in all respects on
        such date.

       

      
        
          
          

        

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

       

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

       

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

       

      ARTICLE
        V

       

      AFFIRMATIVE
        COVENANTS

       

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

      

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

       

      (a) on
        the
        date that is the earliest of (i) the date on which Holdings’ or Griffon’s
        financial statements shall have been filed with the SEC, (ii) the date Holdings’
or Griffon’s financial statements are required to be filed with the SEC (without
        regard to any extension of the SEC’s filing requirements) and (iii) the day
        which is 120 days after the end of each fiscal year of Holdings, (x) the
        audited
        consolidated balance sheet and related statements of income, stockholders’
equity and cash flows of Griffon and its subsidiaries as of the end of and
        for
        such year, together with consolidating balance sheets and statements of income,
        stockholders' equity and cash flows by business unit consistent with past
        practice and, within each business unit, a further breakdown of consolidating
        financial information between Subsidiaries which are Loan Parties within
        such
        business unit and Subsidiaries which are not Loan Parties within such business
        unit (which consolidating financial information shall have been subject to
        the
        audit procedures applied in the audit and shall be accompanied by an opinion
        of
        the accountants performing the audit that such consolidating financial
        information, in their opinion, is fairly stated in all material respects
        in
        relation to the consolidated financial statements, taken as a whole), setting
        forth in each case in comparative form the figures for the previous fiscal
        year,
        all reported on, in the case of the consolidated financial statements, by
        Grant
        Thornton LLP or other independent public accountants of recognized national
        standing (without a “going concern” or like qualification or exception and
        without any qualification or exception as to the scope of such audit) to
        the
        effect that such consolidated financial statements present fairly in all
        material respects the financial condition and results of operations of Griffon
        and its subsidiaries on a consolidated basis in accordance with GAAP, and
        (y) an
        unaudited consolidated balance sheet and related consolidated statements
        of
        income, stockholders’ equity and cash flows of the Loan Parties (excluding, for
        the avoidance of doubt, Subsidiaries which are not Loan Parties) as of the
        end
        of and for such year, together with a reconciliation to the financial statements
        delivered pursuant to clause (x) of this paragraph, setting forth in each
        case
        in comparative form the figures for the previous fiscal year, all certified
        by a
        Financial Officer of the Borrower Representative as presenting fairly in
        all
        material respects the financial condition and results of operations of the
        Loan
        Parties on a consolidated basis (excluding, for the avoidance of doubt,
        Subsidiaries which are not Loan Parties) in accordance with GAAP, subject
        to
        normal year end audit adjustments and the absence of footnotes;

       

      
        
          
          

        

        
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      (b) (x)
        on
        the date that is the earliest of (i) the date on which Holdings’ or Griffon’s
        financial statements shall have been filed with the SEC, (ii) the date Holdings’
or Griffon’s financial statements are required to be filed with the SEC (without
        regard to any extension of the SEC’s filing requirements) and (iii) the day
        which is 60 days after the end of each of the first three quarterly periods
        of
        each fiscal year of Holdings, commencing with respect to the fiscal quarter
        ended December 31, 2008, (A) the consolidated and consolidating balance sheets
        and related consolidated and consolidating statements of income and cash
        flows
        of Holdings and its Subsidiaries as of the end of and for such fiscal quarter
        and the then elapsed portion of the fiscal year, setting forth in each case
        in
        comparative form the figures for (or, in the case of the balance sheet, as
        of
        the end of) the corresponding period or periods of the previous fiscal year,
        all
        certified by a Financial Officer of the Borrower Representative as presenting
        fairly in all material respects the financial condition and results of
        operations of Holdings and its Subsidiaries on a consolidated basis in
        accordance with GAAP, subject to normal year end audit adjustments and the
        absence of footnotes, and (B) the consolidated and consolidating balance
        sheets
        and related consolidated and consolidating statements of income and cash
        flows
        of the Loan Parties (excluding, for the avoidance of doubt, Subsidiaries
        which
        are not Loan Parties) as of the end of and for such fiscal quarter and the
        then
        elapsed portion of the fiscal year, setting forth in each case in comparative
        form the figures for (or, in the case of the balance sheet, as of the end
        of)
        the corresponding period or periods of the previous fiscal year, all certified
        by a Financial Officer of the Borrower Representative as presenting fairly
        in
        all material respects the financial condition and results of operations of
        the
        Loan Parties on a consolidated basis (excluding, for the avoidance of doubt,
        Subsidiaries which are not Loan Parties) in accordance with GAAP, subject
        to
        normal year end audit adjustments and the absence of footnotes, and (y) on
        the
        date that is the earliest of (i) the date on which Griffon’s financial
        statements shall have been filed with the SEC, (ii) the date Griffon’s financial
        statements are required to be filed with the SEC (without regard to any
        extension of the SEC’s filing requirements) and (iii) the day which is 60 days
        after the end of the quarterly period of the Parent ending June 30, 2008,
        the
        consolidated and consolidating balance sheet and related consolidated and
        consolidating statements of operations, stockholders’ equity and cash flows of
        the Parent and its subsidiaries as of the end of and for such fiscal quarter
        and
        the then elapsed portion of the fiscal year, setting forth in each case in
        comparative form the figure for the corresponding period or periods of (or,
        in
        the case of the balance sheet, as of the end of) the previous fiscal year,
        all
        certified by a Financial Officer of the Borrower Representative as presenting
        fairly in all material respects the financial condition and results of
        operations of the Parent and its subsidiaries, on a consolidated basis in
        accordance with GAAP, subject to normal year-end adjustments and the absence
        of
        footnotes;

       

      
        
          
          

        

        
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      (c) (x)
        within 30 days after the end of each fiscal month of Holdings (or, in the
        case
        of a fiscal month which is the last fiscal month of a fiscal quarter of
        Holdings, by the date on which the quarterly financial statements of Holdings
        are due pursuant to Section
        5.01(b)),
        commencing with respect to the fiscal month ended September 30, 2008, (i)
        the
        consolidated and consolidating balance sheet and related consolidated and
        consolidating statements of operations, stockholders' equity and cash flows
        of
        Holdings and its Subsidiaries as of the end of and for such fiscal month
        and the
        then elapsed portion of the fiscal year, setting forth in each case in
        comparative form the figures for the corresponding period or periods of (or,
        in
        the case of the balance sheet, as of the end of) the previous fiscal year,
        all
        certified by a Financial Officer of the Borrower Representative as presenting
        fairly in all material respects the financial condition and results of
        operations of Holdings and its Subsidiaries on a consolidated basis in
        accordance with GAAP, subject to normal year-end audit adjustments and the
        absence of footnotes, and (ii) the consolidated and consolidating balance
        sheet
        and related consolidated and consolidating statements of operations,
        stockholders' equity and cash flows of the Loan Parties (excluding, for the
        avoidance of doubt, Subsidiaries which are not Loan Parties) as of the end
        of
        and for such fiscal month and the then elapsed portion of the fiscal year,
        setting forth in each case in comparative form the figures for the corresponding
        period or periods of (or, in the case of the balance sheet, as of the end
        of)
        the previous fiscal year, all certified by a Financial Officer of the Borrower
        Representative as presenting fairly in all material respects the financial
        condition and results of operations of the Loan Parties on a consolidated
        basis
        (excluding, for the avoidance of doubt, Subsidiaries which are not Loan Parties)
        in accordance with GAAP, subject to normal year-end audit adjustments and
        the
        absence of footnotes and (y) within 30 days after the end of each fiscal
        month
        of the Parent ending prior to September 30, 2008 (or, in the case of a fiscal
        month which is the last fiscal month of a fiscal quarter of the Parent, by
        the
        date on which the quarterly financial statements of the Parent are due pursuant
        to Section
        5.01(b)),
        the
        consolidated and consolidating balance sheet and related consolidated and
        consolidating statements of operations, stockholders’ equity and cash flows of
        the Parent and its subsidiaries as of the end of and for such fiscal month
        and
        the then elapsed portion of the fiscal year, setting forth in each case in
        comparative form the figure for the corresponding period or periods of (or,
        in
        the case of the balance sheet, as of the end of) the previous fiscal year,
        all
        certified by a Financial Officer of the Borrower Representative as presenting
        fairly in all material respects the financial condition and results of
        operations of the Parent and its subsidiaries, on a consolidated basis in
        accordance with GAAP, subject to normal year-end adjustments and the absence
        of
        footnotes;

       

      
        
          
          

        

        
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      (d) concurrently
        with any delivery of financial statements under paragraph (a), (b) or (c)
        of
        this Section, a certificate of a Financial Officer of the Borrower
        Representative in substantially the form of Exhibit
        D
        (i)
        certifying as to whether a Default has occurred and, if a Default has occurred,
        specifying the details thereof and any action taken or proposed to be taken
        with
        respect thereto, (ii) commencing with the certificate for the period ending
        September 30, 2008, setting forth reasonably detailed calculations of the
        Fixed
        Charge Coverage Ratio and, if applicable, demonstrating compliance with
Section
        6.11,
        and
        (iii) stating whether any change in GAAP or in the application thereof has
        occurred since the date of the audited financial statements referred to in
        Section
        3.04
        or since
        the date of any such notice and, if any such change has occurred, specifying
        the
        effect of such change on the financial statements accompanying such
        certificate;

       

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

       

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

       

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

       

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

       

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

       

      (j) as
        soon
        as available but in any event within 20 days of the end of each calendar
        month
        (in case Availability is less than 15% of the Revolving Commitments, within
        3
        days (but in no event earlier than two Business Days) after the end of each
        week), as of the period then ended, a Borrowing Base Certificate and supporting
        information in connection therewith, together with any additional reports
        with
        respect to Borrowing Base as the Administrative Agent may reasonably request;
        and the PP&E Component of the Borrowing Base shall be updated (i) concurrent
        with the sale or commitment to sell any assets constituting part of the PP&E
        Component, (ii) in the event such assets are idled for any reason other than
        routine maintenance or repairs for a period in excess of ten consecutive
        days,
        or (iii) in the event that the value of such assets is otherwise materially
        impaired, as determined in the Administrative Agent’s Permitted
        Discretion;

       

      
        
          
          

        

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

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
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      (l) 
        as soon
        as available but in any event within 20 days of the end of each calendar
        month
        (commencing with the first calendar month ended at least 90 days after the
        Effective Date), as of the month then ended, a schedule and aging of the
        Borrowers’ accounts payable, delivered electronically in a text formatted file
        acceptable to the Administrative Agent;

       

      (m) as
        soon
        as available but in any event within 20 days of the end of each
        March 31 and September 30, an updated customer list for each Loan Party,
        which
        list shall state the customer’s name, mailing address and phone number and shall
        be certified as true and correct by a Financial Officer of each
        Borrower,
        delivered electronically in a text formatted file acceptable to the
        Administrative Agent;

       

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

       

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

       

      (ii) copies
        of
        purchase orders, invoices, and shipping and delivery documents in connection
        with any Inventory or Equipment purchased by any Borrower; and

       

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

       

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

       

      (p) as
        soon
        as reasonably practicable and in any event within 30 days of filing thereof,
        copies of all tax returns filed by any Loan Party with the U.S. Internal
        Revenue
        Service;

       

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

       

      (r) within
        10
        days of the first Business Day of each December, a certificate of good standing
        for each Loan Party from the appropriate governmental officer in its
        jurisdiction of incorporation, formation, or organization;
        

       

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

       

      
        
          
          

        

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

    

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

     

    (a) the
      occurrence of any Default;

     

    (b) the
      filing or commencement of any action, suit or proceeding by or before any
      arbitrator or Governmental Authority against or affecting Holdings or any of
      its
      Affiliates, other than disputes in the ordinary course of business or, whether
      or not in the ordinary course of business, disputes involving amounts exceeding
      $5,000,000 (excluding, however, any actions relating to workers’ compensation
      claims or negligence claims relating to use of motor vehicles, if fully covered
      by insurance, subject to deductibles);

     

    (c) the
      occurrence of any ERISA Event that, alone or together with any other ERISA
      Events that have occurred, could reasonably be expected to result in liability
      of Holdings and any of its ERISA Affiliates in an aggregate amount exceeding
      $15,000,000;

     

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

     

    (e) any
      loss,
      damage, or destruction to the Collateral in the amount of $1,000,000 or more,
      whether or not covered by insurance;

     

    (f) any
      and
      all default notices received under or with respect to any leased location or
      public warehouse where Collateral with a value in excess of $500,000 is located
      (which shall be delivered within three Business Days after receipt thereof);
      

     

    (g) all
      material amendments to the material contracts set forth on Schedule
      5.02
      to which
      any Borrower is a party, together with a copy of each such
      amendment;

     

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

     

    
      
        
        

      

      
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    (i) the
      assertion in writing of any environmental claim by any Person against, or with
      respect to the activities of, any Group Member and any alleged violation of
      or
      non compliance with any Environmental Laws or any permits, licenses or
      authorizations, other than any environmental claim or alleged violation that,
      alone or together with any other such matters that have occurred, could
      reasonably be expected to result in liability of the Group Members in an
      aggregate amount exceeding $5,000,000; and

     

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

     

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

    

    Section
      5.03. Existence;
      Conduct of Business.
      Each
      Loan Party will, and will cause each of its Subsidiaries to, do or cause to
      be
      done all things necessary to preserve, renew and keep in full force and effect
      its legal existence and the rights, licenses, permits, privileges and franchises
      material to the conduct of its business; provided
      that the
      foregoing shall not prohibit any merger, consolidation, liquidation or
      dissolution permitted under Section
      6.03.

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

    (b) At
      any
      time that the Administrative Agent reasonably requests, each Loan Party will,
      at
      its sole expense, provide the Administrative Agent and, to the extent requested
      by any Lender, such Lender, with appraisals or updates thereof of their
      Inventory, Equipment and real property from an appraiser selected and engaged
      by
      the Administrative Agent, and prepared on a basis reasonably satisfactory to
      the
      Administrative Agent, such appraisals and updates to include, without
      limitation, information required by applicable law and regulations; provided
      that the
      Loan Parties shall not be required to reimburse the Administrative Agent for
      the
      reasonable costs of more than one appraisal of each Inventory, Equipment or
      real
      property per calendar year; provided,
      however,
      that
      there shall be no limitation on the Loan Parties’ obligation to reimburse for,
      or the number or frequency of, such appraisals if an Event of Default shall
      have
      occurred and be continuing or if the Availability is less than 15% of the
      Revolving Commitments at the time such appraisal process is scheduled or
      commenced.

     

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

     

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

     

    
      
        
        

      

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

     

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

     

    Section
      5.13. Collateral;
      Further Assurances.

     

    (a) With
      respect to any property acquired after the Effective Date by any Loan Party
      (other than (i) any property described in paragraph (b), (c) or (d) of this
      Section and (ii) any property subject to a Lien expressly permitted by
Section
      6.02(d),
      (e)
      or
(f)),
      such
      Loan Party will promptly, (A) execute and deliver to the Administrative Agent
      such amendments to the Collateral Documents or such other documents as the
      Administrative Agent reasonably deems necessary to grant to the Administrative
      Agent, for the benefit of the Secured Parties, a security interest in such
      property and (B) take all actions reasonably necessary to grant to the
      Administrative Agent, for the benefit of the Secured Parties, a perfected first
      priority security interest in such property (subject to Permitted Encumbrances),
      including the filing of UCC financing statements in such jurisdictions as may
      be
      reasonably required by the Collateral Documents or by law or as reasonably
      may
      be requested by the Administrative Agent.

     

    (b) With
      respect to any new Subsidiary (other than a foreign Subsidiary or an Immaterial
      Subsidiary) created or acquired after the Effective Date by any Loan Party,
      such
      Loan Party will, and will cause each of its Subsidiaries to, promptly (i)
      subject to paragraph (c) of this Section, execute and deliver to the
      Administrative Agent such amendments to the Collateral Documents as the
      Administrative Agent reasonably deems necessary to grant to the Administrative
      Agent, for the benefit of the Secured Parties, a perfected first priority
      security interest in the Equity Interests of such new Subsidiary that is owned
      by such Loan Party, (ii) subject to paragraph (c) of this Section, deliver
      to
      the Administrative Agent the certificates representing such Equity Interests,
      together with undated stock powers, in blank, executed and delivered by a duly
      authorized officer of such Loan Party, (iii) cause such new Subsidiary (A)
      to
      become a Loan Party by executing the Joinder Agreement set forth as Exhibit
      E
      hereto
      (the “Joinder
      Agreement”),
      (B)
      to take such actions reasonably necessary to grant to the Administrative Agent,
      for the benefit of the Secured Parties, a perfected first priority security
      interest in the Collateral described in the Security Agreement with respect
      to
      such new Subsidiary, including the filing of UCC financing statements in such
      jurisdictions as reasonably may be required by the Security Agreement or by
      law
      or as reasonably may be requested by the Administrative Agent and (C) to deliver
      to the Administrative Agent a closing certificate of such new Subsidiary, which
      certificate shall be in the form and substance reasonably satisfactory to the
      Administrative Agent, and (iv) if requested by the Administrative Agent, deliver
      to the Administrative Agent legal opinions relating to the matters described
      above, which opinions shall be in customary form and substance, and from
      counsel, reasonably satisfactory to the Administrative Agent.

     

    
      
        
        

      

      
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    (c) With
      respect to any new foreign Subsidiary created or acquired after the Effective
      Date by any Loan Party which after such creation or acquisition is directly
      owned by a Borrower or any of its domestic Subsidiaries, such Borrower will,
      and
      will cause each of its Subsidiaries to, promptly (i) execute and deliver to
      the
      Administrative Agent such amendments to the Security Agreement as the
      Administrative Agent reasonably deems necessary to grant to the Administrative
      Agent, for the benefit of the Secured Parties, a perfected first priority
      security interest in the Equity Interests of such new Subsidiary that is then
      owned by such Borrower or any of its domestic Subsidiary (provided
      that in
      no event shall more than 65% of the total outstanding voting Equity Interests
      of
      any such new foreign Subsidiary be required to be so pledged), (ii) deliver
      to
      the Administrative Agent the certificates representing such pledged Equity
      Interests, together with undated stock powers, in blank, executed and delivered
      by a duly authorized officer of such Borrower or its domestic Subsidiary, as
      applicable, and take such other action as reasonably may be necessary to perfect
      the Administrative Agent’s security interest therein, and (iii) if requested by
      the Administrative Agent, deliver to the Administrative Agent legal opinions
      relating to the matters described above, which opinions shall be in customary
      form and substance, and from counsel, reasonably satisfactory to the
      Administrative Agent.

     

    (d) With
      respect to any fee interest in any real property having a value (together with
      improvements thereof) of at least $50,000 acquired (or which ceases to be
      subject to a restriction limiting Liens in favor of the Administrative Agent)
      after the Effective Date by any Loan Party, promptly (i) execute and deliver
      a
      first priority Mortgage, in favor of the Administrative Agent, for the benefit
      of the Secured Parties, covering such real property, (ii) if requested by the
      Administrative Agent, provide the Secured Parties with (x) title and extended
      coverage insurance covering such real property in an amount at least equal
      to
      the purchase price of such real property (or such other amount as shall be
      reasonably specified by the Administrative Agent) as well as a current ALTA
      survey thereof, together with a surveyor’s certificate and (y) any consents or
      estoppels reasonably deemed necessary or advisable by the Administrative Agent
      in connection with such Mortgage, each of the foregoing in form and substance
      reasonably satisfactory to the Administrative Agent and (iii) if requested
      by
      the Administrative Agent, deliver to the Administrative Agent legal opinions
      relating to the matters described above, which opinions shall be in form and
      substance, and from counsel, reasonably satisfactory to the Administrative
      Agent.

     

    
      
        
        

      

      
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    (e) Each
      Loan
      Party will, and will cause each of its Subsidiaries to, take such action from
      time to time as shall reasonably be requested by the Administrative Agent to
      effectuate the purposes and objectives of this Agreement, including this
      Section, and the other Loan Documents.

     

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

     

    Section
      5.15. Post-closing
      Deliverables.
      (a)
Within
      90
      days after the Effective Date (except as set forth on Schedule
      5.15),
      the
      Loan Parties will (i) deliver to the Administrative Agent each item specified
      under the heading “Environmental Deliverables” on Schedule
      5.15
      (except
      as set forth on Schedule
      5.15),
      (ii)
      resolve each item specified under the heading “Issues to be Resolved” on
Schedule
      5.15
      in a
      manner reasonably satisfactory to the Administrative Agent, (iii) deliver to
      the
      Administrative Agent an ALTA survey prepared and certified to the Administrative
      Agent by a surveyor reasonably acceptable to the Administrative Agent for each
      Mortgaged Property (other than the Mortgaged Property located in Augusta,
      Kentucky, as specified on Schedule
      3.05),
      (iv)
      execute and deliver to the Administrative Agent such documents which shall
      be
      required, in the reasonable judgment of the Administrative Agent, to perfect
      under German law the pledge under the Security Agreement of 65% of the Equity
      Interests in German Subsidiaries owned directly by a Loan Party and (v) deliver
      to the Administrative Agent, with respect to the real property located in
      Augusta, Kentucky as specified on Schedule
      3.05,
      each of
      the following, in form and substance reasonably satisfactory to the
      Administrative Agent:

     

    (1) a
      Mortgage on such property;

     

    (2) evidence
      that a counterpart of the Mortgage has been recorded in the place necessary,
      in
      the Administrative Agent’s reasonable judgment, to create a valid and
      enforceable first priority Lien in favor of the Secured Parties;

     

    (3) a
      Title
      Policy;

     

    (4) an
      opinion of counsel in the state in which such parcel of real property is
      located; 

     

    (5) an
      ALTA
      survey prepared and certified to the Administrative Agent by a surveyor
      reasonably acceptable to the Administrative Agent; and

     

    (6) such
      other information, documentation, and certifications as may be reasonably
      required by the Administrative Agent.

     

    
      
        
        

      

      
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    Within
      ten days of the delivery of surveys pursuant to clause (iii) above, the
      applicable Loan Party will (x) cause the title insurance company which issued
      each Title Policy to issue an endorsement to each such Title Policy which
      removes the general survey exception and to issue the following endorsements
      to
      such Title Policy: survey endorsement; contiguity endorsement (if applicable),
      comprehensive endorsement and land same as survey endorsement; and (y) if
      reasonably requested by the Administrative Agent, enter into an amendment to
      the
      applicable Mortgage which amends the legal description attached to such Mortgage
      to reflect the matters shown on the applicable new survey.

     

    (b) Within
      30
      days after the Effective Date, the Loan Parties will deliver to the
      Administrative Agent (i) a copy of a demand promissory note in the aggregate
      principal amount of $23,000,000, bearing interest at 5% per annum, in form
      and
      substance reasonably satisfactory to the Administrative Agent evidencing
      Indebtedness of the Borrowers owed to Griffon as of the date hereof and
      permitted under Section 6.01(a)(xv) and (ii) any Intercompany Note which is
      required to be delivered pursuant to Section 4.4 of the Security
      Agreement.

    

    ARTICLE
      VI

     

    NEGATIVE
      COVENANTS

     

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

    

    Section
      6.01. Indebtedness;
      Guarantees.
      (a) No
      Borrower will, nor will it permit any of its Subsidiaries to, create, incur,
      assume or permit to exist any Indebtedness, except:

     

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

     

    (ii) Indebtedness
      of any Borrower to any other Group Member and of any Subsidiary of a Borrower
      to
      any other Group Member; provided
      Indebtedness of Group Members which are not Loan Parties to Group Members which
      are Loan Parties must also be expressly permitted by Section
      6.06(d)
      or
(p); 

     

    (iii) Indebtedness
      outstanding on the date hereof and listed on Schedule
      6.01(a)
      and any
      refinancings, refundings, renewals, replacement, waivers, amendments, amendments
      and restatements or extensions thereof (without increasing, or shortening the
      maturity of, the principal amount thereof);

     

    (iv) Indebtedness
      (including, without limitation, Capital Lease Obligations) secured by Liens
      expressly permitted by Section
      6.02(e)
      in an
      aggregate principal amount not to exceed $20,000,000 at any time outstanding;

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

    (xi) Indebtedness
      resulting from Swap Agreements permitted hereunder; 

     

    (xii) Indebtedness
      consisting of guaranties of loans made to officers, directors or employees
      of
      any Group Member in an aggregate amount which shall not exceed $2,000,000 at
      any
      time outstanding; 

     

    (xiii) (I)
      Indebtedness that is unsecured so long as, after giving effect to the incurrence
      of such Indebtedness on a pro forma basis, (A) the Fixed Charge Coverage Ratio
      shall be at least 1.20 to 1.0 as of the end of the most recent fiscal month
      for
      which financial statements have been delivered, (B) no Default or Event of
      Default shall have occurred and be continuing and (C) the aggregate amount
      of
      such unsecured Indebtedness (other than Permitted Subordinated Debt) incurred
      shall not exceed $100,000,000 at any time outstanding, and, (II) without
      limiting any of the forgoing, any refinancings, refundings, renewals,
      replacement, waivers, amendments, amendments and restatements or extensions
      thereof (without increasing, or shortening the maturity of, the principal amount
      thereof), provided
      that,
      after giving effect to any such refinancings, refundings, renewals, replacement,
      waivers, amendments, amendments and restatements or extensions of Permitted
      Subordinated Debt, the resulting Indebtedness shall constitute Permitted
      Subordinated Debt; and 

     

    
      
        
        

      

      
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    (xiv) unsecured
      or secured Indebtedness of the German Subsidiaries in an aggregate amount not
      to
      exceed $50,000,000 at any time outstanding; 

     

    (xv) Indebtedness
      of the Borrowers owed to Griffon as of the date hereof in an aggregate principal
      amount of $23,000,000; provided
      that
      such Indebtedness shall be subordinated to the Secured Obligations on terms
      and
      conditions satisfactory to the Administrative Agent; 

     

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

     

    (xvii) in
      addition to Indebtedness otherwise expressly permitted by this Section,
      Indebtedness of the Group Members in an aggregate principal amount not to exceed
      $10,000,000 at any time outstanding.

     

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

     

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

     

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

     

    (iii) Guarantees
      by any Loan Party of obligations incurred pursuant to Section
      6.01(a) (xiv)
      to the
      extent such Guarantees are subordinated to the Obligations on terms and
      conditions reasonably satisfactory to the Administrative Agent; and

     

    (iv) in
      addition to Guarantees otherwise expressly permitted by this Section, Guarantees
      of the Group Members not to exceed $10,000,000 at any time
      outstanding.

     

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

     

    (a) Liens
      created pursuant to the Loan Documents;

     

    (b) Permitted
      Encumbrances;

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

    (h) Liens
      granted by any German Subsidiaries on their assets to secure Indebtedness
      incurred pursuant to Section
      6.01(a)(xiv)

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

    (o) additional
      Liens not otherwise expressly permitted by this Section on any property or
      asset
      of any Group Member securing obligations in an aggregate amount not exceeding
      $7,500,000 at any time outstanding.

     

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

    

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

     

    Section
      6.04. Dispositions.
      No Loan
      Party will, nor will it permit any of its Subsidiaries to, convey, sell, lease,
      transfer or otherwise dispose of, in one transaction or a series of
      transactions, any part of its business or property, whether now owned or
      hereafter acquired (including receivables and leasehold interests),
      except:

     

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

     

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

     

    (c) any
      Subsidiary of any Borrower may sell, lease, transfer or otherwise dispose of
      any
      or all of its property (upon voluntary liquidation or otherwise) to any Group
      Member (provided
      that, in
      the case of any such transfer by a Subsidiary that is a Loan Party, the
      transferee must also be a Loan Party);

     

    
      
        
        

      

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

     

    (e) any
      Group
      Member may sell, lease, transfer or otherwise dispose of (i) its property and
      assets the fair market value of which does not exceed in the aggregate in any
      fiscal year 5% of the consolidated assets of the Group Members as of the end
      of
      the immediately preceding fiscal year (for which financial statements have
      been
      delivered) of the Borrowers for fair consideration and (ii) Equity Interests
      of
      any Subsidiary of any Borrower (x) the net revenues of which do not exceed
      in
      the aggregate in any fiscal year 5% of the consolidated net revenues of the
      Group Members or (y) the assets of which do not exceed in the aggregate in
      any
      fiscal year 10% of the consolidated assets of the Group Members, in each case,
      as of the end of the immediately preceding fiscal year (for which financial
      statements have been delivered) of the Borrowers for fair
      consideration;

     

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

     

    (g) the
      dispositions expressly permitted by Section
      6.03;

     

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

     

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

     

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

     

    (k) Liens
      expressly permitted by Section
      6.02;
      

     

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

     

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

     

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

    

    
      
        
        

      

      
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    Section
      6.05. Lines
      of Business.
      No Loan
      Party will, nor will it permit any of its Subsidiaries to, engage to any
      material extent in any business other than businesses of the type conducted
      by
      the Group Members on the date hereof and businesses reasonably related
      thereto.

     

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

     

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

     

    (b) Guarantees
      expressly permitted by Section
      6.01(b)
      and any
      payments made in respect of such Guarantees; 

     

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

     

    (d) Investments
      by (i) any Borrower in any Subsidiary which is a Loan Party or by any Subsidiary
      of a Borrower in any Subsidiary which is a Loan Party or in a Borrower; (ii)
      any
      Subsidiary that is not a Loan Party in any Subsidiary that is not a Loan Party
      and (iii) any Loan Party in a Subsidiary that is not a Loan Party not exceeding
      in the aggregate $1,000,000;

     

    (e) Permitted
      Acquisitions if, after giving pro forma effect thereto, (i) no Default or Event
      of Default shall have occurred and be continuing, (ii) the Fixed Charge Coverage
      Ratio shall be at least 1.20 to 1.0 as of the end of the most recent fiscal
      month for which financial statements have been delivered and (iii) Availability
      shall be at least 30% of the Revolving Commitments; provided
      that the
      aggregate consideration in respect of all such Permitted Acquisitions shall
      not
      exceed $100,000,000 during the Availability Period;

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

    (p) in
      addition to Investments otherwise expressly permitted by this Section,
      Investments not exceeding in the aggregate $7,500,000.

     

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

     

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

     

    (ii) any
      Borrower may declare and pay to Holdings (for distribution to the Parent and
      ultimately to Griffon, if applicable) dividends, or make other payments, to
      pay
      the Borrowers’ allocated share of overhead and expenses incurred by Griffon, the
      Parent or Holdings (other than interest expense) in accordance with the exercise
      of the reasonable business judgment of Griffon, the Parent or Holdings, as
      applicable; provided
      that
      such amounts are used for such purposes within 60 days after such amounts are
      paid;

     

    (iii) any
      Borrower may declare and pay to Holdings (for distribution to the Parent and
      ultimately to Griffon, if applicable) dividends, the proceeds of which will
      be
      used to pay, or to make payments to allow Griffon, the Parent or Holdings to
      pay
      Taxes (including in respect of any consolidated, combined, unitary or affiliated
      group or tax returns of Holdings, the Borrowers or any of their Subsidiaries)
      attributable to the Borrowers and their Subsidiaries, determined as if the
      Borrowers and their Subsidiaries filed separately; provided
      that, in
      each case, the amount of such payments in any year does not exceed the amount
      that the Borrowers and their Subsidiaries would be required to pay in respect
      of
      federal, state and/or local income Taxes, as applicable, for such year were
      the
      Borrowers and their Subsidiaries required to pay such taxes separately from
      Holdings, the Parent and Griffon, less the amount of any such taxes paid
      directly by the Borrowers or their Subsidiaries; provided
      that
      such amounts are used for such purposes within 60 days after such amounts are
      paid;

     

    
      
        
        

      

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

     

    provided
      that
      nothing herein shall be deemed to prohibit the payment of dividends by any
      Subsidiary of any Borrower to any Borrower, any other Subsidiary of any Borrower
      or, if applicable, any minority shareholder of such Subsidiary (in accordance
      with the percentage of the Equity Interests of such Subsidiary owned by such
      minority shareholder).

    

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

     

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

     

    (ii) payment
      of regularly scheduled interest and principal payments as and when due in
      respect of any Indebtedness, other than payments in respect of the Subordinated
      Indebtedness prohibited by the subordination provisions thereof, provided
      that
      principal payments (including, without limitation, any payment due at maturity
      or any partial or full repayment upon demand or otherwise) in respect of
      Indebtedness owed to Griffon or the Parent shall only be permitted so long
      as,
      after giving pro forma effect to such payment, (A) no Default or Event of
      Default shall have occurred and be continuing and (B) Availability shall be
      at
      least 30% of the Revolving Commitments for the most recent 30 days (or, if
      less,
      the number of days elapsed since the Effective Date) and, after giving effect
      thereto;

     

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

     

    
      
        
        

      

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

     

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

     

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

     

    (b) payments
      of management fees to Griffon pursuant to the Management Agreement in an
      aggregate amount not to exceed, in any fiscal year, the greater of (i) $250,000
      or (ii) 7.5% of the Consolidated Pre-tax Income; provided
      that
      such management fees, insofar as such management fees relate to the Consolidated
      Pre-tax Income of Subsidiaries which are not Loan Parties, shall be paid in
      cash
      directly or indirectly by such Subsidiaries;

     

    (c) transactions
      between or among the Borrowers and their wholly-owned Subsidiaries not involving
      any other Affiliate;

     

    (d) any
      Investments expressly permitted by Section
      6.06;

     

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

     

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

     

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

     

    (a) restrictions
      and conditions imposed by law or by this Agreement;

     

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

     

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

     

    
      
        
        

      

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

     

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

     

    Section
      6.11. Fixed
      Charge Coverage Ratio.
      In the
      event that Availability is less than 17.5% of the Revolving Commitments at
      any
      time, the Borrowers will not permit the Fixed Charge Coverage Ratio for the
      most-recently ended twelve fiscal months (or, if less, the number of full fiscal
      months elapsed since the Effective Date) of the Borrowers as of the end of
      the
      most recent fiscal month for which financial statements have been delivered
      and
      each fiscal month thereafter to be less than 1.0 to 1.0, provided
      that
      this covenant shall cease to apply (until any subsequent time, if any, at which
      Availability is less than 17.5% of the Revolving Commitments, as so determined)
      if Availability exceeds 22.5% of the Revolving Commitments for 90 consecutive
      calendar days; provided,
      further, that, by notifying the Administrative Agent on or prior to the delivery
      of financial statements pursuant to Section
      5.01
      with
      respect to any fiscal year or fiscal quarter and so long as Availability at
      such
      time is not less than 10% of the Revolving Commitments, the Borrowers may elect
      to include in the calculation of Net Income for the purpose of determining
      the
      Fixed Charge Coverage Ratio with respect to the applicable fiscal period the
      undistributed net income of their foreign Subsidiaries; provided
      that (a)
      such undistributed net income may only be so included to the extent that such
      foreign Subsidiaries have cash at such time to make payment of dividends or
      similar distribution to any Loan Party and such distributions are not restricted
      by any contractual restrictions or any Requirement of Law applicable to such
      Subsidiary, (b) the amount of net income so included shall be net of any
      reasonably anticipated taxes payable in connection with such distribution,
      (c)
      the Administrative Agent shall have received a certificate of a Financial
      Officer of the Borrower Representative (i) certifying as to the accuracy and
      compliance of the calculations pursuant to clauses (a) and (b) above, (ii)
      setting forth in reasonable detail such calculations and (iii) attaching
      supporting materials reasonably satisfactory to the Administrative Agent in
      its
      Permitted Discretion, and (d) until the date on which Availability exceeds
      22.5%
      of the Revolving Commitments for 90 consecutive calendar days, the Borrowers
      shall be subject to an Availability Block.

     

    Section
      6.12. Stock
      Issuance.
      No Loan
      Party will, nor will it permit any of its Subsidiaries to, issue any additional
      shares, or any right or option to acquire any shares or any security convertible
      into any shares, of the Equity Interests of any Subsidiary, except (a) in
      connection with dividends in Equity Interests expressly permitted by
Section
      6.07
      and (b)
      to any Borrower or any of its Subsidiaries.

     

    
      
        
        

      

      
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    Section
      6.13. Modifications
      of Certain Documents.
      No Loan
      Party will, nor will it permit any of its Subsidiaries to, consent to any
      modification, amendment, supplement or waiver of any of the provisions of (A)
      its charter, by-laws or other organizational documents or any other agreement
      or
      instrument to which any Group Member is a party or is bound that could
      reasonably be expected to have a Material Adverse Effect or (B) except as
      permitted by Section
      6.01(a)(xiii)(II),
      any
      Permitted Subordinated Debt, in each case, without the prior consent of the
      Administrative Agent (with the approval of the Required Lenders).

     

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

     

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

     

    Section
      6.16. Capital
      Expenditures.
      (a) The
      Borrowers will not, nor will it permit any Subsidiary to, incur or make any
      Capital Expenditures in any fiscal year in an amount exceeding $25,000,000.
      

     

    (b) The
      amount of any Capital Expenditures permitted to be made in respect of any fiscal
      year shall be increased by 60% of the unused amount of Capital Expenditures
      that
      were permitted to be made during the immediately preceding fiscal year pursuant
      to Section
      6.16(a),
      without giving effect to any carryover amount. Capital Expenditures in any
      fiscal year shall be deemed to use first, the amount for such fiscal year set
      forth in Section
      6.16(a)
      and,
      second, any amount carried forward to such fiscal year pursuant to this
Section
      6.16(b).

     

    
      
        
        

      

      
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    Section
      6.17. Fiscal
      Year.
      Holdings shall not permit its fiscal year or the fiscal year of any of its
      Subsidiaries to end on a day other than September 30.

     

    ARTICLE
      VII

     

    EVENTS
      OF DEFAULT 

     

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

    

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

     

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

     

    (c) any
      representation or warranty made or deemed made by or on behalf of any Loan
      Party
      in or in connection with this Agreement or any other Loan Document or any
      amendment or modification hereof or thereof, or in any report, certificate,
      financial statement or other document furnished pursuant to or in connection
      with this Agreement or any other Loan Document or any amendment or modification
      hereof or thereof, shall prove to have been false or misleading when made or
      deemed made in any material respect;

     

    (d) any
      Loan
      Party shall fail to observe or perform any covenant, condition or agreement
      contained in Section
      5.02
      or
Section
      5.03
      (with
      respect to a Loan Party’s existence) or in Article VI or any Loan Party shall
      default in the performance of any of its obligations contained in Sections
      4.1(d), (e) or (f), 4.6(a) or (b), 4.11 or 4.14 of the Security Agreement or
      Article VII of the Security Agreement;

     

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

     

    (f) Griffon,
      the Parent or any Group Member shall fail to make any payment (whether of
      principal or interest and regardless of amount) in respect of any Material
      Indebtedness, when and as the same shall become due and payable, and such
      failure shall continue unremedied for a period (except in the case of principal,
      beyond any applicable grace period) of five or more Business Days;

     

    
      
        
        

      

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

     

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

     

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

     

    (j) Griffon,
      the Parent or any Group Member shall become unable, admit in writing its
      inability or fail generally to pay its debts as they become due;

     

    (k) one
      or
      more judgments for the payment of money in an aggregate amount in excess of
      $7,500,000 shall be rendered against Griffon, the Parent or any Group Member
      or
      any combination thereof and the same shall remain undischarged for a period
      of
      30 consecutive days during which execution shall not be effectively stayed
      or
      vacated or, in respect with such judgment, any action shall be legally taken
      by
      a judgment creditor to attach or levy upon any assets of Griffon, the Parent
      or
      any Group Member to enforce any such judgment;

     

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

     

    (m) a
      Change
      of Control shall occur; 

     

    
      
        
        

      

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

     

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

     

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

     

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

    

    ARTICLE
      VIII

     

    The
      Administrative Agent

     

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

     

    
      
        
        

      

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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    ARTICLE
      IX

     

    Miscellaneous

     

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

     

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

     

    Clopay
      Plastic Products Company, Inc.

    8585
      Duke
      Blvd.

    Mason,
      Ohio 45040

    Attention:
      Treasurer 

    Fax:
      513-770-6544

     

    with
      a
      copy to:

     

    Griffon
      Corporation

    100
      Jericho Quadrangle Suite 224

    Jericho,
      NY 11753-2702

    Attention:
      Chief Financial Officer

    Fax:
      516-932-1169

     

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

     

    Mailcode:
      NY1-K855

    New
      York,
      NY 10017

    Attention:
      Donna DiForio

    Fax:
      646-534-2274

    

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

     

    
      
        
        

      

      
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    All
      such
      notices and other communications (i) sent by hand or overnight courier service,
      or mailed by certified or registered mail, shall be deemed to have been given
      when received or (ii) sent by facsimile shall be deemed to have been given
      when
      sent, provided
      that if
      not given during normal business hours for the recipient, shall be deemed to
      have been given at the opening of business on the next Business Day for the
      recipient.

     

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

     

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

     

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

     

    
      
        
        

      

      
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    (b) Neither
      this Agreement nor any other Loan Document nor any provision hereof or thereof
      may be waived, amended or modified except (i) in the case of this Agreement,
      pursuant to an agreement or agreements in writing entered into by the Borrowers
      and the Required Lenders or, (ii) in the case of any other Loan Document,
      pursuant to an agreement or agreements in writing entered into by the
      Administrative Agent and the Loan Party or Loan Parties that are parties
      thereto, with the consent of the Required Lenders; provided
      that no
      such agreement shall (i) (A) increase the Commitment of any Lender without
      the
      written consent of such Lender (provided that the Administrative Agent may
      make
      Protective Advances as set forth in Section 2.04) or (B) change Section 2.09(f)
      or otherwise increase the aggregate Revolving Commitments such that, in either
      case, the aggregate Revolving Commitments would exceed $150,000,000, without
      the
      written consent of each Lender, (ii) reduce or forgive the principal amount
      of
      any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce
      or
      forgive any interest, fees or other Obligations payable hereunder, without
      the
      written consent of each Lender directly affected thereby, (iii) postpone any
      scheduled date of payment of the principal amount of any Loan or LC
      Disbursement, or any date for the payment of any interest, fees or other
      Obligations payable hereunder, or reduce the amount of, waive or excuse any
      such
      payment, or postpone the scheduled date of expiration of any Commitment, without
      the written consent of each Lender directly affected thereby, (iv) change
      Section 2.18(b) or (d) in a manner that would alter the manner in which payments
      are shared, without the written consent of each Lender, (v) increase the advance
      rates set forth in the definition of Borrowing Base (or change the constituent
      definitional provisions thereof in a manner having the effect of increasing
      the
      advance rates) or add new categories of eligible assets, without the written
      consent of each Lender, (vi) change any of the provisions of this Section or
      the
      definition of “Required Lenders” or any other provision of any Loan Document
      specifying the number or percentage of Lenders (or Lenders of any Class)
      required to waive, amend or modify any rights thereunder or make any
      determination or grant any consent thereunder, without the written consent
      of
      each Lender, (vii) release any Guarantor from its obligation under its Guaranty
      (except as otherwise permitted herein or in the other Loan Documents), without
      the written consent of each Lender, (viii) except as provided in clauses (c)
      and
      (d) of this Section or in any Collateral Document, release all or substantially
      all of the Collateral, without the written consent of each Lender or (ix)
      subordinate the Obligations to any other obligation without the written consent
      of each Lender; provided further
      that no
      such agreement shall amend, modify or otherwise affect the rights or duties
      of
      the Administrative Agent, the Issuing Bank or the Swingline Lender hereunder
      without the prior written consent of the Administrative Agent, the Issuing
      Bank
      or the Swingline Lender, as the case may be. The Administrative Agent may also
      amend the Commitment
      Schedule
      to
      reflect assignments entered into pursuant to Section 9.04.

     

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

     

    
      
        
        

      

      
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    (d) If,
      in
      connection with any proposed amendment, waiver or consent requiring the consent
      of “each Lender” or “each Lender affected thereby,” the consent of the Required
      Lenders is obtained, but the consent of other necessary Lenders is not obtained
      (any such Lender whose consent is necessary but not obtained being referred
      to
      herein as a “Non-Consenting
      Lender”),
      then
      the Borrowers may elect to replace a Non-Consenting Lender as a Lender party
      to
      this Agreement, provided
      that,
      concurrently with such replacement, (i) another bank or other entity which
      is
      reasonably satisfactory to the Borrowers and the Administrative Agent shall
      agree, as of such date, to purchase for cash the Loans and other Obligations
      due
      to the Non-Consenting Lender pursuant to an Assignment and Assumption and to
      become a Lender for all purposes under this Agreement and to assume all
      obligations of the Non-Consenting Lender to be terminated as of such date and
      to
      comply with the requirements of clause (b) of Section 9.04, and (ii) the
      Borrowers shall pay to such Non-Consenting Lender in same day funds on the
      day
      of such replacement (1) all interest, fees and other amounts then accrued but
      unpaid to such Non-Consenting Lender by the Borrowers hereunder to and including
      the date of termination, including without limitation payments due to such
      Non-Consenting Lender under Section 2.14 and Section 2.16, and (2) an amount,
      if
      any, equal to the payment which would have been due to such Lender on the day
      of
      such replacement under Section 2.16 had the Loans of such Non-Consenting Lender
      been prepaid on such date rather than sold to the replacement
      Lender.
      Any such
      replaced Non-Consenting Lender shall not be responsible for any assignment
      fee.

     

    Section
      9.03. Expenses;
      Indemnity; Damage Waiver.
      (a) The
      Borrowers shall pay (i) all reasonable documented out-of-pocket expenses
      incurred by the Administrative Agent and its Affiliates, including the
      reasonable fees, charges and disbursements of counsel for the Administrative
      Agent, in connection with the syndication and distribution (including, without
      limitation, via the internet or through a service such as Intralinks) of the
      credit facilities provided for herein, the preparation and administration of
      the
      Loan Documents or any amendments, modifications or waivers of the provisions
      of
      the Loan Documents (whether or not the transactions contemplated hereby or
      thereby shall be consummated), (ii) all reasonable documented out-of-pocket
      expenses incurred by the Issuing Bank in connection with the issuance,
      amendment, renewal or extension of any Letter of Credit or any demand for
      payment thereunder and (iii) all out-of-pocket expenses incurred by the
      Administrative Agent, the Issuing Bank or any Lender, including the reasonable
      fees, charges and disbursements of any counsel for the Administrative Agent,
      the
      Issuing Bank or any Lender, in connection with the enforcement, collection
      or
      protection of its rights in connection with the Loan Documents, including its
      rights under this Section, or in connection with the Loans made or Letters
      of
      Credit issued hereunder, including all such out-of-pocket expenses incurred
      during any workout, restructuring or negotiations in respect of such Loans
      or
      Letters of Credit. Expenses being reimbursed by the Borrowers under this Section
      include, without limiting the generality of the foregoing, costs and expenses
      incurred in connection with:

     

    (i) appraisals
      and insurance reviews; 

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

    Section
      9.04. Successors
      and Assigns.
      (a) The
      provisions of this Agreement shall be binding upon and inure to the benefit
      of
      the parties hereto and their respective successors and assigns permitted hereby
      (including any Affiliate of the Issuing Bank that issues any Letter of Credit),
      except that (i) the Borrowers may not assign or otherwise transfer any of its
      rights or obligations hereunder without the prior written consent of each Lender
      (and any attempted assignment or transfer by the Borrowers without such consent
      shall be null and void) and (ii) no Lender may assign or otherwise transfer
      its
      rights or obligations hereunder except in accordance with this Section. Nothing
      in this Agreement, expressed or implied, shall be construed to confer upon
      any
      Person (other than the parties hereto, their respective successors and assigns
      permitted hereby (including any Affiliate of the Issuing Bank that issues any
      Letter of Credit), Participants (to the extent provided in paragraph (c) of
      this
      Section) and, to the extent expressly contemplated hereby, the Related Parties
      of each of the Administrative Agent, the Issuing Bank and the Lenders) any
      legal
      or equitable right, remedy or claim under or by reason of this
      Agreement.

     

    
      
        
        

      

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

     

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

     

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

     

    (C)  the
      Issuing Bank.

     

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

     

    (A)  except
      in
      the case of an assignment to a Lender or an Affiliate of a Lender or an
      assignment of the entire remaining amount of the assigning Lender’s Commitment
      or Loans of any Class, the amount of the Commitment or Loans of the assigning
      Lender subject to each such assignment (determined as of the date the Assignment
      and Assumption with respect to such assignment is delivered to the
      Administrative Agent) shall not be less than $5,000,000 unless each of the
      Borrower Representative and the Administrative Agent otherwise consent,
provided
      that no
      such consent of the Borrower Representative shall be required if an Event of
      Default has occurred and is continuing;

     

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

     

    (C)  the
      parties to each assignment shall execute and deliver to the Administrative
      Agent
      an Assignment and Assumption, together with a processing and recordation fee
      of
      $3,500; and

     

    (D)  the
      assignee, if it shall not be a Lender, shall deliver to the Administrative
      Agent
      an Administrative Questionnaire in which the assignee designates one or more
      Credit Contacts to whom all syndicate-level information (which may contain
      material non-public information about Griffon, the Parent, any Group Member
      and
      their Related Parties or their respective securities) will be made available
      and
      who may receive such information in accordance with the assignee’s compliance
      procedures and applicable laws, including Federal and state securities
      laws.

     

    For
      the
      purposes of this Section 9.04(b), the term “Approved
      Fund”
has
      the
      following meaning:

     

    
      
        
        

      

      
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    “Approved
      Fund”
means
      any Person (other than a natural person) that is engaged in making, purchasing,
      holding or investing in bank loans and similar extensions of credit in the
      ordinary course of its business and that is administered or managed by (a)
      a
      Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
      entity that administers or manages a Lender.

     

    (iii) Subject
      to acceptance and recording thereof pursuant to paragraph (b)(iv) of this
      Section, from and after the effective date specified in each Assignment and
      Assumption the assignee thereunder shall be a party hereto and, to the extent
      of
      the interest assigned by such Assignment and Assumption, have the rights and
      obligations of a Lender under this Agreement, and the assigning Lender
      thereunder shall, to the extent of the interest assigned by such Assignment
      and
      Assumption, be released from its obligations under this Agreement (and, in
      the
      case of an Assignment and Assumption covering all of the assigning Lender’s
      rights and obligations under this Agreement, such Lender shall cease to be
      a
      party hereto but shall continue to be entitled to the benefits of Section 2.14,
      Section 2.15, Section 2.16, Section 2.17 and Section 9.03). Any assignment
      or
      transfer by a Lender of rights or obligations under this Agreement that does
      not
      comply with this Section 9.04 shall be treated for purposes of this Agreement
      as
      a sale by such Lender of a participation in such rights and obligations in
      accordance with paragraph (c) of this Section.

     

    (iv) The
      Administrative Agent, acting for this purpose as an agent of the Borrowers,
      shall maintain at one of its offices a copy of each Assignment and Assumption
      delivered to it and a register for the recordation of the names and addresses
      of
      the Lenders, and the Commitment of, and principal amount of the Loans and LC
      Disbursements owing to, each Lender pursuant to the terms hereof from time
      to
      time (the “Register”).
      The
      entries in the Register shall be conclusive, and the Borrowers, the
      Administrative Agent, the Issuing Bank and the Lenders may treat each Person
      whose name is recorded in the Register pursuant to the terms hereof as a Lender
      hereunder for all purposes of this Agreement, notwithstanding notice to the
      contrary. The Register shall be available for inspection by the Borrowers,
      the
      Issuing Bank and any Lender, at any reasonable time and from time to time upon
      reasonable prior notice.

     

    (v) Upon
      its
      receipt of a duly completed Assignment and Assumption executed by an assigning
      Lender and an assignee, the assignee’s completed Administrative Questionnaire
      (unless the assignee shall already be a Lender hereunder), the processing and
      recordation fee referred to in paragraph (b) of this Section and any
      written consent to such assignment required by paragraph (b) of this Section,
      the Administrative Agent shall accept such Assignment and Assumption and record
      the information contained therein in the Register; provided
      that if
      either the assigning Lender or the assignee shall have failed to make any
      payment required to be made by it pursuant to Section 2.05, Section 2.06(d)
      or
      (e), Section 2.07(b), Section 2.18(d) or Section 9.03(c), the Administrative
      Agent shall have no obligation to accept such Assignment and Assumption and
      record the information therein in the Register unless and until such payment
      shall have been made in full, together with all accrued interest thereon. No
      assignment shall be effective for purposes of this Agreement unless it has
      been
      recorded in the Register as provided in this paragraph.

     

    
      
        
        

      

      
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    (1) Any
      Lender may, without the consent of the Borrowers, the Administrative Agent,
      the
      Issuing Bank or the Swingline Lender, sell participations to one or more banks
      or other entities (a “Participant”)
      in all
      or a portion of such Lender’s rights and obligations under this Agreement
      (including all or a portion of its Commitment and the Loans owing to it);
provided
      that
      (A) such Lender’s obligations under this Agreement shall remain unchanged,
      (B) such Lender shall remain solely responsible to the other parties hereto
      for the performance of such obligations and (C) the Borrowers, the
      Administrative Agent, the Issuing Bank and the other Lenders shall continue
      to
      deal solely and directly with such Lender in connection with such Lender’s
      rights and obligations under this Agreement. Any agreement or instrument
      pursuant to which a Lender sells such a participation shall provide that such
      Lender shall retain the sole right to enforce this Agreement and to approve
      any
      amendment, modification or waiver of any provision of this Agreement;
provided
      that
      such agreement or instrument may provide that such Lender will not, without
      the
      consent of the Participant, agree to any amendment, modification or waiver
      described in the first proviso to Section 9.02(b) that affects such Participant.
      Subject to paragraph (c)(ii) of this Section, the Borrowers agree that each
      Participant shall be entitled to the benefits of Section 2.15, Section 2.16
      and
      Section 2.17 to the same extent as if it were a Lender and had acquired its
      interest by assignment pursuant to paragraph (b) of this Section. To the extent
      permitted by law, each Participant also shall be entitled to the benefits of
      Section 9.08 as though it were a Lender, provided such Participant agrees to
      be
      subject to Section 2.18(d) as though it were a Lender.

     

    (2) A
      Participant shall not be entitled to receive any greater payment under Section
      2.15 or Section 2.17 than the applicable Lender would have been entitled to
      receive with respect to the participation sold to such Participant, unless
      the
      sale of the participation to such Participant is made with the Borrower
      Representative’s prior written consent. A Participant that would be a Foreign
      Lender if it were a Lender shall not be entitled to the benefits of Section
      2.17
      unless the Borrower Representative is notified of the participation sold to
      such
      Participant and such Participant agrees, for the benefit of the Borrowers,
      to
      comply with Section 2.17(e) as though it were a Lender. 

     

    (d) Any
      Lender may at any time pledge or assign a security interest in all or any
      portion of its rights under this Agreement to secure obligations of such Lender,
      including without limitation any pledge or assignment to secure obligations
      to a
      Federal Reserve Bank, and this Section shall not apply to any such pledge or
      assignment of a security interest; provided
      that no
      such pledge or assignment of a security interest shall release a Lender from
      any
      of its obligations hereunder or substitute any such pledgee or assignee for
      such
      Lender as a party hereto.

     

    Section
      9.05. Survival.
      All
      covenants, agreements, representations and warranties made by the Loan Parties
      in the Loan Documents and in the certificates or other instruments delivered
      in
      connection with or pursuant to this Agreement or any other Loan Document shall
      be considered to have been relied upon by the other parties hereto and shall
      survive the execution and delivery of the Loan Documents and the making of
      any
      Loans and issuance of any Letters of Credit, regardless of any investigation
      made by any such other party or on its behalf and notwithstanding that the
      Administrative Agent, the Issuing Bank or any Lender may have had notice or
      knowledge of any Default or incorrect representation or warranty at the time
      any
      credit is extended hereunder, and shall continue in full force and effect as
      long as the principal of or any accrued interest on any Loan or any fee or
      any
      other amount payable under this Agreement is outstanding and unpaid or any
      Letter of Credit is outstanding and so long as the Commitments have not expired
      or terminated. The provisions of Section 2.15, Section 2.16, Section 2.17 and
      Section 9.03 and Article VIII shall survive and remain in full force and effect
      regardless of the consummation of the transactions contemplated hereby, the
      repayment of the Loans, the expiration or termination of the Letters of Credit
      and the Commitments or the termination of this Agreement or any provision
      hereof.

     

    
      
        
        

      

      
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    Section
      9.06. Counterparts;
      Integration; Effectiveness.
      This
      Agreement may be executed in counterparts (and by different parties hereto
      on
      different counterparts), each of which shall constitute an original, but all
      of
      which when taken together shall constitute a single contract. This Agreement,
      the other Loan Documents and any separate letter agreements with respect to
      fees
      payable to the Administrative Agent constitute the entire contract among the
      parties relating to the subject matter hereof and supersede any and all previous
      agreements and understandings, oral or written, relating to the subject matter
      hereof. Except as provided in Section 4.01, this Agreement shall become
      effective when it shall have been executed by the Administrative Agent and
      when
      the Administrative Agent shall have received counterparts hereof which, when
      taken together, bear the signatures of each of the other parties hereto, and
      thereafter shall be binding upon and inure to the benefit of the parties hereto
      and their respective successors and assigns. Delivery of an executed counterpart
      of a signature page of this Agreement by facsimile shall be effective as
      delivery of a manually executed counterpart of this Agreement. 

     

    Section
      9.07. Severability.
      Any
      provision of any Loan Document held to be invalid, illegal or unenforceable
      in
      any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
      of
      such invalidity, illegality or unenforceability without affecting the validity,
      legality and enforceability of the remaining provisions thereof; and the
      invalidity of a particular provision in a particular jurisdiction shall not
      invalidate such provision in any other jurisdiction.

     

    Section
      9.08. Right
      of Setoff.
      If an
      Event of Default shall have occurred and be continuing, each Lender and each
      of
      its Affiliates is hereby authorized at any time and from time to time, to the
      fullest extent permitted by law, to set off and apply any and all deposits
      (general or special, time or demand, provisional or final) at any time held
      and
      other obligations at any time owing by such Lender or Affiliate to or for the
      credit or the account of the Borrowers or such Guarantor against any of and
      all
      the Secured Obligations held by such Lender, irrespective of whether or not
      such
      Lender shall have made any demand under the Loan Documents and although such
      obligations may be unmatured. The applicable Lender shall notify the Borrower
      Representative and the Administrative Agent of such set-off or application,
      provided
      that any
      failure to give or any delay in giving such notice shall not affect the validity
      of any such set-off or application under this Section. The rights of each Lender
      under this Section are in addition to other rights and remedies (including
      other
      rights of setoff) which such Lender may have. 

     

    
      
        
        

      

      
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    Section
      9.09. Governing
      Law; Jurisdiction; Consent to Service of Process.
      (a) The
      Loan Documents (other than those containing a contrary express choice of law
      provision) shall be governed by and construed in accordance with the laws of
      the
      State of New York, but giving effect to federal laws applicable to national
      banks.

     

    (b) Each
      Loan
      Party
      hereby
      irrevocably and unconditionally submits, for itself and its property, to the
      nonexclusive jurisdiction of any U.S. Federal or New York State court sitting
      in
      New York, New York in any action or proceeding arising out of or relating to
      any
      Loan Documents, or for recognition or enforcement of any judgment, and each
      of
      the parties hereto hereby irrevocably and unconditionally agrees that all claims
      in respect of any such action or proceeding may be heard and determined in
      such
      New York State or, to the extent permitted by law, in such Federal court. Each
      of the parties hereto agrees that a final judgment in any such action or
      proceeding shall be conclusive and may be enforced in other jurisdictions by
      suit on the judgment or in any other manner provided by law. Nothing in this
      Agreement or any other Loan Document shall affect any right that the
      Administrative Agent, the Issuing Bank or any Lender may otherwise have to
      bring
      any action or proceeding relating to this Agreement or any other Loan Document
      against any Loan Party or its properties in the courts of any
      jurisdiction.

     

    (c) Each
      Loan
      Party hereby irrevocably and unconditionally waives, to the fullest extent
      it
      may legally and effectively do so, any objection which it may now or hereafter
      have to the laying of venue of any suit, action or proceeding arising out of
      or
      relating to this Agreement or any other Loan Document in any court referred
      to
      in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
      waives, to the fullest extent permitted by law, the defense of an inconvenient
      forum to the maintenance of such action or proceeding in any such
      court.

     

    (d) Each
      party to this Agreement irrevocably consents to service of process in the manner
      provided for notices in Section 9.01. Nothing in this Agreement or any other
      Loan Document will affect the right of any party to this Agreement to serve
      process in any other manner permitted by law.

     

    Section
      9.10. WAIVER
      OF JURY TRIAL.
      EACH
      PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
      ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
      INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT
      OR THE TRANSACTIONS CONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT, TORT OR
      ANY
      OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
      AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
      THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
      THE
      FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
      HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
      MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

     

    
      
        
        

      

      
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    Section
      9.11. Headings.
      Article
      and Section headings and the Table of Contents used herein are for convenience
      of reference only, are not part of this Agreement and shall not affect the
      construction of, or be taken into consideration in interpreting, this
      Agreement.

     

    Section
      9.12. Confidentiality.
      Each of
      the Administrative Agent, the Issuing Bank and the Lenders agrees to maintain
      the confidentiality of the Information (as defined below), except that
      Information may be disclosed (a) to its and its Affiliates’ directors,
      officers, employees and agents, including accountants, legal counsel and other
      advisors (it being understood that the Persons to whom such disclosure is made
      will be informed of the confidential nature of such Information and instructed
      to keep such Information confidential), (b) to the extent requested by any
      regulatory authority, (c) to the extent required by Requirement of Laws or
      by any subpoena or similar legal process, (d) to any other party to this
      Agreement, (e) in connection with the exercise of any remedies hereunder or
      any
      suit, action or proceeding relating to this Agreement or any other Loan Document
      or the enforcement of rights hereunder or thereunder, (f) subject to an
      agreement containing provisions substantially the same as those of this Section,
      to (i) any assignee of or Participant in, or any prospective assignee of or
      Participant in, any of its rights or obligations under this Agreement or (ii)
      any actual or prospective counterparty (or its advisors) to any swap or
      derivative transaction relating to the Loan Parties and their obligations,
      (g)
      with the consent of the Borrower Representative or (h) to the extent such
      Information (i) becomes publicly available other than as a result of a
      breach of this Section or (ii) becomes available to the Administrative
      Agent, the Issuing Bank or any Lender on a non-confidential basis from a source
      other than the Borrowers. For the purposes of this Section, “Information” means
      all information received from the Borrowers relating to the Borrowers or their
      business, other than any such information that is available to the
      Administrative Agent, the Issuing Bank or any Lender on a non-confidential
      basis
      prior to disclosure by the Borrowers; provided
      that, in
      the case of information received from the Borrowers after the date hereof,
      such
      information is clearly identified at the time of delivery as confidential.
      Any
      Person required to maintain the confidentiality of Information as provided
      in
      this Section shall be considered to have complied with its obligation to do
      so
      if such Person has exercised the same degree of care to maintain the
      confidentiality of such Information as such Person would accord to its own
      confidential information.

     

    EACH
      LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN Section 9.12 FURNISHED TO
      IT
      PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION
      CONCERNING GRIFFON AND ITS AFFILIATES AND THEIR RELATED PARTIES OR THEIR
      RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES
      REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE
      SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND
      APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.

     

    
      
        
        

      

      
        104

        
          

        

      

      
        
        

      

    

    ALL
      INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE
      BORROWERS OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF
      ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY
      CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE COMPANY, THE LOAN PARTIES
      AND
      THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES. ACCORDINGLY, EACH LENDER
      REPRESENTS TO THE BORROWERS AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED
      IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION
      THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS
      COMPLIANCE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES
      LAWS.

    

    Section
      9.13. Several
      Obligations; Nonreliance; Violation of Law.
      The
      respective obligations of the Lenders hereunder are several and not joint and
      the failure of any Lender to make any Loan or perform any of its obligations
      hereunder shall not relieve any other Lender from any of its obligations
      hereunder. Each Lender hereby represents that it is not relying on or looking
      to
      any margin stock for the repayment of the Borrowings provided for herein.
      Anything contained in this Agreement to the contrary notwithstanding, neither
      the Issuing Bank nor any Lender shall be obligated to extend credit to the
      Borrowers in violation of any Requirement of Law.

    

    Section
      9.14. USA
      PATRIOT Act.
      Each
      Lender that is subject to the requirements of the USA Patriot Act (Title III
      of
      Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”)
      hereby
      notifies the Borrowers that pursuant to the requirements of the Act, it is
      required to obtain, verify and record information that identifies the Borrowers,
      which information includes the names and addresses of the Borrowers and other
      information that will allow such Lender to identify the Borrowers in accordance
      with the Act.

    

    Section
      9.15. Disclosure.
      Each
      Loan Party and each Lender hereby acknowledges and agrees that the
      Administrative Agent and/or its Affiliates from time to time may hold
      investments in, make other loans to or have other relationships with any of
      the
      Loan Parties and their respective Affiliates.

    

    Section
      9.16. Appointment
      for Perfection.
      Each
      Lender hereby appoints each other Lender as its agent for the purpose of
      perfecting Liens, for the benefit of the Administrative Agent and the Secured
      Parties, in assets which, in accordance with Article 9 of the UCC or any other
      applicable law can be perfected only by possession. Should any Lender (other
      than the Administrative Agent) obtain possession of any such Collateral, such
      Lender shall notify the Administrative Agent thereof, and, promptly upon the
      Administrative Agent’s request therefor shall deliver such Collateral to the
      Administrative Agent or otherwise deal with such Collateral in accordance with
      the Administrative Agent’s instructions.

    
      
        
        

      

      
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    Section
      9.17. Interest
      Rate Limitation.
      Notwithstanding anything herein to the contrary, if at any time the interest
      rate applicable to any Loan, together with all fees, charges and other amounts
      which are treated as interest on such Loan under applicable law (collectively
      the “Charges”), shall exceed the maximum lawful rate (the “Maximum
      Rate”)
      which
      may be contracted for, charged, taken, received or reserved by the Lender
      holding such Loan in accordance with applicable law, the rate of interest
      payable in respect of such Loan hereunder, together with all Charges payable
      in
      respect thereof, shall be limited to the Maximum Rate and, to the extent lawful,
      the interest and Charges that would have been payable in respect of such Loan
      but were not payable as a result of the operation of this Section shall be
      cumulated and the interest and Charges payable to such Lender in respect of
      other Loans or periods shall be increased (but not above the Maximum Rate
      therefor) until such cumulated amount, together with interest thereon at the
      Federal Funds Effective Rate to the date of repayment, shall have been received
      by such Lender.

    

    ARTICLE
      X

     

    Guaranty

    Section
      10.01. Guaranty.
      Each
      Guarantor hereby agrees that it is jointly and severally liable for, and, as
      primary obligor and not merely as surety, absolutely and unconditionally
      guarantees to the Secured Parties the prompt payment when due, whether at stated
      maturity, upon acceleration or otherwise, and at all times thereafter, of the
      Secured Obligations and all costs and expenses including, without limitation,
      all court costs and attorneys’ and paralegals’ fees (including allocated costs
      of in-house counsel and paralegals) and expenses paid or incurred by the
      Administrative Agent, the Issuing Bank and the Secured Parties in endeavoring
      to
      collect all or any part of the Secured Obligations from, or in prosecuting
      any
      action against, any Borrower, any Guarantor or any other guarantor of all or
      any
      part of the Secured Obligations (such costs and expenses, together with the
      Secured Obligations, collectively the “Guaranteed
      Obligations”).
      Each
      Guarantor further agrees that the Guaranteed Obligations may, to the extent
      permitted by the terms of this Agreement or any other Loan Document, be extended
      or renewed in whole or in part without notice to or further assent from it,
      and
      that it remains bound upon its guarantee notwithstanding any such extension
      or
      renewal. All terms of this Guaranty apply to and may be enforced by or on behalf
      of any domestic or foreign branch or Affiliate of any Lender that extended
      any
      portion of the Guaranteed Obligations.

    

    Section
      10.02. Guaranty
      of Payment.
      This
      Guaranty is a guaranty of payment and not of collection. Each Guarantor waives
      any right to require the Administrative Agent, the Issuing Bank or any Lender
      to
      sue any Borrower, any Guarantor, any other guarantor, or any other person
      obligated for all or any part of the Guaranteed Obligations (each, an “Obligated
      Party”), or otherwise to enforce its payment against any collateral securing all
      or any part of the Guaranteed Obligations.

    

    Section
      10.03. No
      Discharge or Diminishment of Guaranty.
      (a)
      Except as otherwise provided for herein or in any other Loan Document, the
      obligations of each Guarantor hereunder are unconditional and absolute and
      not
      subject to any reduction, limitation, impairment or termination for any reason
      (other than the indefeasible payment in full in cash of the Guaranteed
      Obligations), including: (i) any claim of waiver, release, extension, renewal,
      settlement, surrender, alteration, or compromise of any of the Guaranteed
      Obligations, by operation of law or otherwise; (ii) any change in the corporate
      existence, structure or ownership of any Borrower or any other guarantor of
      or
      other person liable for any of the Guaranteed Obligations; (iii) any insolvency,
      bankruptcy, reorganization or other similar proceeding affecting any Obligated
      Party, or their assets or any resulting release or discharge of any obligation
      of any Obligated Party; or (iv) the existence of any claim, setoff or other
      rights which any Guarantor may have at any time against any Obligated Party,
      the
      Administrative Agent, the Issuing Bank, any Lender, or any other person, whether
      in connection herewith or in any unrelated transactions. 

     

    
      
        
        

      

      
        106

        
          

        

      

      
        
        

      

    

     

    (b) The
      obligations of each Guarantor hereunder are not subject to any defense or
      setoff, counterclaim, recoupment, or termination whatsoever by reason of the
      invalidity, illegality, or unenforceability of any of the Guaranteed Obligations
      or otherwise, or any provision of applicable law or regulation purporting to
      prohibit payment by any Obligated Party, of the Guaranteed Obligations or any
      part thereof. 

    

    (c) Further,
      the obligations of any Guarantor hereunder are not discharged or impaired or
      otherwise affected by: (i) the failure of the Administrative Agent, the Issuing
      Bank or any Lender to assert any claim or demand or to enforce any remedy with
      respect to all or any part of the Guaranteed Obligations; (ii) any waiver or
      modification of or supplement to any provision of any agreement relating to
      the
      Guaranteed Obligations; (iii) any release, non-perfection, or invalidity of
      any
      indirect or direct security for the obligations of any Borrower for all or
      any
      part of the Guaranteed Obligations or any obligations of any other guarantor
      of
      or other person liable for any of the Guaranteed Obligations; (iv) any action
      or
      failure to act by the Administrative Agent, the Issuing Bank or any Lender
      with
      respect to any collateral securing any part of the Guaranteed Obligations;
      or
      (v) any default, failure or delay, willful or otherwise, in the payment or
      performance of any of the Guaranteed Obligations, or any other circumstance,
      act, omission or delay that might in any manner or to any extent vary the risk
      of such Guarantor or that would otherwise operate as a discharge of any
      Guarantor as a matter of law or equity (other than the indefeasible payment
      in
      full in cash of the Guaranteed Obligations). 

    

    Section
      10.04. Defenses
      Waived.
      To the
      fullest extent permitted by applicable law, each Guarantor hereby waives any
      defense based on or arising out of any defense of any Borrower or any Guarantor
      or the unenforceability of all or any part of the Guaranteed Obligations from
      any cause, or the cessation from any cause of the liability of any Borrower
      or
      any Guarantor, other than the indefeasible payment in full in cash of the
      Guaranteed Obligations. Without limiting the generality of the foregoing,
each
      Guarantor irrevocably waives acceptance hereof, presentment, demand, protest
      and, to the fullest extent permitted by law, any notice not provided for herein,
      as well as any requirement that at any time any action be taken by any person
      against any
      Obligated Party,
      or any
      other person. The
      Administrative Agent may, at its election, foreclose on any Collateral held
      by
      it by one or more judicial or non-judicial sales, accept an assignment of any
      such Collateral in lieu of foreclosure or otherwise act or fail to act with
      respect to any collateral securing all or a part of the Guaranteed Obligations,
      compromise or adjust any part of the Guaranteed Obligations, make any other
      accommodation with any Obligated Party or exercise any other right or remedy
      available to it against any Obligated Party, without affecting or impairing
      in
      any way the liability of such Guarantor under this Guaranty except to the extent
      the Guaranteed Obligations have been fully and indefeasibly paid in cash. To
      the
      fullest extent permitted by applicable law, each Guarantor waives any defense
      arising out of any such election even though that election may operate, pursuant
      to applicable law, to impair or extinguish any right of reimbursement or
      subrogation or other right or remedy of any Guarantor against any Obligated
      Party or any security.

     

    
      
        
        

      

      
        107

        
          

        

      

      
        
        

      

    

     

    Section
      10.05. Rights
      of Subrogation.
      No
      Guarantor will assert any right, claim or cause of action, including, without
      limitation, a claim of subrogation, contribution or indemnification that it
      has
      against any Obligated Party, or any collateral, until the Loan Parties and
      the
      Guarantors have fully performed all their obligations to the Administrative
      Agent, the Issuing Bank and the Secured Parties. 

    

    Section
      10.06. Reinstatement;
      Stay of Acceleration.
      If at
      any time any payment of any portion of the Guaranteed Obligations is rescinded
      or must otherwise be restored or returned upon the insolvency, bankruptcy,
      or
      reorganization of any Borrower or otherwise, each Guarantor’s obligations under
      this Guaranty with respect to that payment shall be reinstated at such time
      as
      though the payment had not been made and whether or not the Administrative
      Agent, the Issuing Bank and the Secured Parties are in possession of this
      Guaranty. If
      acceleration of the time for payment of any of the Guaranteed Obligations is
      stayed upon the insolvency, bankruptcy or reorganization of any Borrower, all
      such amounts otherwise subject to acceleration under the terms of any agreement
      relating to the Guaranteed Obligations shall nonetheless be payable by the
      Guarantors forthwith on demand by the Lender.

    

    Section
      10.07. Information.
      Each
      Guarantor assumes all responsibility for being and keeping itself informed
      of
      the Borrowers’ financial condition and assets, and of all other circumstances
      bearing upon the risk of nonpayment of the Guaranteed Obligations and the
      nature, scope and extent of the risks that each Guarantor assumes and incurs
      under this Guaranty, and agrees that neither the Administrative Agent, the
      Issuing Bank nor any Lender shall have any duty to advise any Guarantor of
      information known to it regarding those circumstances or risks.

    

    Section
      10.08. [Reserved].
      

    

    Section
      10.09. Maximum
      Liability.
      The
      provisions of this Guaranty are severable, and in any action or proceeding
      involving any state corporate law, or any state, federal or foreign bankruptcy,
      insolvency, reorganization or other law affecting the rights of creditors
      generally, if the obligations of any Guarantor under this Guaranty would
      otherwise be held or determined to be avoidable, invalid or unenforceable on
      account of the amount of such Guarantor’s liability under this Guaranty, then,
      notwithstanding any other provision of this Guaranty to the contrary, the amount
      of such liability shall, without any further action by the Guarantors or the
      Secured Parties, be automatically limited and reduced to the highest amount
      that
      is valid and enforceable as determined in such action or proceeding (such
      highest amount determined hereunder being the relevant Guarantor’s “Maximum
      Liability”). This Section with respect to the Maximum Liability of each
      Guarantor is intended solely to preserve the rights
      of the
      Secured Parties to the maximum extent not subject to avoidance under applicable
      law, and no Guarantor nor any other person or entity shall have any right or
      claim under this Section with respect to such Maximum Liability, except to
      the
      extent necessary so that the obligations of any Guarantor hereunder shall not
      be
      rendered voidable under applicable law. Each
      Guarantor agrees that the Guaranteed Obligations may at any time and from time
      to time exceed the Maximum Liability of each Guarantor without impairing this
      Guaranty or affecting the rights and remedies of the Secured Parties hereunder,
      provided
      that,
      nothing in this sentence shall be construed to increase any Guarantor’s
      obligations hereunder beyond its Maximum Liability.

     

    
      
        
        

      

      
        108

        
          

        

      

      
        
        

      

    

     

    Section
      10.10. Contribution.
      In the
      event any Guarantor (a “Paying Guarantor”) shall make any payment or payments
      under this Guaranty or shall suffer any loss as a result of any realization
      upon
      any collateral granted by it to secure its obligations under this Guaranty,
      each
      other Guarantor (each a “Non-Paying Guarantor”) shall contribute to such Paying
      Guarantor an amount equal to such Non-Paying Guarantor’s “Applicable Percentage”
of such payment or payments made, or losses suffered, by such Paying Guarantor.
      For purposes of this Article X, each Non-Paying Guarantor’s “Applicable
      Percentage” with respect to any such payment or loss by a Paying Guarantor shall
      be determined as of the date on which such payment or loss was made by reference
      to the ratio of (i) such Non-Paying Guarantor’s Maximum Liability as of such
      date (without giving effect to any right to receive, or obligation to make,
      any
      contribution hereunder) or, if such Non-Paying Guarantor’s Maximum Liability has
      not been determined, the aggregate amount of all monies received by such
      Non-Paying Guarantor from the Borrowers after the date hereof (whether by loan,
      capital infusion or by other means) to (ii) the aggregate Maximum Liability
      of
      all Guarantors hereunder (including such Paying Guarantor) as of such date
      (without giving effect to any right to receive, or obligation to make, any
      contribution hereunder), or to the extent that a Maximum Liability has not
      been
      determined for any Guarantor, the aggregate amount of all monies received by
      such Guarantors from the Borrowers after the date hereof (whether by loan,
      capital infusion or by other means). Nothing in this provision shall affect
      any
      Guarantor’s several liability for the entire amount of the Guaranteed
      Obligations (up to such Guarantor’s Maximum Liability). Each of the Guarantors
      covenants and agrees that its right to receive any contribution under this
      Guaranty from a Non-Paying Guarantor shall be subordinate and junior in right
      of
      payment to the payment in full in cash of the Guaranteed Obligations. This
      provision is for the benefit of the Administrative Agent, the Issuing Bank,
      the
      Secured Parties and the Guarantors and may be enforced by any one, or more,
      or
      all of them in accordance with the terms hereof.

    

    Section
      10.11. Liability
      Cumulative.
      The
      liability of each Loan Party as a Guarantor under this Article X is in addition
      to and shall be cumulative with all liabilities of each Loan Party to the
      Administrative Agent, the Issuing Bank and the Secured Parties under this
      Agreement and the other Loan Documents to which such Loan Party is a party
      or in
      respect of any obligations or liabilities of the other Loan Parties, without
      any
      limitation as to amount, unless the instrument or agreement evidencing or
      creating such other liability specifically provides to the
      contrary.

     

    
      
        
        

      

      
        109

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      XI

     

    The
      Borrower Representative

    

    Section
      11.01. Appointment;
      Nature of Relationship.
      Clopay
      Plastic Products Company, Inc. is hereby appointed by each of the Borrowers
      as
      its contractual representative (herein referred to as the “Borrower
      Representative”) hereunder and under each other Loan Document, and each of the
      Borrowers irrevocably authorizes the Borrower Representative to act as the
      contractual representative of such Borrower with the rights and duties expressly
      set forth herein and in the other Loan Documents. The Borrower Representative
      agrees to act as such contractual representative upon the express conditions
      contained in this Article XI. Additionally, the Borrowers hereby appoint the
      Borrower Representative as their agent to receive all of the proceeds of the
      Loans in the Funding Account(s), at which time the Borrower Representative
      shall
      promptly disburse such Loans to the appropriate Borrower, provided that, in
      the
      case of a Revolving Loan, such amount shall not exceed the Availability. The
      Administrative Agent and the Lenders, and their respective officers, directors,
      agents or employees, shall not be liable to the Borrower Representative or
      any
      Borrower for any action taken or omitted to be taken by the Borrower
      Representative or the Borrowers pursuant to this Section
      11.01.

    

    Section
      11.02. Powers.
      The
      Borrower Representative
      shall
      have and may exercise such powers under the Loan Documents as are specifically
      delegated to the Borrower Representative by the terms of each thereof, together
      with such powers as are reasonably incidental thereto. The Borrower
      Representative shall have no implied duties to the Borrowers, or any obligation
      to the Lenders to take any action thereunder except any action specifically
      provided by the Loan Documents to be taken by the Borrower
      Representative.

    

    Section
      11.03. Employment
      of Agents.
      The
      Borrower Representative may execute any of its duties as the Borrower
      Representative hereunder and under any other Loan Document by or through
      authorized officers.

    

    Section
      11.04. Notices.
      Any
      notice provided to the Borrower Representative hereunder shall constitute notice
      to each Borrower on the date received by the Borrower
      Representative.

    

    Section
      11.05. Successor
      Borrower
      Representative.
      Upon the
      prior written consent of the Administrative Agent, the Borrower Representative
      may resign at any time, such resignation to be effective upon the appointment
      of
      a successor Borrower Representative. The Administrative Agent shall give prompt
      written notice of such resignation to the Lenders.

     

    
      
        
        

      

      
        110

        
          

        

      

      
        
        

      

    

     

    Section
      11.06. Execution
      of Loan Documents; Borrowing Base Certificate.
      The
      Borrowers hereby empower and
      authorize the Borrower Representative, on behalf of the Borrowers, to execute
      and deliver to the Administrative Agent and the Lenders the Loan Documents
      and
      all related agreements, certificates, documents, or instruments as shall be
      necessary or appropriate to effect the purposes of the Loan Documents, including
      without limitation, the Borrowing Base Certificate and the Compliance
      Certificate. Each Borrower agrees that any action taken by the Borrower
      Representative or the Borrowers in accordance with the terms of this Agreement
      or the other Loan Documents, and the exercise by the Borrower Representative
      of
      its powers set forth therein or herein, together with such other powers that
      are
      reasonably incidental thereto, shall be binding upon all of the Borrowers.
      

    

    Section
      11.07. Reporting.
      Each
      Borrower hereby agrees that such Borrower shall furnish promptly after each
      fiscal month to the Borrower Representative a copy of its part of the Borrowing
      Base Certificate and any other certificate or report required hereunder or
      requested by the Borrower Representative on which the Borrower Representative
      shall rely to prepare the Borrowing Base Certificate and Compliance Certificate
      required pursuant to the provisions of this Agreement. 

    
      
        
        

      

      
        111

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
      executed by their respective authorized officers as of the day and year first
      above written.

    

    
      	 	
              BORROWERS:

            
	 	 	 
	 	
              CLOPAY
                BUILDING PRODUCTS COMPANY, INC.,

            
	 	 	 
	 	
              By:

            	
              /s/
                Thomas D. Gibbons

            
	 	
              Name:
                Thomas D. Gibbons

            
	 	
              Title:
                Treasurer

            
	 	 	 
	 	
              CLOPAY
                PLASTIC PRODUCTS COMPANY, INC.,

            
	 	 	 
	 	 	 
	 	
              By:

            	
              /s/
                Thomas D. Gibbons

            
	 	
              Name:
                Thomas D. Gibbons

            
	 	
              Title:
                Treasurer

            
	 	 	 
	 	
              CLOPAY
                HOLDING CO.,

            
	 	 	 
	 	 	 
	 	
              By:

            	
              /s/
                Thomas D. Gibbons

            
	 	
              Name:
                Thomas D. Gibbons

            
	 	
              Title:
                Treasurer

            
	 	 	 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              JPMORGAN
                CHASE BANK, N.A., individually,

              as
                Administrative Agent, Issuing Bank and

              Swingline
                Lender

            
	 	 	 
	 	
              By

            	
              /s/
                Kathleen C. Maggi

            
	 	 	
              Name:
                Kathleen C. Maggi

            
	 	 	
              Title:
                Senior Vice President

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	 	
              WACHOVIA
                BANK, NATIONAL ASSOCIATION

            
	 	 	 
	 	
              By

            	
              /s/
                Robert Milhorat

            
	 	 	
              Name:
                Robert Milhorat

            
	 	 	
              Title:
                Director

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	 	
              HSBC
                BUSINESS CREDIT (USA) INC.

            
	 	 	 
	 	
              By

            	
              /s/Jimmy
                Schwartz          

            
	 	 	
              Name:
                Jimmy Schwartz

            
	 	 	
              Title:
                Vice President

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	 	
              US
                BANK NATIONAL ASSOCIATION

            
	 	 	 
	 	
              By

            	
              /s/
                Joseph
                Scaglione           

            
	 	 	
              Name:
                Joseph J. Scaglione

            
	 	 	
              Title:
                Vice President

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	 	
              DEUTSCHE
                BANK TRUST COMPANY AMERICAS

            
	 	 	 
	 	
              By

            	
              /s/
                Stephen R.
                Lapidus         

            
	 	 	
              Name:
                Stephen R. Lapidus

            
	 	 	
              Title:
                Director

            
	 	 	 
	 	
              By

            	
              /s/
                Marguerite
                Sutton         

            
	 	 	
              Name:
                Marguerite Sutton

            
	 	 	
              Title:
                Director

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	 	
              FIFTH
                THIRD BANK

            
	 	 	 
	 	
              By

            	
              /s/
                Brooke
                Balcom         

            
	 	 	
              Name:
                Brooke Balcom

            
	 	 	
              Title:
                Vice President

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	 	
              MANUFACTURERS
                AND TRADERS TRUST COMPANY

            
	 	 	 
	 	
              By

            	
              /s/
                William H. Moul
                Jr.         

            
	 	 	
              Name:
                William H. Moul Jr. 

            
	 	 	
              Title:
                Vice President

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	 	
              PNC
                BANK, NATIONAL ASSOCIATION

            
	 	 	 
	 	
              By

            	
              /s/ David
                B. Thayer  

            
	 	 	
              Name:
                David B. Thayer

            
	 	 	
              Title:
                Vice PresidentAGREEMENT
      OF MERGER AND
PLAN
      OF REORGANIZATION

     

      
        

      

    

     

    BY
      AND AMONG

     

    OPTIONS
      MEDIA GROUP HOLDINGS, INC.

     

    OPTIONS
      ACQUISITION CORP.

     

    OPTIONS
      ACQUISITION SUB, INC.

     

    and

     

    CUSTOMER
      ACQUISITION NETWORK HOLDINGS, INC.

     

    Dated
      as
      of June 23, 2008

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    AGREEMENT
      OF MERGER AND PLAN OF REORGANIZATION

     

    THIS
      AGREEMENT OF MERGER AND PLAN OF REORGANIZATION (this “Agreement”)
      is
      made and entered into on June 23, 2008, by and among OPTIONS MEDIA GROUP
      HOLDINGS, INC., a Nevada corporation (“Parent”),
      OPTIONS ACQUISITION CORP., a Delaware corporation (“Acquisition
      Corp.”),
      which
      is a wholly-owned subsidiary of Parent, OPTIONS ACQUISITION SUB, INC., a
      Delaware corporation (the “Company”)
      and
      CUSTOMER ACQUISITION NETWORK HOLDINGS, INC., a Delaware corporation and the
      sole
      stockholder of the Company (“CAN”).

     

    W
      I T N E
      S S E T H :

     

    WHEREAS,
      the Board of Directors of each of Acquisition Corp., Parent and the Company
      have
      each determined that it is fair to and in the best interests of their respective
      corporations and stockholders for Acquisition Corp. to be merged with and into
      the Company (the “Merger”)
      upon
      the terms and subject to the conditions set forth herein; and 

     

    WHEREAS,
      the Board of Directors of each of Parent, Acquisition Corp. and the Company
      have
      approved the Merger in accordance with the General Corporation Law of the State
      of Delaware (the “DGCL”)
      and
      the Nevada Revised Statutes (the “NRS”),
      and
      upon the terms and subject to the conditions set forth herein, in the Delaware
      Certificate of Merger attached as Exhibit
      A
      hereto
      (the “Certificate
      of Merger”);
      and

     

    WHEREAS,
      CAN, as the sole stockholder of the Company, has approved by written consent
      pursuant to Section 228 of the DGCL this Agreement, the Certificate of Merger
      and the transactions contemplated and described hereby and thereby, including,
      without limitation, the Merger, and Parent, as the sole stockholder of
      Acquisition Corp., has approved by written consent pursuant to Section 228
      of
      the DGCL this Agreement, the Certificate of Merger and the transactions
      contemplated and described hereby and thereby, including, without limitation,
      the Merger; and

     

    WHEREAS,
      immediately following the Closing (as defined below), Parent (as it will exist
      as of the closing of the Merger) will sell a minimum of $3,000,000 and a maximum
      of $6,000,000 of its Units subject to increase as the discretion of Parent,
      with
      each “Unit” consisting of one share of its common stock and a three year
      detachable warrant to purchase 0.5 of one share of common stock at $0.50 per
      share, for a purchase price of $0.30 per Unit, in a private placement offering
      to accredited investors (the “Private
      Placement”)
      for
      the purpose of financing the Cash Merger Consideration (as defined below) and
      the ongoing business and operations of the Surviving Corporation (as defined
      below) following the Merger; and

     

    WHEREAS,
      the parties hereto intend that the Merger contemplated herein shall qualify
      as a
      reorganization within the meaning of Section 368(a)(1)(A) of the Internal
      Revenue Code of 1986, as amended (the “Code”),
      by
      reason of Section 368(a)(2)(E) of the Code.

     

    NOW,
      THEREFORE, in consideration of the mutual agreements and covenants hereinafter
      set forth, the parties hereto agree as follows:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
       

      ARTICLE
        I.

      THE
        MERGER

       

      Section
        1.01 Merger.
        Subject
        to the terms and conditions of this Agreement and the Certificate of Merger,
        Acquisition Corp. shall be merged with and into the Company in accordance
        with
        Section 251 of the DGCL. At the Effective Time (as defined below), the separate
        legal existence of Acquisition Corp. shall cease, and the Company shall be
        the
        surviving corporation in the Merger (sometimes hereinafter referred to as
        the
“Surviving
        Corporation”)
        and
        shall continue its corporate existence under the laws of the State of Delaware
        under the name “Options Acquisition Sub, Inc.”

       

      Section
        1.02 Effective
        Time.
        The
        Merger shall become effective upon the filing of the Certificate of Merger
        with
        the Secretary of State of the State of Delaware in accordance with Section
        251
        of the DGCL. The time at which the Merger shall become effective as aforesaid
        is
        referred to hereinafter as the “Effective
        Time.”

       

      Section
        1.03 Closing.
        The
        closing of the Merger (the “Closing”)
        shall
        occur concurrently with the Effective Time (the “Closing
        Date”).
        The
        Closing shall occur at the offices of Cane Clark LLP referred to in Section
        10.01 hereof. At the Closing, all of the documents, certificates, agreements,
        opinions and instruments referenced in Article VII will be executed and
        delivered as described therein. At the Effective Time, all actions to be
        taken
        at the Closing shall be deemed to be taken simultaneously.

       

      Section
        1.04 Certificate
        of Incorporation, By-laws, Directors and Officers.

       

      (a) The
        Certificate of Incorporation of the Company, as in effect immediately prior
        to
        the Effective Time, attached as Exhibit
        B
        hereto,
        as amended by the Certificate of Merger, shall be the Certificate of
        Incorporation of the Surviving Corporation from and after the Effective Time
        until amended in accordance with applicable law and such Certificate of
        Incorporation.

       

      (b) The
        By-laws of the Company, as in effect immediately prior to the Effective Time,
        attached as Exhibit
        C
        hereto,
        shall be the By-laws of the Surviving Corporation from and after the Effective
        Time until amended in accordance with applicable law, the Certificate of
        Incorporation of the Surviving Corporation and such By-laws.

       

      (c) The
        directors and officers listed in Exhibit
        D
        hereto
        shall be the directors and officers of the Surviving Corporation and Parent,
        and
        each shall hold his respective office or offices from and after the Effective
        Time until his successor shall have been elected and shall have qualified
        in
        accordance with applicable law, or as otherwise provided in the Certificate
        of
        Incorporation or By-laws of the Surviving Corporation or the Certificate
        of
        Incorporation or By-laws of Parent, as the case may be.

       

      
        
           

        

        
          -
            2
            -

          
            

          

        

        
           

        

      

      Section
        1.05 Assets
        and Liabilities.
        At the
        Effective Time, the Surviving Corporation shall possess all the rights,
        privileges, powers and franchises of a public as well as of a private nature,
        and be subject to all the restrictions, disabilities and duties of each of
        Acquisition Corp. and the Company (collectively, the “Constituent
        Corporations”);
        and
        all the rights, privileges, powers and franchises of each of the Constituent
        Corporations, and all property, real, personal and mixed, and all debts due
        to
        any of the Constituent Corporations on whatever account, as well as all other
        things in action or belonging to each of the Constituent Corporations, shall
        be
        vested in the Surviving Corporation; and all property, rights, privileges,
        powers and franchises, and all and every other interest shall be thereafter
        as
        effectively the property of the Surviving Corporation as they were of the
        several and respective Constituent Corporations, and the title to any real
        estate vested by deed or otherwise in either of such Constituent Corporations
        shall not revert or be in any way impaired by the Merger; but all rights
        of
        creditors and all liens upon any property of any of the Constituent Corporations
        shall be preserved unimpaired, and all debts, liabilities and duties of the
        Constituent Corporations shall thenceforth attach to the Surviving Corporation,
        and may be enforced against it to the same extent as if said debts, liabilities
        and duties had been incurred or contracted by it.

       

      Section
        1.06 Manner
        and Basis of Converting Shares.

       

      (a) At
        the
        Effective Time:

       

      (i) each
        share of common stock, par value $0.001 per share, of Acquisition Corp. that
        shall be outstanding immediately prior to the Effective Time shall, by virtue
        of
        the Merger and without any action on the part of the holder thereof, be
        converted into the right to receive one (1) share of common stock, par value
        $0.001 per share, of the Surviving Corporation, so that at the Effective
        Time,
        Parent shall be the holder of all of the issued and outstanding shares of
        the
        Surviving Corporation;

       

      (ii) each
        share of common stock, par value $0.001 per share, of the Company (the
“Company
        Common Stock”)
        shall,
        by virtue of the Merger and without any action on the part of the holders
        thereof, be converted into the right to receive (A) an amount in cash or
        evidenced by a secured promissory note or a combination thereof, determined
        by
        dividing $4,000,000 (the “Cash
        Merger Consideration”)
        by the
        total number of shares of Company Common Stock issued and outstanding at
        the
        Effective Time (the “Company
        Common Stock Outstanding”)
        and
        (B) that number of shares of common stock, par value $0.001 of Parent (the
        “Parent
        Common Stock”)
        determined by dividing 12,500,000 shares of Parent Common Stock (the
“Stock
        Merger Consideration”
and
        together with the Cash Merger Consideration, the “Merger
        Consideration”)
        by the
        Company Common Stock Outstanding; and

       

      (iii) each
        share of Company Common Stock held in the treasury of the Company immediately
        prior to the Effective Time shall be cancelled in the Merger and cease to
        exist.

       

      (b) After
        the
        Effective Time, there shall be no further registration of transfers on the
        stock
        transfer books of the Surviving Corporation of the shares of Company Common
        Stock that were outstanding immediately prior to the Effective
        Time.

       

      
        
           

        

        
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      Section
        1.07 Surrender
        and Exchange of Certificates.
        Promptly after the Effective Time and upon surrender of a certificate or
        certificates representing shares of Company Common Stock that were outstanding
        immediately prior to the Effective Time or an affidavit and indemnification
        in
        form reasonably acceptable to counsel for Parent stating that such Company
        stockholder has lost its certificate or certificates or that such have been
        destroyed, Parent shall deliver to CAN, (i) a certificate or certificates
        registered in the name of CAN representing that the Stock Merger Consideration
        and (ii) the Cash Merger Consideration, payable by wire transfer to an account
        designated by such CAN. Until the certificate, certificates or affidavit
        is or
        are surrendered by CAN, each certificate or affidavit held by CAN that
        immediately prior to the Effective Time represented any outstanding shares
        of
        Company Common Stock shall be deemed at and after the Effective Time to
        represent only the right to receive a pro rata portion of the Merger
        Consideration.

       

      Section
        1.08 Parent
        Common Stock.
        Parent
        agrees that it will cause the Parent Common Stock into which the Company
        Common
        Stock is converted at the Effective Time pursuant to Section 1.06(a)(ii)
        to be
        available for such purposes. Parent further covenants that immediately following
        the Effective Time, Parent will effect cancellations of its outstanding shares
        of Parent Common Stock and that there will be no more than 12,250,000 shares
        of
        Parent Common Stock issued and outstanding, and that no other common or
        preferred stock or equity securities or any options, warrants, rights or
        other
        agreements or instruments convertible, exchangeable or exercisable into common
        or preferred stock or other equity securities shall be issued or outstanding,
        except as described herein.

       

      Section
        1.09 Operation
        of Surviving Corporation.
        The
        Company acknowledges that upon the effectiveness of the Merger, and the material
        compliance by Parent and Acquisition Corp. with their respective duties and
        obligations hereunder, Parent shall have the absolute and unqualified right
        to
        deal with the assets and business of the Surviving Corporation as its own
        property without limitation on the disposition or use of such assets or the
        conduct of such business. 

       

      Section
        1.10 Further
        Assurances.
        From
        time to time, from and after the Effective Time, as and when reasonably
        requested by Parent, the proper officers and directors of the Company as
        of the
        Effective Time shall, for and on behalf and in the name of the Company or
        otherwise, execute and deliver all such deeds, bills of sale, assignments
        and
        other instruments and shall take or cause to be taken such further actions
        as
        Parent, Acquisition Corp. or their respective successors or assigns reasonably
        may deem necessary or desirable in order to confirm or record or otherwise
        transfer to the Surviving Corporation title to and possession of all of the
        properties, rights, privileges, powers, franchises and immunities of the
        Company
        or otherwise to carry out fully the provisions and purposes of this Agreement
        and the Certificate of Merger. 

       

      ARTICLE
        II.

      REPRESENTATIONS
        AND WARRANTIES OF THE COMPANY AND CAN

       

      Each
        of
        the Company and CAN hereby jointly and severally represents and warrants
        to
        Parent and Acquisition Corp. as follows. Notwithstanding anything to the
        contrary contained herein, disclosure of items in the draft Current Report
        on
        Form 8-K of Parent with respect to the Merger and the Private Placement and
        all
        exhibits thereto, a copy of which is attached hereto as Exhibit
        E
        (collectively, the “Disclosures”)
        shall
        be deemed to be disclosure of such items for all purposes under this Agreement,
        including, without limitation, for all applicable representations and warranties
        of the Company and CAN: 

       

      
        
           

        

        
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      Section
        2.01 Organization,
        Standing, Subsidiaries, Etc.

       

      (a) The
        Company is a corporation duly organized and existing in good standing under
        the
        laws of the State of Delaware and has all requisite power and authority
        (corporate and other) to carry on its business, to own or lease its properties
        and assets, to enter into this Agreement and the Certificate of Merger and
        to
        carry out the terms hereof and thereof. Copies of the Certificate of
        Incorporation and By-laws of the Company that have been delivered to Parent
        and
        Acquisition Corp. prior to the execution of this Agreement are true and complete
        and have not since been amended or repealed.

       

      (b) The
        Company has no subsidiaries or direct or indirect interest (by way of stock
        ownership or otherwise) in any firm, corporation, limited liability company,
        partnership, association or business. 

       

      Section
        2.02 Qualification.
        The
        Company is duly qualified to conduct business as a foreign corporation and
        is in
        good standing in each jurisdiction wherein the nature of its activities or
        its
        properties owned or leased makes such qualification necessary, except where
        the
        failure to be so qualified would not have a material adverse effect on the
        condition (financial or otherwise), properties, assets, liabilities, business
        operations, results of operations or prospects of the Company taken as a
        whole
        (the “Condition
        of the Company”).

       

      Section
        2.03 Capitalization
        of the Company.
        The
        authorized capital stock of the Company consists of 3,000 shares of Company
        Common Stock, of which there are 1,000 shares of Company Common Stock issued
        and
        outstanding, and, except as set forth on Schedule
        2.03
        hereto,
        such shares are duly authorized, validly issued, fully paid and non-assessable,
        and none of such shares have been issued in violation of the preemptive rights
        of any natural person, corporation, business trust, association, limited
        liability company, partnership, joint venture, other entity, government,
        agency
        or political subdivision (each, a “Person”).
        The
        offer, issuance and sale of such shares of Company Common Stock were (a)
        exempt
        from the registration and prospectus delivery requirements of the Securities
        Act
        of 1933, as amended (the “Securities
        Act”),
        (b)
        registered or qualified (or were exempt from registration or qualification)
        under the registration or qualification requirements of all applicable state
        securities laws and (c) accomplished in conformity with all other applicable
        securities laws. None of such shares of Company Common Stock are subject
        to a
        right of withdrawal or a right of rescission under any federal or state
        securities or “Blue Sky” law. Except as otherwise set forth in this Agreement or
        any Schedule hereto, the Company has no outstanding options, rights or
        commitments to issue Company Common Stock or other Equity Securities (as
        defined
        below) of the Company, and there are no outstanding securities convertible
        or
        exercisable into or exchangeable for Company Common Stock or other Equity
        Securities of the Company. For purposes of this Agreement, “Equity
        Security”
shall
        mean any stock or similar security of an issuer or any security (whether
        stock
        or Indebtedness for Borrowed Money (as defined below)) convertible, with
        or
        without consideration, into any stock or other equity security, or any security
        (whether stock or Indebtedness for Borrowed Money) carrying any warrant or
        right
        to subscribe to or purchase any stock or similar security, or any such warrant
        or right.

       

      
        
           

        

        
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      Section
        2.04 Indebtedness.
        The
        Company has no Indebtedness for Borrowed Money, except as otherwise set forth
        in
        this Agreement or disclosed on the Balance Sheet. For purposes of this
        Agreement, “Indebtedness
        for Borrowed Money”
shall
        mean (a) all Indebtedness in respect of money borrowed including, without
        limitation, Indebtedness which represents the unpaid amount of the purchase
        price of any property and is incurred in lieu of borrowing money or using
        available funds to pay such amounts and not constituting an account payable
        or
        expense accrual incurred or assumed in the ordinary course of business of
        the
        Company, (b) all Indebtedness evidenced by a promissory note, bond or similar
        written obligation to pay money or (c) all such Indebtedness guaranteed by
        the
        Company or for which the Company is otherwise contingently liable. Furthermore,
        for purposes of this Agreement, “Indebtedness”
shall
        mean any obligation of the Company which, under generally accepted accounting
        principles in the United Stated (“GAAP”),
        is
        required to be shown on the balance sheet of the Company as a liability.
        Any
        obligation secured by a mortgage, pledge, security interest, encumbrance,
        lien
        or charge of any kind (a “Lien”),
        shall
        be deemed to be Indebtedness, even though such obligation is not assumed
        by the
        Company.

       

      Section
        2.05 Company
        Stockholders.
        Schedule
        1.06
        hereto
        contains a true and complete list of the names of the record owners of all
        of
        the outstanding shares of Company Common Stock and other Equity Securities
        of
        the Company, together with the number of securities held or to which such
        Person
        has rights to acquire. To the knowledge of the Company, there is no voting
        trust, agreement or arrangement among any of the beneficial holders of Company
        Common Stock affecting the nomination or election of directors or the exercise
        of the voting rights of Company Common Stock.

       

      Section
        2.06 Corporate
        Acts and Proceedings.
        The
        execution, delivery and performance of this Agreement and the Certificate
        of
        Merger (together, the “Merger
        Documents”)
        have
        been duly authorized by the Board of Directors of the Company and have been
        approved by CAN, and all of the corporate acts and other proceedings required
        for the due and valid authorization, execution, delivery and performance
        of the
        Merger Documents and the consummation of the Merger have been validly and
        appropriately taken, except for the filings referred to in Section
        1.02.

       

      Section
        2.07 Governmental
        Consents.
        All
        material consents, approvals, orders, or authorizations of, or registrations,
        qualifications, designations, declarations, or filings with any federal or
        state
        governmental authority on the part of the Company required in connection
        with
        the consummation of the Merger shall have been obtained prior to, and be
        effective as of, the Closing.

       

      Section
        2.08 Compliance
        with Laws and Instruments.
        The
        business, products and operations of the Company have been and are being
        conducted in compliance in all material respects with all applicable laws,
        rules
        and regulations, except for such violations thereof for which the penalties,
        in
        the aggregate, would not have a material adverse effect on the Condition
        of the
        Company. The execution, delivery and performance by the Company of the Merger
        Documents and the consummation by the Company of the transactions contemplated
        by this Agreement: (a) will not cause the Company to violate or contravene
        (i)
        any provision of law, (ii) any rule or regulation of any agency or government,
        (iii) any order, judgment or decree of any court, or (iv) any provision of
        the
        Certificate of Incorporation or By-laws of the Company, (b) will not violate
        or
        be in conflict with, result in a breach of or constitute (with or without
        notice
        or lapse of time, or both) a default under, any indenture, loan or credit
        agreement, deed of trust, mortgage, security agreement or other contract,
        agreement or instrument to which the Company is a party or by which the Company
        or any of its properties is bound or affected, except as would not have a
        material adverse effect on the Condition of the Company and (c) will not
        result
        in the creation or imposition of any Lien upon any property or asset of the
        Company. The Company is not in violation of, or (with or without notice or
        lapse
        of time, or both) in default under, any term or provision of its Certificate
        of
        Incorporation or By-laws or of any indenture, loan or credit agreement, deed
        of
        trust, mortgage, security agreement or, except as would not materially and
        adversely affect the Condition of the Company, any other material agreement
        or
        instrument to which the Company is a party or by which the Company or any
        of its
        properties is bound or affected.

       

      
        
           

        

        
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      Section
        2.09 Binding
        Obligations.
        The
        Merger Documents constitute the legal, valid and binding obligations of the
        Company and are enforceable against the Company in accordance with their
        respective terms, except as such enforcement is limited by bankruptcy,
        insolvency and other similar laws affecting the enforcement of creditors’ rights
        generally and by general principles of equity.

       

      Section
        2.10 Broker’s
        and Finder’s Fees.
        Except
        for fees paid to the placement agents as set forth in the Disclosures, no
        Person
        has, or as a result of the transactions contemplated or described herein
        will
        have, any right or valid claim against the Company, Parent, Acquisition Corp.
        or
        CAN for any commission, fee or other compensation as a finder or broker,
        or in
        any similar capacity. 

       

      Section
        2.11 Financial
        Statements.
        Parent
        has previously been provided with the Company’s audited balance sheet (the
“Balance
        Sheet”)
        as of
        December 31, 2007 (the “Balance
        Sheet Date”)
        and
        the audited statements of operations and accumulated deficits and cash flows
        for
        the year ended December 31, 2007. Such financial statements are collectively
        referred to as the “Financial
        Statements”.
        Such
        financial statements (a) are in accordance with the books and records of
        the
        Company, (b) present fairly in all material respects the financial condition
        of
        the Company at the dates therein specified and the results of its operations
        and
        changes in financial position for the periods therein specified and (c) have
        been prepared in accordance with GAAP applied on a basis consistent with
        prior
        accounting periods.

       

      Section
        2.12 Absence
        of Undisclosed Liabilities.
        The
        Company has no material obligation or liability (whether accrued, absolute,
        contingent, liquidated or otherwise, whether due or to become due), arising
        out
        of any transaction entered into at or prior to the Closing, except (a) as
        disclosed in the Balance Sheet, (b) to the extent set forth on or reserved
        against in the Balance Sheet or the notes to the Financial Statements, (c)
        current liabilities incurred and obligations under agreements entered into
        in
        the usual and ordinary course of business since the Balance Sheet Date, none
        of
        which (individually or in the aggregate) has had or will have a material
        adverse
        effect on the Condition of the Company and (d) by the specific terms of any
        written agreement, document or arrangement identified in the
        Disclosures.

       

      
        
           

        

        
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      Section
        2.13 Changes.
        Since
        the Balance Sheet Date, the Company has not (a) incurred any debts, obligations
        or liabilities, absolute, accrued, contingent or otherwise, whether due or
        to
        become due, except for fees, expenses and liabilities incurred in connection
        with the Merger and related transactions and current liabilities incurred
        in the
        usual and ordinary course of business, (b) discharged or satisfied any Liens
        other than those securing, or paid any obligation or liability other than,
        current liabilities shown on the Balance Sheet and current liabilities incurred
        since the Balance Sheet Date, in each case in the usual and ordinary course
        of
        business, (c) mortgaged, pledged or subjected to Lien any of its assets,
        tangible or intangible other than in the usual and ordinary course of business,
        (d) sold, transferred or leased any of its assets, except in the usual and
        ordinary course of business, (e) cancelled or compromised any debt or claim,
        or
        waived or released any right, of material value, (f) suffered any physical
        damage, destruction or loss (whether or not covered by insurance) materially
        and
        adversely affecting the Condition of the Company, (g) entered into any
        transaction other than in the usual and ordinary course of business, (h)
        encountered any labor union difficulties, (i) made or granted any wage or
        salary
        increase or made any increase in the amounts payable under any profit sharing,
        bonus, deferred compensation, severance pay, insurance, pension, retirement
        or
        other employee benefit plan, agreement or arrangement, other than in the
        ordinary course of business consistent with past practice, or entered into
        any
        employment agreement, (j) issued or sold any shares of capital stock, bonds,
        notes, debentures or other securities or granted any options (including employee
        stock options), warrants or other rights with respect thereto, (k) declared
        or
        paid any dividends on or made any other distributions with respect to, or
        purchased or redeemed, any of its outstanding capital stock, (l) suffered
        or
        experienced any change in, or condition affecting, the Condition of the Company
        other than changes, events or conditions in the usual and ordinary course
        of its
        business, none of which (either by itself or in conjunction with all such
        other
        changes, events and conditions) has been materially adverse, (m) made any
        change
        in the accounting principles, methods or practices followed by it or
        depreciation or amortization policies or rates theretofore adopted, (n) made
        or
        permitted any amendment or termination of any material contract, agreement
        or
        license to which it is a party, (o) suffered any material loss not reflected
        in
        the Balance Sheet or its statement of income for the period ended on the
        Balance
        Sheet Date, (p) paid, or made any accrual or arrangement for payment of,
        bonuses
        or special compensation of any kind or any severance or termination pay to
        any
        present or former officer, director, employee, stockholder or consultant,
        (q)
        made or agreed to make any charitable contributions or incurred any non-business
        expenses in excess of $50,000 in the aggregate, or (r) entered into any
        agreement, or otherwise obligated itself, to do any of the
        foregoing.

       

      Section
        2.14 Assets
        and Contracts.
        

       

      (a) Schedule
        2.14(a)
        contains
        a true and complete list of all real property leased by the Company and of
        all
        tangible personal property owned or leased by the Company having a cost or
        fair
        market value of greater than $250,000. All the real property listed in
Schedule
        2.14(a)
        is
        leased by the Company under valid leases enforceable in accordance with their
        terms, and there is not, under any such lease, any existing default or event
        of
        default or event which with notice or lapse of time, or both, would constitute
        a
        default by the Company, and the Company has not received any notice or claim
        of
        any such default by the Company. The Company does not own any real
        property.

       

      
        
           

        

        
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      (b) Except
        as
        expressly set forth in this Agreement, the Financial Statements or the notes
        thereto, or as disclosed in Schedule
        2.14(b)
        hereto,
        the Company is not a party to any written or oral agreement not made in the
        ordinary course of business that is material to the Company. Except as disclosed
        in Schedule
        2.14(b)
        hereto,
        the Company is not a party to any written or oral (i) agreement for the purchase
        of fixed assets or for the purchase of materials, supplies or equipment in
        excess of normal operating requirements, (ii) agreement for the employment
        of
        any officer, individual employee or other Person on a full-time basis or
        any
        agreement with any Person for consulting services, (iii) indenture, loan
        or
        credit agreement, note agreement, deed of trust, mortgage, security agreement,
        promissory note or other agreement or instrument relating to or evidencing
        Indebtedness for Borrowed Money or subjecting any asset or property of the
        Company to any Lien or evidencing any Indebtedness, (iv) guaranty of any
        Indebtedness, (v) other than as set forth in Schedule
        2.14(a)
        hereto,
        lease or agreement under which the Company is lessee of or holds or operates
        any
        property, real or personal, owned by any other Person under which payments
        to
        such Person exceed $250,000 per year, (vi) agreement granting any preemptive
        right, right of first refusal or similar right to any Person, (vii) agreement
        or
        arrangement with any Affiliate or any “associate” (as such term is defined in
        Rule 405 under the Securities Act) of the Company or any present or former
        officer, director or stockholder of the Company, (viii) agreement obligating
        the
        Company to pay any royalty or similar charge for the use or exploitation
        of any
        tangible or intangible property, (ix) covenant not to compete or other material
        restriction on its ability to conduct a business or engage in any other
        activity, (x) agreement to register securities under the Securities Act or
        (xi)
        collective bargaining agreement. Except as disclosed in Schedule
        2.14(b),
        none of
        the agreements, contracts, leases, instruments or other documents or
        arrangements listed in Schedules
        2.14(a)
        and
2.14(b)
        requires
        the consent of any of the parties thereto other than the Company to permit
        the
        contract, agreement, lease, instrument or other document or arrangement to
        remain effective following consummation of the Merger and the transactions
        contemplated hereby. For purposes of this Agreement, an “Affiliate”
shall
        mean any Person that directly or indirectly controls, is controlled by, or
        is
        under common control with, the indicated Person.

       

      (c) The
        Company has made available to Parent and Acquisition Corp. true and complete
        copies of all agreements and other documents and a description of all applicable
        oral agreements disclosed or referred to in Schedules
        2.14(a)
        and
2.14(b),
        as well
        as any additional agreements or documents, requested by Parent or Acquisition
        Corp. The Company has in all material respects performed all obligations
        required to be performed by it to date and is not in default in any material
        respect under any of the contracts, agreements, leases, documents, commitments
        or other arrangements to which it is a party or by which it or any of its
        property is otherwise bound or affected.

       

      Section
        2.15 Employees.
        The
        Company has complied in all material respects with all laws relating to the
        employment of labor, and the Company has encountered no material labor union
        difficulties. Other than pursuant to ordinary arrangements of employment
        compensation, the Company is not under any obligation or liability to any
        officer, director or employee of the Company.

       

      
        
           

        

        
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      Section
        2.16 Tax
        Returns and Audits.
        

       

      (a) All
        required federal, state and local Tax Returns (as defined below) of the Company
        have been accurately prepared and duly and timely filed, and all federal,
        state
        and local Taxes (as defined below) required to be paid with respect to the
        periods covered by such returns have been paid. The Company is not and has
        not
        been delinquent in the payment of any Tax. The Company has not had a Tax
        deficiency proposed or assessed against it and has not executed a waiver
        of any
        statute of limitations on the assessment or collection of any Tax. None of
        the
        Company’s federal income tax returns has been audited by any governmental
        authority; and none of the Company’s state or local income or franchise tax
        returns has been audited by any governmental authority. The reserves for
        Taxes
        reflected on the Balance Sheet are and will be sufficient for the payment
        of all
        unpaid Taxes payable by the Company as of the Balance Sheet Date. Since the
        Balance Sheet Date, the Company has made adequate provisions on its books
        of
        account for all Taxes with respect to its business, properties and operations
        for such period. The Company has withheld or collected from each payment
        made to
        each of its employees the amount of all taxes (including, but not limited
        to,
        federal, state and local income taxes, Federal Insurance Contribution Act
        taxes
        and Federal Unemployment Tax Act taxes) required to be withheld or collected
        therefrom, and has paid the same to the proper Tax receiving officers or
        authorized depositaries. There are no federal, state, local or foreign audits,
        actions, suits, proceedings, investigations, claims or administrative
        proceedings relating to Taxes or any Tax Returns of the Company now pending,
        and
        the Company has not received any notice of any proposed audits, investigations,
        claims or administrative proceedings relating to Taxes or any Tax Returns.
        The
        Company is not obligated to make a payment, nor is it a party to any agreement
        that under certain circumstances could obligate it to make a payment that
        would
        not be deductible under Section 280G of the Code. The Company has not agreed,
        nor is it required, to make any adjustments under Section 481(a) of the Code
        (or
        any similar provision of state, local and foreign law), whether by reason
        of a
        change in accounting method or otherwise, for any Tax period for which the
        applicable statute of limitations has not yet expired. The Company (i) is
        not a
        party to, nor is it bound by or obligated under, any Tax sharing agreement,
        Tax
        indemnification agreement or similar contract or arrangement, whether written
        or
        unwritten (collectively, “Tax
        Sharing Agreements”),
        and
        (ii) does not have any potential liability or obligation to any Person as
        a
        result of, or pursuant to, any such Tax Sharing Agreements.

       

      (b) For
        purposes of this Agreement, the following terms shall have the meanings provided
        below:

       

      (i) “Tax”
or
        “Taxes”
shall
        mean (A) any and all taxes, assessments, customs, duties, levies, fees, tariffs,
        imposts, deficiencies and other governmental charges of any kind whatsoever
        (including, but not limited to, taxes on or with respect to net or gross
        income,
        franchise, profits, gross receipts, capital, sales, use, ad valorem, value
        added, transfer, real property transfer, transfer gains, transfer taxes,
        inventory, capital stock, license, payroll, employment, social security,
        unemployment, severance, occupation, real or personal property, estimated
        taxes,
        rent, excise, occupancy, recordation, bulk transfer, intangibles, alternative
        minimum, doing business, withholding and stamp), together with any interest
        thereon, penalties, fines, damages costs, fees, additions to tax or additional
        amounts with respect thereto, imposed by the United States (Federal, state
        or
        local) or other applicable jurisdiction; (B) any liability for the payment
        of
        any amounts described in clause (A) as a result of being a member of an
        affiliated, consolidated, combined, unitary or similar group or as a result
        of
        transferor or successor liability, including, without limitation, by reason
        of
        Regulation section 1.1502-6; and (C) any liability for the payments of any
        amounts as a result of being a party to any Tax Sharing Agreement or as a
        result
        of any express or implied obligation to indemnify any other Person with respect
        to the payment of any amounts of the type described in clause (A) or
        (B).

       

      (ii) “Tax
        Return”
shall
        include all returns and reports (including elections, declarations, disclosures,
        schedules, estimates and information returns (including Form 1099 and
        partnership returns filed on Form 1065) required to be supplied to a Tax
        authority relating to Taxes.

       

      
        
           

        

        
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      Section
        2.17 Patents
        and Other Intangible Assets.
        

       

      (a) The
        Company (i) owns or has the right to use, free and clear of all Liens, claims
        and restrictions, all patents, trademarks, service marks, trade names,
        copyrights, licenses and rights with respect to the foregoing used in or
        necessary for the conduct of its business as now conducted or proposed to
        be
        conducted without infringing upon or otherwise acting adversely to the right
        or
        claimed right of any Person under or with respect to any of the foregoing
        and
        (ii) is not obligated or under any liability to make any payments by way
        of
        royalties, fees or otherwise to any owner or licensor of, or other claimant
        to,
        any patent, trademark, service mark, trade name, copyright or other intangible
        asset, with respect to the use thereof or in connection with the conduct
        of its
        business or otherwise.

       

      (b) To
        the
        knowledge of the Company, the Company owns and has the unrestricted right
        to use
        all trade secrets, if any, including know-how, negative know-how, formulas,
        patterns, programs, devices, methods, techniques, inventions, designs,
        processes, computer programs and technical data and all information that
        derives
        independent economic value, actual or potential, from not being generally
        known
        or known by competitors (collectively, “Intellectual
        Property”)
        required for or incident to the development, operation and sale of all products
        and services sold by the Company, free and clear of any right, Lien or claim
        of
        others; provided,
        however,
        that
        the possibility exists that other Persons, completely independently of the
        Company or its employees or agents, could have developed Intellectual Property
        similar or identical to that of the Company. The Company is not aware of
        any
        such development of substantially identical trade secrets or technical
        information by others. All Intellectual Property can and will be transferred
        by
        the Company to the Surviving Corporation as a result of the Merger and without
        the consent of any Person other than the Company.

       

      Section
        2.18 Employee
        Benefit Plans; ERISA.
        

       

      (a) Except
        as
        disclosed on Schedule
        2.18
        hereto,
        there are no “employee benefit plans” (within the meaning of Section 3(3) of
        ERISA) nor any other employee benefit or fringe benefit arrangements, practices,
        contracts, policies or programs of every type other than programs merely
        involving the regular payment of wages, commissions, or bonuses established,
        maintained or contributed to by the Company, whether written or unwritten
        and
        whether or not funded. The plans listed on Schedule
        2.18
        hereto
        are hereinafter referred to as the “Employee
        Benefit Plans.”

       

      (b) All
        current and prior material documents, including all amendments thereto, with
        respect to each Employee Benefit Plan have been made available to Parent
        and
        Acquisition Corp. or their advisors.

       

      (c) To
        the
        knowledge of the Company, all Employee Benefit Plans are in material compliance
        with the applicable requirements of ERISA, the Code and any other applicable
        state, federal or foreign law.

       

      (d) There
        are
        no pending claims or lawsuits that have been asserted or instituted against
        any
        Employee Benefit Plan, the assets of any of the trusts or funds under the
        Employee Benefit Plans, the plan sponsor or the plan administrator of any
        of the
        Employee Benefit Plans or against any fiduciary of an Employee Benefit Plan
        with
        respect to the operation of such plan, nor does the Company have any knowledge
        of any incident, transaction, occurrence or circumstance that might reasonably
        be expected to form the basis of any such claim or lawsuit.

       

      
        
           

        

        
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      (e) There
        is
        no pending or, to the knowledge of the Company, contemplated investigation,
        or
        pending or possible enforcement action by the Pension Benefit Guaranty
        Corporation, the Department of Labor, the Internal Revenue Service or any
        other
        government agency with respect to any Employee Benefit Plan and the Company
        has
        no knowledge of any incident, transaction, occurrence or circumstance which
        might reasonably be expected to trigger such an investigation or enforcement
        action.

       

      (f) No
        actual
        or, to the knowledge of the Company, contingent liability exists with respect
        to
        the funding of any Employee Benefit Plan or for any other expense or obligation
        of any Employee Benefit Plan, except as disclosed on the financial statements
        of
        the Company, and no contingent liability exists under ERISA with respect
        to any
“multi-employer plan,” as defined in Section 3(37) or Section 4001(a)(3) of
        ERISA.

       

      (g) No
        events
        have occurred or are expected to occur with respect to any Employee Benefit
        Plan
        that would cause a material change in the costs of providing benefits under
        such
        Employee Benefit Plan or would cause a material change in the cost of providing
        for other liabilities of such Employee Benefit Plan.

       

      Section
        2.19 Title
        to Property and Encumbrances.
        The
        Company has good, valid and indefeasible marketable title to all properties
        and
        assets used in the conduct of its business (except for property held under
        valid
        and subsisting leases that are in full force and effect and which are not
        in
        default) free of all Liens and other encumbrances, except Permitted Liens
        and
        such ordinary and customary imperfections of title, restrictions and
        encumbrances as do not, individually or in the aggregate, materially detract
        from the value of the property or assets or materially impair the use made
        thereof by the Company in its business. Without limiting the generality of
        the
        foregoing, the Company has good and indefeasible title to all of its properties
        and assets reflected in the Balance Sheet, except for property disposed of
        in
        the usual and ordinary course of business since the Balance Sheet Date and
        for
        property held under valid and subsisting leases that are in full force and
        effect and that are not in default. For purposes of this Agreement,
“Permitted
        Liens”
shall
        mean (a) Liens for taxes and assessments or governmental charges or levies
        not
        at the time due or in respect of which the validity thereof shall currently
        be
        contested in good faith by appropriate proceedings; (b) Liens in respect
        of
        pledges or deposits under workmen’s compensation laws or similar legislation,
        carriers’, warehousemen’s, mechanics’, laborers’ and materialmens’ and similar
        Liens, if the obligations secured by such Liens are not then delinquent or
        are
        being contested in good faith by appropriate proceedings and (c) Liens
        incidental to the conduct of the business of the Company that were not incurred
        in connection with the borrowing of money or the obtaining of advances or
        credits and which do not in the aggregate materially detract from the value
        of
        its property or materially impair the use made thereof by the Company in
        its
        business.

       

      Section
        2.20 Condition
        of Properties.
        All
        facilities, machinery, equipment, fixtures and other properties owned, leased
        or
        used by the Company are in reasonably good operating condition and repair,
        subject to ordinary wear and tear, and are adequate and sufficient for the
        Company’s business.

       

      
        
           

        

        
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      Section
        2.21 Insurance
        Coverage.
        There
        is in full force and effect one or more policies of insurance issued by insurers
        of recognized responsibility, insuring the Company and its properties, products
        and business against such losses and risks, and in such amounts, as are
        customary for corporations of established reputation engaged in the same
        or
        similar business and similarly situated. The Company has not been refused
        any
        insurance coverage sought or applied for, and the Company has no reason to
        believe that it will be unable to renew its existing insurance coverage as
        and
        when the same shall expire upon terms at least as favorable to those currently
        in effect, other than possible increases in premiums that do not result from
        any
        act or omission of the Company. No suit, proceeding or action or, to the
        best
        current actual knowledge of the Company, threat of suit, proceeding or action
        has been asserted or made against the Company within the last five years
        due to
        alleged bodily injury, disease, medical condition, death or property damage
        arising out of the function or malfunction of a product, procedure or service
        designed, manufactured, sold or distributed by the Company.

       

      Section
        2.22 Litigation.
        Except
        as disclosed in Schedule
        2.22,
        there
        is no legal action, suit, arbitration or other legal, administrative or other
        governmental proceeding pending or, to the knowledge of the Company, threatened
        against or affecting the Company or its properties, assets or business, and
        after reasonable investigation, the Company is not aware of any incident,
        transaction, occurrence or circumstance that might reasonably be expected
        to
        result in or form the basis for any such action, suit, arbitration or other
        proceeding. The Company is not in default with respect to any order, writ,
        judgment, injunction, decree, determination or award of any court or any
        governmental agency or instrumentality or arbitration authority.

       

      Section
        2.23 Licenses.
        The
        Company possesses from all appropriate governmental authorities all licenses,
        permits, authorizations, approvals, franchises and rights necessary for the
        Company to engage in the business currently conducted by it, all of which
        are in
        full force and effect.

       

      Section
        2.24 Interested
        Party Transactions.
        No
        officer, director or stockholder of the Company or any Affiliate or “associate”
(as such term is defined in Rule 405 under the Securities Act) of any such
        Person or the Company has or has had, either directly or indirectly, (a)
        an
        interest in any Person that (i) furnishes or sells services or products that
        are
        furnished or sold or are proposed to be furnished or sold by the Company
        or (ii)
        purchases from or sells or furnishes to the Company any goods or services,
        or
        (b) a beneficial interest in any contract or agreement to which the Company
        is a
        party or by which it may be bound or affected.

       

      Section
        2.25 Environmental
        Matters.

       

      (a) To
        the
        knowledge of the Company, the Company has never generated, used, handled,
        treated, released, stored or disposed of any Hazardous Materials (as defined
        below) on any real property on which it now has or previously had any leasehold
        or ownership interest, except in compliance with all applicable Environmental
        Laws (as defined below).

       

      
        
           

        

        
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      (b) To
        the
        knowledge of the Company, the historical and present operations of the business
        of the Company are in compliance with all applicable Environmental Laws,
        except
        where any non-compliance has not had and would not reasonably be expected
        to
        have a material adverse effect on the Condition of the Company.

       

      (c) There
        are
        no material pending or, to the knowledge of the Company, threatened, demands,
        claims, information requests or notices of noncompliance or violation against
        or
        to the Company relating to any Environmental Law; and, to the knowledge of
        the
        Company, there are no conditions or occurrences on any of the real property
        used
        by the Company in connection with its business that would reasonably be expected
        to lead to any such demands, claims or notices against or to the Company,
        except
        such as have not had, and would not reasonably be expected to have, a material
        adverse effect on the Condition of the Company.

       

      (d) To
        the
        knowledge of the Company, (i) the Company has not sent or disposed of, otherwise
        had taken or transported, arranged for the taking or disposal of (on behalf
        of
        itself, a customer or any other party) or in any other manner participated
        or
        been involved in the taking of or disposal or release of a Hazardous Material
        to
        or at a site that is contaminated by any Hazardous Material or that, pursuant
        to
        any Environmental Law, (A) has been placed on the “National Priorities List”,
        the “CERCLIS” list, or any similar state or federal list, or (B) is subject to
        or the source of a claim, an administrative order or other request to take
        “removal”, “remedial”, “corrective” or any other “response” action, as defined
        in any Environmental Law, or to pay for the costs of any such action at the
        site; (ii) the Company is not involved in (and has no basis to reasonably
        expect
        to be involved in) any suit or proceeding and has not received (and has no
        basis
        to reasonably expect to receive) any notice, request for information or other
        communication from any governmental authority or other third party with respect
        to a release or threatened release of any Hazardous Material or a violation
        or
        alleged violation of any Environmental Law, and has not received (and has
        no
        basis to reasonably expect to receive) notice of any claims from any Person
        relating to property damage, natural resource damage or to personal injuries
        from exposure to any Hazardous Material; and (iii) the Company has timely
        filed
        every report required to be filed, acquired all necessary certificates,
        approvals and permits, and generated and maintained all required data,
        documentation and records under all Environmental Laws, in all such instances
        except where the failure to do so would not reasonably be expected to have,
        individually or in the aggregate, a material adverse effect on the Condition
        of
        the Company.

       

      (e) For
        purposes of this Agreement, the following terms shall have the meanings provided
        below:

       

      (i) “Environmental
        Laws”
shall
        mean the Comprehensive Environmental Response, Compensation and Liability
        Act,
        42 U.S.C. §§ 9601, et seq.; the Emergency Planning and Community Right-to-Know
        Act of 1986, 42 U.S.C. §§ 11001, et seq.; the Resource Conservation and Recovery
        Act, 42 U.S.C. §§ 6901, et seq.; the Toxic Substances Control Act, 15 U.S.C. §§
2601 et seq.; the Federal Insecticide, Fungicide, and Rodenticide Act, 7
        U.S.C.
§§ 136, et seq. and comparable state statutes dealing with the registration,
        labeling and use of pesticides and herbicides; the Clean Air Act, 42 U.S.C.
§§
7401 et seq.; the Clean Water Act (Federal Water Pollution Control Act),
        33
        U.S.C. §§ 1251 et seq.; the Safe Drinking Water Act, 42 U.S.C. §§ 300f, et seq.;
        the Hazardous Materials Transportation Act, 49 U.S.C. §§ 1801, et seq.; as any
        of the above statutes have been amended as of the date hereof, all rules,
        regulations and policies promulgated pursuant to any of the above statutes,
        and
        any other foreign, federal, state or local law, statute, ordinance, rule,
        regulation or policy governing environmental matters, as the same have been
        amended as of the date hereof.

       

      
        
           

        

        
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      (ii) “Hazardous
        Material”
shall
        mean any substance or material meeting any one or more of the following
        criteria: (a) it is or contains a substance designated as or meeting the
        characteristics of a hazardous waste, hazardous substance, hazardous material,
        pollutant, contaminant or toxic substance under any Environmental Law; (b)
        its
        presence at some quantity requires investigation, notification or remediation
        under any Environmental Law; or (c) it contains, without limiting the foregoing,
        asbestos, polychlorinated biphenyls, petroleum hydrocarbons, petroleum derived
        substances or waste, pesticides, herbicides, crude oil or any fraction thereof,
        nuclear fuel, natural gas or synthetic gas.

       

      Section
        2.26 Questionable
        Payments.
        Neither
        the Company nor any director, officer or, to the knowledge of the Company,
        agent, employee or other Person associated with or acting on behalf of the
        Company, has used any corporate funds for unlawful contributions, gifts,
        entertainment or other unlawful expenses relating to political activity;
        made
        any direct or indirect unlawful payments to government officials or employees
        from corporate funds; established or maintained any unlawful or unrecorded
        fund
        of corporate monies or other assets; made any false or fictitious entries
        on the
        books of record of any such corporations; or made any bribe, rebate, payoff,
        influence payment, kickback or other unlawful payment.

       

      Section
        2.27 Obligations
        to or by Stockholders.
        Except
        as set forth on Schedule
        2.27
        hereto,
        the Company has no liability or obligation or commitment to CAN or any Affiliate
        or “associate” (as such term is defined in Rule 405 under the Securities Act) of
        CAN, nor does CAN or any such Affiliate or associate have any liability,
        obligation or commitment to the Company.

       

      Section
        2.28 Duty
        to Make Inquiry.
        To the
        extent that any of the representations or warranties in this Article II are
        qualified by “knowledge” or “belief,” the Company represents and warrants that
        it has made due and reasonable inquiry and investigation concerning the matters
        to which such representations and warranties relate, including, but not limited
        to, diligent inquiry of its directors, officers and key personnel.

       

      Section
        2.29 Disclosure.
        There
        is no fact relating to the Company that the Company has not disclosed to
        Parent
        and Acquisition Corp. in writing that has had or is currently having a material
        and adverse effect or, insofar as the Company can now foresee, will materially
        and adversely affect the Condition of the Company. No representation or warranty
        by the Company herein and no information disclosed in the schedules or exhibits
        hereto by the Company contains any untrue statement of a material fact or
        omits
        to state a material fact necessary to make the statements contained herein
        or
        therein not misleading.

       

      
        
           

        

        
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      ARTICLE
        III.

      REPRESENTATIONS
        AND WARRANTIES OF PARENT AND ACQUISITION CORP.

       

      Parent
        and Acquisition Corp. represent and warrant to the Company and CAN as follows.
        Notwithstanding anything to the contrary contained herein, disclosure of
        items
        in the Parent SEC Documents (as defined below) shall be deemed to be disclosure
        of such items for all purposes under this Agreement, including, without
        limitation, for all applicable representations and warranties of Parent and
        Acquisition Corp.:

       

      Section
        3.01 Organization
        and Standing.
        Parent
        is a corporation duly organized and existing in good standing under the laws
        of
        the State of Delaware. Acquisition Corp. is a corporation duly organized
        and
        existing in good standing under the laws of the State of Delaware. Parent
        and
        Acquisition Corp. have heretofore delivered to the Company complete and correct
        copies of their respective Certificates of Incorporation and By-laws as now
        in
        effect. Parent and Acquisition Corp. have full corporate power and authority
        to
        carry on their respective businesses as they are now being conducted and
        as now
        proposed to be conducted and to own or lease their respective properties
        and
        assets. Neither Parent nor Acquisition Corp. has any subsidiaries (except
        Parent’s ownership of Acquisition Corp.) or direct or indirect interest (by way
        of stock ownership or otherwise) in any firm, corporation, limited liability
        company, partnership, association or business. Parent owns all of the issued
        and
        outstanding capital stock of Acquisition Corp. free and clear of all Liens,
        and
        Acquisition Corp. has no outstanding options, warrants or rights to purchase
        capital stock or other securities of Acquisition Corp., other than the capital
        stock owned by Parent. Unless the context otherwise requires, all references
        in
        this Article III to “Parent” shall be treated as being a reference to Parent and
        Acquisition Corp. taken together as one enterprise.

       

      Section
        3.02 Qualification.
        Parent
        is duly qualified to conduct business as a foreign corporation and are in
        good
        standing in each jurisdiction wherein the nature of its activities or its
        properties owned or leased makes such qualification necessary, except where
        the
        failure to be so qualified would not have a material adverse effect on the
        condition, properties, assets, liabilities or business operations of Parent
        (the
“Condition
        of the Parent”).

       

      Section
        3.03 Corporate
        Authority.
        Each of
        Parent and/or Acquisition Corp. (as the case may be) has full corporate power
        and authority to enter into the Merger Documents and the other agreements
        to be
        made pursuant to the Merger Documents, and to carry out the transactions
        contemplated hereby and thereby. All corporate acts and proceedings required
        for
        the authorization, execution, delivery and performance of the Merger Documents
        and such other agreements and documents by Parent and/or Acquisition Corp.
        (as
        the case may be) have been duly and validly taken or will have been so taken
        prior to the Closing. Each of the Merger Documents constitutes a legal, valid
        and binding obligation of Parent and/or Acquisition Corp. (as the case may
        be),
        each is enforceable against it and/or them in accordance with its terms,
        except
        as such enforcement may be limited by bankruptcy, insolvency, reorganization
        or
        other similar laws affecting creditors’ rights generally and by general
        principles of equity.

       

      Section
        3.04 Broker’s
        and Finder’s Fees.
        No
        Person is entitled by reason of any act or omission of Parent or Acquisition
        Corp. to any broker’s or finder’s fees, commission or other similar compensation
        with respect to the execution and delivery of the Merger Documents, or with
        respect to the consummation of the transactions contemplated thereby, except
        as
        set forth in the Disclosures. 

       

      
        
           

        

        
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      Section
        3.05 Capitalization.
        

       

      (a) The
        authorized capital stock of Parent consists of (i) 100,000,000 shares of
        Parent
        Common Stock, of which 30,398,148 shares are issued and outstanding, and
        (ii)
        10,000,000 shares of preferred stock, par value $0.001 per share, of which
        no
        shares have been issued or designated as any series of preferred stock (the
        “Parent
        Preferred Stock”).
        Parent has no outstanding options, rights or commitments to issue shares
        of
        Parent Common Stock or any other Equity Security of Parent or Acquisition
        Corp.,
        and there are no outstanding securities convertible or exercisable into or
        exchangeable for shares of Parent Common Stock or any other Equity Security
        of
        Parent or Acquisition Corp. There is no voting trust, agreement or arrangement
        among any of the beneficial holders of Parent Common Stock affecting the
        nomination or election of directors or the exercise of the voting rights
        of
        Parent Common Stock.

       

      (b) The
        authorized capital stock of Acquisition Corp. consists of 3,000 shares of
        common
        stock, par value $.001 per share (the “Acquisition
        Corp. Common Stock”),
        of
        which 1,000 shares are issued and outstanding. All of the outstanding
        Acquisition Corp. Common Stock is owned by Parent. All outstanding shares
        of the
        capital stock of Acquisition Corp. are validly issued and outstanding, fully
        paid and non-assessable, and none of such shares have been issued in violation
        of the preemptive rights of any Person. Acquisition Corp. has no outstanding
        options, rights or commitments to issue shares of Acquisition Corp. Common
        Stock
        or any other Equity Security of Acquisition Corp., and there are no outstanding
        securities convertible or exercisable into or exchangeable for shares of
        Acquisition Corp. Common Stock or any other Equity Security of Acquisition
        Corp.

       

      Section
        3.06 Acquisition
        Corp.
        Acquisition Corp. is a wholly-owned Delaware subsidiary of Parent that was
        formed specifically for the purpose of the Merger and that has not conducted
        any
        business or acquired any property, and will not conduct any business or acquire
        any property prior to the Closing Date, except in preparation for and otherwise
        in connection with the transactions contemplated by the Merger Documents
        and the
        other agreements to be made pursuant to or in connection with the Merger
        Documents.

       

      Section
        3.07 Validity
        of Shares.
        The
        shares of Parent Common Stock to be issued at the Closing pursuant to Section
        1.06(a)(ii) hereof, when issued and delivered in accordance with the terms
        of
        the Merger Documents, shall be duly and validly issued, fully paid and
        non-assessable. Based in part on the representations and warranties of CAN
        as
        contemplated by Article IV hereof and assuming the accuracy thereof, the
        issuance of the Parent Common Stock upon consummation of the Merger pursuant
        to
        Section 1.06(a)(ii) will be exempt from the registration and prospectus delivery
        requirements of the Securities Act and from the qualification or registration
        requirements of any applicable state “Blue Sky” or securities laws.

       

      Section
        3.08 SEC
        Reporting and Compliance.
        

       

      (a) Parent
        filed a registration statement on Form SB-2 under the Securities Act, which
        became effective on or about November 26, 2007. Since that date, Parent has
        timely filed with the U.S. Securities and Exchange Commission (the “Commission”)
        all
        registration statements, proxy statements, information statements and reports
        required to be filed pursuant to the Securities Exchange Act of 1934, as
        amended
        (the “Exchange
        Act”).
        Parent has not filed with the Commission a certificate on Form 15 pursuant
        to
        Rule 12h-3 of the Exchange Act.

       

      
        
           

        

        
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      (b) Parent
        has made available to the Company true and complete copies of the registration
        statements, information statements and other reports (collectively, the
“Parent
        SEC Documents”)
        filed
        by Parent with the Commission. None of the Parent SEC Documents, as of their
        respective dates, contained any untrue statement of a material fact or omitted
        to state a material fact necessary in order to make the statements contained
        therein not misleading.

       

      (c) Prior
        to
        and until the Closing, Parent will provide to the Company copies of any and
        all
        amendments or supplements to the Parent SEC Documents filed with the Commission
        and all subsequent registration statements and reports filed by Parent
        subsequent to the filing of the Parent SEC Documents with the Commission
        and any
        and all subsequent information statements, proxy statements, reports or notices
        filed by Parent with the Commission or delivered to the stockholders of
        Parent.

       

      (d) Parent
        is
        not an investment company within the meaning of Section 3 of the Investment
        Company Act of 1940, as amended.

       

      (e) The
        shares of Parent Common Stock are quoted on the Over-the-Counter (OTC) Bulletin
        Board under the symbol “HVYM.OB” and Parent is in compliance in all material
        respects with all rules and regulations of the OTC Bulletin Board applicable
        to
        it and the Parent Common Stock.

       

      (f) Between
        the date hereof and the Closing Date, Parent shall continue to satisfy the
        filing requirements of the Exchange Act and all other requirements of applicable
        securities laws and of the OTC Bulletin Board.

       

      (g) The
        Parent SEC Documents include all certifications and statements required of
        it,
        if any, by (i) Rule 13a-14 or 15d-14 under the Exchange Act, and (ii) 18
        U.S.C.
        Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002), and each of
        such
        certifications and statements contain no qualifications or exceptions to
        the
        matters certified therein other than a knowledge qualification, permitted
        under
        such provision, and have not been modified or withdrawn and neither Parent
        nor
        any of its officers has received any notice from the Commission questioning
        or
        challenging the accuracy, completeness, form or manner of filing or submission
        of such certifications or statements.

       

      Section
        3.09 Financial
        Statements.
        The
        balance sheets and statements of operations, stockholders’ equity and cash flows
        contained in the Parent SEC Documents (the “Parent
        Financial Statements”)
        (a)
        have been prepared in accordance with GAAP applied on a basis consistent
        with
        prior periods (and, in the case of unaudited financial information, on a
        basis
        consistent with year-end audits), (b) are in accordance with the books and
        records of Parent and (c) present fairly in all material respects the financial
        condition of Parent at the dates therein specified and the results of its
        operations and changes in financial position for the periods therein specified.
        The financial statements included in Parent’s SB-2 were audited by Manning
        Elliott LLP, Parent’s independent registered public accounting firm 

       

      
        
           

        

        
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      Section
        3.10 Governmental
        Consents.
        All
        material consents, approvals, orders, or authorizations of, or registrations,
        qualifications, designations, declarations, or filings with any federal or
        state
        governmental authority on the part of Parent or Acquisition Corp. required
        in
        connection with the consummation of the Merger shall have been obtained prior
        to, and be effective as of, the Closing.

       

      Section
        3.11 Compliance
        with Laws and Other Instruments.
        The
        execution, delivery and performance by Parent and/or Acquisition Corp. of
        the
        Merger Documents and the other agreements to be made by Parent or Acquisition
        Corp. pursuant to or in connection with the Merger Documents and the
        consummation by Parent and/or Acquisition Corp. of the transactions contemplated
        by the Merger Documents will not cause Parent and/or Acquisition Corp. to
        violate or contravene any provision of their respective charters or By-laws
        as
        amended and in effect on and as of the Closing Date and will not violate
        or be
        in conflict with, result in a breach of or constitute (with or without notice
        or
        lapse of time, or both) a default under any material indenture, loan or credit
        agreement, deed of trust, mortgage, security agreement or other agreement
        or
        contract to which Parent or Acquisition Corp. is a party or by which Parent
        and/or Acquisition Corp. or any of their respective properties is
        bound.

       

      Section
        3.12 No
        General Solicitation.
        In
        issuing Parent Common Stock in the Merger hereunder, neither Parent nor anyone
        acting on its behalf has offered to sell the Parent Common Stock by any form
        of
        general solicitation or advertising.

       

      Section
        3.13 Binding
        Obligations.
        The
        Merger Documents constitute the legal, valid and binding obligations of Parent
        and Acquisition Corp., and are enforceable against Parent and Acquisition
        Corp.,
        in accordance with their respective terms, except as such enforcement is
        limited
        by bankruptcy, insolvency and other similar laws affecting the enforcement
        of
        creditors’ rights generally and by general principles of equity. 

       

      Section
        3.14 Absence
        of Undisclosed Liabilities.
        Neither
        Parent nor Acquisition Corp. has any material obligation or liability (whether
        accrued, absolute, contingent, liquidated or otherwise, whether due or to
        become
        due), arising out of any transaction entered into at or prior to the Closing,
        except (a) as disclosed in the Parent SEC Documents, (b) to the extent set
        forth
        on or reserved against in the balance sheet of Parent in the most recent
        Parent
        SEC Document filed by Parent (the “Parent
        Balance Sheet”)
        or the
        notes to the Parent Financial Statements, (c) current liabilities incurred
        and
        obligations under agreements entered into in the usual and ordinary course
        of
        business since the date of the Parent Balance Sheet (the “Parent
        Balance Sheet Date”),
        none
        of which (individually or in the aggregate) materially and adversely affects
        the
        Condition of Parent and (d) by the specific terms of any written agreement,
        document or arrangement attached as an exhibit to the Parent SEC
        Documents.

       

      
        
           

        

        
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      Section
        3.15 Changes.
        Since
        the Parent Balance Sheet Date, except as disclosed in the Parent SEC Documents,
        Parent has not (a) incurred any debts, obligations or liabilities, absolute,
        accrued or, to Parent’s knowledge, contingent, whether due or to become due,
        except for current liabilities incurred in the usual and ordinary course
        of
        business, (b) discharged or satisfied any Liens other than those securing,
        or
        paid any obligation or liability other than, current liabilities shown on
        the
        Parent Balance Sheet and current liabilities incurred since the Parent Balance
        Sheet Date, in each case in the usual and ordinary course of business, (c)
        mortgaged, pledged or subjected to Lien any of its assets, tangible or
        intangible, other than in the usual and ordinary course of business, (d)
        sold,
        transferred or leased any of its assets, except in the usual and ordinary
        course
        of business, (e) cancelled or compromised any debt or claim, or waived or
        released any right of material value, (f) suffered any physical damage,
        destruction or loss (whether or not covered by insurance) that could reasonably
        be expected to have a material adverse effect on the Condition of the Parent,
        (g) entered into any transaction other than in the usual and ordinary course
        of
        business, (h) encountered any labor union difficulties, (i) made or granted
        any
        wage or salary increase or made any increase in the amounts payable under
        any
        profit sharing, bonus, deferred compensation, severance pay, insurance, pension,
        retirement or other employee benefit plan, agreement or arrangement, other
        than
        in the ordinary course of business consistent with past practice, or entered
        into any employment agreement, (j) issued or sold any shares of capital stock,
        bonds, notes, debentures or other securities or granted any options (including
        employee stock options), warrants or other rights with respect thereto, (k)
        declared or paid any dividends on or made any other distributions with respect
        to, or purchased or redeemed, any of its outstanding capital stock, (l) suffered
        or experienced any change in, or condition affecting, the Condition of the
        Parent other than changes, events or conditions in the usual and ordinary
        course
        of its business, none of which (either by itself or in conjunction with all
        such
        other changes, events and conditions) could reasonably be expected to have
        a
        material adverse effect on the Condition of the Parent, (m) made any change
        in
        the accounting principles, methods or practices followed by it or depreciation
        or amortization policies or rates theretofore adopted, (n) made or permitted
        any
        amendment or termination of any material contract, agreement or license to
        which
        it is a party, (o) suffered any material loss not reflected in the Parent
        Balance Sheet or its statement of income for the year ended on the Parent
        Balance Sheet Date, (p) paid, or made any accrual or arrangement for payment
        of,
        bonuses or special compensation of any kind or any severance or termination
        pay
        to any present or former officer, director, employee, stockholder or consultant,
        (q) made or agreed to make any charitable contributions or incurred any
        non-business expenses in excess of $5,000 in the aggregate or (r) entered
        into
        any agreement, or otherwise obligated itself, to do any of the
        foregoing.

       

      Section
        3.16 Tax
        Returns and Audits.
        All
        required federal, state and local Tax Returns of Parent have been accurately
        prepared in all material respects and duly and timely filed, and all federal,
        state and local Taxes required to be paid with respect to the periods covered
        by
        such returns have been paid to the extent that the same are material and
        have
        become due, except where the failure so to file or pay could not reasonably
        be
        expected to have a material adverse effect upon the Condition of the Parent.
        Parent is not and has not been delinquent in the payment of any Tax. Parent
        has
        not had a Tax deficiency assessed against it. None of Parent’s federal income,
        state and local income and franchise tax returns has been audited by any
        governmental authority. The reserves for Taxes reflected on the Parent Balance
        Sheet are sufficient for the payment of all unpaid Taxes payable by Parent
        with
        respect to the period ended on the Parent Balance Sheet Date. There are no
        federal, state, local or foreign audits, actions, suits, proceedings,
        investigations, claims or administrative proceedings relating to Taxes or
        any
        Tax Returns of Parent now pending, and Parent has not received any notice
        of any
        proposed audits, investigations, claims or administrative proceedings relating
        to Taxes or any Tax Returns.

       

      
        
           

        

        
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      Section
        3.17 Employee
        Benefit Plans; ERISA.
        

       

      (a) Except
        as
        disclosed in the Parent SEC Documents, there are no “employee benefit plans”
(within the meaning of Section 3(3) of ERISA) nor any other employee benefit
        or
        fringe benefit arrangements, practices, contracts, policies or programs other
        than programs merely involving the regular payment of wages, commissions,
        or
        bonuses established, maintained or contributed to by Parent. Any plans listed
        in
        the Parent SEC Documents are hereinafter referred to as the “Parent
        Employee Benefit Plans.”

       

      (b) Any
        current and prior material documents, including all amendments thereto, with
        respect to each Parent Employee Benefit Plan have been given to the Company
        or
        its advisors.

       

      (c) All
        Parent Employee Benefit Plans are in material compliance with the applicable
        requirements of ERISA, the Code and any other applicable state, federal or
        foreign law.

       

      (d) There
        are
        no pending, or to the knowledge of Parent, threatened, claims or lawsuits
        which
        have been asserted or instituted against any Parent Employee Benefit Plan,
        the
        assets of any of the trusts or funds under the Parent Employee Benefit Plans,
        the plan sponsor or the plan administrator of any of the Parent Employee
        Benefit
        Plans or against any fiduciary of a Parent Employee Benefit Plan with respect
        to
        the operation of such plan.

       

      (e) There
        is
        no pending, or to the knowledge of Parent, threatened, investigation or pending
        or possible enforcement action by the Pension Benefit Guaranty Corporation,
        the
        Department of Labor, the Internal Revenue Service or any other government
        agency
        with respect to any Parent Employee Benefit Plan.

       

      (f) No
        actual
        or, to the knowledge of Parent, contingent liability exists with respect
        to the
        funding of any Parent Employee Benefit Plan or for any other expense or
        obligation of any Parent Employee Benefit Plan, except as disclosed on the
        financial statements of Parent or the Parent SEC Documents, and to the knowledge
        of Parent, no contingent liability exists under ERISA with respect to any
        “multi-employer plan,” as defined in Section 3(37) or Section 4001(a)(3) of
        ERISA.

       

      Section
        3.18 Litigation.
        There
        is no legal action, suit, arbitration or other legal, administrative or other
        governmental proceeding pending or, to the knowledge of Parent, threatened
        against or affecting Parent or Acquisition Corp. or any of their respective
        properties, assets or businesses. To the knowledge of Parent, neither Parent
        nor
        Acquisition Corp. is in default with respect to any order, writ, judgment,
        injunction, decree, determination or award of any court or any governmental
        agency or instrumentality or arbitration authority.

       

      Section
        3.19 Licenses.
        Parent
        possesses from all appropriate governmental authorities all licenses, permits,
        authorizations, approvals, franchises and rights necessary for the Company
        to
        engage in the business currently conducted by it, all of which are in full
        force
        and effect.

       

      Section
        3.20 Interested
        Party Transactions.
        Except
        as disclosed in the Parent SEC Documents, no officer, director or stockholder
        of
        Parent or any Affiliate or “associate” (as such term is defined in Rule 405
        under the Securities Act) of any such Person or of Parent has or has had,
        either
        directly or indirectly, (a) an interest in any Person that (i) furnishes
        or
        sells services or products that are furnished or sold or are proposed to
        be
        furnished or sold by Parent or (ii) purchases from or sells or furnishes
        to
        Parent any goods or services, or (b) a beneficial interest in any contract
        or
        agreement to which Parent is a party or by which it or any of its assets
        may be
        bound or affected.

       

      
        
           

        

        
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      Section
        3.21 Questionable
        Payments.
        Neither
        Parent, Acquisition Corp. nor, to the knowledge of Parent, any director,
        officer, agent, employee or other Person associated with or acting on behalf
        of
        Parent or Acquisition Corp. has used any corporate funds for unlawful
        contributions, gifts, entertainment or other unlawful expenses relating to
        political activity; made any direct or indirect unlawful payments to government
        officials or employees from corporate funds; established or maintained any
        unlawful or unrecorded fund of corporate monies or other assets; made any
        false
        or fictitious entries on the books of record of any such corporations; or
        made
        any bribe, rebate, payoff, influence payment, kickback or other unlawful
        payment.

       

      Section
        3.22 Obligations
        to or by Stockholders.
        Except
        as disclosed in the Parent SEC Documents, Parent has no liability or obligation
        or commitment to any stockholder of Parent or any Affiliate or “associate” (as
        such term is defined in Rule 405 under the Securities Act) of any stockholder
        of
        Parent, nor does any stockholder of Parent or any such Affiliate or associate
        have any liability, obligation or commitment to Parent.

       

      Section
        3.23 Assets
        and Contracts.
        Except
        as expressly set forth in this Agreement, the Parent Balance Sheet or the
        notes
        thereto, or the Parent SEC Documents, Parent is not a party to any written
        or
        oral agreement not made in the ordinary course of business that is material
        to
        Parent. Parent does not own any real property. Except as expressly set forth
        in
        this Agreement, the Parent Balance Sheet or the notes thereto, or the Parent
        SEC
        Documents, Parent is not a party to or otherwise barred by any written or
        oral
        (a) agreement with any labor union, (b) agreement for the purchase of fixed
        assets or for the purchase of materials, supplies or equipment in excess
        of
        normal operating requirements, (c) agreement for the employment of any officer,
        individual employee or other Person on a full-time basis or any agreement
        with
        any Person for consulting services, (d) bonus, pension, profit sharing,
        retirement, stock purchase, stock option, deferred compensation, medical,
        hospitalization or life insurance or similar plan, contract or understanding
        with respect to any or all of the employees of Parent or any other Person,
        (e)
        indenture, loan or credit agreement, note agreement, deed of trust, mortgage,
        security agreement, promissory note or other agreement or instrument relating
        to
        or evidencing Indebtedness for Borrowed Money or subjecting any asset or
        property of Parent to any Lien or evidencing any Indebtedness, (f) guaranty
        of
        any Indebtedness, (g) lease or agreement under which Parent is lessee of
        or
        holds or operates any property, real or personal, owned by any other Person,
        (h)
        lease or agreement under which Parent is lessor or permits any Person to
        hold or
        operate any property, real or personal, owned or controlled by Parent, (i)
        agreement granting any preemptive right, right of first refusal or similar
        right
        to any Person, (j) agreement or arrangement with any Affiliate or any
“associate” (as such term is defined in Rule 405 under the Securities Act) of
        Parent or any present or former officer, director or stockholder of Parent,
        (k)
        agreement obligating Parent to pay any royalty or similar charge for the
        use or
        exploitation of any tangible or intangible property, (1) covenant not to
        compete
        or other restriction on its ability to conduct a business or engage in any
        other
        activity, (m) distributor, dealer, manufacturer’s representative, sales agency,
        franchise or advertising contract or commitment, (n) agreement to register
        securities under the Securities Act, (o) collective bargaining agreement
        or (p)
        agreement or other commitment or arrangement with any Person continuing for
        a
        period of more than three months from the Closing Date that involves an
        expenditure or receipt by Parent in excess of $1,000. Parent maintains no
        insurance policies or insurance coverage of any kind with respect to Parent,
        its
        business, premises, properties, assets, employees and agents. No consent
        of any
        bank or other depository is required to maintain any bank account, other
        deposit
        relationship or safety deposit box of Parent in effect following the
        consummation of the Merger and the transactions contemplated hereby.

       

      
        
           

        

        
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      Section
        3.24 Employees.
        Other
        than pursuant to ordinary arrangements of employment compensation, Parent
        is not
        under any obligation or liability to any officer, director, employee or
        Affiliate of Parent.

       

      Section
        3.25 Disclosure.
        There
        is no fact relating to Parent that Parent has not disclosed to the Company
        in
        writing that materially and adversely affects nor, insofar as Parent can
        now
        foresee, will materially and adversely affect, the condition (financial or
        otherwise), properties, assets, liabilities, business operations, results
        of
        operations or prospects of Parent. No representation or warranty by Parent
        herein and no information disclosed in the schedules or exhibits hereto by
        Parent contains any untrue statement of a material fact or omits to state
        a
        material fact necessary to make the statements contained herein or therein
        not
        misleading.

       

      ARTICLE
        IV.

      ADDITIONAL
        REPRESENTATIONS, WARRANTIES AND
COVENANTS
        OF CAN 

       

      (a)
        CAN
        has full right, power and authority to deliver the Company Common Stock,
        (b) the
        delivery of the Company Common Stock will not violate or be in conflict with,
        result in a breach of or constitute a default under, any indenture, loan
        or
        credit agreement, deed of trust, mortgage, security agreement or other agreement
        or instrument to which CAN is bound or affected, (c) CAN has good, valid
        and
        marketable title to all shares of Company Common Stock and CAN is not affected
        by any voting trust, agreement or arrangement affecting the voting rights
        of
        such Company Common Stock, (d) CAN is an “accredited investor,” as such term is
        defined in Regulation D under the Securities Act and CAN is acquiring Parent
        Common Stock for investment purposes, and not with a view to selling or
        otherwise distributing such Parent Common Stock in violation of the Securities
        Act or the securities laws of any state and (e) CAN has had an opportunity
        to
        ask and receive answers to any questions CAN may have had concerning the
        terms
        and conditions of the Merger and the Parent Common Stock and has obtained
        any
        additional information that CAN has requested.

       

      ARTICLE
        V.

      CONDUCT
        OF BUSINESSES PENDING THE MERGER.

       

      Section
        5.01 Conduct
        of Business by the Company Pending the Merger.
        Prior
        to the Effective Time, unless Parent or Acquisition Corp. shall otherwise
        agree
        in writing or as otherwise contemplated by this Agreement:

       

      (a) the
        business of the Company shall be conducted only in the ordinary
        course;

       

      
        
           

        

        
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      (b) the
        Company shall not (i) directly or indirectly redeem, purchase or otherwise
        acquire or agree to redeem, purchase or otherwise acquire any shares of its
        capital stock; (ii) amend its Certificate of Incorporation or By-laws except
        to
        effectuate the transactions contemplated in the Disclosures or (iii) split,
        combine or reclassify the outstanding Company Stock or declare, set aside
        or pay
        any dividend payable in cash, stock or property or make any distribution
        with
        respect to any such stock;

       

      (c) the
        Company shall not (i) issue or agree to issue any additional shares of, or
        options, warrants or rights of any kind to acquire any shares of, Company
        Common
        Stock, except to issue shares of Company Common Stock in connection with
        any
        matter relating to the Disclosures (ii) acquire or dispose of any fixed assets
        or acquire or dispose of any other substantial assets other than in the ordinary
        course of business; (iii) incur additional Indebtedness or any other liabilities
        or enter into any other transaction other than in the ordinary course of
        business; (iv) enter into any contract, agreement, commitment or arrangement
        with respect to any of the foregoing or (v) except as contemplated by this
        Agreement, enter into any contract, agreement, commitment or arrangement
        to
        dissolve, merge, consolidate or enter into any other material business
        combination;

       

      (d) the
        Company shall use its best efforts to preserve intact the business organization
        of the Company, to keep available the service of its present officers and
        key
        employees, and to preserve the good will of those having business relationships
        with it;

       

      (e) the
        Company will not, nor will it authorize any director or authorize or permit
        any
        officer or employee or any attorney, accountant or other representative retained
        by it to, make, solicit, encourage any inquiries with respect to, or engage
        in
        any negotiations concerning, any Acquisition Proposal (as defined below for
        purposes of this paragraph). The Company will promptly advise Parent orally
        and
        in writing of any such inquiries or proposals (or requests for information)
        and
        the substance thereof. As used in this paragraph, “Acquisition
        Proposal”
shall
        mean any proposal for a merger or other business combination involving the
        Company or for the acquisition of a substantial equity interest in it or
        any
        material assets of it other than as contemplated by this Agreement. The Company
        will immediately cease and cause to be terminated any existing activities,
        discussions or negotiations with any Person conducted heretofore with respect
        to
        any of the foregoing; and

       

      (f) the
        Company will not enter into any new employment agreements with any of its
        officers or employees or grant any increases in the compensation or benefits
        of
        its officers and employees or amend any employee benefit plan or
        arrangement.

       

      Section
        5.02 Conduct
        of Business by Parent and Acquisition Corp.
        Pending
        the Merger. Prior to the Effective Time, unless the Company and CAN shall
        otherwise agree in writing or as otherwise contemplated by this
        Agreement:

       

      (a) the
        business of Parent and Acquisition Corp. shall be conducted only in the ordinary
        course; provided,
        however,
        that
        Parent shall take the steps necessary to have discontinued its existing business
        without liability to Parent or Acquisition Corp. immediately following the
        Effective Time;

       

      
        
           

        

        
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      (b) neither
        Parent nor Acquisition Corp. shall (i) directly or indirectly redeem, purchase
        or otherwise acquire or agree to redeem, purchase or otherwise acquire any
        shares of its capital stock; (ii) amend its charter or by-laws other than
        to
        effectuate the transactions contemplated hereby; or (iii) split, combine
        or
        reclassify its capital stock or declare, set aside or pay any dividend payable
        in cash, stock or property or make any distribution with respect to such
        stock;

       

      (c) neither
        Parent nor Acquisition Corp. shall (i) issue or agree to issue any additional
        shares of, or options, warrants or rights of any kind to acquire shares of,
        its
        capital stock; (ii) acquire or dispose of any assets other than in the ordinary
        course of business (except for dispositions in connection with Section 5.02(a)
        hereof); (iii) incur additional Indebtedness or any other liabilities or
        enter
        into any other transaction except in the ordinary course of business; (iv)
        enter
        into any contract, agreement, commitment or arrangement with respect to any
        of
        the foregoing or (v) except as contemplated by this Agreement, enter into
        any
        contract, agreement, commitment or arrangement to dissolve, merge, consolidate
        or enter into any other material business contract or enter into any
        negotiations in connection therewith;

       

      (d) neither
        Parent nor Acquisition Corp. will, nor will they authorize any director or
        authorize or permit any officer or employee or any attorney, accountant or
        other
        representative retained by them to, make, solicit, encourage any inquiries
        with
        respect to, or engage in any negotiations concerning, any Acquisition Proposal
        (as defined below for purposes of this paragraph). Parent will promptly advise
        the Company orally and in writing of any such inquiries or proposals (or
        requests for information) and the substance thereof. As used in this paragraph,
        “Acquisition
        Proposal”
shall
        mean any proposal for a merger or other business combination involving Parent
        or
        Acquisition Corp. or for the acquisition of a substantial equity interest
        in
        either of them or any material assets of either of them other than as
        contemplated by this Agreement. Parent will immediately cease and cause to
        be
        terminated any existing activities, discussions or negotiations with any
        Person
        conducted heretofore with respect to any of the foregoing; and

       

      (e) neither
        Parent nor Acquisition Corp. will enter into any new employment agreements
        with
        any of their officers or employees or grant any increases in the compensation
        or
        benefits of their officers and employees. 

       

      
        
           

        

        
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      ARTICLE
        VI.

      ADDITIONAL
        AGREEMENTS

       

      Section
        6.01 Access
        and Information.
        The
        Company, on the one hand, and Parent and Acquisition Corp., on the other
        hand,
        shall each afford to the other and to the other’s accountants, counsel and other
        representatives full access during normal business hours throughout the period
        prior to the Effective Time to all of its properties, books, contracts,
        commitments and records (including but not limited to tax returns) and during
        such period, each shall furnish promptly to the other all information concerning
        its business, properties and personnel as such other party may reasonably
        request, provided that no investigation pursuant to this Section 6.01 shall
        affect any representations or warranties made herein. Each party shall hold,
        and
        shall cause its employees and agents to hold, in confidence all such information
        (other than such information that (a) is already in such party’s possession or
        (b) becomes generally available to the public other than as a result of a
        disclosure by such party or its directors, officers, managers, employees,
        agents
        or advisors or (c) becomes available to such party on a non-confidential
        basis
        from a source other than a party hereto or its advisors, provided that such
        source is not known by such party to be bound by a confidentiality agreement
        with or other obligation of secrecy to a party hereto or another party until
        such time as such information is otherwise publicly available; provided,
        however,
        that
        (i) any such information may be disclosed to such party’s directors, officers,
        employees and representatives of such party’s advisors who need to know such
        information for the purpose of evaluating the transactions contemplated hereby
        (it being understood that such directors, officers, employees and
        representatives shall be informed by such party of the confidential nature
        of
        such information), (ii) any disclosure of such information may be made as
        to
        which the party hereto furnishing such information has consented in writing
        and
        (iii) any such information may be disclosed pursuant to a judicial,
        administrative or governmental order or request; provided,
        further,
        that
        the requested party will promptly so notify the other party so that the other
        party may seek a protective order or appropriate remedy and/or waive compliance
        with this Agreement and if such protective order or other remedy is not obtained
        or the other party waives compliance with this provision, the requested party
        will furnish only that portion of such information that is legally required
        and
        will exercise its best efforts to obtain a protective order or other reliable
        assurance that confidential treatment will be accorded the information
        furnished. If this Agreement is terminated, each party will deliver to the
        other
        all documents and other materials (including copies) obtained by such party
        or
        on its behalf from the other party as a result of this Agreement or in
        connection herewith, whether so obtained before or after the execution
        hereof.

       

      Section
        6.02 Additional
        Agreements.
        Subject
        to the terms and conditions herein provided, each of the parties hereto agrees
        to use its commercially reasonable efforts to take, or cause to be taken,
        all
        action and to do, or cause to be done, all things necessary, proper or advisable
        under applicable laws and regulations to consummate and make effective the
        transactions contemplated by this Agreement, including using its commercially
        reasonable efforts to satisfy the conditions precedent to the obligations
        of any
        of the parties hereto, to obtain all necessary waivers, and to lift any
        injunction or other legal bar to the Merger (and, in such case, to proceed
        with
        the Merger as expeditiously as possible). In order to obtain any necessary
        governmental or regulatory action or non-action, waiver, consent, extension
        or
        approval, each of Parent, Acquisition Corp. and the Company agrees to take
        all
        reasonable actions and to enter into all reasonable agreements as may be
        necessary to obtain timely governmental or regulatory approvals and to take
        such
        further action in connection therewith as may be necessary. In case at any
        time
        after the Effective Time any further action is necessary or desirable to
        carry
        out the purposes of this Agreement, the proper officers and/or directors
        of
        Parent, Acquisition Corp. and the Company shall take all such necessary
        action.

       

      Section
        6.03 Publicity.
        No
        party shall issue any press release or public announcement pertaining to
        the
        Merger that has not been agreed upon in advance by Parent, the Company and
        CAN,
        except as Parent and CAN reasonably determine to be necessary in order to
        comply
        with the rules of the Commission, provided, that in such case each of Parent
        and
        CAN will use its best efforts to allow the other party to review and reasonably
        approve any such press release or public announcement prior to its
        release.

       

      
        
           

        

        
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      Section
        6.04 Appointment
        of Directors and Officers.
        Immediately at the Effective Time, Parent shall accept the resignations of
        the
        current officers and directors of Parent, and shall cause the persons listed
        as
        directors in Exhibit
        F
        hereto
        to be elected to the Board of Directors of Parent. At the first annual meeting
        of Parent stockholders and thereafter, the election of members of Parent’s Board
        of Directors shall be accomplished in accordance with the By-laws of Parent
        and
        the rules of the Commission.

       

      Section
        6.05 Exchange
        Listing.
        Promptly following the Effective Time, Parent shall take all required actions,
        upon satisfaction of the original listing requirements, to list the Parent
        Common Stock for trading on the American Stock Exchange or the NASDAQ Stock
        Market.

       

      Section
        6.06 Assumption
        of Agreements.
        At the
        Effective Time, Parent shall affirmatively assume any all liabilities and
        obligations of the Company with respect to the Private Placement and the
        Merger.

       

      Section
        6.07 Future
        Indebtedness. Reference
        is hereby made to that certain amendment agreement dated as of June 17, 2008,
        by
        and between CAN and Longview Marquis Master Fund, L.P. (the “Amendment
        Agreement”).
        The
        Company agrees to abide by the terms and conditions as set forth in Section
        2,
        Part (viii) of the Amendment Agreement, attached as Exhibit
        G
        hereto.

       

      ARTICLE
        VII.
CONDITIONS
        TO PARTIES’ OBLIGATIONS

       

      Section
        7.01 Conditions
        to Parent and Acquisition Corp. Obligations.
        The
        obligations of Parent and Acquisition Corp. under the Merger Documents are
        subject to the fulfillment, at or prior to the Closing, of the following
        conditions, any of which may be waived in whole or in part by
        Parent.

       

      (a) The
        representations and warranties of the Company under this Agreement shall
        be
        deemed to have been made again on the Closing Date and shall then be true
        and
        correct in all material respects.

       

      (b) The
        Company shall have performed and complied in all material respects with all
        agreements and conditions required by this Agreement to be performed or complied
        with by it on or before the Closing Date.

       

      (c) There
        shall not exist on the Closing Date any Default (as defined below) or Event
        of
        Default (as defined below) or any event or condition that, with the giving
        of
        notice or lapse of time or both, would constitute a Default or Event of Default
        and, since the Balance Sheet Date, there shall have been no material adverse
        change in the Condition of the Company. For purposes of this Agreement,
“Default”
shall
        mean a default or failure in the due observance or performance of any covenant,
        condition or agreement on the part of a party to be observed or performed
        under
        the terms of the Merger Documents, if such default or failure in performance
        shall remain un-remedied for five (5) days. Furthermore, for purposes of
        this
        Agreement, “Event
        of Default”
shall
        mean (i) the failure to pay any Indebtedness for Borrowed Money, or any interest
        or premium thereon, within five (5) days after the same shall become due,
        whether such Indebtedness shall become due by scheduled maturity, by required
        prepayment, by acceleration, by demand or otherwise, (ii) an event of default
        under any agreement or instrument evidencing or securing or relating to any
        such
        Indebtedness or (iii) the failure to perform or observe any material term,
        covenant, agreement or condition on its part to be performed or observed
        under
        any agreement or instrument evidencing or securing or relating to any such
        Indebtedness when such term, covenant or agreement is required to be performed
        or observed.

       

      
        
           

        

        
          -
            27
            -

          
            

          

        

        
           

        

      

      (d) No
        action
        or proceeding before any court, governmental body or agency shall have been
        threatened, asserted or instituted to restrain or prohibit, or to obtain
        substantial damages in respect of, the Merger Documents or the carrying out
        of
        the transactions contemplated by the Merger Documents.

       

      (e) Parent
        and Acquisition Corp. shall have received the following:

       

      (i) copies
        of
        resolutions of the Board of Directors and CAN, certified by the Secretary
        of the
        Company, authorizing and approving the execution, delivery and performance
        of
        the Merger Documents and all other documents and instruments to be delivered
        pursuant thereto;

       

      (ii) a
        certificate of incumbency executed by the Secretary of the Company certifying
        the names, titles and signatures of the officers authorized to execute any
        documents referred to in this Agreement and further certifying that the
        Certificate of Incorporation and By-laws of the Company delivered to Parent
        and
        Acquisition Corp. at the time of the execution of this Agreement have been
        validly adopted and have not been amended or modified;

       

      (iii) a
        certificate, dated the Closing Date, executed by the President and Chief
        Executive Officer of the Company certifying that the undersigned officers
        have
        no knowledge of any plan to issue any securities of the Company, and the
        Company
        has not entered into any agreement, written or oral, to issue any securities
        of
        the Company except as described in the Disclosures or this
        Agreement;

       

      (iv) evidence
        as of a recent date of the good standing and corporate existence of the Company
        issued by the Secretary of State of the State of Delaware and evidence that
        the
        Company is qualified to transact business as a foreign corporation and is
        in
        good standing in each state of the United States and in each other jurisdiction
        where the character of the property owned or leased by it or the nature of
        its
        activities makes such qualification necessary; 

       

      (v) letter
        of
        resignation from Michael Mathews as a director of the Company; and

       

      (vi) such
        additional supporting documentation and other information with respect to
        the
        transactions contemplated hereby as Parent and Acquisition Corp. may reasonably
        request.

       

      (f) All
        corporate and other proceedings and actions taken in connection with the
        transactions contemplated hereby and all certificates, opinions, agreements,
        instruments and documents mentioned herein or incident to any such transactions
        shall be reasonably satisfactory in form and substance to Parent and Acquisition
        Corp. The Company shall furnish to Parent and Acquisition Corp. such supporting
        documentation and evidence of the satisfaction of any or all of the conditions
        precedent specified in this Section 7.01 as Parent or its counsel may reasonably
        request.

       

      
        
           

        

        
          -
            28
            -

          
            

          

        

        
           

        

      

      Section
        7.02 Conditions
        to the Company’s and CAN’s Obligations.
        The
        obligations of the Company and CAN under the Merger Documents are subject
        to the
        fulfillment, at or prior to the Closing, of the following conditions, any
        of
        which may be waived in whole or in part by the Company.

       

      (a) The
        representations and warranties of Parent and Acquisition Corp. under this
        Agreement shall be deemed to have been made again on the Closing Date and
        shall
        then be true and correct in all material respects.

       

      (b) Parent
        and Acquisition Corp. shall have performed and complied in all material respects
        with all agreements and conditions required by the Merger Documents to be
        performed or complied with by them on or before the Closing Date.

       

      (c) There
        shall not exist on the Closing Date any Default or Event of Default or any
        event
        or condition that, with the giving of notice or lapse of time or both, would
        constitute a Default or Event of Default and, since the Parent Balance Sheet
        Date, there shall have been no material adverse change in the Condition of
        the
        Parent.

       

      (d) The
        Company and CAN shall have received the following:

       

      (i) copies
        of
        resolutions of Parent’s and Acquisition Corp.’s respective boards of directors
        and the sole stockholder of Acquisition Corp., certified by their respective
        Secretaries, authorizing and approving, to the extent applicable, the execution,
        delivery and performance of the Merger Documents and all other documents
        and
        instruments to be delivered by them pursuant thereto;

       

      (ii) a
        certificate of incumbency executed by the respective Secretaries of Parent
        and
        Acquisition Corp. certifying the names, titles and signatures of the officers
        authorized to execute the documents referred to in this Agreement and further
        certifying that the Certificates or Articles of Incorporation and By-laws
        of
        Parent and Acquisition Corp. appended thereto have not been amended or
        modified.

       

      (iii) a
        certificate, dated the Closing Date, executed by the President and Chief
        Financial Officer of each of the Parent and Acquisition Corp., certifying
        that
        (A) except for the filing of the Certificate of Merger, all consents,
        authorizations, orders and approvals of, and filings and registrations with,
        any
        court, governmental body or instrumentality that are required for the execution
        and delivery of the Merger Documents and the consummation of the Merger shall
        have been duly made or obtained, and all material consents by third parties
        required for the Merger have been obtained and (B) no action or proceeding
        before any court, governmental body or agency has been threatened, asserted
        or
        instituted to restrain or prohibit, or to obtain substantial damages in respect
        of, the Merger Documents or the carrying out of the transactions contemplated
        by
        any of the Merger Documents;

       

      
        
           

        

        
          -
            29
            -

          
            

          

        

        
           

        

      

      (iv) a
        certificate of Island Stock Transfer, Parent’s transfer agent and registrar,
        certifying, as of the business day prior to the Closing Date, a true and
        complete list of the names and addresses of the record owners of all of the
        outstanding shares of Parent Common Stock, together with the number of shares
        of
        Parent Common Stock held by each record owner and the total number of shares
        of
        Parent Common Stock then outstanding; 

       

      (v) the
        executed resignations of all directors and officers of Parent, with the director
        resignations to take effect at the Closing Date;

       

      (vi) evidence
        as of a recent date and within five (5) days of the Effective Date of the
        good
        standing and corporate existence of each of Parent and Acquisition Corp.
        issued
        by the Secretary of State of the State of Nevada and by the Secretary of
        State
        of the State of Delaware, respectively, and evidence that Parent and Acquisition
        Corp. are qualified to transact business as foreign corporations and are
        in good
        standing in each state of the United States and in each other jurisdiction
        where
        the character of the property owned or leased by them or the nature of their
        activities makes such qualification necessary; and

       

      (vii) an
        opinion from Noble International Investments, Inc. to the effect that the
        Merger
        is fair to CAN, and its stockholders, from a financial point of
        view.

       

      (viii) such
        additional supporting documentation and other information with respect to
        the
        transactions contemplated hereby as the Company may reasonably
        request.

       

      (e) All
        corporate and other proceedings and actions taken in connection with the
        transactions contemplated hereby and all certificates, opinions, agreements,
        instruments and documents mentioned herein or incident to any such transactions
        shall be satisfactory in form and substance to the Company. Parent and
        Acquisition Corp. shall furnish to the Company such supporting documentation
        and
        evidence of satisfaction of any or all of the conditions specified in this
        Section 7.02 as the Company may reasonably request.

       

      (f) No
        action
        or proceeding before any court, governmental body or agency shall have been
        threatened, asserted or instituted to restrain or prohibit, or to obtain
        substantial damages in respect of, the Merger Documents or the carrying out
        of
        the transactions contemplated by the Merger Documents.

       

      (g) Parent
        shall have accepted and assumed, and CAN and its subsidiaries shall have
        been
        released from, all of the obligations and liabilities of any nature of the
        Company or otherwise related to the business of the Company or the assets
        of the
        Company, whether fixed or unfixed, known or unknown, secured or unsecured,
        absolute, accrued, contingent or otherwise and whether due or to become due,
        except for any “earn-out” obligations incurred in connection with CAN’s initial
        acquisition of the business of the Company pursuant to that certain Agreement
        and Plan of Merger, dated as of January 4, 2008, among CAN, the Company,
        Options
        Newsletter, Inc. and Hagai Shechter.

       

      
        
           

        

        
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            30
            -

          
            

          

        

        
           

        

      

      ARTICLE
        VIII.
INDEMNIFICATION
        AND RELATED MATTERS

       

      Section
        8.01 Indemnification
        by Parent.
        Parent
        shall indemnify and hold harmless CAN and its officers, directors, agents,
        attorneys and employees, and each Person, if any, who controls or may control
        CAN within the meaning of the Securities Act, (the “CAN
        Indemnified Parties”),
        and
        shall reimburse the CAN Indemnified Parties for, any loss, liability, claim,
        damage, expense (including, but not limited to, costs of investigation and
        defense and reasonable attorneys’ fees) or diminution of value (collectively,
“Damages”)
        arising from or in connection with (a) any inaccuracy, in any material respect,
        in any of the representations and warranties of Parent and Acquisition Corp.
        in
        this Agreement or in any certificate delivered by Parent and Acquisition
        Corp.
        to CAN pursuant to this Agreement, or any actions, omissions or statements
        of
        fact inconsistent with any such representation or warranty, (b) any failure
        by
        Parent or Acquisition Corp. to perform or comply in any material respect
        with
        any covenant or agreement in this Agreement, (c) any claim for brokerage
        or
        finder’s fees or commissions or similar payments based upon any agreement or
        understanding alleged to have been made by any such party with Parent or
        Acquisition Corp. in connection with any of the transactions contemplated
        by
        this Agreement, (d) taxes attributable to any transaction or event occurring
        on
        or prior to the Closing, (e) any claim relating to or arising out of any
        liabilities reflected in the Parent or Company Financial Statement or with
        respect to accounting fees arising thereafter, (f) any litigation, action,
        claim, proceeding or investigation by any third party relating to or arising
        out
        of the business or operations of Parent, the Company or the Surviving
        Corporation, or the actions of Parent, the Company or the Surviving Corporation,
        whether before or after the Effective Time, or (g) any claim assumed by Parent
        in accordance with that certain Assignment and Assumption Agreement dated
        the
        date hereof by and among CAN and Parent.

       

      Section
        8.02 Indemnification
        by CAN.
        CAN
        shall indemnify and hold harmless Parent and the Surviving Corporation and
        their
        respective officers, directors, agents, attorneys and employees, and each
        Person, if any, who controls or may control Parent or the Surviving Corporation
        within the meaning of the Securities Act (the “Parent
        Indemnified Parties”),
        and
        shall reimburse the Parent Indemnified Parties for, any Damages arising from
        or
        in connection with (a) any inaccuracy, in any material respect, in any of
        the
        representations and warranties of CAN and the Company in this Agreement or
        in
        any certificate delivered by CAN or the Company to Parent pursuant to this
        Agreement, or any actions, omissions or statements of fact inconsistent with
        any
        such representation or warranty or (b) any failure by CAN or the Company
        to
        perform or comply in any material respect with any covenant or agreement
        in this
        Agreement.

       

      Section
        8.03 Survival.
        All
        representations, warranties, covenants and agreements of parties contained
        in
        this Agreement shall survive the Effective Time for a period of two years
        following the Effective Time (the “Claims
        Deadline”),
        provided,
        however,
        that
        any claim made pursuant to clause (g) of Section 8.01 may be made at any
        time
        even after the Claims Deadline.

       

      Section
        8.04 Notice
        of Claims.

       

      (a) If,
        at
        any time on or prior to the Claims Deadline, a party entitiled to
        indemnification hereunder (an “Indemnified
        Party”)
        shall
        assert a claim for indemnification under this Agreement, such Indemnified
        Party
        shall submit to to the indemifying party (the “Indemnifying
        Party”)
        a
        written claim in good faith signed by an authorized officer of the Company
        Indemnified Party, as applicable, stating (i) that the Indemnified Party
        incurred or reasonably believes it may incur Damages and the reasonable estimate
        of the amount of any such Damages; (ii) in reasonable detail, the facts alleged
        as the basis for such claim and the section or sections of this Agreement
        alleged as the basis or bases for the claim; and (iii) if the Damages have
        actually been incurred, the amount of such Damages.

       

      
        
           

        

        
          -
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            -

          
            

          

        

        
           

        

      

      (b) In
        the
        event that any action, suit or proceeding is brought against any Indemnified
        Party with respect to which an Indemnifying Party may have liability under
        this
        Article VIII, the Indemnifying Party shall have the right, at its cost and
        expense, to defend such action, suit or proceeding in the name and on behalf
        of
        the Indemnified Party; provided,
        however,
        that an
        Indemnified Party shall have the right to retain its own counsel, with fees
        and
        expenses paid by the Indemnifying Party, if representation of the Indemnified
        Party by counsel retained by the Indemnifying Party would be inappropriate
        because of actual or potential differing interests between the Idemnifying
        Party
        and the Indemnified Party. In connection with any action, suit or proceeding
        subject to Article VIII, each Indemnifying Party and each Indemnified Party
        agree to render to each other such assistance as may reasonably be required
        in
        order to ensure proper and adequate defense of such action, suit or proceeding.
        The Indemnifying Party shall not, without the prior written consent of the
        applicable Indemnified Party, which consent shall not be unreasonably withheld
        or delayed, settle or compromise any claim or demand if such settlement or
        compromise does not include an irrevocable and unconditional release of such
        Indemnified Party for any liability arising out of such claim or
        demand.

       

      ARTICLE
        IX.
TERMINATION
        PRIOR TO CLOSING

       

      Section
        9.01 Termination
        of Agreement.
        This
        Agreement may be terminated at any time prior to the Closing:

       

      (a) by
        the
        mutual written consent of CAN, the Company, Acquisition Corp. and
        Parent;

       

      (b) by
        the
        Company, if Parent or Acquisition Corp. (i) fails to perform in any material
        respect any of its agreements contained herein required to be performed by
        it on
        or prior to the Closing Date, or (ii) materially breach any of their
        representations, warranties or covenants contained herein, which failure
        or
        breach is not cured within thirty (30) days after the Company has notified
        Parent and Acquisition Corp. of its intent to terminate this Agreement pursuant
        to this paragraph (b);

       

      (c) by
        Parent
        and Acquisition Corp. if the Company or CAN (i) fails to perform in any material
        respect any of its agreements contained herein required to be performed by
        it on
        or prior to the Closing Date or (ii) materially breaches any of its
        representations, warranties or covenants contained herein, which failure
        or
        breach is not cured within thirty (30) days after Parent or Acquisition Corp.
        has notified the Company and CAN of its intent to terminate this Agreement
        pursuant to this paragraph (c);

       

      (d) by
        either
        the Company and CAN, on the one hand, or Parent and Acquisition Corp., on
        the
        other hand, if there shall be any order, writ, injunction or decree of any
        court
        or governmental or regulatory agency binding on Parent, Acquisition Corp.,
        CAN
        or the Company that prohibits or materially restrains any of them from
        consummating the transactions contemplated hereby, provided that the parties
        hereto shall have used their best efforts to have any such order, writ,
        injunction or decree lifted and the same shall not have been lifted within
        ninety (90) days after entry by any such court or governmental or regulatory
        agency; or

       

      
        
           

        

        
          -
            32
            -

          
            

          

        

        
           

        

      

      (e) by
        either
        the Company or CAN, on the one hand, or Parent and Acquisition Corp., on
        the
        other hand, if the Closing has not occurred on or prior to July 31, 2008
        for any
        reason other than delay or nonperformance of the party seeking such
        termination.

       

      Section
        9.02 Termination
        of Obligations.
        Termination of this Agreement pursuant to this Article IX shall terminate
        all
        obligations of the parties hereunder, except for the obligations under Sections
        6.1, 10.03 and 10.11; provided,
        however,
        that
        termination pursuant to paragraphs (b) or (c) of Section 9.01 shall not relieve
        the defaulting or breaching party or parties from any liability to the other
        parties hereto.

       

      ARTICLE
        X.
MISCELLANEOUS

       

      Section
        10.01 Notices.
        Any
        notice, request or other communication hereunder shall be given in writing
        and
        shall be served either personally, by overnight delivery or delivered by
        mail,
        certified return receipt and addressed to the following addresses:

       

      
        	
              	(a)	
                If
                  to Parent or Acquisition Corp.:

              

      

       

      Options
        Media Group Holdings, Inc.

      9457
        215A
        Street

      Langley,
        British Columbia V1M 2A5

      Canada

      Attention:
        David Harapiak

      

      With
        a
        copy to:

       

      Cane
        Clark LLP

      3273
        East
        Warm Springs Road

      Las
        Vegas, Nevada 89120

      Attention:
        Kyleen E. Cane, Esq.

      .

      
        	
              	(b)	
                If
                  to the Company: 

              

      

       

      Options
        Acquisition Sub, Inc.

      240
        Old
        Federal Highway

      Suite
        100

      Hallandale,
        Florida 33009

      Attention:
        Scott Frohman

       

      
        
           

        

        
          -
            33
            -

          
            

          

        

        
           

        

      

       

      
        	
              	(c)	
                If
                  to CAN: 

              

      

       

      Customer
        Acquisition Network Holdings, Inc.

      200
        Park
        Avenue South

      Suite
        908-909

      New
        York,
        New York 10003

      Attention:
        Michael Mathews

      

      With
        a
        copy to:

      

      Haynes
        and Boone, LLP

      153
        East
        53rd Street

      Suite
        4900

      New
        York,
        New York 10022

      Attention:
        Harvey J. Kesner, Esq

       

      Notices
        shall be deemed received at the earlier of actual receipt or three (3) business
        days following mailing. Counsel for a party (or any authorized representative)
        shall have authority to accept delivery of any notice on behalf of such
        party.

       

      Section
        10.02 Entire
        Agreement.
        This
        Agreement, including the schedules and exhibits attached hereto and other
        documents referred to herein, contains the entire understanding of the parties
        hereto with respect to the subject matter hereof. This Agreement supersedes
        all
        prior agreements and undertakings between the parties with respect to such
        subject matter.

       

      Section
        10.03 Expenses.
        Each
        party shall bear and pay all of the legal, accounting and other expenses
        incurred by it in connection with the transactions contemplated by this
        Agreement.

       

      Section
        10.04 Time.
        Time is
        of the essence in the performance of the parties’ respective obligations herein
        contained.

       

      Section
        10.05 Severability.
        Any
        provision of this Agreement that is prohibited or unenforceable in any
        jurisdiction shall, as to such jurisdiction, be ineffective to the extent
        of
        such prohibition or unenforceability without invalidating the remaining
        provisions hereof, and any such prohibition or unenforceability in any
        jurisdiction shall not invalidate or render unenforceable such provision
        in any
        other jurisdiction.

       

      Section
        10.06 Successors
        and Assigns.
        This
        Agreement shall be binding upon and inure to the benefit of the parties hereto
        and their respective successors, assigns and heirs; provided, however, that
        neither party shall directly or indirectly transfer or assign any of its
        rights
        hereunder in whole or in part without the written consent of the others,
        which
        may be withheld in its sole discretion, and any such transfer or assignment
        without said consent shall be void.

       

      Section
        10.07 No
        Third Parties Benefited.
        This
        Agreement is made and entered into for the sole protection and benefit of
        the
        parties hereto, their successors, assigns and heirs, and no other Person
        shall
        have any right or action under this Agreement.

       

      Section
        10.08 Counterparts.
        This
        Agreement may be executed in one or more counterparts, with the same effect
        as
        if all parties had signed the same document. Each such counterpart shall
        be an
        original, but all such counterparts together shall constitute a single
        agreement.

       

      
        
           

        

        
          -
            34
            -

          
            

          

        

        
           

        

      

      Section
        10.09 Recitals,
        Schedules and Exhibits.
        The
        Recitals, Schedules and Exhibits to this Agreement are incorporated herein
        and,
        by this reference, made a part hereof as if fully set forth herein.

       

      Section
        10.10 Section
        Headings and Gender.
        The
        Section headings used herein are inserted for reference purposes only and
        shall
        not in any way affect the meaning or interpretation of this Agreement. All
        personal pronouns used in this Agreement shall include the other genders,
        whether used in the masculine, feminine or neuter gender, and the singular
        shall
        include the plural, and vice versa, whenever and as often as may be
        appropriate.

       

      Section
        10.11 Governing
        Law.
        This
        Agreement shall be governed by and construed and enforced in accordance with
        the
        internal laws of the State of New York without regard to principles of conflicts
        of laws, except that the applicable terms of Section 1 shall be governed
        by the
        DGCL.

       

      [Signature
        Page Follows]

      
        
           

        

        
          -
            35
            -

          
            

          

        

        
           

        

      

       

      IN
        WITNESS WHEREOF, the parties hereto have executed this Agreement to be binding
        and effective as of the day and year first above written.

       

      
        	 	
                PARENT:

              
	 	
                OPTIONS
                  MEDIA GROUP HOLDINGS, INC.

              
	 	 
	 	
                By:

              	
                    
                  /s/ David Harapiak

              
	 	 	
                Name:
                  David Harapiak

              
	 	 	
                Title:
                  President and Chief Executive Officer

              
	 	 
	 	
                ACQUISITION
                  CORP:

              
	 	
                OPTIONS
                  ACQUISITION CORP.

              
	 	 
	 	 
	 	
                By: 

              	
                    
                  /s/ David Harapiak

              
	 	 	
                Name:
                  David Harapiak

              
	 	 	
                Title:
                  Chief Executive Officer

              
	 	 
	 	
                CAN:

              
	 	
                CUSTOMER
                  ACQUSITION NETWORK

                HOLDINGS,
                  INC.

              
	 	 
	 	
                By:
                  

              	
                    
                  /s/ Michael D. Mathews

              
	 	 	
                Name:
                  Michael Mathews

              
	 	 	
                Title:
                  Chief Executive Officer

              
	 	 
	 	
                THE
                  COMPANY:

              
	 	
                OPTIONS
                  ACQUISITION SUB, INC.

              
	 	 
	 	
                By:

              	
                    
                  /s/ Scott Frohman

              
	 	 	
                Name:
                  Scott Frohman

              
	 	 	
                Title:
                  Chief Executive Officer

              

      

      

      [SIGNATURE
        PAGE TO AGREEMENT OF MERGER AND PLAN OF REORGANIZATION]

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