Document:

Exhibit 4.(d)

 

 

 

SECOND AMENDED AND
RESTATED CREDIT AGREEMENT

 

Dated as of December 4,
2009

 

among

 

BLOUNT, INC.,

GEAR PRODUCTS,
INC, OMARK PROPERTIES, INC. and

WINDSOR FORESTRY
TOOLS LLC,

 

as Borrowers,

 

THE OTHER CREDIT
PARTIES SIGNATORY HERETO,

 

as Credit Parties,

 

THE LENDERS
SIGNATORY HERETO

 

FROM TIME TO TIME,

 

as Lenders,

 

GENERAL ELECTRIC
CAPITAL CORPORATION,

 

as Administrative
Agent and Lender,

 

and

 

GE CAPITAL
MARKETS, INC.,

 

as Lead Arranger
and Bookrunner

 

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  AMOUNT AND TERMS OF
  CREDIT

  	
  2

  
	
   

  	
  1.1

  	
  Credit Facilities

  	
  2

  
	
   

  	
  1.2

  	
  Letters of Credit

  	
  7

  
	
   

  	
  1.3

  	
  Prepayments

  	
  9

  
	
   

  	
  1.4

  	
  Use of Proceeds

  	
  11

  
	
   

  	
  1.5

  	
  Interest and Applicable
  Margins

  	
  11

  
	
   

  	
  1.6

  	
  Intentionally Omitted

  	
  14

  
	
   

  	
  1.7

  	
  Intentionally Omitted

  	
  14

  
	
   

  	
  1.8

  	
  Cash Management Systems

  	
  14

  
	
   

  	
  1.9

  	
  Fees

  	
  14

  
	
   

  	
  1.10

  	
  Receipt of Payments

  	
  14

  
	
   

  	
  1.11

  	
  Application and
  Allocation of Payments

  	
  15

  
	
   

  	
  1.12

  	
  Loan Account and
  Accounting

  	
  16

  
	
   

  	
  1.13

  	
  Indemnity

  	
  17

  
	
   

  	
  1.14

  	
  Access

  	
  18

  
	
   

  	
  1.15

  	
  Taxes

  	
  19

  
	
   

  	
  1.16

  	
  Capital Adequacy;
  Increased Costs; Illegality

  	
  20

  
	
   

  	
  1.17

  	
  Single Loan

  	
  21

  
	
  2.

  	
  CONDITIONS PRECEDENT

  	
  21

  
	
   

  	
  2.1

  	
  Conditions to the
  Initial Loans

  	
  21

  
	
   

  	
  2.2

  	
  Further Conditions to
  Each Loan

  	
  22

  
	
  3.

  	
  REPRESENTATIONS AND
  WARRANTIES

  	
  23

  
	
   

  	
  3.1

  	
  Corporate Existence;
  Compliance with Law

  	
  23

  
	
   

  	
  3.2

  	
  Executive Offices,
  Collateral Locations, FEIN

  	
  23

  
	
   

  	
  3.3

  	
  Corporate Power,
  Authorization, Enforceable Obligations

  	
  24

  
	
   

  	
  3.4

  	
  Financial Statements
  and Projections

  	
  24

  
	
   

  	
  3.5

  	
  Material Adverse Effect

  	
  25

  
	
   

  	
  3.6

  	
  Ownership of Property;
  Liens

  	
  25

  
	
   

  	
  3.7

  	
  Labor Matters

  	
  26

  
	
   

  	
  3.8

  	
  Ventures, Subsidiaries and Affiliates; Outstanding
  Stock and Indebtedness

  	
  26

  

 

i

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.9

  	
  Government Regulation

  	
  26

  
	
   

  	
  3.10

  	
  Margin Regulations

  	
  27

  
	
   

  	
  3.11

  	
  Taxes

  	
  27

  
	
   

  	
  3.12

  	
  ERISA and Benefit Plans

  	
  28

  
	
   

  	
  3.13

  	
  No Litigation

  	
  28

  
	
   

  	
  3.14

  	
  Brokers

  	
  29

  
	
   

  	
  3.15

  	
  Intellectual Property

  	
  29

  
	
   

  	
  3.16

  	
  Full Disclosure

  	
  29

  
	
   

  	
  3.17

  	
  Environmental Matters

  	
  29

  
	
   

  	
  3.18

  	
  Insurance

  	
  30

  
	
   

  	
  3.19

  	
  Deposit and
  Disbursement Accounts

  	
  30

  
	
   

  	
  3.20

  	
  Government Contracts

  	
  30

  
	
   

  	
  3.21

  	
  Customer and Trade
  Relations

  	
  30

  
	
   

  	
  3.22

  	
  Agreements and Other
  Documents

  	
  31

  
	
   

  	
  3.23

  	
  Solvency

  	
  31

  
	
   

  	
  3.24

  	
  Status of Holdings

  	
  31

  
	
   

  	
  3.25

  	
  Subordinated Debt

  	
  31

  
	
   

  	
  3.26

  	
  Senior Debt

  	
  31

  
	
  4.

  	
  FINANCIAL STATEMENTS
  AND INFORMATION

  	
  32

  
	
   

  	
  4.1

  	
  Reports and Notices

  	
  32

  
	
   

  	
  4.2

  	
  Communication with
  Accountants

  	
  32

  
	
  5.

  	
  AFFIRMATIVE COVENANTS

  	
  32

  
	
   

  	
  5.1

  	
  Maintenance of
  Existence and Conduct of Business

  	
  32

  
	
   

  	
  5.2

  	
  Payment of Charges

  	
  33

  
	
   

  	
  5.3

  	
  Books and Records

  	
  33

  
	
   

  	
  5.4

  	
  Insurance; Damage to or
  Destruction of Collateral

  	
  33

  
	
   

  	
  5.5

  	
  Compliance with Laws

  	
  35

  
	
   

  	
  5.6

  	
  Supplemental Disclosure

  	
  35

  
	
   

  	
  5.7

  	
  Intellectual Property

  	
  35

  
	
   

  	
  5.8

  	
  Environmental Matters

  	
  35

  

 

ii

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.9

  	
  Landlords’ Agreements,
  Mortgagee Agreements, Bailee Letters and Real Estate Purchases

  	
  36

  
	
   

  	
  5.10

  	
  Further Assurances

  	
  37

  
	
   

  	
  5.11

  	
  Credit Rating

  	
  37

  
	
   

  	
  5.12

  	
  Intentionally Omitted

  	
  37

  
	
   

  	
  5.13

  	
  New Subsidiaries

  	
  37

  
	
  6.

  	
  NEGATIVE COVENANTS

  	
  38

  
	
   

  	
  6.1

  	
  Mergers, Subsidiaries,
  Etc.

  	
  38

  
	
   

  	
  6.2

  	
  Investments; Loans and
  Advances

  	
  41

  
	
   

  	
  6.3

  	
  Indebtedness

  	
  43

  
	
   

  	
  6.4

  	
  Employee Loans and
  Affiliate Transactions

  	
  45

  
	
   

  	
  6.5

  	
  Capital Structure and
  Business

  	
  45

  
	
   

  	
  6.6

  	
  Guaranteed Indebtedness

  	
  46

  
	
   

  	
  6.7

  	
  Liens

  	
  46

  
	
   

  	
  6.8

  	
  Sale of Stock and
  Assets

  	
  47

  
	
   

  	
  6.9

  	
  ERISA and Benefit Plans

  	
  47

  
	
   

  	
  6.10

  	
  Financial Covenants

  	
  47

  
	
   

  	
  6.11

  	
  Hazardous Materials

  	
  47

  
	
   

  	
  6.12

  	
  Sale-Leasebacks

  	
  48

  
	
   

  	
  6.13

  	
  Cancellation of
  Indebtedness

  	
  48

  
	
   

  	
  6.14

  	
  Restricted Payments

  	
  48

  
	
   

  	
  6.15

  	
  Change of Corporate
  Name or Location; Change of Fiscal Year

  	
  48

  
	
   

  	
  6.16

  	
  No Impairment of
  Intercompany Transfers

  	
  49

  
	
   

  	
  6.17

  	
  No Speculative
  Transactions

  	
  49

  
	
   

  	
  6.18

  	
  Changes Relating to
  Subordinated Debt; Material Contracts

  	
  49

  
	
  7.

  	
  TERM

  	
  49

  
	
   

  	
  7.1

  	
  Termination

  	
  49

  
	
   

  	
  7.2

  	
  Survival of Obligations
  Upon Termination of Financing Arrangements

  	
  49

  
	
  8.

  	
  EVENTS OF DEFAULT;
  RIGHTS AND REMEDIES

  	
  50

  
	
   

  	
  8.1

  	
  Events of Default

  	
  50

  

 

iii

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.2

  	
  Remedies

  	
  52

  
	
   

  	
  8.3

  	
  Waivers by Credit
  Parties

  	
  52

  
	
  9.

  	
  ASSIGNMENT AND
  PARTICIPATIONS; APPOINTMENT OF AGENT

  	
  53

  
	
   

  	
  9.1

  	
  Assignments and
  Participations

  	
  53

  
	
   

  	
  9.2

  	
  Appointment of Agent

  	
  56

  
	
   

  	
  9.3

  	
  Agent’s Reliance, Etc.

  	
  56

  
	
   

  	
  9.4

  	
  GE Capital and
  Affiliates

  	
  57

  
	
   

  	
  9.5

  	
  Lender Credit Decision

  	
  57

  
	
   

  	
  9.6

  	
  Indemnification

  	
  58

  
	
   

  	
  9.7

  	
  Successor Agent

  	
  58

  
	
   

  	
  9.8

  	
  Setoff and Sharing of
  Payments

  	
  59

  
	
   

  	
  9.9

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

  	
  59

  
	
   

  	
  9.10

  	
  Collateral Matters

  	
  62

  
	
   

  	
  9.11

  	
  Additional Agents

  	
  63

  
	
   

  	
  9.12

  	
  Distribution of
  Materials to Lenders and L/C Issuers

  	
  63

  
	
  10.

  	
  SUCCESSORS AND ASSIGNS

  	
  65

  
	
   

  	
  10.1

  	
  Successors and Assigns

  	
  65

  
	
  11.

  	
  MISCELLANEOUS

  	
  65

  
	
   

  	
  11.1

  	
  Complete Agreement;
  Modification of Agreement

  	
  65

  
	
   

  	
  11.2

  	
  Amendments and Waivers

  	
  65

  
	
   

  	
  11.3

  	
  Fees and Expenses

  	
  67

  
	
   

  	
  11.4

  	
  No Waiver

  	
  68

  
	
   

  	
  11.5

  	
  Remedies

  	
  68

  
	
   

  	
  11.6

  	
  Severability

  	
  68

  
	
   

  	
  11.7

  	
  Conflict of Terms

  	
  69

  
	
   

  	
  11.8

  	
  Confidentiality

  	
  69

  
	
   

  	
  11.9

  	
  GOVERNING LAW

  	
  69

  
	
   

  	
  11.10

  	
  Notices

  	
  70

  
	
   

  	
  11.11

  	
  Section Titles

  	
  71

  

 

iv

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.12

  	
  Counterparts

  	
  71

  
	
   

  	
  11.13

  	
  WAIVER OF JURY TRIAL

  	
  71

  
	
   

  	
  11.14

  	
  Press Releases and
  Related Matters

  	
  71

  
	
   

  	
  11.15

  	
  Reinstatement

  	
  71

  
	
   

  	
  11.16

  	
  Advice of Counsel

  	
  72

  
	
   

  	
  11.17

  	
  No Strict Construction

  	
  72

  
	
   

  	
  11.18

  	
  Currency Equivalent
  Generally

  	
  72

  
	
   

  	
  11.19

  	
  Judgment Currency

  	
  72

  
	
   

  	
  11.20

  	
  Intentionally Omitted

  	
  73

  
	
   

  	
  11.21

  	
  Amendment and
  Restatement

  	
  73

  
	
  12.

  	
  CROSS-GUARANTY

  	
  73

  
	
   

  	
  12.1

  	
  Cross-Guaranty

  	
  73

  
	
   

  	
  12.2

  	
  Waivers by Borrowers

  	
  74

  
	
   

  	
  12.3

  	
  Benefit of Guaranty

  	
  74

  
	
   

  	
  12.4

  	
  Subordination of
  Subrogation, Etc.

  	
  74

  
	
   

  	
  12.5

  	
  Election of Remedies

  	
  75

  
	
   

  	
  12.6

  	
  Limitation

  	
  75

  
	
   

  	
  12.7

  	
  Contribution with
  Respect to Guaranty Obligations

  	
  76

  
	
   

  	
  12.8

  	
  Liability Cumulative

  	
  76

  
	
   

  	
  12.9

  	
  USA Patriot Act Notice

  	
  76

  

 

v

 

INDEX OF APPENDICES

 

	
  Annex A (Recitals)

  	
   

  	
  -

  	
   

  	
  Definitions

  
	
  Annex B (Section 1.2)

  	
   

  	
  -

  	
   

  	
  Letters of Credit

  
	
  Annex C (Section 1.8)

  	
   

  	
  -

  	
   

  	
  Cash Management System

  
	
  Annex D (Section 2.1(a))

  	
   

  	
  -

  	
   

  	
  Closing Checklist

  
	
  Annex E (Section 4.1(a))

  	
   

  	
  -

  	
   

  	
  Financial Statements
  and Projections — Reporting

  
	
  Annex F (Section 4.1(b))

  	
   

  	
  -

  	
   

  	
  Collateral Reports

  
	
  Annex G (Section 6.10)

  	
   

  	
  -

  	
   

  	
  Financial Covenants

  
	
  Annex H (Section 9.9(a))

  	
   

  	
  -

  	
   

  	
  Lenders’ Wire Transfer
  Information

  
	
  Annex I (Section 11.10)

  	
   

  	
  -

  	
   

  	
  Notice Addresses

  
	
  Annex
  J (from Annex A - Commitments definition)

  	
   

  	
   

  	
   

  	
  Commitments as of
  Closing Date

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit 1.1(a)(i)

  	
   

  	
  -

  	
   

  	
  Form of Notice of
  Revolving Credit Advance

  
	
  Exhibit 1.1(a)(ii)

  	
   

  	
  -

  	
   

  	
  Form of Revolving
  Note

  
	
  Exhibit 1.1(b)(i)

  	
   

  	
  -

  	
   

  	
  Form of Existing
  Term Loan Note

  
	
  Exhibit 1.1(b)(ii)

  	
   

  	
  -

  	
   

  	
  Form of Extending
  Term Loan Note

  
	
  Exhibit 1.1(c)(ii)

  	
   

  	
  -

  	
   

  	
  Form of Swing Line
  Note

  
	
  Exhibit 1.5(f)(i)

  	
   

  	
  -

  	
   

  	
  Form of Notice of
  Conversion/Continuation-LIBOR

  
	
  Exhibit 5.13

  	
   

  	
  -

  	
   

  	
  Form of Credit
  Agreement Joinder Agreement

  
	
  Exhibit 9.1(c)

  	
   

  	
  -

  	
   

  	
  Form of Assignment
  Agreement

  
	
  Exhibit B-1

  	
   

  	
  -

  	
   

  	
  Application for Standby
  Letter of Credit

  
	
  Exhibit B-2

  	
   

  	
  -

  	
   

  	
  Application for
  Documentary Letter of Credit

  
	
  Schedule 1.1

  	
   

  	
  -

  	
   

  	
  Agent’s Representatives

  
	
  Disclosure Schedule 1.4

  	
   

  	
  -

  	
   

  	
  Sources and Uses; Funds
  Flow Memorandum

  
	
  Disclosure Schedule 3.1

  	
   

  	
  -

  	
   

  	
  Type of Entity; State
  of Organization

  
	
  Disclosure Schedule 3.2

  	
   

  	
  -

  	
   

  	
  Executive Offices,
  Collateral Locations, FEIN, Organizational Identification Number

  
	
  Disclosure Schedule
  3.3(e)

  	
   

  	
  -

  	
   

  	
  Conflicts

  
	
  Disclosure Schedule
  3.4(A)

  	
   

  	
  -

  	
   

  	
  Financial Statements

  
	
  Disclosure Schedule
  3.4(B)

  	
   

  	
  -

  	
   

  	
  Pro Forma

  
	
  Disclosure Schedule
  3.4(C)

  	
   

  	
  -

  	
   

  	
  Projections

  
	
  Disclosure Schedule 3.6

  	
   

  	
  -

  	
   

  	
  Real Estate and Leases

  
	
  Disclosure Schedule 3.7

  	
   

  	
  -

  	
   

  	
  Labor Matters

  
	
  Disclosure Schedule 3.8

  	
   

  	
  -

  	
   

  	
  Ventures, Subsidiaries
  and Affiliates; Outstanding Stock

  
	
  Disclosure Schedule
  3.11

  	
   

  	
  -

  	
   

  	
  Tax Matters

  
	
  Disclosure Schedule
  3.12

  	
   

  	
  -

  	
   

  	
  ERISA Plans

  
	
  Disclosure Schedule
  3.13

  	
   

  	
  -

  	
   

  	
  Litigation

  
	
  Disclosure Schedule
  3.15

  	
   

  	
  -

  	
   

  	
  Intellectual Property

  
	
  Disclosure Schedule
  3.17

  	
   

  	
  -

  	
   

  	
  Hazardous Materials

  
	
  Disclosure Schedule
  3.18

  	
   

  	
  -

  	
   

  	
  Insurance

  
	
  Disclosure Schedule
  3.19

  	
   

  	
  -

  	
   

  	
  Deposit and
  Disbursement Accounts

  
	
  Disclosure Schedule
  3.20

  	
   

  	
  -

  	
   

  	
  Government Contracts

  
	
  Disclosure Schedule
  3.21

  	
   

  	
  -

  	
   

  	
  Customer and Trade
  Relations

  
	
  Disclosure Schedule
  3.22

  	
   

  	
  -

  	
   

  	
  Material Agreements

  
	
  Disclosure Schedule 5.1

  	
   

  	
  -

  	
   

  	
  Trade Names

  
	
  Disclosure Schedule 6.3

  	
   

  	
  -

  	
   

  	
  Indebtedness

  

 

vi

 

	
  Disclosure Schedule
  6.4(a)

  	
   

  	
  -

  	
   

  	
  Transactions with
  Affiliates

  
	
  Disclosure Schedule 6.7

  	
   

  	
  -

  	
   

  	
  Existing Liens

  

 

vii

 

Execution Copy

 

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

 

RECITALS

 

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

 

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

 

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

 

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

 

WHEREAS,
Borrowers and Lenders acknowledge and confirm that: (i) the Obligations
represent, among other things, the amendment, restatement, renewal, extension,
consolidation and modification of the Obligations (as defined in the Prior
Credit Agreement) arising in connection with the Prior Credit Agreement and
other Loan Documents (as defined in the Prior Credit Agreement); (ii) the
Prior Credit Agreement and the other Loan Documents (as defined in the Prior
Credit Agreement) and the collateral pledged thereunder shall secure, without
interruption or impairment of any kind, all existing Obligations (as defined in
the Prior Credit Agreement) under the Prior Credit Agreement and the other Loan
Documents (as defined in the Prior Credit Agreement) as amended, restated,
renewed, extended, consolidated or modified hereunder and under the other Loan
Documents, together with all other Obligations 

 

 

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

 

WHEREAS,
Borrowers and Lenders intend that: (i) the provisions of the Prior Credit
Agreement and the other Loan Documents (as defined in the Prior Credit
Agreement), to the extent restated, renewed, extended, consolidated, amended or
modified hereby and by the other Loan Documents, be hereby superseded and
replaced by the provisions hereof and of the other Loan Documents; and (ii) by
entering into and performing their respective obligations hereunder, this
transaction shall not constitute a novation and shall in no way adversely
affect or impair the priority of Liens granted by the Loan Documents (as
defined in the Prior Credit Agreement); and

 

WHEREAS,
capitalized terms used in this Agreement shall have the meanings ascribed to
them in Annex A and, for purposes of this Agreement and the other Loan
Documents, the rules of construction set forth in Annex A
shall govern.  All Annexes, Disclosure
Schedules, Exhibits and other attachments (collectively, “Appendices”)
hereto, or expressly identified in this Agreement, are incorporated herein by
reference, and taken together with this Agreement, shall constitute a single
agreement.  These Recitals shall be
construed as part of the Agreement.

 

NOW,
THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, and for other good and valuable consideration, the
parties hereto hereby amend and restate the Prior Loan Agreement in its
entirety and further agree as follows:

 

1.                                       AMOUNT AND TERMS OF CREDIT

 

1.1                                 Credit Facilities.

 

(a)                                  Revolving Credit Facility.

 

(i)                                     Subject to the terms and conditions
hereof, each Revolving Lender agrees to make available to Borrowers from time
to time until the Commitment Termination Date its Pro Rata Share of advances
under the Revolving Loan Commitment (each, a “Revolving Credit Advance”).  All “Revolving Credit Advances” under, and as
defined in, the Prior Credit Agreement that are outstanding on the Closing Date
shall be deemed to be Revolving Credit Advances hereunder.  The Pro Rata Share of the Revolving Loan of
any Lender shall not at any time exceed its separate Revolving Loan Commitment.  The obligations of each Lender hereunder
shall be several and not joint.  Until
the Commitment Termination Date, Borrowers may borrow, repay and reborrow under
this Section 1.1(a)(i); provided that the amount of any
Revolving Credit Advance to be made at any time shall not exceed Borrowing
Availability at such time.  Each
Revolving Credit Advance shall be made on notice by Borrower Representative on
behalf of the applicable Borrower to one of the representatives of Agent
identified in Schedule 1.1 at the address specified therein.  Any such notice must be given no later than (1) 1:00 p.m.
(New York time) on the Business Day of the proposed Revolving Credit Advance,
in the case of an Index Rate Loan, or (2) 1:00 p.m. (New York time)
on the date which is 3 Business Days prior to the proposed Revolving Credit
Advance, in the case of a LIBOR Loan.  

 

2

 

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

 

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

 

(b)                                 Term Loans.

 

(i)                                     Existing Term Loan.

 

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

 

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

 

3

 

	
  Payment
  Dates

  	
   

  	
  Installment
  Amounts

  	
   

  
	
  January 1,
  2010

  	
   

  	
  $

  	
  10,228.29

  	
   

  
	
  April 1,
  2010

  	
   

  	
  $

  	
  10,228.29

  	
   

  
	
  July 1,
  2010

  	
   

  	
  $

  	
  10,228.29

  	
   

  
	
  August 9,
  2010

  	
   

  	
  $

  	
  3,907,208.19

  	
   

  

 

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

 

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

 

(ii)                                  Extending Term Loan.

 

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

 

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

 

4

 

	
  Payment
  Dates

  	
   

  	
  Installment
  Amounts

  	
   

  
	
  January 1,
  2010

  	
   

  	
  $

  	
  268,902.36

  	
   

  
	
  April 1,
  2010

  	
   

  	
  $

  	
  268,902.36

  	
   

  
	
  July 1,
  2010

  	
   

  	
  $

  	
  268,902.36

  	
   

  
	
  October 1,
  2010 

  	
   

  	
  $

  	
  268,902.36

  	
   

  
	
  January 1,
  2011

  	
   

  	
  $

  	
  268,902.36

  	
   

  
	
  April 1,
  2011

  	
   

  	
  $

  	
  268,902.36

  	
   

  
	
  July 1,
  2011

  	
   

  	
  $

  	
  268,902.36

  	
   

  
	
  October 1,
  2011 

  	
   

  	
  $

  	
  268,902.36

  	
   

  
	
  January 1,
  2012,

  	
   

  	
  $

  	
  268,902.36

  	
   

  
	
  February 9,
  2012

  	
   

  	
  $

  	
  101,107,287.54

  	
   

  

 

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

 

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

 

(c)                                  Swing Line Facility.

 

(i)                                     Agent shall notify the Swing Line Lender
upon Agent’s receipt of any Notice of Revolving Credit Advance.  Subject to the terms and conditions hereof,
the Swing Line Lender may, in its discretion, make available from time to time
until the Commitment Termination Date advances (each, a “Swing Line Advance”)
in accordance with any such notice. The provisions of this Section 1.1(c) shall
not relieve the Revolving Lenders of their obligations to make Revolving Credit
Advances under Section 1.1(a); provided that if the Swing
Line Lender makes a Swing Line Advance pursuant to any such notice, such Swing
Line Advance shall be in lieu of any Revolving Credit Advance that otherwise
may be made by the Revolving Lenders pursuant to such notice.  The aggregate amount of Swing Line Advances
outstanding shall not exceed at any time the lesser of (A) the Swing Line
Commitment and (B) the Maximum Amount, in each case under clauses (A) and
(B) of this sentence, less the outstanding balance of the Revolving Loan
at such time (“Swing Line Availability”).  Until the Commitment Termination Date,
Borrowers may from time to time borrow, repay and reborrow under this Section 1.1(c).  Each Swing Line Advance shall be made
pursuant to a Notice of Revolving Credit Advance delivered to Agent by Borrower
Representative on behalf of the applicable Borrower in accordance with Section 1.1(a).  Any such notice must be given no later than
1:00 p.m. (New York time) on the Business Day of the proposed Swing Line
Advance.  Unless the Swing Line Lender
has received at least one Business Day’s prior written notice from Requisite
Revolving Lenders instructing it not to make a Swing Line Advance, the Swing
Line Lender shall, notwithstanding the failure of any condition precedent set
forth in Sections 2.2, be entitled to fund that Swing Line Advance, and
to have each Revolving Lender make Revolving Credit 

 

5

 

Advances in accordance
with Section 1.1(c)(iii) or purchase participating interests
in accordance with Section 1.1(c)(iv).  Notwithstanding any other provision of this
Agreement or the other Loan Documents, the Swing Line Loan shall constitute an
Index Rate Loan.  Borrowers shall repay
the aggregate outstanding principal amount of the Swing Line Loan upon demand
therefor by Agent.

 

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

 

(iii)                               If no Revolving Lender is a Non-Funding
Lender, then the Swing Line Lender, at any time and from time to time in its
sole and absolute discretion, but not less frequently than weekly, shall on
behalf of Borrowers (and each Borrower hereby irrevocably authorizes the Swing
Line Lender to so act on its behalf) request each Revolving Lender (including
the Swing Line Lender) to make a Revolving Credit Advance to Borrowers (which
shall be an Index Rate Loan) in an amount equal to that Revolving Lender’s Pro
Rata Share of the principal amount of Borrowers’ Swing Line Loan (the “Refunded
Swing Line Loan”) outstanding on the date such notice is given.  If any Revolving Lender is a Non-Funding
Lender, that Non-Funding Lender’s reimbursement obligations with respect to the
Swing Line Loans shall be reallocated to and assumed by the other Revolving
Lenders pro rata in accordance with their Pro Rata Share of the Revolving Loans
(calculated as if the Non-Funding Lender’s Pro Rata Share was reduced to zero
and each other Revolving Lender’s Pro Rata Share had been increased
proportionately).  If any Revolving
Lender is a Non-Funding Lender, upon receipt of the demand described above,
each Revolving Lender that is not a Non-Funding Lender will be obligated to pay
to Agent for the account of the Swing Line Lender its Pro Rata Share of the
outstanding Swing Line Loans (increased as described above); provided that no
Revolving Lender shall be required to fund any amount in excess of its
Revolving Loan Commitment. Unless any of the events described in Sections
8.1(h) or 8.1(i) has occurred (in which event the procedures of Section 1.1(c)(iv) shall
apply) and regardless of whether the conditions precedent set forth in this
Agreement to the making of a Revolving Credit Advance are then satisfied, each
Revolving Lender shall disburse directly to Agent, its Pro Rata Share of a
Revolving Credit Advance on behalf of the Swing Line Lender prior to 3:00 p.m.
(New York time) in immediately available funds on the Business Day next
succeeding the date that notice is given. 
The proceeds of those Revolving Credit Advances shall be immediately paid
to the Swing Line Lender and applied to repay the Refunded Swing Line Loan of
Borrowers.

 

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

 

6

 

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

 

(v)                                 Each Revolving Lender’s obligation to
make Revolving Credit Advances in accordance with Section 1.1(c)(iii) and
to purchase participation interests in accordance with Section 1.1(c)(iv) shall
be absolute and unconditional and shall not be affected by any circumstance,
including (A) any setoff, counterclaim, recoupment, defense or other right
that such Revolving Lender may have against the Swing Line Lender, any Borrower
or any other Person for any reason whatsoever; (B) the occurrence or
continuance of any Default or Event of Default; (C) any inability of any
Borrower to satisfy the conditions precedent to borrowing set forth in this
Agreement at any time or (D) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing.  If any Revolving Lender does not make
available to Agent or the Swing Line Lender, as applicable, the amount required
pursuant to Sections 1.1(c)(iii) or 1.1(c)(iv), as the case
may be, the Swing Line Lender shall be entitled to recover such amount on
demand from such Revolving Lender, together with interest thereon for each day
from the date of non-payment until such amount is paid in full at the Federal
Funds Rate for the first two (2) Business Days and at the Index Rate
thereafter.

 

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

 

1.2                                 Letters of Credit. 
Subject to and in accordance with the terms and conditions contained
herein and in Annex B, Borrower Representative, on behalf of the
applicable Borrower, shall have the right to request, and the Revolving Lenders
agree to incur, or purchase participations in, Letter of Credit Obligations in
respect of each Borrower.

 

7

 

1.2A.                    Swap Related Reimbursement Obligations.

 

(a)                                  Borrowers, jointly and severally, agree
to reimburse GE Capital in immediately available funds in the amount of any
payment made by GE Capital under a Swap Related L/C (such reimbursement
obligation, whether contingent upon payment by GE Capital under the Swap
Related L/C or otherwise, being herein called a “Swap Related Reimbursement
Obligation”).  No Swap Related
Reimbursement Obligation for any Swap Related L/C may exceed the amount of the
payment obligations owed by any Borrower under the interest rate protection or
hedging agreement or transaction supported by the Swap Related L/C.

 

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

 

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

 

(i)                                     The LIBOR Rate applicable to Revolving
Loans shall be determined for each successive one-month LIBOR Period during
which the Swap Related Reimbursement Obligation is unpaid, notwithstanding the
occurrence of any Event of Default and even if the LIBOR Period were to extend
beyond the Commitment Termination Date.

 

(ii)                                  If a Swap Related Reimbursement
Obligation is paid during a monthly period for which the LIBOR Rate applicable
to Revolving Loans is determined, interest shall be pro-rated and charged for
the portion of the monthly period during which the Swap Related Reimbursement
Obligation was unpaid.  Section 1.13(b) shall
not apply to any payment of a Swap Related Reimbursement Obligation during the
monthly period.

 

(iii)                               Notwithstanding anything to the contrary in the
definition of “LIBOR Rate”, if the LIBOR Rate applicable to Revolving Loans is
no longer available from Reuters, the LIBOR Rate with respect to Swap Related
Reimbursement Obligations shall be determined by GE Capital from such financial
reporting service or other information available to GE Capital as in GE Capital’s
reasonable discretion indicates GE Capital’s cost of funds.

 

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

 

8

 

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

 

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

 

1.3                                 Prepayments.

 

(a)                                  Voluntary Prepayments; Reductions in
Revolving Loan Commitment.  Borrowers may at any time on
at least five (5) days’ prior written notice by Borrower Representative to
Agent (i) voluntarily prepay all or part of the Term Loan B and/or (ii) permanently
reduce (but not terminate) the Revolving Loan Commitment; provided that (A) any
such prepayments or reductions shall be in a minimum amount of $1,000,000 and
integral multiples of $100,000 in excess of such amount, (B) the Revolving
Loan Commitment shall not be reduced to an amount less than the amount of the
Revolving Loan then outstanding and (C) after giving effect to such
reductions in the Revolving Loan Commitment, Borrowers shall comply with Section 1.3(b)(i).  In addition, Borrowers may at any time on at
least five (5) days’ prior written notice by Borrower Representative to
Agent terminate the Revolving Loan Commitment; provided that upon such
termination, all Loans and other Obligations shall be immediately due and
payable in full and all Letter of Credit Obligations shall be cash
collateralized or otherwise satisfied in accordance with Annex B
hereto.  Any voluntary prepayment of
Loans and any reduction or termination of the Revolving Loan Commitment must be
accompanied by payment of any LIBOR Rate breakage costs in accordance with Section 1.13(b).  Upon any such reduction or termination of the
Revolving Loan Commitment, each applicable Borrower’s right to request (I) Revolving
Credit Advances, (II) that Letter of Credit Obligations be incurred on its
behalf, or (III) Swing Line Advances, shall simultaneously be permanently
reduced or terminated, as the case may be; provided that a permanent
reduction of the Revolving Loan Commitment shall not require a reduction in the
L/C Sublimit unless the Revolving Loan Commitment is reduced to an amount below
the L/C Sublimit.  Each notice of partial
prepayment shall designate the Loans or other Obligations to which such
prepayment is to be applied; provided that any partial prepayments of
any Term Loan made by or on behalf of any Borrower shall be applied to prepay
the scheduled installments of the applicable Borrowers’ Term Loan on a pro rata
basis.

 

(b)                                 Mandatory Prepayments.

 

(i)                                     If at any time the aggregate outstanding
balances of the Revolving Loan and the Swing Line Loan exceed the Maximum
Amount, Borrowers shall immediately repay the aggregate outstanding Revolving
Credit Advances to the extent required to eliminate 

 

9

 

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

 

(ii)                                  Immediately upon receipt by any Credit
Party of proceeds of any asset disposition or any sale of Stock of any
Subsidiary of any Credit Party (excluding Excluded Proceeds), it shall forward
such proceeds to the Borrowers and Borrowers shall prepay the Loans in an
amount equal to all such proceeds, net of (A) commissions and other
reasonable and customary transaction costs, fees and expenses (including
reasonable attorney’s fees and investment banking fees) properly attributable
to such transaction and payable by Credit Parties in connection therewith (in
each case, paid to non-Affiliates), (B) transfer taxes, goods and services
taxes and sales taxes, as applicable, (C) amounts payable to holders of
senior Liens (to the extent such Liens constitute Permitted Encumbrances
hereunder), if any, (D) an appropriate reserve for income taxes in
accordance with GAAP in connection therewith and (E) cash amounts required
to be maintained as a reserve or in escrow against any such asset sale or sale
of Stock in an amount not to exceed twenty percent (20%) of the purchase price
of such assets or Stock, until such amounts are received by such Credit
Party.  Notwithstanding the foregoing,
unless an Event of Default shall have occurred and be continuing or would
result therefrom, Credit Parties may elect to reinvest such net proceeds from
any asset disposition by delivering a certificate of the Borrower
Representative to Agent that (1) states that the Credit Parties intend to
reinvest such net proceeds in the business of a Credit Party within 365 days of
the date of such sale and (2) confirms that such net proceeds have been (x) deposited
into an account that is subject to a Control Letter or a control agreement meeting
the requirements of Annex C, which net proceeds when so deposited (i) shall
constitute Collateral, securing the payment of the Obligations then
outstanding, (ii) may be withdrawn by the applicable Credit Party solely
to reinvest in other assets of such Credit Party that are useful in the
business of such Credit Party and (iii) upon the occurrence and during the
continuance of an Event of Default, an amount equal to such net proceeds shall
be applied to the repayment of the Obligations as set forth above or (y) used
to repay the Revolving Loan (in whole or in part) on a temporary basis and if
so used to repay the Revolving Loan and notwithstanding anything herein to the
contrary such amount may be reborrowed only for the purpose of funding such
reinvestment or if the Reinvestment Period (as defined below) has expired and
such amount has not been reinvested pursuant to this Section to make the
mandatory prepayment required by this Section; provided, that (a) such
reinvestment must be made within 365 days (the “Reinvestment Period”)
after the date of such sale, and (b) no Event of Default shall have
occurred and be continuing at the time of such reinvestment or after giving
effect thereto.  If and to the extent
such net proceeds are not fully reinvested during the Reinvestment Period, an
amount equal to such net proceeds is required to be applied to repay the
Obligations as set forth above.

 

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

 

10

 

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

 

(c)                                  Status of Commitments after Mandatory
Prepayments.  Neither the Revolving Loan Commitment nor the
Swing Line Commitment shall be permanently reduced by the amount of any
prepayments under Section 1.3(b).

 

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

 

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

 

1.4                                 Use of Proceeds. 
Borrowers shall utilize the proceeds of the Loans solely for the
Refinancing (and to pay any related transaction expenses), to fund Fees and
expenses incurred in connection with the Loans and for the financing of Borrowers’
ordinary working capital and general corporate needs, including, without
limitation, capital expenditures permitted hereunder.  Disclosure Schedule (1.4) contains a
description of Borrowers’ sources and uses of funds as of the Closing Date,
including Loans and Letter of Credit Obligations to be made or incurred on that
date, and a funds flow memorandum detailing how funds from each source are to
be transferred to particular uses.

 

1.5                                 Interest and Applicable Margins.

 

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

 

11

 

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

 

The Applicable
Margins are as follows:

 

	
  Applicable
  Revolver Index Margin

  	
   

  	
  3.25

  	
  %

  
	
  Applicable
  Revolver LIBOR Margin

  	
   

  	
  5.00

  	
  %

  
	
  Applicable
  Existing Term Loan Index Margin

  	
   

  	
  0.00

  	
  %

  
	
  Applicable
  Existing Term Loan LIBOR Margin

  	
   

  	
  1.75

  	
  %

  
	
  Applicable
  Extending Term Loan Index Margin

  	
   

  	
  2.50

  	
  %

  
	
  Applicable
  Extending Term Loan LIBOR Margin

  	
   

  	
  3.50

  	
  %

  
	
  Applicable
  Unused Line Fee Margin

  	
   

  	
  1.00

  	
  %

  

 

(b)                                 Intentionally Omitted.

 

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

 

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

 

(e)                                  So long as an Event of Default has
occurred and is continuing under Section 8.1(a), (h) or (i) or
so long as any other Event of Default with respect to Annex C, E, F or G
has occurred and is continuing and at the election of Agent (or upon the
written request of Requisite Lenders) confirmed by written notice from Agent to
Borrower Representative, subject to applicable law, the interest rates
applicable to the Loans and the Letter of Credit Fees shall be increased by two
percentage points (2.00%) per annum above the rates of interest or the rate of
such Fees otherwise applicable hereunder (the “Default Rate”), and all
outstanding Obligations shall bear interest at the Default Rate applicable to
such Obligations. Interest and Letter of Credit 

 

12

 

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

 

(f)                                    Borrower Representative shall have the
option to (A) request that any Revolving Credit Advance be made as a LIBOR
Loan, (B) convert at any time all or any part of outstanding Loans (other
than the Swing Line Loan) from Index Rate Loans to LIBOR Loans, (C) convert
any LIBOR Loan to an Index Rate Loan, subject to payment of LIBOR breakage
costs in accordance with Section 1.13(b) if such conversion is
made prior to the expiration of the LIBOR Period applicable thereto, or (D) continue
all or any portion of any Loan (other than the Swing Line Loan) as a LIBOR Loan
upon the expiration of the applicable LIBOR Period and the succeeding LIBOR
Period of that continued Loan shall commence on the first day after the last
day of the LIBOR Period of the Loan to be continued; provided, however,
that no Loan or group of Loans shall be made as, converted to, or continued at
the end of the LIBOR Period therefor as a LIBOR Loan if any Default or Event of
Default has occurred and is continuing and no Loan may be made as a LIBOR Loan
until the earlier of 60 days following the Closing Date or the date the
Administrative Agent has determined that the syndication of the Commitments has
been completed.  Any Loan or group of
Loans having the same proposed LIBOR Period to be made or continued as, or converted
into, a LIBOR Loan must be in a minimum amount of $5,000,000 and integral
multiples of $100,000 in excess of such amount. 
Any such election must be made by 1:00 p.m. (New York time) on the
3rd Business Day prior to (1) the date of any proposed Advance which is to
bear interest at the LIBOR Rate, (2) the end of each LIBOR Period with
respect to any LIBOR Loans to be continued as such, or (3) the date on
which Borrower Representative wishes to convert any Index Rate Loan to a LIBOR
Loan for a LIBOR Period designated by Borrower Representative in such
election.  If no election is received
with respect to a LIBOR Loan by 1:00 p.m. (New York time) on the 3rd
Business Day prior to the end of the LIBOR Period with respect thereto (or if a
Default or an Event of Default has occurred and is continuing), that LIBOR Loan
shall be converted to an Index Rate Loan at the end of its LIBOR Period.  Borrower Representative must make such
election by notice to Agent in writing by telecopy or overnight courier.  In the case of any conversion or
continuation, such election must be made pursuant to a written notice (a “Notice
of Conversion/Continuation-LIBOR Rate”) in the form of Exhibit 1.5(f)(i).

 

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

 

13

 

interest due hereunder
been calculated for the full term hereof at the Maximum Lawful Rate.  If the Maximum Lawful Rate is calculated
pursuant to this paragraph, such interest shall be calculated at a daily rate
equal to the Maximum Lawful Rate divided by the number of days in the year in
which such calculation is made.  If,
notwithstanding the provisions of this Section 1.5(g), a court of
competent jurisdiction shall finally determine that a Lender has received
interest hereunder in excess of the Maximum Lawful Rate, Agent shall, to the
extent permitted by applicable law, promptly apply such excess in the order
specified in Section 1.11 and thereafter shall refund any excess to
Borrowers or as a court of competent jurisdiction may otherwise order.

 

(h)                                 Intentionally Omitted.

 

(i)                                     Intentionally Omitted.

 

1.6                                 Intentionally Omitted.

 

1.7                                 Intentionally Omitted.

 

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

 

1.9                                 Fees.

 

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

 

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

 

(c)                                  Intentionally Omitted.

 

(d)                                 Intentionally Omitted.

 

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

 

1.10                           Receipt of Payments. 
Borrowers shall make each payment under this Agreement not later than
2:00 p.m. (New York time) on the day when due in immediately available
funds in 

 

14

 

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

 

1.11                           Application and Allocation of Payments.

 

(a)                                  So long as no Event of Default has
occurred and is continuing, (i) payments consisting of proceeds of
Accounts received in the ordinary course of business shall be applied, in the
case of receipt by or on behalf of any Borrower, first, to the Swing
Line Loan and, second, the Revolving Loan; (ii) payments (other
than mandatory prepayments) matching specific scheduled payments then due shall
be applied to those scheduled payments; (iii) voluntary prepayments shall
be applied as set forth in Section 1.3(a) hereof; and (iv) mandatory
prepayments shall be applied as set forth in Sections 1.11(b) and 1.11(c) hereof.  All payments and prepayments applied to a
particular Loan shall be applied ratably to the portion thereof held by each
Lender as determined by its Pro Rata Share. 
As to any other payment, and as to all payments made when an Event of
Default has occurred and is continuing or following the Commitment Termination
Date, Borrowers hereby irrevocably waive the right to direct the application of
any and all payments received from or on behalf of Borrowers, and Borrowers
hereby irrevocably agree that Agent shall have the continuing exclusive right
to apply any and all such payments against the Obligations as Agent may deem
advisable notwithstanding any previous entry by Agent in the Loan Account or
any other books and records.  In the
absence of a specific determination by Agent with respect thereto, payments
shall be applied to amounts then due and payable in the following order: (1) to
Fees and Agent’s expenses reimbursable hereunder and to all obligations owing
to Agent, the Swing Line Lender, any L/C Issuer or any other Lender by any
Non-Funding Lender under the Loan Documents; (2) to interest on the Swing
Line Loan; (3) to principal payments on the Swing Line Loan; (4) to
interest on the other Loans and unpaid Swap Related Reimbursement Obligations,
ratably in proportion to the interest accrued as to each Loan and unpaid Swap
Related Reimbursement Obligation, as applicable; (5) to principal payments
on the other Loans and unpaid Swap Related Reimbursement Obligations and other
unpaid Obligations under Hedge Agreements permitted under Section 6.3(a)(viii) and
to provide cash collateral for Letter of Credit Obligations in the manner
described in Annex B, ratably to the aggregate, combined principal
balance of the other Loans, unpaid Swap Related 

 

15

 

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

 

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

 

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

 

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

 

16

 

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

 

1.13                           Indemnity.

 

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

 

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

 

17

 

interest on any LIBOR
Loan; (iii) any Borrower shall refuse to accept any borrowing of, or shall
request a termination of, any borrowing of, conversion into or continuation of,
LIBOR Loans after Borrower Representative has given notice requesting the same
in accordance herewith; or (iv) any Borrower shall fail to make any
prepayment of a LIBOR Loan after Borrower Representative has given a notice
thereof in accordance herewith, then Borrowers shall indemnify and hold
harmless each affected Lender from and against all losses, costs and expenses
resulting from or arising from any of the foregoing.  Such indemnification shall include any loss
(including loss of margin) or expense arising from the reemployment of funds
obtained by it or from fees payable to terminate deposits from which such funds
were obtained.  For the purpose of
calculating amounts payable to a Lender under this subsection, each Lender
shall be deemed to have actually funded its relevant LIBOR Loan through the
purchase of a deposit bearing interest at the applicable LIBOR Rate in an
amount equal to the amount of that LIBOR Loan and having a maturity comparable
to the relevant LIBOR Period; provided, that each Lender may fund each
of its LIBOR Loans in any manner it sees fit, and the foregoing assumption
shall be utilized only for the calculation of amounts payable under this
subsection.  This covenant shall survive
the termination of this Agreement and the payment of the Obligations and all
other amounts payable hereunder.  As
promptly as practicable under the circumstances, each Lender shall provide
Borrower Representative with its written calculation of all amounts payable
pursuant to this Section 1.13(b), and such calculation shall be
binding on the parties hereto unless Borrower Representative shall object in
writing within ten (10) Business Days of receipt thereof, specifying the
basis for such objection in detail.

 

1.14                           Access.  Each Credit
Party that is a party hereto shall, during normal business hours, from time to
time upon one Business Day’s prior notice as frequently as Agent reasonably
determines to be appropriate: (a) provide Agent and any of its respective
officers, employees and agents access to its properties, facilities, advisors
and employees (including officers) of each Credit Party and to the Collateral, (b) permit
Agent and any of its officers, employees and agents, to inspect, audit and make
extracts from any Credit Party’s books and records, and (c) permit Agent
and its officers, employees and agents, to inspect, review, evaluate and make
test verifications and counts of the Accounts, Inventory and other Collateral
of any Credit Party.  Notwithstanding the
foregoing or anything else herein or any other Loan Document to the contrary,
if a Default or Event of Default has occurred and is continuing or if access is
necessary to preserve or protect the Collateral as determined by Agent, each
such Credit Party shall provide such access to Agent and to each Lender at all
times and without advance notice. 
Furthermore, so long as any Event of Default has occurred and is
continuing, Borrowers shall use reasonable efforts to provide Agent and each
Lender with access to their suppliers and customers.  Each Credit Party shall make available to
Agent and their counsel, as quickly as is possible under the circumstances,
originals or copies of all books and records that Agent may reasonably request.  Each Credit Party shall deliver any document
or instrument necessary for Agent, as may be reasonably requested from time to
time, to obtain records from any service bureau or other Person that maintains
records for such Credit Party, and shall maintain duplicate records or
supporting documentation on media, including computer tapes and discs owned by
such Credit Party.  Agent will give
Lenders at least five (5) days’ prior written notice of regularly
scheduled audits.  Representatives of
other Lenders may accompany Agent’s representatives on regularly scheduled
audits at no charge to Borrowers.

 

18

 

1.15                           Taxes.

 

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

 

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

 

(c)                                  Each Credit Party that is a signatory hereto
shall jointly and severally indemnify and, within ten (10) days of demand
therefor, pay Agent and each Lender for the full amount of Taxes and Other
Taxes (including any Taxes imposed by any jurisdiction on amounts payable under
this Section 1.15) paid by Agent or such Lender on or with respect
to any payment by or on account of any obligation of the Credit Parties
hereunder, as appropriate, and any penalties, interest and expenses arising
therefrom or with respect thereto, whether or not such Taxes were correctly or
legally asserted.

 

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

 

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

 

19

 

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

 

1.16                           Capital Adequacy; Increased Costs;
Illegality.

 

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

 

(b)                                 If, due to either (i) the introduction
of or any change in any law or regulation (or any change in the interpretation
thereof) or (ii) the compliance with any guideline or request from any
central bank or other Governmental Authority (whether or not having the force
of law), in each case adopted after the Closing Date, there shall be any
increase in the cost to any Lender of agreeing to make or making, funding or
maintaining any Loan, then Borrowers shall from time to time, upon demand by
such Lender (with a copy of such demand to Agent), pay to Agent for the account
of such Lender additional amounts sufficient to compensate such Lender for such
increased cost.  A certificate as to the
amount of such increased cost, submitted to Borrower Representative and to
Agent by such Lender, shall be conclusive and binding on Borrowers for all
purposes, absent manifest error.  Each
Lender agrees that, as promptly as practicable after it becomes aware of any
circumstances referred to above which would result in any such increased cost,
the affected Lender shall, to the extent not inconsistent with such Lender’s
internal policies of general application, use reasonable commercial efforts to
minimize costs and expenses incurred by it and payable to it by Borrowers
pursuant to this Section 1.16(b).

 

(c)                                  Notwithstanding anything to the contrary
contained herein, if the introduction of or any change in any law or regulation
(or any change in the interpretation thereof) shall make it unlawful, or any
central bank or other Governmental Authority shall assert that it is unlawful,
for any Lender to agree to make or to make or to continue to fund or maintain
any LIBOR Loan, then, unless that Lender is able to make or to continue to fund
or to maintain such LIBOR Loan at another branch or office of that Lender
without, in that Lender’s opinion, adversely affecting it or its Loans or the
income obtained therefrom, on notice thereof and demand therefor by such Lender
to Borrower Representative through Agent (i) the obligation of such Lender
to agree to make or to make or to continue to fund or maintain LIBOR Loans
shall 

 

20

 

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

 

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

 

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

 

2.                                       CONDITIONS PRECEDENT

 

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

 

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

 

21

 

contemplated by this
Agreement and the other Loan Documents, including all those listed in the
Closing Checklist attached hereto as Annex D, each in form and substance
reasonably satisfactory to Agent.

 

(b)                                 Intentionally Omitted.

 

(c)                                  Approvals.  Agent shall
have received (i) satisfactory evidence that the Credit Parties have
obtained all required consents and approvals of all Persons including all
requisite Governmental Authorities, to the execution, delivery and performance
of this Agreement and the other Loan Documents and the consummation of the
Related Transactions or (ii) an officer’s certificate in form and
substance reasonably satisfactory to Agent affirming that no such consents or
approvals are required.

 

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

 

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

 

(f)                                    Intentionally Omitted.

 

(g)                                 Intentionally Omitted.

 

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

 

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

 

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

 

(a)                                  any representation or warranty by any
Credit Party contained herein or in any other Loan Document is untrue or
incorrect (with respect to any representation or warranty that is not otherwise
qualified as to materiality, in any material respect) as of such date, except
to the extent that such representation or warranty expressly relates to an earlier
date and except for changes therein expressly permitted or expressly
contemplated by this Agreement;

 

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

 

22

 

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

 

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

 

The request and acceptance by any Borrower of the proceeds of any
Advance or the incurrence of any Letter of Credit Obligation shall be deemed to
constitute, as of the date thereof, (i) a representation and warranty by
Borrowers that the conditions in this Section 2.2  have been satisfied and (ii) a
reaffirmation by Borrowers of the provisions set forth in Section 12
and of the granting and continuance of Agent’s Liens pursuant to the Collateral
Documents.  The extension of credit by
any Lender after the occurrence of any Default or Event of Default shall not
result in a waiver of such Default or Event of Default.

 

3.             REPRESENTATIONS AND WARRANTIES

 

To
induce Lenders to make the Loans and to incur Letter of Credit Obligations, the
Credit Parties executing this Agreement, jointly and severally, make the
following representations and warranties to Agent and each Lender with respect
to all Credit Parties, each and all of which shall survive the execution and
delivery of this Agreement.

 

3.1          Corporate Existence; Compliance with Law. 
Each Credit Party (a) is a corporation, limited liability company
or limited partnership duly organized, validly existing and in good standing
under the laws of its respective jurisdiction of incorporation or organization
set forth in Disclosure Schedule (3.1); (b) is duly qualified to
conduct business and is in good standing in each other jurisdiction where its
ownership or lease of property or the conduct of its business requires such
qualification, except where the failure to be so qualified would not result in
exposure to losses, damages or liabilities which could, in the aggregate,
reasonably be expected to result in a Material Adverse Effect; (c) has the
requisite power and authority and the legal right to own and operate in all
material respects its properties, to lease the property it operates under lease
and to conduct its business in all material respects as now, heretofore and
proposed to be conducted and has the requisite power and authority and the
legal right to pledge, mortgage, hypothecate or otherwise encumber the
Collateral; (d) subject to specific representations regarding
Environmental Laws, has all material licenses, permits, consents or approvals
from or by, and has made all material filings with, and has given all material
notices to, all Governmental Authorities having jurisdiction, to the extent
required for such ownership, operation and conduct; (e) is in compliance
with its charter and bylaws or partnership or operating agreement, as
applicable; and (f) subject to specific representations set forth herein
regarding ERISA, Environmental Laws, tax and other laws, is in compliance with
all applicable provisions of law, except where the failure to comply,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.

 

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

 

23

 

months preceding the
Closing Date.  In addition, Disclosure
Schedule (3.2) lists the federal employer identification number and
organizational identification number, if any, of each Credit Party.

 

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

 

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

 

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

 

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

 

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

 

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

 

24

 

(c)           Projections. 
The Projections delivered on the date hereof and attached hereto as Disclosure
Schedule (3.4(c)) have been prepared by Holdings in light of the past
operations of their businesses and reflect projections for the period beginning
on October 1, 2009 and continuing through December 31, 2012 on a
quarter-by-quarter basis for periods in calendar years 2009 and 2010 and on a
year-by-year basis thereafter.  The
Projections are based upon estimates and assumptions stated therein, all of
which Borrowers believe to be reasonable and fair in light of current
conditions and current facts known to Borrowers and, as of the Closing Date,
reflect Borrowers’ good faith and reasonable estimates of the future financial
performance of Borrowers and of the other information projected therein for the
period set forth therein.

 

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

 

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

 

25

 

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

 

3.7          Labor Matters. 
As of the Closing Date (a) no strikes or other material labor
disputes against any Credit Party are pending or, to any Credit Party’s
knowledge, threatened; (b) hours worked by and payment made to employees
of each Credit Party comply in all material respects with the Fair Labor
Standards Act and each other federal, state, provincial, local or foreign law
applicable to such matters; (c) all payments due from any Credit Party for
employee health and welfare insurance have been paid or accrued as a liability
on the books of such Credit Party; (d) except as set forth in Disclosure
Schedule (3.7), no Credit Party is a party to or bound by any collective
bargaining agreement, management agreement, consulting agreement, employment
agreement, bonus, restricted stock, stock option, or stock appreciation plan or
agreement or any similar plan, agreement or arrangement (and true and complete
copies of any agreements (or, with respect to employment agreements for
employees who are not executive officers, copies of the templates for such
employment agreements) described on Disclosure Schedule (3.7) have been
delivered to Agent); (e) there is no organizing activity involving any
Credit Party pending or, to any Credit Party’s knowledge, threatened by any
labor union or group of employees; (f) there are no representation
proceedings pending or, to any Credit Party’s knowledge, threatened with the
National Labor Relations Board or any other applicable labor relations board,
and no labor organization or group of employees of any Credit Party has made a
pending demand for recognition; and (g) except as set forth in Disclosure
Schedule (3.7), there are no material complaints or charges against any
Credit Party pending or, to the knowledge of any Credit Party, threatened to be
filed with any Governmental Authority or arbitrator based on, arising out of,
in connection with, or otherwise relating to the employment or termination of
employment by any Credit Party of any individual.

 

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

 

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

 

26

 

regulation under the
Federal Power Act, or any other United States or state statute or law that
restricts or limits its ability to incur Indebtedness or to perform its obligations
hereunder. The making of the Loans by Lenders to Borrowers, the incurrence of
the Letter of Credit Obligations on behalf of Borrowers, the application of the
proceeds thereof and repayment thereof and the consummation of the Related
Transactions will not violate any provision of any such statute or any rule,
regulation or order issued by the Securities and Exchange Commission or any
other securities regulation authority or securities exchange.

 

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

 

3.11        Taxes.  All tax
returns, reports and statements, including information returns, required by any
Governmental Authority to be filed by any Credit Party have been filed with the
appropriate Governmental Authority and all Taxes have been paid prior to the
date on which any fine, penalty, interest or late charge may be added thereto
for nonpayment thereof (or any such fine, penalty, interest, late charge or
loss has been paid), excluding Taxes or other amounts being contested in
accordance with Section 5.2(b). 
Proper and accurate amounts have been withheld by each Credit Party from
its respective employees for all periods in full and complete compliance with
all applicable United States federal, state, local laws and all applicable
foreign laws and such withholdings have been timely paid to the respective
Governmental Authorities.  Disclosure
Schedule (3.11) sets forth as of the Closing Date (i) those taxable
years (A) for which any Credit Party has received notice, in writing, that
such Credit Party’s tax returns were to be audited, and (B) for which tax
returns are, as of the Closing Date, being audited by the IRS  or any other applicable Governmental
Authority, (ii) any assessments or threatened assessments in connection
with such audit, and (iii) those taxable years the tax returns for which
are otherwise currently outstanding. 
Except as described in Disclosure Schedule (3.11), no Credit
Party has executed or filed with the IRS or any other domestic or foreign
Governmental Authority any agreement or other document extending, or having the
effect of extending, the period for assessment or collection of any Taxes.  Except as set forth on Disclosure Schedule
(3.11), none of the Credit Parties or any of their respective predecessors
are liable for any Taxes: (a) under any agreement (including any tax
sharing agreements) or (b) to each Credit Party’s knowledge, as a
transferee.  As of the Closing Date, no
Credit Party has agreed or been requested to make any adjustment under IRC Section 481(a),
by reason of a change in accounting method or otherwise, which would have a
Material Adverse Effect.

 

27

 

3.12        ERISA and Benefit Plans.

 

(a)           Except with respect to Multiemployer
Plans, each Qualified Plan has been determined by the IRS to qualify under Section 401
of the IRC, the trusts created thereunder have been determined to be exempt
from tax under the provisions of Section 501 of the IRC, and nothing has
occurred that would cause the loss of such qualification or tax-exempt status,
except for qualification failures which, in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect.  Each Plan is in compliance with the
applicable provisions of ERISA and the IRC, including the timely filing of all
reports required under the IRC or ERISA, including the statement required by 29
CFR Section 2520.104-23, except for such failures which, in the aggregate,
could not reasonably be likely to result in a Material Adverse Effect.  Neither any Credit Party nor ERISA Affiliate
has failed to make any contribution or pay any amount due as required by either
Section 412 of the IRC or Section 302 of ERISA or the terms of any
such Plan, except for contributions and amounts due which, in the aggregate, do
not exceed $500,000.  As of the Closing
Date, no Lien has been imposed against any Credit Party or ERISA Affiliate
under Section 412 of the IRC or Section 302 or 4068 of ERISA.  Neither any Credit Party nor ERISA Affiliate
has engaged in a “prohibited transaction,” as defined in Section 406 of
ERISA and Section 4975 of the IRC, in connection with any Plan, that would
subject any Credit Party to a material tax on prohibited transactions imposed
by Section 502(i) of ERISA or Section 4975 of the IRC, except for
prohibited transactions or excise taxes which, in the aggregate, could not
reasonably be likely to result in a Material Adverse Effect.

 

(b)           Except as set forth in Disclosure
Schedule (3.12) or as could not reasonably be likely to result in a
Material Adverse Effect: (i) no Title IV Plan has any Unfunded Pension
Liability; (ii) no ERISA Event or event described in Section 4062(e) of
ERISA with respect to any Title IV Plan has occurred or is reasonably expected
to occur; (iii) there are no pending, or to the knowledge of any Credit
Party, threatened claims (other than claims for benefits in the normal course),
sanctions, actions or lawsuits, asserted or instituted against any Plan or any
Person as fiduciary or sponsor of any Plan; (iv) no Credit Party or ERISA
Affiliate has incurred or reasonably expects to incur any liability as a result
of a complete or partial withdrawal from a Multiemployer Plan; (v) within the
last five years no Title IV Plan of any Credit Party or ERISA Affiliate has
been terminated, whether or not in a “standard termination” as that term is
used in Section 4041(b)(1) of ERISA, nor has any Title IV Plan of any
Credit Party or any ERISA Affiliate (determined at any time within the last
five years) with Unfunded Pension Liabilities been transferred outside of the “controlled
group” (within the meaning of Section 4001(a)(14) of ERISA) of any Credit
Party or ERISA Affiliate (determined at such time); (vi) except in the
case of any ESOP, Stock of all Credit Parties and their ERISA Affiliates makes
up, in the aggregate, no more than 10% of fair market value of the assets of
any Plan measured on the basis of fair market value as of the latest valuation
date of any Plan; and (vii) no liability under any Title IV Plan has been
satisfied with the purchase of a contract from an insurance company that is not
rated AAA by the Standard & Poor’s Corporation or an equivalent rating
by another nationally recognized rating agency.

 

(c)           Intentionally Omitted.

 

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

 

28

 

its obligations under the
Loan Documents to which it is a party, or the validity or enforceability of any
Loan Document or any action taken thereunder, or (b) that has a reasonable
risk of being determined adversely to any Credit Party and that, if so
determined, could reasonably be expected to have a Material Adverse
Effect.  Except as set forth on Disclosure
Schedule (3.13), as of the Closing Date there is no Litigation pending or,
to any Credit Party’s knowledge, threatened, that could reasonably be likely to
result in damages in excess of $2,000,000 (net of insurance coverages for such
damages) or injunctive relief against, or alleges criminal misconduct of, any
Credit Party.

 

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

 

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

 

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

 

3.17        Environmental Matters.

 

(a)           Except as set forth in Disclosure
Schedule (3.17), as of the Closing Date: (i) the Real Estate is free
of contamination from any Hazardous Material except for such contamination that
would not adversely impact the value or marketability of such Real Estate and
except for such contamination that would not result in Environmental
Liabilities that could reasonably be expected to exceed $2,500,000; (ii) no
Credit Party has caused to occur any Release of Hazardous Materials on, at, in,
under, above, to, from or about any of its Real Estate, except for such Release
that would not result in Environmental Liabilities that could reasonably be
expected to exceed $2,500,000; (iii) the Credit Parties are and have been
in compliance with all Environmental Laws, except for such noncompliance that
would not result in Environmental Liabilities which could reasonably be
expected to exceed $2,500,000; (iv) the Credit Parties (A) have
obtained, (B) possess as valid, uncontested and in good standing, and (C) are
in compliance with all Environmental Permits required by Environmental Laws for
the operations of their respective businesses as presently conducted or as
proposed to be conducted, except where the 

 

29

 

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

 

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

 

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

 

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

 

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

 

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

 

30

 

Party, threatened
termination or cancellation of, or any material adverse modification or change
in the business relationship of any Credit Party with any customer or group of
customers whose purchases during the preceding 12 months caused them to be
ranked among the ten largest customers of such Credit Party or the business
relationship of any Credit Party with any supplier material to its operations.

 

3.22        Agreements and Other Documents. 
As of the Closing Date, each Credit Party has provided to Agent or its
counsel accurate and complete copies (or summaries) of all of the following
agreements or documents to which it is subject and each of which is listed in
Disclosure Schedule (3.22):  (a) supply
agreements and purchase agreements not terminable by such Credit Party within
60 days following written notice issued by such Credit Party and involving
transactions in excess of $5,000,000 per annum; (b) leases of Equipment
having a remaining term of one year or longer and requiring aggregate rental
and other payments in excess of $1,000,000 per annum; (c) licenses and
permits held by the Credit Parties, the absence of which could be reasonably
likely to have a Material Adverse Effect; (d) instruments and documents
evidencing any Indebtedness or Guaranteed Indebtedness of such Credit Party and
any Lien granted by such Credit Party with respect thereto; and (e) instruments
and agreements evidencing the issuance of any equity securities, warrants,
rights or options to purchase equity securities of such Credit Party.

 

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

 

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

 

3.25        Subordinated Debt. 
Prior to the Closing Date, Borrowers have delivered to Agent a complete
and correct copy of the New Subordinated Debt Documents (including all
schedules, exhibits, amendments, supplements, modifications, assignments and
all other documents delivered pursuant thereto or in connection therewith).  The subordination provisions of the New
Subordinated Debt Documents are enforceable against the holders of the New
Subordinated Notes by Agent and Lenders. 
All Obligations, including the Letter of Credit Obligations, constitute
senior Indebtedness entitled to the benefits of the subordination provisions
contained in the New Subordinated Debt Documents.  Borrowers acknowledge that Agent and each
Lender are entering into this Agreement and are extending the Commitments in
reliance upon the subordination provisions of the New Subordinated Debt
Documents and this Section 3.25.

 

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

 

31

 

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

 

4.             FINANCIAL STATEMENTS AND INFORMATION

 

4.1          Reports and Notices.

 

(a)           Each Credit Party executing this
Agreement hereby agrees that from and after the Closing Date and until the
Termination Date, it shall deliver to Agent or to Agent and Lenders, as
required, the Financial Statements, notices, Projections and other information
at the times, to the Persons and in the manner set forth in Annex E.

 

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

 

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

 

5.             AFFIRMATIVE COVENANTS

 

Each
Credit Party executing this Agreement jointly and severally agrees as to all
Credit Parties that from and after the date hereof and until the Termination
Date:

 

5.1          Maintenance of Existence and Conduct of
Business.  Each Credit Party shall:  do or cause to be done all things necessary
to preserve and keep in full force and effect its corporate existence and its
rights and franchises; continue to conduct its business substantially as now
conducted or as otherwise permitted hereunder; at all times maintain, preserve
and protect all of its assets and properties used or useful in the conduct of
its business, and keep the same in good repair, working order and condition in
all material respects (taking into consideration ordinary wear and tear) and
from time to time make, or cause to be made, all necessary or appropriate
repairs, replacements and improvements thereto consistent with industry
practices; and transact business only in such corporate and trade names as are
set forth in Disclosure Schedule (5.1) or in such other trade names as
shall be disclosed to Agent in writing from time to time.

 

32

 

 

5.2           Payment of Charges.

 

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

 

(b)           Each Credit Party may in good faith contest, by
appropriate proceedings, the validity or amount of any Charges, Taxes or claims
described in Section 5.2(a); provided, that (i) adequate
reserves with respect to such contest are maintained on the books of such
Credit Party, in accordance with GAAP; (ii) no Lien shall be imposed to
secure payment of such Charges (other than payments to warehousemen and/or
bailees) that is superior to any of the Liens securing the Obligations and such
contest is maintained and prosecuted continuously and with diligence and
operates to suspend collection or enforcement of such Charges; (iii) none
of the Collateral becomes subject to forfeiture or loss as a result of such
contest; (iv) such Credit Party shall promptly pay or discharge such
contested Charges, Taxes or claims and all additional charges, interest,
penalties and expenses, if any, and shall deliver to Agent evidence reasonably
acceptable to Agent of such compliance, payment or discharge, if such contest
is terminated or discontinued adversely to such Credit Party or the conditions
set forth in this Section 5.2(b) are no longer met; and (v) Agent
have not advised Borrowers in writing that Agent reasonably believe that
nonpayment or nondischarge thereof could have or result in a Material Adverse
Effect.

 

5.3           Books and Records.  Each Credit
Party shall keep adequate books and records with respect to its business
activities in which proper entries, reflecting all financial transactions, are
made in accordance with GAAP and on a basis consistent with the Financial
Statements attached as Disclosure Schedule (3.4(a)).

 

5.4           Insurance; Damage to or Destruction of Collateral.

 

(a)           The Credit Parties shall, at their sole cost and
expense, maintain the policies of insurance described on Disclosure Schedule
(3.18) as in effect on the date hereof or otherwise in form and
amounts and with insurers reasonably acceptable to Agent.  Such policies of insurance (or the loss
payable and additional insured endorsements delivered to Agent) shall contain
provisions pursuant to which the insurer agrees to provide 30 days prior
written notice to Agent in the event of any non-renewal, cancellation or
amendment of any such insurance policy. 
If any Credit Party at any time or times hereafter shall fail to obtain
or maintain any of the policies of insurance required above, or to pay all
premiums relating thereto, Agent may at any time or times thereafter obtain and
maintain such policies of insurance and pay such premiums and take any other
action with respect thereto that Agent deems advisable.  Agent shall not have any obligation to obtain
insurance for any Credit Party or pay any premiums therefor.  By doing so, Agent shall not be deemed to
have waived any Default or Event of Default arising from any Credit Party’s
failure to maintain such insurance or pay any premiums therefor.  All sums so disbursed, including reasonable
attorneys’ fees, court costs and other charges related thereto, 

 

33

 

shall be payable on
demand by Borrowers to Agent and shall be additional Obligations hereunder
secured by the Collateral.

 

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

 

(c)           Each Credit Party shall deliver to Agent, in form and
substance reasonably satisfactory to Agent, endorsements to (i) all “All
Risk” and business interruption insurance naming Agent as loss payee, and (ii) all
general liability and other liability policies naming Agent as additional
insured.  Each Credit Party irrevocably
makes, constitutes and appoints Agent (and all officers, employees or agents
designated by Agent), so long as any Default or Event of Default has occurred
and is continuing or the anticipated insurance proceeds exceed $5,000,000, as
such Credit Party’s true and lawful agent and attorney-in-fact for the purpose
of making, settling and adjusting claims under such “All Risk” policies of
insurance, endorsing the name of such Credit Party on any check or other item
of payment for the proceeds of such “All Risk” policies of insurance and for
making all determinations and decisions with respect to such “All Risk”
policies of insurance.  Agent shall not
have any duty to exercise any rights or powers granted to it pursuant to the
foregoing power-of-attorney.  Borrower
Representative shall promptly notify Agent of any loss, damage, or destruction
to the Collateral in the amount of $2,000,000 or more, whether or not covered
by insurance.  After deducting from such
proceeds the expenses, if any, incurred by Agent in the collection or handling
thereof, Agent may, at its option, apply such proceeds to the reduction of the
Obligations in accordance with Section 1.3(d) and Section 1.11(b) or
permit or require the applicable Credit Party to use such money, or any part
thereof, to replace, repair, restore or rebuild the Collateral in a diligent
and expeditious manner with materials and workmanship of substantially the same
quality as existed before the loss, damage or destruction.  Notwithstanding the foregoing, so long as no
Default or Event of Default has occurred and is continuing, if the casualty
giving rise to such insurance proceeds could not reasonably be expected to have
a Material Adverse Effect and such insurance proceeds do not exceed $10,000,000
in the aggregate or, to the extent that the proceeds from a sale of such assets
would have been deemed Excluded Proceeds had such assets been disposed of prior
to the loss, Agent shall permit the applicable Credit Party to replace,
restore, repair or rebuild the property; provided that if such Credit
Party shall not have completed or entered into binding agreements to complete
such replacement, restoration, repair or rebuilding within 365 days of such
casualty, Agent may apply such insurance proceeds to the Obligations in
accordance with Section 1.3(d) and Section 1.11(b).  All insurance proceeds that are to be made
available to Borrowers to replace, repair, restore or rebuild the Collateral
shall be applied by Agent to reduce the outstanding principal balance of the
Revolving Loan (which application shall not result in a permanent reduction of
the Revolving Loan Commitment).  All
insurance proceeds made available to any Credit Party that is not a Borrower to
replace, repair, restore or rebuild Collateral shall be deposited in a cash
collateral account.  Thereafter, such
funds shall be made available to Borrowers or other Credit Parties, as
applicable, to provide funds to replace, repair, restore or 

 

34

 

rebuild the Collateral as
follows: (i) Borrower Representative shall request a Revolving Credit
Advance to be made to Borrowers or a release from the cash collateral account
to be made to Credit Parties in the amount requested to be released; and (ii) so
long as the conditions set forth in Section 2.2 have been met,
Revolving Lenders shall make such Revolving Credit Advance or, so long as no
Default or Event of Default has occurred and is continuing, Agent shall release
funds from the cash collateral account. 
To the extent not used to replace, repair, restore or rebuild the Collateral,
such insurance proceeds shall be applied as agreed among the Lenders.

 

5.5           Compliance with Laws.  Each Credit
Party shall comply with all United States federal, state and local laws,
regulations and decrees and all foreign laws, regulations and decrees, in each
case, applicable to it, including those relating to ERISA, employment and labor
matters and Environmental Laws and Environmental Permits, except to the extent
that the failure to comply, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.

 

5.6           Supplemental Disclosure.  From time to
time as may be reasonably requested by Agent (which request will not be made
prior to the second anniversary of the Closing Date or more than once during
the term of this Agreement, in each case, absent the occurrence and continuance
of a Default or an Event of Default), the Credit Parties shall supplement each
Disclosure Schedule hereto, or any representation herein or in any other Loan
Document, with respect to any matter hereafter arising that, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in such Disclosure Schedule or as an exception to such
representation or that is necessary to correct any information in such
Disclosure Schedule or representation which has been rendered inaccurate
thereby (and, in the case of any supplements to any Disclosure Schedule, such
Disclosure Schedule shall be appropriately marked to show the changes made
therein); provided that (a) no such supplement to any such
Disclosure Schedule or representation shall amend, supplement or otherwise
modify any Disclosure Schedule or representation, or be or be deemed a waiver
of any Default or Event of Default resulting from the matters disclosed
therein, except as consented to by Agent and Requisite Lenders in writing, and (b) no
supplement shall be required or permitted as to representations and warranties
that relate solely to the Closing Date.

 

5.7           Intellectual Property.  Each Credit
Party will conduct its business and affairs without infringement of or
interference with any Intellectual Property of any other Person in any material
respect.

 

5.8           Environmental Matters.  Each Credit
Party shall and shall cause each Person within its control to: (a) conduct
its operations and keep and maintain its Real Estate in compliance with all
Environmental Laws and Environmental Permits other than noncompliance that
could not reasonably be expected to have a Material Adverse Effect; (b) implement
any and all investigation, remediation, removal and response actions that are
appropriate or necessary to comply with Environmental Laws and Environmental
Permits pertaining to the presence, generation, treatment, storage, use,
disposal, transportation or Release of any Hazardous Material on, at, in,
under, above, to, from or about any of its Real Estate; provided, that
no Credit Party shall be required to undertake such actions to the extent that
its obligations to do so are being contested in good faith and by proper
proceedings and adequate reserves therefor have been 

 

35

 

established in accordance
with GAAP; (c) notify Agent promptly after such Credit Party becomes aware
of any violation of Environmental Laws or Environmental Permits, or any Release
on, at, in, under, above, to, from or about any Real Estate, that is reasonably
likely to result in Environmental Liabilities in excess of $250,000; and (d) promptly
forward to Agent a copy of any written order, notice, request for information
or any other written communication or report received by such Credit Party in
connection with any violation or Release which is the subject of subpart 5.8(c) above,
in each case whether or not the Environmental Protection Agency or any
Governmental Authority has taken or threatened any action in connection with
any such violation or Release.  If Agent
at any time has a reasonable basis to believe that there may be a violation of
any Environmental Laws or Environmental Permits by any Credit Party or any
Environmental Liability arising thereunder, or a Release of Hazardous Materials
on, at, in, under, above, to, from or about any of its Real Estate, that, in
each case, is in breach of Section 3.17 or this Section 5.8
and could reasonably be expected to have a Material Adverse Effect, then (i) the
relevant Credit Party shall, upon Agent’s written request, cause the
performance of such environmental audits including reasonable subsurface
sampling of soil and groundwater, and preparation of such environmental
reports, at Borrowers’ expense, as Agent may from time to time reasonably
request, which shall be conducted by reputable environmental consulting firms
reasonably acceptable to Agent and shall be in form and substance reasonably
acceptable to Agent and (ii) if, upon Agent’s reasonable request, the
relevant Credit Party shall fail to take reasonable steps to commence such
audits within 30 days of such request the relevant Credit Party shall permit
Agent or its representatives to have access to all Real Estate for the purpose
of conducting such environmental audits and testing reasonably appropriate,
including subsurface sampling of soil and groundwater; provided, that (x) Agent
use a reputable environmental consulting firm reasonably acceptable to the
Credit Party, (y) such firm carry appropriate levels of insurance and (z) such
audit not unreasonably interfere with the Credit Party’s operations.  Borrowers shall reimburse Agent for the
reasonable costs of such audits and tests and the same will constitute a part
of the Obligations secured hereunder.

 

5.9           Landlords’ Agreements, Mortgagee Agreements, Bailee
Letters and Real Estate Purchases.  Each Credit
Party shall use commercially reasonable efforts to obtain a landlord’s
agreement, mortgagee agreement or bailee letter, as applicable, from the lessor
of each leased property, mortgagee of owned property or bailee with respect to
any warehouse, processor or converter facility or other location where
Collateral is stored or located, which agreement or letter shall contain a waiver
or subordination of all Liens or claims that the landlord, mortgagee or bailee
may assert against the Collateral at that location, and shall otherwise be
reasonably satisfactory in form and substance to Agent.  After the Closing Date, no real property or
warehouse space shall be leased by any Credit Party and no Inventory shall be
shipped to a processor or converter under arrangements established after the
Closing Date without the prior written consent of Agent or, unless and until a
reasonably satisfactory landlord agreement or bailee letter, as appropriate,
shall first have been obtained with respect to such location.  Each Credit Party shall timely and fully pay
and perform its material obligations under all leases and other agreements with
respect to each leased location or public warehouse where any Collateral is or
may be located.  To the extent otherwise
permitted hereunder, if any Credit Party proposes to acquire a fee ownership
interest in Real Estate after the Closing Date, it shall first provide to Agent
a mortgage, debenture or deed of trust granting Agent a first priority Lien on
such Real Estate, together with environmental audits, mortgage title insurance
commitment, real property survey, local counsel opinion(s), and, if required by
Agent supplemental casualty insurance and 

 

36

 

flood insurance, and such
other documents, instruments or agreements reasonably requested by Agent, in
each case, in form and substance reasonably satisfactory to Agent.

 

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

 

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

 

5.12         Intentionally Omitted.

 

5.13         New Subsidiaries.  At the time
of the formation of any Subsidiary of any Credit Party or acquisition of a
Subsidiary of any Credit Party pursuant to Section 6.1(a), Credit
Parties, or any of them, as appropriate, shall (a) cause each such new
United States domestic Subsidiary to join this Agreement by providing to Agent
a joinder agreement in the form of Exhibit 5.13 hereto (a “Credit
Agreement Joinder Agreement”), (b) cause each such new United States
domestic Subsidiary to deliver to Agent a supplement to the Guaranty, a
supplement to the Security Agreement, a supplement to the Pledge Agreement, and
such other security documents (including, without limitation, any mortgage,
deed to secure debt or deed of trust where such Subsidiary owns real property)
requested by Agent in its discretion, together with appropriate UCC-1 financing
statements, all in form and substance satisfactory to Agent and subject to
Permitted Encumbrances, (c) with respect to all new Subsidiaries that are
owned in whole or in part by a Credit Party, provide to Agent a supplement to
the Pledge Agreement or such other Pledge Agreements, in each case, providing
for the pledge (subject to Permitted Encumbrances) of the direct and beneficial
interests in such new Subsidiary (or, in the case of the pledge of a direct
Foreign Subsidiary, 65% of all of the Stock of such Subsidiary) as shall be
requested by Agent, together with appropriate certificates and powers or
financing statements under the Uniform Commercial Code or other applicable
personal property or movable property registries or other documents necessary
to perfect such pledge, in form and substance satisfactory to Agent; provided,
that no such pledge shall be required with respect to the Stock of a new
Foreign Subsidiary of a Credit Party unless and until such Subsidiary has
assets with a value of $1,000,000 or more, and (d) provide to Agent all
other documentation, including one or more opinions of counsel satisfactory to
Agent, which in its opinion is appropriate with respect to such formation and
the execution and delivery of the applicable documentation referred to
above.  Upon execution and delivery of a
Credit Agreement Joinder Agreement by each new United States domestic
Subsidiary, such Subsidiary shall become a Credit Party hereunder with the same
force and effect as if originally named as a Credit Party herein.  The execution and delivery of any Credit
Agreement Joinder Agreement shall not require the consent of any Credit Party
or Lender hereunder.  The rights and
obligations of each Credit Party hereunder shall remain in full force and
effect notwithstanding the addition of any Credit Party hereunder.  Any document, agreement or instrument
executed or issued pursuant to this Section 5.13 shall be a “Loan
Document” for purposes of this Agreement.

 

37

 

6.             NEGATIVE COVENANTS

 

Each
Credit Party executing this Agreement jointly and severally agrees as to all
Credit Parties and their respective Subsidiaries that from and after the date
hereof until the Termination Date:

 

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

 

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

 

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

 

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

 

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

 

38

 

applicable to the
exercise of such rights and remedies with respect to Borrowers prior to such
Permitted Acquisition;

 

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

 

(iv)          no additional Indebtedness, Guaranteed Indebtedness,
contingent obligations or other liabilities shall be incurred, assumed or
otherwise be reflected on a consolidated balance sheet of Credit Parties and
Target after giving effect to such Permitted Acquisition, except, without
duplication, (A) Loans made hereunder, (B) ordinary course trade
payables, accrued expenses and unsecured or secured Indebtedness of the Target
to the extent no Default or Event of Default has occurred and is continuing or
would result after giving effect to such Permitted Acquisition and (C) Indebtedness
permitted under Section 6.3(a)(xii) and Section 6.3(a)(xiii);

 

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

 

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

 

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

 

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

 

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

 

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

 

39

 

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

 

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

 

(3)           a certificate of the chief financial officer of
Holdings and each Borrower to the effect that: (w) each Borrower (after
taking into consideration all rights of contribution and indemnity such
Borrower has against Holdings and each other Subsidiary of Holdings) will be
Solvent upon the consummation of the Permitted Acquisition; (x) the
Acquisition Pro Forma fairly presents the financial condition of Holdings and
its Subsidiaries (on a consolidated basis) as of the date thereof after giving
effect to the Permitted Acquisition; (y) the Acquisition Projections are
reasonable estimates of the future financial performance of Holdings and its
Subsidiaries subsequent to the date thereof based upon the historical
performance of Holdings and its Subsidiaries and the Target and show that
Holdings and its Subsidiaries shall continue to be in compliance with the
financial covenants set forth in Annex G for the 3-year period
thereafter; and (z) Holdings and Borrowers have completed their due diligence
investigation with respect to the Target and such Permitted Acquisition, which
investigation was conducted in a manner similar to that which would have been
conducted by a prudent purchaser of a comparable business and the results of
which investigation were delivered to Agent and Lenders;

 

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

 

(xi)           at the time of such Permitted Acquisition and after
giving effect thereto, no Default or Event of Default has occurred and is
continuing; and

 

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

 

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

 

40

 

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

 

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

 

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

 

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

 

(c)           each Credit Party and any direct Foreign Subsidiary
may make any investment that constitutes or is otherwise permitted in
connection with a Permitted Acquisition;

 

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

 

(i)            Intentionally Omitted;

 

(ii)           such corporation or limited liability company shall be
formed under the laws of the United States or Canada or any state or province
thereof and its assets shall be located in the United States or Canada and
comprise a business, or those assets of a business, of the type engaged in by
Borrowers as of the Closing Date;

 

41

 

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

 

(iv)          the corporation or limited liability company shall not
have incurred an operating loss for the trailing twelve-month period preceding
the date of the investment, as determined based upon the corporation or limited
liability company’s financial statements for its most recently completed fiscal
year and its most recent interim financial period completed within 60 days
prior to the date of consummation of such investment;

 

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

 

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

 

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

 

(e)           Foreign Subsidiaries (other than Foreign Subsidiaries
operating in Brazil) and, so long as Agent has not delivered an Activation
Notice, Borrowers may make investments, subject to Control Letters, with
respect to investments of any Credit Party, in favor of Agent or otherwise
subject to a perfected security interest in favor of Agent in (i) marketable
direct obligations issued or unconditionally guaranteed by the United States of
America or Canada or any agency thereof maturing within one year from the date
of acquisition thereof, (ii) commercial paper maturing no more than one
year from the date of creation thereof and currently having the highest rating
obtainable from either S&P or Moody’s, (iii) certificates of deposit
maturing no more than one year from the date of creation thereof issued by
commercial banks incorporated under the laws of the United States of America or
Canada, each having combined capital, surplus and undivided profits of not less
than $300,000,000 and having a senior unsecured rating of “A” or better by a
nationally recognized rating agency (an “A Rated Bank”), (iv) time
deposits maturing no more than thirty (30) days from the date of creation
thereof with A Rated Banks, (v) mutual funds that invest solely in one or
more of the investments described in clauses (i) through (iv) above, (vi) money
market funds that invest substantially in one or more of the investments
described in clauses (i) through (iv) above and (vii) substantially
similar investments to those set forth in clauses (i) through (vi) above
denominated in (A) Euro or Sterling, or (B) other foreign currencies
in an aggregate amount not to exceed $5,000,000 (or the applicable Dollar
equivalent); provided that references to the 

 

42

 

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

 

(f)            in the case of Foreign Subsidiaries operating in
Brazil, Investments made in the ordinary course of business in export notes in
Dollars issued by a Brazilian commercial bank with maturities of one year or
less from the date of acquisition thereof (or, if export notes are not
available, certificates of deposit issued by a Brazilian commercial bank with
maturities of one year or less from the date of acquisition thereof and
denominated in Brazilian reals swapped for Dollars pursuant to a hedge
agreement permitted hereunder) and overnight Investments in short term
Brazilian government securities made in the ordinary course of business;

 

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

 

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

 

(i)            Intentionally Omitted; and

 

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

 

6.3           Indebtedness.

 

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

 

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

 

(ii)           the Loans and the other Obligations,

 

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

 

(iv)          the New Subordinated Debt,

 

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

 

43

 

Party, Agent or any
Lender, as determined by Agent than the terms of the Indebtedness being
refinanced, amended or modified,

 

(vi)          Indebtedness specifically permitted under Section 6.1,

 

(vii)         Indebtedness specifically permitted under Section 6.6,

 

(viii)        Indebtedness specifically permitted under Section 6.17,

 

(ix)           Indebtedness consisting of intercompany loans and
advances made by any Credit Party or Subsidiary of a Credit Party to any other
Credit Party; provided, that: (A) each Credit Party shall have
executed and delivered to each other Credit Party or Subsidiary of a Credit
Party, on the Closing Date, a demand note (collectively, the “Intercompany
Notes”) to evidence any such intercompany Indebtedness owing at any time by
such Credit Party to such other Credit Party or Subsidiary of a Credit Party
which Intercompany Notes shall be in form and substance reasonably satisfactory
to Agent and shall be pledged and delivered to Agent pursuant to the applicable
Collateral Documents as additional collateral security (subject to Permitted
Encumbrances) for the Obligations; (B) each Credit Party shall record all
intercompany transactions on its books and records in a manner reasonably
satisfactory to Agent; (C) the obligations of each Credit Party under any
such Intercompany Notes shall be subordinated to the Obligations of such Credit
Party hereunder in a manner reasonably satisfactory to Agent; (D) at the
time any such intercompany loan or advance is made by any Credit Party or
Subsidiary of a Credit Party to any other Credit Party and after giving effect
thereto, each such Credit Party shall be Solvent; and (E) no Default or
Event of Default would occur and be continuing after giving effect to any such
proposed intercompany loan,

 

(x)            Indebtedness of Foreign Subsidiaries owed to Credit
Parties in an aggregate amount not to exceed $5,000,000 at any time
outstanding,

 

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

 

(xii)          Other unsecured Indebtedness (including, without
limitation, repurchase obligations arising in connection with financing
provided by certain financial institutions to certain dealers with respect to
Inventory purchased by such dealers from Credit Parties) in an aggregate amount
not to exceed $20,000,000 at any time outstanding; provided, however,
that any such other unsecured Indebtedness of Foreign Subsidiaries shall not
exceed $10,000,000 in the aggregate at any time outstanding, and

 

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

 

44

 

Indebtedness and after
giving effect thereto, no Default or Event of Default has occurred and is
continuing.

 

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

 

(i)            the Obligations;

 

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

 

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

 

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

 

(v)           as otherwise permitted in Section 6.14.

 

6.4           Employee Loans and Affiliate Transactions.

 

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

 

(b)           No Credit Party shall, or shall permit any Subsidiary
of a Credit Party to, enter into any lending or borrowing transaction with any
employees of any Credit Party or any such Subsidiaries, except loans to its
respective employees in the ordinary course of business consistent with past
practices for travel and entertainment expenses, relocation costs and similar
purposes up to a maximum of $500,000 in the aggregate at any one time
outstanding.

 

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

 

45

 

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

 

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

 

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

 

(a)           Permitted Encumbrances;

 

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

 

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

 

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

 

46

 

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

 

6.8           Sale of Stock and Assets. 
No Credit Party shall, or shall permit any Subsidiary of any Credit
Party to, sell, transfer, convey, assign or otherwise dispose of any of its
properties or other assets, including the Stock of any of its Subsidiaries
(whether in a public or a private offering or otherwise) or any of its
Accounts, other than (a) the sale of Inventory, license of Intellectual
Property or the use of cash or cash equivalents, in each case, in the ordinary
course of business; (b) the sale, transfer, conveyance or other
disposition by a Credit Party or any Foreign Subsidiary of Equipment or
Fixtures that are obsolete or no longer used or useful in such Credit Party’s
or such Foreign Subsidiary’s business; (c) the sale of all of the Stock or
substantially all of the assets of Gear so long as (i) no Default or Event
of Default exists or would be caused thereby or (ii) Requisite Lenders
otherwise consent to such sale; (d) other assets having a value not
exceeding $5,000,000 in the aggregate in any Fiscal Year; and (e) leases
and subleases of Real Estate not materially interfering with the ordinary
conduct of business of the applicable Credit Parties and otherwise consented to
by Agent which consent will not be unreasonably withheld. With respect to any
disposition of assets or other properties permitted pursuant to clauses (b),
(c), or (d) above, subject to Section 1.3(b),
Agent agrees on reasonable prior written notice to release its Lien on such
assets or other properties in order to permit the applicable Credit Party to
effect such disposition and shall execute and deliver to Borrowers, at
Borrowers’ expense, appropriate UCC-3 termination statements and other releases
as are reasonably requested by Borrowers.

 

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

 

6.10         Financial Covenants.  Borrowers shall
not breach or fail to comply with any of the Financial Covenants.

 

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

 

47

 

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

 

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

 

6.14         Restricted Payments.  No Credit
Party shall, or shall permit any Subsidiary of a Credit Party to, make any
Restricted Payment, except (a) intercompany loans and advances between
Credit Parties to the extent permitted by Section 6.3, (b) dividends
and distributions by Subsidiaries of any Credit Party paid to a Credit Party or
a Subsidiary of a Credit Party, (c) employee loans permitted under Section 6.4(b),
(d) payments of principal and interest of Intercompany Notes issued in
accordance with Section 6.3; (e) scheduled cash payments of
interest with respect to other Subordinated Debt, provided, that (i) no
Default or Event of Default has occurred and is continuing or would result
after giving effect to any Restricted Payment pursuant to clause  (e) above,
and (ii) with respect to any Subordinated Debt created after the Closing
Date, the timing of the Restricted Payments referred to in clause  (e) above
shall be set at dates that permit the delivery of Financial Statements
necessary to determine current compliance with the Financial Covenants prior to
each such payment and (f) redemptions of Stock of Holdings and/or
dividends and distributions to the holders of the Stock of Holdings in an
aggregate amount not to exceed $25,000,000 per year and $100,000,000 during the
term of this Agreement, provided, that (i) no Default or Event of Default
has occurred and is continuing or would result after giving effect to any
Restricted Payment under clause (f) above and (ii) after
giving effect to such Restricted Payment under clause (f) above,
the Credit Facility Leverage Ratio as reflected in the Compliance Certificate
most recently delivered to Agent pursuant to Annex E prior to the
consummation of such Restricted Payment (after giving effect to such Restricted
Payment and all Loans funded in connection therewith as if made on the first
date of such period) was not greater than 2.25 to 1.00.

 

6.15         Change of Corporate Name or Location; Change of Fiscal
Year.  No Credit Party shall, or shall permit any
Subsidiary of any Credit Party to, (a) change its name, corporate name or
trade name as it appears in official filings in the state, province, county or
other jurisdiction of its existence, incorporation or other organization (b) change
its chief executive office, registered office pursuant to its constituent
documents, principal place of business, corporate offices or warehouses or
locations at which Collateral is held or stored, or the location of its records
concerning the Collateral, (c) change the type of entity that it is, (d) change
its organization identification number, if any, issued by its state of
incorporation or other organization, or (e) change its state, province,
county or other jurisdiction of existence, incorporation or organization, in
each case without at least 30 days prior written notice to Agent and after
Agent’s written acknowledgment that any reasonable action requested by Agent in
connection therewith, including to continue the perfection of any Liens in
favor of Agent in any Collateral, has been completed or taken, and provided
that any such new location shall be in the continental United States, except
that any Credit Party or any Subsidiary of any Credit Party may transfer
Collateral having value not exceeding $500,000 in the aggregate from any
warehouse or location at which such Collateral is held or stored to any
warehouse or location in Mexico.  Without
limiting the 

 

48

 

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

 

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

 

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

 

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

 

7.             TERM

 

7.1           Termination.  The financing
arrangements contemplated hereby shall be in effect until the Commitment
Termination Date, and the Loans and all other Obligations shall be
automatically due and payable in full on such date.

 

7.2           Survival of Obligations Upon Termination of Financing
Arrangements.  Except as otherwise expressly provided for in
the Loan Documents, no termination or cancellation 

 

49

 

(regardless of cause or
procedure) of any financing arrangement under this Agreement shall in any way
affect or impair the obligations, duties and liabilities of the Credit Parties
or the rights of Agent and Lenders relating to any unpaid portion of the Loans
or any other Obligations, due or not due, liquidated, contingent or
unliquidated, or any transaction or event occurring prior to such termination,
or any transaction or event, the performance of which is required after the
Commitment Termination Date.  Except as
otherwise expressly provided herein or in any other Loan Document, all
undertakings, agreements, covenants, warranties and representations of or
binding upon the Credit Parties, and all rights of Agent and each Lender, all
as contained in the Loan Documents, shall not terminate or expire, but rather
shall survive any such termination or cancellation and shall continue in full
force and effect until the Termination Date; provided, that the
provisions of Section 11, the payment obligations under Sections
1.15 and 1.16, and the indemnities contained in the Loan Documents
shall survive the Termination Date.

 

8.             EVENTS OF DEFAULT; RIGHTS AND REMEDIES

 

8.1           Events of Default.  The
occurrence of any one or more of the following events (regardless of the reason
therefor) shall constitute an “Event of Default” hereunder:

 

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

 

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

 

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

 

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

 

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

 

50

 

$5,000,000 in the
aggregate to become due prior to its stated maturity or prior to its regularly
scheduled dates of payment, or cash collateral in respect thereof to be
demanded, in each case, regardless of whether such default is waived, or such
right is exercised, by such holder or trustee.

 

(f)            Any representation or warranty herein or in any Loan
Document or in any written statement, report, financial statement or
certificate made or delivered to Agent or any Lender by any Credit Party is
untrue or incorrect in any material respect as of the date when made or deemed
made.

 

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

 

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

 

(i)            Any Credit Party or Foreign Subsidiary that is an
operating company (i) files a petition seeking relief under any Insolvency
Law, or any other applicable federal, state or foreign bankruptcy or other
similar law, (ii) consents to or fails to contest in a timely and
appropriate manner the institution of proceedings referred to in Section 8.1(h) thereunder
or the filing of any such petition or the appointment of or taking possession
by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or
similar official) for such Credit Party or such Foreign Subsidiary or for any
substantial part of any such Credit Party’s or such Foreign Subsidiary’s
assets, (iii) makes an assignment for the benefit of creditors, (iv) takes
any action in furtherance of any of the foregoing or described under Section 8.1(h);
or (v) admits in writing its inability to, or is generally unable to, pay
its debts as such debts become due.

 

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

 

51

 

 

(k)           Any material provision of any Loan Document for any
reason ceases to be valid, binding and enforceable in accordance with its terms
(or any Credit Party or other Person party to a Loan Document shall challenge
the enforceability of any Loan Document or shall assert in writing, or engage
in any action or inaction based on any such 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), or any Lien created under any
Loan Document ceases to be a valid and perfected first priority Lien (except as
otherwise permitted herein or therein) in any of the Collateral purported to be
covered thereby.

 

(l)            Any Change of Control occurs.

 

(m)          Any Material Adverse Effect occurs.

 

8.2           Remedies.

 

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

 

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

 

(c)           Intentionally Omitted.

 

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

 

52

 

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

 

9.             ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT

 

9.1           Assignments and Participations.

 

(a)           Intentionally Omitted.

 

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

 

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

 

53

 

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

 

(d)           Effectiveness.  (i) The
assignee under the Assignment Agreement shall become a party hereto and, to the
extent that rights and obligations under the Loan Documents have been assigned
to such assignee pursuant to such Assignment Agreement, shall have the rights
and obligations of a Lender, (ii) any applicable Note shall be transferred
to such assignee through such entry and (iii) the assignor thereunder
shall, to the extent that rights and obligations under this Agreement have been
assigned by it pursuant to such Assignment Agreement, relinquish its rights
(except for those surviving the termination of the Commitments and the payment
in full of the Obligations) and be released from its obligations under the Loan
Documents, other than those relating to events or circumstances occurring prior
to such assignment (and, in the case of an Assignment Agreement covering all or
the remaining portion of an assigning Lender’s rights and obligations under the
Loan Documents, such Lender shall cease to be a party hereto except that each
Lender agrees to remain bound by Article 9).

 

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

 

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

 

54

 

commitment, or be deemed
to have made an offer to commit, to make Loans hereunder, and, except as
provided in the applicable option agreement, none shall be liable for any
obligation of such Lender hereunder, (ii) such Lender’s rights and
obligations, and the rights and obligations of the Credit Parties and the other
Lenders towards such Lender, under any Loan Document shall remain unchanged and
each other party hereto shall continue to deal solely with such Lender, which
shall remain the holder of the Obligations, except that (A) each such
participant and SPV shall be entitled to the benefit of Sections 1.15
and 1.16, but only to the extent such participant or SPV delivers the
tax forms such Lender is required to collect pursuant to Section 1.15
and then only to the extent of any amount to which such Lender would be
entitled in the absence of any such grant or participation and (B) each
such SPV may receive other payments that would otherwise be made to such Lender
with respect to Loans funded by such SPV to the extent provided in the
applicable option agreement and set forth in a notice provided to Agent by such
SPV and such Lender, provided, however, that in no case
(including pursuant to clause (A) or (B) above) shall
an SPV or participant have the right to enforce any of the terms of any Loan
Document, and (iii) the consent of such SPV or participant shall not be
required (either directly, as a restraint on such Lender’s ability to consent
hereunder or otherwise) for any amendments, waivers or consents with respect to
any Loan Document or to exercise or refrain from exercising any powers or
rights such Lender may have under or in respect of the Loan Documents
(including the right to enforce or direct enforcement of the Obligations),
except for those described in clauses (iii) and (iv) of
Section 11.2 with respect to amounts, or dates fixed for payment of
amounts, to which such participant or SPV would otherwise be entitled and, in
the case of participants, except for those described in Section 11.2(c)(viii) (or
amendments, consents and waivers with respect to Section 11.2(c)(v) to
release all or substantially all of the Collateral).  No party hereto shall institute (and each
Borrower shall cause each other Credit Party not to institute) against any SPV
grantee of an option pursuant to this clause (f) any bankruptcy,
reorganization, insolvency, liquidation or similar proceeding, prior to the
date that is one year and one day after the payment in full of all outstanding
commercial paper of such SPV; provided, however, that each Lender having
designated an SPV as such agrees to indemnify each Indemnitee against any
Liability that may be incurred by, or asserted against, such Indemnitee as a
result of failing to institute such proceeding (including a failure to get
reimbursed by such SPV for any such Liability). 
The agreement in the preceding sentence shall survive the termination of
the Commitments and the payment in full of the Obligations.

 

(g)           Agent shall maintain, acting solely in its capacity as
agent for Borrowers, a copy of each Assignment Agreement delivered to them and
a register for the recordation of the name and address and the Commitments of
each Lender from time to time party hereto (the “Register”).  The entries in the Register shall be
conclusive, and Borrowers, Agent and 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.  Upon
acceptance by Agent of a properly completed and executed Assignment Agreement
in respect of any interest under this Agreement which has at any time been
recorded in the Register, Agent shall record the name, address and percentage
share of the assignee in the Register. 
No assignment shall be effective unless and until it has been recorded
in the Register.

 

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

 

55

 

9.2           Appointment of Agent.  GE Capital is
hereby appointed to act on behalf of all Lenders with respect to the
administration of Loans made to Borrowers and to act as agent on behalf of all
Lenders with respect to Collateral of Credit Parties under this Agreement and
the other Loan Documents.  The provisions
of this Section 9.2 are solely for the benefit of Agent and Lenders
and no Credit Party nor any other Person shall have any rights as a third party
beneficiary of any of the provisions hereof. 
In performing its functions and duties under this Agreement and the
other Loan Documents, Agent shall act solely as an agent of Lenders and Agent
does not assume or shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for any Credit Party or any other
Person.  Agent shall not have any duties
or responsibilities except for those expressly set forth in this Agreement and
the other Loan Documents.  The duties of
Agent shall be mechanical and administrative in nature and Agent shall not
have, or be deemed to have, by reason of this Agreement, any other Loan
Document or otherwise a fiduciary relationship in respect of any Lender.  Except as expressly set forth in this
Agreement and the other Loan Documents, Agent shall not have any duty to
disclose, nor shall it be liable for failure to disclose, any information
relating to any Credit Party or any of their respective Subsidiaries or any
Account Debtor that is communicated to or obtained by GE Capital or any of its
Affiliates in any capacity.  None of
Agent or any of its Affiliates nor any of their respective officers, directors,
employees, agents or representatives shall be liable to any Lender for any
action taken or omitted to be taken by it hereunder or under any other Loan
Document, or in connection herewith or therewith, except for damages caused by
its or their own gross negligence or willful misconduct.

 

If
Agent shall request instructions from Requisite Lenders, Requisite Revolving
Lenders or all affected Lenders with respect to any act or action (including
failure to act) in connection with this Agreement or any other Loan Document,
then Agent shall be entitled to refrain from such act or taking such action
unless and until Agent shall have received instructions from Requisite Lenders,
Requisite Revolving Lenders or all affected Lenders, as the case may be, and
Agent shall not incur liability to any Person by reason of so refraining.  Agent shall be fully justified in failing or
refusing to take any action hereunder or under any other Loan Document (a) if
such action would, in the opinion of Agent be contrary to law or the terms of
this Agreement or any other Loan Document, (b) if such action would, in
the opinion of Agent expose Agent to Environmental Liabilities or (c) if
Agent shall not first be indemnified to its satisfaction against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. 
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or refraining from acting
hereunder or under any other Loan Document in accordance with the instructions
of Requisite Lenders, Requisite Revolving Lenders or all affected Lenders, as
applicable.

 

9.3           Agent’s Reliance, Etc.  None of Agent
or any of its Affiliates nor any of their respective directors, officers,
agents or employees shall be liable for any action taken or omitted to be taken
by it or them under or in connection with this Agreement or the other Loan
Documents, except for damages caused by its or their own gross negligence or
willful misconduct.  Without limiting the
generality of the foregoing, Agent:  (a) may
treat the payee of any Note as the holder thereof until Agent receives written
notice of the assignment or transfer thereof signed by such payee and in form
reasonably satisfactory to Agent; (b) may consult with legal counsel,
independent public accountants and other experts selected by it and shall not
be liable for any action taken or omitted to be taken by it in good faith in
accordance with the 

 

56

 

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

 

Except
for action requiring the approval of Requisite Lenders or all Lenders, as the
case may be, Agent shall each be entitled to use its discretion with respect to
exercising or refraining from exercising any rights which may be vested in it
by, and with respect to taking or refraining from taking any action or actions
which it may be able to take under or in respect of, this Agreement, unless
Agent shall have been instructed by Requisite Lenders or all Lenders, as the
case may be, to exercise or refrain from exercising such rights or to take or
refrain from taking such action.  Agent
shall not incur any liability to the Lenders under or in respect of this
Agreement with respect to anything which it may do or refrain from doing in the
reasonable exercise of its judgment or which may seem to it to be necessary or
desirable in the circumstances, except for its own gross negligence or willful
misconduct.  Agent shall not be liable to
any Lender in acting or refraining from acting under this Agreement in
accordance with the instructions of Requisite Lenders or all Lenders, as the
case may be, and any action taken or failure to act pursuant to such
instructions shall be binding on all Lenders.

 

9.4           GE Capital and Affiliates. 
With respect to its Commitments hereunder, GE Capital shall have
the same rights and powers under this Agreement and the other Loan Documents as
any other Lender and may exercise the same as though it were not Agent; and the
term “Lender” or “Lenders” shall, unless otherwise expressly indicated, include
GE Capital in its individual capacity. 
GE Capital and its Affiliates may lend money to, invest in, and
generally engage in any kind of business with, any Credit Party, any of their
Affiliates and any Person who may do business with or own securities of any Credit
Party or any such Affiliate, all as if GE Capital were not Agent and without
any duty to account therefor to Lenders. 
GE Capital and its Affiliates may accept fees and other consideration
from any Credit Party for services in connection with this Agreement or
otherwise without having to account for the same to Lenders.  Each Lender acknowledges the potential
conflict of interest between GE Capital, as a Lender, holding disproportionate
interests in the Loans and GE Capital as Agent.

 

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

 

57

 

as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement. 
Each Lender acknowledges the potential conflict of interest of each
other Lender as a result of Lenders holding disproportionate interests in the
Loans, and expressly consents to, and waives any claim based upon, such
conflict of interest.

 

9.6           Indemnification.  Lenders agree
to indemnify Agent (to the extent not reimbursed by Credit Parties and without
limiting the obligations of Borrowers hereunder), ratably according to their
respective commitments, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by, or asserted against Agent in any way relating to or arising out of this
Agreement or any other Loan Document or any action taken or omitted to be taken
by Agent in connection therewith; provided, that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from Agent’s gross negligence or willful misconduct. Without limiting
the foregoing, each Lender agrees to reimburse Agent promptly upon demand for
its ratable share of any out-of-pocket expenses (including reasonable counsel
fees) incurred by Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement and each other Loan
Document, to the extent that Agent is not reimbursed for such expenses by
Credit Parties.

 

9.7           Successor Agent.  Agent may
resign at any time by giving not less than thirty (30) days’ prior written
notice thereof to Lenders and Borrower Representative and, at any time that GE
Capital is no longer a holder of any Loans or Commitments, Requisite Lenders
may remove Agent at any time by giving not less than 30 days’ prior written
notice thereof to Agent, Lenders and Borrower Representative.  Upon any such resignation or removal,
Requisite Lenders shall have the right to appoint a successor Agent.  If no successor Agent shall have been so
appointed by the Requisite Lenders and shall have accepted such appointment
within thirty (30) days after the resigning Agent’s giving notice of
resignation or Requisite Lenders’ giving notice of removal, then the resigning
or removed Agent may, on behalf of Lenders, appoint a successor Agent, which
shall be a Lender, if a Lender is willing to accept such appointment, or
otherwise shall be a commercial bank or financial institution or a subsidiary
of a commercial bank or financial institution if such commercial bank or
financial institution is organized under the laws of the United States of
America or of any State thereof and has a combined capital and surplus of at
least $300,000,000.  If no successor
Agent has been appointed pursuant to the foregoing, within thirty (30) days
after the date such notice of resignation was given by the resigning Agent or Requisite
Lenders’ giving notice of removal, such resignation shall become effective and
the Requisite Lenders shall thereafter perform all the duties of Agent
hereunder until such time, if any, as the Requisite Lenders appoint a successor
Agent as provided above.  Any successor
Agent appointed by Requisite Lenders hereunder shall be subject to the approval
of Borrower Representative, such approval not to be unreasonably withheld or
delayed; provided that such approval shall not be required if a Default
or an Event of Default has occurred and is continuing.  Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall succeed to and
become vested with all the rights, powers, privileges and duties of the
resigning or removed Agent.  Upon the
earlier of the acceptance of any appointment as Agent hereunder by a successor
Agent or the effective date of the resigning Agent’s resignation or the removed
Agent’s removal, the resigning or removed Agent shall be discharged 

 

58

 

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

 

9.8           Setoff and Sharing of Payments. 
In addition to any rights now or hereafter granted under applicable law
and not by way of limitation of any such rights, upon the occurrence and during
the continuance of any Event of Default and subject to Section 9.9(f),
each Lender is hereby authorized at any time or from time to time, without
notice to any Credit Party or to any other Person, any such notice being hereby
expressly waived, to offset and to appropriate and to apply any and all
balances held by it at any of its offices for the account of Borrowers or
Guarantors (regardless of whether such balances are then due to Borrowers or
Guarantors) and any other properties or assets at any time held or owing by
that Lender or that holder to or for the credit or for the account of Borrowers
or Guarantors against and on account of any of the Obligations that are not
paid when due.  Any Lender exercising a
right of setoff or otherwise receiving any payment on account of the
Obligations shall purchase for cash (and the other Lenders or holders shall
sell) such participations in each such other Lender’s or holder’s Obligations
as would be necessary to cause such Lender to share the amount so offset or
otherwise received with each other Lender or holder in accordance with any
agreement among the Lenders (other than offset rights exercised by any Lender
with respect to Sections 1.13, 1.15 or 1.16).  Each Lender’s obligation under this Section 9.8
shall be in addition to and not in limitation of its obligations to purchase a
participation in an amount equal to its Pro Rata Share of the Swing Line Loans
under Section 1.1.  Each
Credit Party that is a Borrower or Guarantor agrees, to the fullest extent
permitted by law, that (a) any Lender may exercise its right to offset
with respect to amounts in excess of the Obligations owed to it and may sell
participations in such amounts so offset to other Lenders and holders and (b) any
Lender so purchasing a participation in the Loans made or other Obligations
held by other Lenders or holders may exercise all rights of offset, bankers’
lien, counterclaim or similar rights with respect to such participation as
fully as if such Lender or holder were a direct holder of the Loans and the
other Obligations in the amount of such participation.  Notwithstanding the foregoing, if all or any
portion of the offset amount or payment otherwise received is thereafter
recovered from the Lender that has exercised the right of offset, the purchase
of participations by that Lender shall be rescinded and the purchase price
restored without interest.  If a Non-Funding
Lender or Impacted Lender receives any such payment as described in this Section 9.8,
such Lender shall turn over such payments to Agent in an amount that would
satisfy the cash collateral requirements set forth in Section 9.9(a).

 

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

 

(a)           Advances; Payments.

 

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

 

59

 

date such Notice of
Revolving Advance is received, by telecopy, telephone or other similar form of
transmission.  Each Lender with Revolving
Loan Commitments shall make the amount of such Lender’s Pro Rata Share of such
Revolving Credit Advance available to Agent in same day funds by wire transfer
to Agent’s account as set forth in Annex H not later than 3:00 p.m.
(New York time) on the requested funding date, in the case of an Index Rate
Loan, and not later than 12:00 noon (New York time) on the requested funding
date, in the case of a LIBOR Loan.  After
receipt of such wire transfers (or, in Agent’s sole discretion, before receipt
of such wire transfers), subject to the terms hereof, Agent shall make the
requested Revolving Credit Advance to the Borrower designated by Borrower
Representative in the Notice of Revolving Credit Advance.  All payments by each Lender shall be made
without setoff, counterclaim or deduction of any kind.

 

(ii)           On the 2nd Business Day of each calendar week or more
frequently at Agent’s election (each, a “Settlement Date”), Agent shall
advise each Lender by telephone, or telecopy of the amount of such Lender’s Pro
Rata Share of principal, interest and Fees paid for the benefit of
Lenders.  Provided that each Lender has
funded all payments or Advances required to be made by it and has purchased all
participations required to be purchased by it under this Agreement and the
other Loan Documents as of such Settlement Date, Agent shall pay to each Lender
such Lender’s Pro Rata Share of principal, interest and Fees paid by Borrowers
since the previous Settlement Date for the benefit of such Lender on the Loans
held by it.  Agent shall be entitled to
set off the funding short-fall against any Non-Funding Lender’s Pro Rata Share
of all payments received from Borrowers and hold, in a non-interest bearing
account, all payments received by Agent for the benefit of any Non-Funding
Lender pursuant to this Agreement as cash collateral for any unfunded
reimbursement obligations of such Non-Funding Lender until the Obligations are
paid in full in cash, all Letter of Credit Obligations have been discharged or
cash collateralized and all Commitments have been terminated, and upon such
unfunded obligations owing by a Non-Funding Lender becoming due and payable,
Agent shall be authorized to use such cash collateral to make such payment on
behalf of such Non-Funding Lender.  Any
amounts owing by a Non-Funding Lender to Agent which are not paid when due
shall accrue interest at the interest rate applicable during such period to
Revolving Loans that are Index Rate Loans. 
Such payments shall be made by wire transfer to such Lender’s account
(as specified by such Lender in Annex H or the applicable Assignment
Agreement) not later than 2:00 p.m. (New York time) on the next Business
Day following each Settlement Date.

 

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

 

60

 

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

 

(c)           Return of Payments.

 

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

 

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

 

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

 

61

 

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

 

(e)           Dissemination of Information. 
Agent shall use reasonable efforts to provide the Lenders with any
notice of Default or Event of Default received by it from, or delivered by it
to, any Credit Party, with notice of any Event of Default of which it has
actually become aware and with notice of any action taken by it following any
Event of Default; provided, that Agent shall not be liable to any Lender
for any failure to do so, except to the extent that such failure is
attributable to Agent’s gross negligence or willful misconduct.  Lenders acknowledge that Borrowers are
required to provide Financial Statements and Collateral Reports to Lenders in
accordance with Annexes E and F hereto and agree that Agent shall not
have any duty to provide the same to Lenders.

 

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

 

9.10         Collateral Matters.

 

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

 

62

 

Closing Date not in excess of $2,500,000 during each Fiscal Year
without the prior written authorization of any Lenders and Agent may (so long
as (x) no Default or Event of Default has occurred and is continuing, or
would result therefrom and (y) Credit Parties have provided evidence to
Agent (in form and substance satisfactory to Agent) that EBITDA of Holdings and
its Subsidiaries on a consolidated basis for the most recently ended four
fiscal quarters, exclusive of the amount of such EBITDA which is attributable
to the assets of Credit Parties so released from the Collateral, would not be
less than $85,000,000) release to release, its Liens on Collateral valued in
the aggregate for all such releases from and after the Closing Date greater
than $2,500,000 but not in excess of 10% of the aggregate Commitments as of the
Closing Date with the prior written authorization of Requisite Lenders.  Upon request by Agent or Borrowers at any
time, Lenders will confirm in writing Agent’s authority to release any Liens upon
particular types or items of Collateral pursuant to this Section 9.10.

 

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

 

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

 

9.12         Distribution of Materials to
Lenders and L/C Issuers.

 

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

 

(b)           Each Borrower
hereby agrees that if either it or Holdings or any Subsidiary of Holdings has
publicly traded equity or debt securities in the United States of 

 

63

 

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

 

(c)           Each Lender and L/C
Issuer represents, warrants, acknowledges and agrees that (i) the Borrower
Materials may contain MNPI concerning the Borrowers, their Affiliates or their
securities, (ii) it has developed compliance policies and procedures
regarding the handling and use of MNPI, and (iii) it shall use any such
Borrower Materials in accordance with Section 11.8 and any
applicable laws and regulations, including federal and state securities laws
and regulations.

 

(d)           If any Lender or L/C Issuer has elected
to abstain from receiving MNPI concerning the Borrowers, their Affiliates or
their securities, such Lender or L/C Issuer acknowledges that, notwithstanding
such election, Agent and/or the Borrowers will, from time to time, make
available syndicate-information (which may contain MNPI) as required by the
terms of, or in the course of administering, the credit facilities, including
this Agreement and the other Loan Documents, to the credit contact(s) identified
for receipt of such information on the Lender’s administrative questionnaire
who are able to receive and use all syndicate-level information (which may
contain MNPI) in accordance with such Lender’s compliance policies and
contractual obligations and applicable law, including federal and state
securities laws; provided that if such contact is not so identified in such
questionnaire, the relevant Lender or L/C Issuer hereby agrees to promptly (and
in any even within one Business Day) provide such a contact to Agent and the
Borrowers upon oral or written request therefor by Agent or Borrowers.  Notwithstanding such Lender’s or L/C Issuer’s
election to abstain from receiving MNPI, such Lender or L/C Issuer acknowledges
that if such Lender or L/C Issuer chooses to communicate 

 

64

 

with Agent, it assumes
the risk of receiving MNPI concerning the Borrowers, their Affiliates or their
securities.

 

10.           SUCCESSORS AND ASSIGNS

 

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

 

11.           MISCELLANEOUS

 

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

 

11.2         Amendments and Waivers.

 

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

 

(b)           Intentionally Omitted.

 

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

 

65

 

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

 

(d)           If, in connection with any proposed amendment,
modification, waiver or termination requiring the consent of all affected Lenders,
the consent of any Lender or Lenders whose consent is required is not obtained
(any such Lender whose consent is not obtained being referred to as a “Non-Consenting
Lender”) then, so long as Agent is not a Non-Consenting Lender, at Borrower
Representative’s request, Agent or another Person reasonably acceptable to
Agent and Borrower Representative (and, with respect to any Person replacing a
Revolving Lender, reasonably acceptable to each L/C Issuer) shall have the
right with Agent’s consent and in Agent’s sole discretion (but shall have no
obligation) to purchase from such Non-Consenting Lenders, and such
Non-Consenting Lenders agree that they shall, upon Agent’s request, sell and
assign to Agent or another Person reasonably acceptable to Agent and Borrower
Representative (and, with respect to any Person replacing a Revolving Lender,
reasonably acceptable to each L/C Issuer), all of the Commitments of such
Non-Consenting Lenders for an amount equal to the principal balance of all
Loans held by the Non-Consenting Lenders and all accrued interest and Fees with
respect thereto through the date of sale, such purchase and sale to be
consummated pursuant to an executed Assignment Agreement.

 

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

 

66

 

necessary or appropriate
to evidence the termination of the Liens securing payment of the Obligations.

 

11.3         Fees and Expenses.  Borrowers
shall reimburse (i) Agent for all fees, costs and expenses (including the
reasonable fees and expenses of all of its counsel, advisors, consultants and
auditors) and (ii) Agent (and, with respect to clauses (c), (d) and
(e) below, all Lenders) for all fees, costs and expenses, including the
reasonable fees, costs and expenses of counsel or other advisors (including
environmental and management consultants and appraisers), incurred in
connection with the negotiation and preparation of the Loan Documents and incurred
in connection with:

 

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

 

(b)           any amendment, modification or waiver of, consent with
respect to, or termination of, any of the Loan Documents or Related
Transactions Documents or advice in connection with the syndication and
administration of the Loans made pursuant hereto or its rights hereunder or
thereunder;

 

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

 

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

 

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

 

67

 

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

 

including, as to each of clauses (a) through (f) above, all
reasonable attorneys’ and other professional and service providers’ fees
arising from such services and other advice, assistance or other
representation, including those in connection with any appellate proceedings,
and all expenses, costs, charges and other fees incurred by such counsel and
others in connection with or relating to any of the events or actions described
in this Section 11.3, all of which shall be payable, on demand, by
Borrowers to Agent.  Without limiting the
generality of the foregoing, such expenses, costs, charges and fees may
include: fees, costs and expenses of accountants, environmental advisors,
appraisers, investment bankers, management, financial, turnaround and other
consultants and paralegals; court costs and expenses; photocopying and
duplication expenses; court reporter fees, costs and expenses; long distance
telephone charges; air express charges; telegram or telecopy charges;
secretarial overtime charges; and expenses for travel, lodging and food paid or
incurred in connection with the performance of such legal or other advisory
services.

 

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

 

11.4         No Waiver.  Agent’s or
any Lender’s failure, at any time or times, to require strict performance by
the Credit Parties of any provision of this Agreement or any other Loan
Document shall not waive, affect or diminish any right of Agent or such Lender
thereafter to demand strict compliance and performance herewith or
therewith.  Any suspension or waiver of
an Event of Default shall not suspend, waive or affect any other Event of
Default whether the same is prior or subsequent thereto and whether the same or
of a different type.  Subject to the
provisions of Section 11.2, none of the undertakings, agreements,
warranties, covenants and representations of any Credit Party contained in this
Agreement or any of the other Loan Documents and no Default or Event of Default
by any Credit Party shall be deemed to have been suspended or waived by Agent
or any Lender, unless such waiver or suspension is by an instrument in writing
signed by an officer of or other authorized employee of Agent and the
applicable required Lenders, and directed to Borrowers specifying such
suspension or waiver.

 

11.5         Remedies.  Agent’s and
Lenders’ rights and remedies under this Agreement shall be cumulative and
nonexclusive of any other rights and remedies that Agent or any Lender may have
under any other agreement, including the other Loan Documents, by operation of
law or otherwise.  Recourse to the
Collateral shall not be required.

 

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

 

68

 

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

 

11.7         Conflict of Terms.  Except as
otherwise provided in this Agreement or any of the other Loan Documents by
specific reference to the applicable provisions of this Agreement, if any
provision contained in this Agreement conflicts with any provision in any of
the other Loan Documents, the provision contained in this Agreement shall
govern and control.

 

11.8         Confidentiality.  Agent and
each Lender agree to maintain as confidential (using the same degree of care
used in maintaining the confidentiality of its own confidential information)
all confidential information provided to them by the Credit Parties and
designated as confidential for a period of 2 years following the termination of
this Agreement, except that Agent and any Lender may disclose such information (a) to
Persons employed or engaged by Agent or such Lender; (b) to any bona fide
assignee or participant or potential assignee or participant that has agreed to
comply with the covenant contained in this Section 11.8 (and any
such bona fide assignee or participant or potential assignee or participant may
disclose such information to Persons employed or engaged by them as described
in clause (a) above); (c) as required or requested by any
Governmental Authority or reasonably believed by Agent or such Lender to be
compelled by any court decree, subpoena or legal or administrative order or
process; (d) as, on the advice of Agent’s or such Lender’s counsel, is
required by law; (e) in connection with the exercise of any right or
remedy under the Loan Documents or in connection with any Litigation to which
Agent or such Lender is a party; or (f) that ceases to be confidential
through no fault of Agent or such Lender.

 

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

 

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

 

69

 

APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES
OF AMERICA.  EACH CREDIT PARTY HEREBY
CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY,
CITY OF NEW YORK, NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, AGENT AND LENDERS
PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY
MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS; PROVIDED, THAT AGENT, LENDERS AND THE CREDIT PARTIES
ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A
COURT LOCATED OUTSIDE OF NEW YORK COUNTY; PROVIDED  FURTHER,  THAT NOTHING IN THIS AGREEMENT SHALL BE
DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN
FAVOR OF AGENT, AND CREDIT PARTIES MAY MAKE ANY COUNTERCLAIMS RELATING TO
THE SAME MATTER, REQUESTS FOR EQUITABLE RELIEF RELATING TO THE SAME MATTER OR
AFFIRMATIVE DEFENSES IN CONNECTION THEREWITH. 
EACH CREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH CREDIT
PARTY HEREBY WAIVES ANY OBJECTION THAT SUCH CREDIT PARTY MAY HAVE BASED
UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM  NON  CONVENIENS
AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY SUCH COURT.  EACH
CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER
PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET FORTH IN ANNEX
I OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON
THE EARLIER OF SUCH CREDIT PARTY’S ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER
DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID.

 

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

 

70

 

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

 

11.11       Section Titles.  The Section titles
and Table of Contents contained in this Agreement are and shall be without
substantive meaning or content of any kind whatsoever and are not a part of the
agreement between the parties hereto.

 

11.12       Counterparts.  This
Agreement may be executed in any number of separate counterparts, each of which
shall collectively and separately constitute one agreement.

 

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

 

11.14       Press Releases and Related Matters. 
Each Credit Party executing this Agreement agrees that neither it nor
its Affiliates will in the future issue any press releases or other public
disclosure using the name of GE Capital or its affiliates or referring to this
Agreement, the other Loan Documents or the Related Transactions Documents
without at least 2 Business Days’ prior notice to GE Capital and without the
prior written consent of GE Capital unless (and only to the extent that) such
Credit Party or Affiliate is required to do so under law and then, in any
event, such Credit Party or Affiliate will consult with GE Capital before
issuing such press release or other public disclosure.  Each Credit Party consents to the publication
by Agent or any Lender of a tombstone or similar advertising material relating
to the financing transactions contemplated by this Agreement.  Agent reserves the right to provide to
industry trade organizations information necessary and customary for inclusion
in league table measurements.

 

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

 

71

 

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

 

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

 

11.17       No Strict Construction.  The parties
hereto have participated jointly in the negotiation and drafting of this
Agreement.  In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.

 

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

 

11.19       Judgment Currency.

 

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

 

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

 

72

 

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

 

11.20       Intentionally Omitted.

 

11.21       Amendment and Restatement. 
Each Credit Party acknowledges and agrees that the security interest
granted to Agent, for the benefit of Prior Lender Group, or any of them,
pursuant to the Loan Documents (as defined in the Prior Credit Agreement),
shall remain outstanding and in full force and effect in accordance with the
Prior Credit Agreement and the other Loan Documents (as defined in the Prior
Credit Agreement), as modified herein and in the other Loan Documents, and
shall continue to secure the Obligations. 
Credit Parties and Lenders acknowledge and confirm that (i) the
Obligations represent, among other things, the amendment, restatement, renewal,
extension, consolidation and modification of the Obligations (as defined in the
Prior Credit Agreement) arising in connection with the Prior Credit Agreement
and other Loan Documents (as defined in the Prior Credit Agreement); (ii) the
Prior Credit Agreement and the other Loan Documents (as defined in the Prior
Credit Agreement) and the collateral pledged thereunder shall secure, without
interruption or impairment of any kind, all existing Obligations (as defined in
the Prior Credit Agreement) under the Prior Credit Agreement and the other Loan
Documents (as defined in the Prior Credit Agreement) as amended, restated,
renewed, extended, consolidated or modified hereunder and under the other Loan
Documents, together with all other Obligations hereunder; (iii) all Liens
evidenced by the Loan Documents (as defined in the Prior Credit Agreement) are
hereby ratified, confirmed and continued as modified, amended or restated under
the Loan Documents; and (iv) this Agreement is intended to restate, renew,
extend, consolidate, amend and modify the Prior Credit Agreement in its
entirety.  Borrowers and Lenders intend
that (i) the provisions of the Prior Credit Agreement and the other Loan
Documents (as defined in the Prior Credit Agreement), to the extent restated,
renewed, extended, consolidated, amended or modified hereby and by the other
Loan Documents, be hereby superseded and replaced by the provisions hereof and
of the other Loan Documents; and (ii) by entering into and performing
their respective obligations hereunder, this transaction shall not constitute a
novation and shall in no way adversely affect or impair the priority of Liens
granted by the Loan Documents (as defined in the Prior Credit Agreement).

 

12.           CROSS-GUARANTY

 

12.1         Cross-Guaranty.

 

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

 

73

 

(i)            the genuineness, validity, regularity, enforceability
or any future amendment of, or change in, this Agreement, any other Loan
Document or any other agreement, document or instrument to which any Borrower
is or may become a party;

 

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

 

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

 

(iv)          the insolvency of any Credit Party; or

 

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

 

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

 

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

 

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

 

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

 

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

 

74

 

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

 

12.5         Election of Remedies.  If Agent or
any Lender may, under applicable law, proceed to realize its benefits under any
of the Loan Documents giving Agent or such Lender a Lien upon any Collateral,
whether owned by any Borrower or by any other Person, either by judicial
foreclosure or by non-judicial sale or enforcement, Agent or any Lender may, at
its sole option, determine which of its remedies or rights it may pursue
without affecting any of its rights and remedies under this Section 12.  If, in the exercise of any of its rights and
remedies, Agent or any Lender shall forfeit any of its rights or remedies,
including its right to enter a deficiency judgment against any Borrower or any
other Person, whether because of any applicable laws pertaining to “election of
remedies” or the like, each Borrower hereby consents to such action by Agent or
such Lender and waives any claim based upon such action, even if such action by
Agent or such Lender shall result in a full or partial loss of any rights of
subrogation that each Borrower might otherwise have had but for such action by
Agent or such Lender.  Any election of
remedies that results in the denial or impairment of the right of Agent or any
Lender to seek a deficiency judgment against any Borrower shall not impair any
other Borrower’s obligation to pay the full amount of the Obligations.  In the event Agent or any Lender shall bid at
any foreclosure or trustee’s sale or at any private sale permitted by law or
the Loan Documents, Agent or such Lender may bid all or less than the amount of
the Obligations and the amount of such bid need not be paid by Agent or such
Lender but shall be credited against the Obligations.  The amount of the successful bid at any such
sale, whether Agent, Lender or any other party is the successful bidder, shall
be conclusively deemed to be the fair market value of the Collateral and the
difference between such bid amount and the remaining balance of the Obligations
shall be conclusively deemed to be the amount of the Obligations guaranteed
under this Section 12, notwithstanding that any present or future
law or court decision or ruling may have the effect of reducing the amount of
any deficiency claim to which Agent or any Lender might otherwise be entitled
but for such bidding at any such sale.

 

12.6         Limitation. 
Notwithstanding any provision herein contained to the contrary, each Borrower’s
liability under this Section 12 shall be limited to an amount not
to exceed as of any date of determination the greater of:

 

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

 

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

 

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

 

75

 

12.7         Contribution with Respect to Guaranty Obligations.

 

(a)           To the extent that any Borrower shall make a payment
under this Section 12 of all or any of the Obligations (other than
Loans made to that Borrower for which it is primarily liable) (a “Guarantor
Payment”) that, taking into account all other Guarantor Payments then
previously or concurrently made by any other Borrower, exceeds the amount that
such Borrower would otherwise have paid if each Borrower had paid the aggregate
Obligations satisfied by such Guarantor Payment in the same proportion that
such Borrower’s “Allocable Amount” (as defined below) (as determined
immediately prior to such Guarantor Payment) bore to the aggregate Allocable
Amounts of each of the Borrowers as determined immediately prior to the making
of such Guarantor Payment, then, following indefeasible payment in full in cash
of the Obligations and termination of the Commitments, such Borrower shall be
entitled to receive contribution and indemnification payments from, and be
reimbursed by, each other Borrower for the amount of such excess, pro rata
based upon their respective Allocable Amounts in effect immediately prior to
such Guarantor Payment.

 

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

 

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

 

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

 

(e)           The rights of the indemnifying Borrowers against other
Credit Parties under this Section 12.7 shall be exercisable upon
the full and indefeasible payment of the Obligations and the termination of the
Commitments.

 

12.8         Liability Cumulative.  The liability
of Borrowers under this Section 12 is in addition to and shall be
cumulative with all liabilities of each Borrower to Agent and Lenders under
this Agreement and the other Loan Documents to which such Borrower is a party
or in respect of any Obligations or obligation of the other Borrower, without
any limitation as to amount, unless the instrument or agreement evidencing or
creating such other liability specifically provides to the contrary.

 

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

 

76

 

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

 

[SIGNATURE PAGES FOLLOW]

 

77

 

Execution Copy

 

IN
WITNESS WHEREOF, this Agreement has been duly executed as of the date first
written above.

 

	
   

  	
  BORROWERS

  
	
   

  	
   

  
	
   

  	
  BLOUNT,
  INC., a
  Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Calvin E. Jenness

  
	
   

  	
  Name: Calvin E. Jenness

  
	
   

  	
  Title: Senior Vice
  President & Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GEAR
  PRODUCTS, INC., an
  Oklahoma corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Calvin E.
  Jenness

  
	
   

  	
  Name: Calvin E.
  Jenness

  
	
   

  	
  Title: Vice
  President & Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OMARK
  PROPERTIES, INC., an
  Oregon corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Calvin E. Jenness

  
	
   

  	
  Name: Calvin E. Jenness

  
	
   

  	
  Title: Senior Vice
  President & Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WINDSOR
  FORESTRY TOOLS LLC,
  a Tennessee limited liability company

  
	
   

  	
   

  
	
   

  	
  By: Blount, Inc.,
  its sole member

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Calvin E. Jenness

  
	
   

  	
  Name: Calvin E. Jenness

  
	
   

  	
  Title: Senior Vice
  President & Chief Financial Officer

  

 

S-1

 

	
   

  	
  AGENT
  AND LENDERS:

  
	
   

  	
   

  
	
   

  	
  GENERAL ELECTRIC CAPITAL CORPORATION,
  as Agent and
  Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Judith A. Langan

  
	
   

  	
  Name: Judith A. Langan

  
	
   

  	
  Title: Duly Authorized
  Signatory

  

 

S-2

 

The
following Persons are signatories to this Agreement in their capacity as Credit
Parties and not as Borrowers.

 

	
   

  	
  CREDIT
  PARTIES:

  
	
   

  	
   

  
	
   

  	
  BLOUNT
  INTERNATIONAL, INC., a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Calvin E. Jenness

  
	
   

  	
  Name: Calvin E. Jenness

  
	
   

  	
  Title: Senior Vice
  President & Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BI,
  L.L.C., a
  Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By: Blount, Inc.,
  its managing member

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Calvin E. Jenness

  
	
   

  	
  Name: Calvin E. Jenness

  
	
   

  	
  Title: Senior Vice
  President & Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  4520
  CORP., INC., a
  Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Calvin E. Jenness

  
	
   

  	
  Name: Calvin E. Jenness

  
	
   

  	
  Title: Senior Vice
  President & Chief Financial Officer

  

 

S-3

 

ANNEX A (RECITALS)

TO

CREDIT AGREEMENT

 

DEFINITIONS

 

Capitalized
terms used in the Loan Documents shall have (unless otherwise provided
elsewhere in the Loan Documents) the following respective meanings, and all
references to Sections, Exhibits, Schedules or Annexes in the following
definitions shall refer to Sections, Exhibits, Schedules or Annexes of or to
the Agreement:

 

“Account
Debtor” means any Person who may become obligated to any Credit Party
under, with respect to, or on account of, an Account, Chattel Paper or General
Intangibles (including a payment intangible).

 

“Accounting
Changes” has the meaning ascribed thereto in Annex G.

 

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

 

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

 

“Activation
Event” and “Activation Notice” have the meanings ascribed thereto in
Annex C.

 

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

 

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

 

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

 

A-1

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

A-2

 

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

 

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

 

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

 

“Bankruptcy
Code” means the provisions of Title 11 of the United States Code, 11 U.S.C.
§§101 et  seq., as now and hereafter in effect, any successors to
such statutes and any other applicable insolvency or other similar law of any
jurisdiction including, without limitation, any law of any jurisdiction
permitting a debtor to obtain a stay or a compromise of the claims of its
creditors against it.

 

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

 

“Blount
China” means Blount (Fuzhou) Industries Co. Limited, a wholly-owned
subsidiary of Blount, Inc. organized under the laws of The People’s
Republic of China.

 

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

 

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

 

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

 

“Borrowing
Availability” means as of any date of determination, the Maximum Amount,
less the sum of the aggregate Revolving Loan and Swing Line Loan then
outstanding.

 

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

 

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

 

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

 

A-3

 

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

 

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

 

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

 

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

 

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

 

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

 

“Change
of Control” means any of the following: 
(a) any person or group of persons (within the meaning of the
Securities Exchange Act of 1934), shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934,) of 20% or more
of the issued and outstanding shares of capital Stock of Holdings having the
right to vote for the election of directors of Holdings under ordinary
circumstances; (b) during any period of twelve consecutive calendar
months, individuals who at the beginning of such period constituted the board
of directors of Holdings (together with any new directors whose election by the
board of directors of Holdings or whose nomination for election by the
Stockholders of Holdings was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason other than death or disability to constitute a
majority of the directors then in office; (c) Holdings ceases to own and
control all of the economic and voting rights associated with all of the
outstanding capital Stock of Blount, Inc., (d) except for minority
interests in certain Foreign Subsidiaries as of the Closing Date and except as
specifically permitted under Section 6.8(c), Blount, Inc.
ceases to own and control all of the economic and voting rights associated with
all of the outstanding capital Stock of any of its Subsidiaries, or (e) any
“change of control” as defined in the New Subordinated Debt Documents.

 

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

 

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

 

“Closing
Checklist” means the schedule, including all appendices, exhibits or
schedules thereto, listing certain documents and information to be delivered in
connection with

 

A-4

 

the Agreement, the other Loan Documents and the
transactions contemplated thereunder, substantially in the form attached hereto
as Annex D.

 

“Closing
Date” means December 4, 2009.

 

“Code”
means the Uniform Commercial Code as the same may, from time to time, be
enacted and in effect in the State of New York; provided, that to the
extent that the Code is used to define any term herein or in any Loan Document
and such term is defined differently in different Articles or Divisions of the
Code, the definition of such term contained in Article or Division 9 shall
govern; provided  further, that in the event that, by reason of
mandatory provisions of law, any or all of the attachment, perfection,
publication or priority of, or remedies with respect to, Agent’s or any Lender’s
Lien on any Collateral is governed by the Uniform Commercial Code or foreign
personal property security laws as enacted and in effect in a jurisdiction
other than the State of New York, the term “Code” shall mean the Uniform
Commercial Code or such foreign personal property security laws as enacted and
in effect in such other jurisdiction solely for purposes of the provisions
thereof relating to such attachment, perfection, priority or remedies and for
purposes of definitions related to such provisions; provided  further,
that if such foreign personal property security laws do not contain a
definition that is used in another Loan Document, the definition that is used
in such other Loan Document shall have the meaning given to it in the Code as
though the references to the words “ or such foreign personal property security
laws” in the second proviso of this definition do not exist.

 

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

 

“Collateral
Documents” means the Security Agreement, the Pledge Agreements, the
Guaranties, the Mortgages, the Patent Security Agreements, the Trademark
Security Agreements, the Copyright Security Agreements and all similar
agreements entered into guaranteeing payment of, or granting a Lien upon
property as security for payment of, the Obligations.

 

“Collateral
Reports” means the reports with respect to the Collateral referred to in Annex
F.

 

“Collection
Account” means that certain account of Agent, account number 502-328-54 in
the name of Agent at Bankers Trust Company in New York, New York ABA No. 021
001 033, or such other account as may be specified in writing by Agent as the “Collection
Account.”

 

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

 

A-5

 

incur Letter of Credit Obligations or permit existing
Loans to remain outstanding pursuant to Section 8.2(b), and (c) the
date of indefeasible prepayment in full by Borrowers of the Loans and the
cancellation and return (or stand-by guarantee) of all Letters of Credit or the
cash collateralization of all Letter of Credit Obligations pursuant to Annex
B, and the permanent reduction of all Commitments to zero dollars ($0).

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

A-6

 

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

 

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

 

“Credit
Facility Leverage Ratio” means, with respect to Holdings, on a consolidated
basis, the ratio of (a) the amount of the Loans outstanding (including
Letter of Credit Obligations) as of any date of determination to (b) the
sum of EBITDA for the twelve months ending on that date of determination.

 

“Credit
Parties” means, collectively, Holdings, each Borrower and each domestic
Subsidiary of a Borrower that executes and delivers a Guaranty; and “Credit
Party” means any one of the foregoing Credit Parties.

 

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

 

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

 

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

 

“Design”
means the following now owned or hereafter acquired by any Credit Party:  (a) all industrial designs, design
patents, other designs and intangibles of like nature (whether registered or
unregistered) now owned or existing or hereafter adopted or acquired, all
registrations and recordings thereof and all applications in connection
therewith, including all registrations, recordings and applications in the
Canadian Industrial Designs Office or any similar office in any country and all
records thereof and (b) all reissues, extensions or renewals thereof.

 

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

 

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

 

“Disclosure
Schedules” means the Schedules prepared by Borrowers and denominated as
Disclosure Schedules (1.4) through (6.7) in the Index to the
Agreement.

 

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

 

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

 

A-7

 

“EBITDA”
means, with respect to any Person for any fiscal period, without duplication,
an amount equal to (a) consolidated net income of such Person for such
period determined in accordance with GAAP, minus (b) the sum of (i) income
tax credits, (ii) interest income, (iii) gain from extraordinary
items for such period, (iv) any aggregate net gain (but not any aggregate
net loss) during any four quarter period exceeding $1,000,000 (and only to the
extent that such net gain exceeds $1,000,000, so that the first $1,000,000 of
such net gain is not deducted pursuant to this clause (iv)) in the aggregate
arising from the sale, exchange or other disposition of capital assets by such
Person (including any fixed assets, whether tangible or intangible, all
Inventory sold in conjunction with the disposition of fixed assets and all
securities), and (v) any other non-cash gains that have been added in
determining consolidated net income, in each case to the extent included in the
calculation of consolidated net income of such Person for such period in
accordance with GAAP, but without duplication, plus (c) the sum of (i) any
provision for income taxes, (ii) Interest Expense plus fees associated
with this transaction that are not capitalized, (iii) loss from
extraordinary items for such period, (iv) the amount of non-cash charges
(including depreciation and amortization of tangible and intangible assets) for
such period, (v) amortized debt discount for such period, (vi) the
amount of any deduction to consolidated net income as the result of any grant
to, or exercise by, any members of the management of such Person of any Stock, (vii) cash
expenses incurred during any four quarter period in connection with
discontinued operations up to $3,000,000 in the aggregate, (viii) any
aggregate net loss (but not any aggregate net gain) during any four quarter
period not to exceed $1,000,000 in the aggregate arising from the sale,
exchange or other disposition of capital assets by such Person (including any
fixed assets, whether tangible or intangible, all Inventory sold in conjunction
with the disposition of fixed assets and all securities), (ix) expenses
incurred in connection with the consolidation of the Credit Parties’ and their
Subsidiaries’ warehouses and the curtailment of Credit Parties’ logistics
arrangements in an aggregate amount not to exceed $4,000,000 during the term of
this Agreement,  (x) any non-cash
charges not to exceed $12,500,000 in the aggregate accrued in connection with
the acceleration of scheduled amortization with respect to the liabilities of
one or more of Borrowers’ benefit plans due to the alteration of any such
benefit plan, and any cash charges associated with the communication of such
alteration or the transition of any defined benefit plan in an amount not to
exceed $500,000 in the aggregate incurred in connection therewith, in each case
to the extent included in the calculation of consolidated net income of such
Person for such period in accordance with GAAP, but without duplication, (xi)
restructuring expenses and related charges incurred during the Fiscal Quarters
ended on or prior to December 31, 2008 in connection with the Forestry
Division sale and related consolidation of corporate and divisional
infrastructure in an amount not to exceed $5,000,000, (xii) cash restructuring
charges paid during the fiscal year ending December 31, 2009 in an
aggregate amount not to exceed $3,500,000 and (xiii) cash expenses incurred in
connection with the transition of such Person’s chief executive officer or
chief executive officer designate incurred between January 1, 2009
throughout the term of this Agreement in an aggregate amount not to exceed
$3,000,000.  For purposes of this
definition, the following items shall be excluded in determining consolidated
net income of a Person: (1) the income (or deficit) of any other Person
accrued prior to the date it became a Subsidiary of, or was merged or
consolidated into or amalgamated with, such Person or any of such Person’s
Subsidiaries; (2) the income (or deficit) of any other Person (other than
a Subsidiary) in which such Person has an ownership interest, except to the
extent any such income has actually been received by such Person in the form of
cash dividends or distributions; (3) the undistributed 

 

A-8

 

earnings of any Subsidiary of such Person to the
extent that the declaration or payment of dividends or similar distributions by
such Subsidiary is not at the time permitted by the terms of any contractual
obligation or requirement of law applicable to such Subsidiary; (4) any
restoration to income of any contingency reserve, except to the extent that
provision for such reserve was made out of income accrued during such period; (5) any
write-up of any asset; (6) any net gain from the collection of the
proceeds of life insurance policies; (7) any net gain arising from the
acquisition of any securities, or the extinguishment, under GAAP, of any
Indebtedness, of such Person, (8) in the case of a successor to such
Person by consolidation or merger or as a transferee of its assets, any
earnings of such successor prior to such consolidation, merger or transfer of
assets, and (9) any deferred credit representing the excess of equity in
any Subsidiary of such Person at the date of acquisition of such Subsidiary
over the cost to such Person of the investment in such Subsidiary.

 

“EMU
Legislation” means the legislative measures of the European Council for the
introduction of, changeover to or operation of a single or unified European
currency.

 

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

 

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

 

A-9

 

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

 

“Equipment”
means all “equipment,” as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party, wherever located and, in any event,
including all such Credit Party’s machinery and equipment, including processing
equipment, conveyors, machine tools, data processing and computer equipment,
including embedded Software and peripheral equipment and all engineering,
processing and manufacturing equipment, office machinery, furniture, materials
handling equipment, tools, attachments, accessories, automotive equipment,
trailers, trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stock
and other equipment of every kind and nature, trade fixtures and fixtures not
forming a part of real property, together with all additions and accessions
thereto, replacements therefor, all parts therefor, all substitutes for any of
the foregoing, fuel therefor, and all manuals, drawings, instructions,
warranties and rights with respect thereto, and all products and proceeds
thereof and condemnation awards and insurance proceeds with respect thereto.

 

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

 

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

 

“ERISA
Event” means, with respect to any Credit Party or any ERISA Affiliate, (a) any
event described in Section 4043(c) of ERISA with respect to a Title
IV Plan (other than an event for which the thirty (30) day notice period is
waived); (b) the withdrawal of any Credit Party or ERISA Affiliate from a
Title IV Plan subject to Section 4063 of ERISA during a plan year in which
it was a substantial employer, as defined in Section 4001(a)(2) of
ERISA; (c) the complete or partial withdrawal of any Credit Party or any
ERISA Affiliate from any Multiemployer Plan; (d) the filing of a notice of
intent to terminate a Title IV Plan or the treatment of a plan amendment as a
termination under Section 4041 of ERISA; (e) the institution of
proceedings to terminate a Title IV Plan or Multiemployer Plan by the PBGC; (f) the
failure by any Credit Party or ERISA Affiliate to make when due required
contributions to a Multiemployer Plan or Title IV Plan unless such failure is
cured within thirty (30) days; (g) the termination of a Multiemployer Plan
under Section 4041A of ERISA or the reorganization or insolvency of a
Multiemployer Plan under Section 4241 or 4245 of ERISA; or (h) the
loss of a Qualified Plan’s qualification or tax exempt status; or (i) the
termination of a Plan described in Section 4064 of ERISA.

 

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

 

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

 

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

 

A-10

 

“Excess
Cash Flow” means, without duplication, with respect to any Fiscal Year of
Holdings and its Subsidiaries, consolidated net income plus (a) depreciation,
amortization and Interest Expense to the extent deducted in determining
consolidated net income, minus (b) Capital Expenditures during such
Fiscal Year (excluding the financed portion thereof and excluding any Capital
Expenditures in such Fiscal Year to the extent in excess of the amount
permitted to be made in such Fiscal Year pursuant to clause (a) of Annex
G), minus (c) Interest Expense paid or accrued (excluding any
original issue discount, interest paid in kind or amortized debt discount, to
the extent included in determining Interest Expense) and scheduled  and voluntary principal payments paid or
payable in respect of Funded Debt, plus or minus (as the case may
be), (d) extraordinary gains or losses which are cash items not included
in the calculation of net income, minus (e) mandatory prepayments
paid in cash pursuant to Section 1.3 other than mandatory
prepayments made pursuant to Sections 1.3(b)(i), 1.3(b)(ii), 1.3(b)(iv) or
1.3(d), plus (f) taxes deducted in determining consolidated net
income to the extent not paid for in cash.

 

“Excluded
Proceeds” means:

 

(a)           the proceeds of asset dispositions
under Section 6.8(a),

 

(b)           the proceeds of asset dispositions
under Sections 6.8(b) and (d) in an aggregate amount
not to exceed $1,000,000 per year so long as no Default or Event of Default has
occurred and is continuing, and

 

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

 

“Excluded
Stock Issuances” means (a) issuances of Stock by Holdings in
connection with the exercise of options by any current or former employee or
director, (b) issuances of Stock by Holdings to current or former
employees in the form of restricted stock awards in the ordinary course of
business, (c) issuances of Stock by Holdings to sellers in connection
with, and as the purchase price for, Permitted Acquisitions and (d) issuances
of Stock, the net proceeds of which are used within 180 days of the issuance
thereof in connection with, and as the purchase price for, Permitted
Acquisitions or other permitted investments, so long as no later than the
Business Day following receipt of the proceeds thereof Borrower Representative
delivers to Agent a certificate (a “Notice of Stock Issuance for Permitted
Acquisition”) confirming that (A) the Credit Parties intend to invest
such net proceeds in a Permitted Acquisition or other permitted investment
within 180 days (the “Investment Period”) of the issuance of such Stock
and (B) such net proceeds have been (x) deposited into an account
that is subject to a Control Letter or a control agreement meeting the
requirements of Annex C, which net proceeds when so deposited (1) shall
constitute Collateral, securing the payment of the Obligations then
outstanding, (2) may be withdrawn by the applicable Credit Party solely to
make a Permitted Acquisition or other permitted investment within 180 days of
the date of the issuance of such Stock or (y) used to repay the Revolving
Loan (in whole or in part) on a temporary basis and if so used to repay the
Revolving Loan and notwithstanding anything herein 

 

A-11

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Federal Funds Rate” means, for any day, a
floating rate equal to the weighted average of the rates on overnight Federal
funds transactions among members of the Federal Reserve System, as determined
by Agent in its sole discretion, which determination shall be final, binding
and conclusive (absent manifest error).

 

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

 

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

 

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

 

A-12

 

“Financial
Statements” means the consolidated and, as applicable, separate income
statements, statements of cash flows and balance sheets of Holdings and its
Subsidiaries delivered in accordance with Section 3.4 and Annex
E.

 

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

 

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

 

“Fiscal
Year” means any of the annual accounting periods of Credit Parties ending
on December 31 of each year.

 

“Fixed Charge Coverage Ratio” means, with
respect to any Person for any fiscal period, the ratio of EBITDA to Fixed
Charges.

 

“Fixed
Charges” means, with respect to any Person for any fiscal period, (a) the
aggregate of all Interest Expense paid during such period (excluding all
non-cash Interest Expense), plus (b) scheduled payments of principal with
respect to Indebtedness during such period, plus (c) Capital Expenditures
during such period, plus (d) the greater of (i) cash payments of
income taxes and capital taxes (net of tax refunds received during such
period), and (ii) zero, plus (e) Restricted Payments made pursuant to
Section 6.14(f).

 

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

 

“Foreign
Lender” has the meaning ascribed to it in Section 1.15 of the
Agreement.

 

“Foreign
Pledge Agreements” means, collectively, (i) that certain Commercial
Pledge Agreement over Shares executed by Blount, Inc. in favor of Agent,
on behalf of itself and Lenders, pledging 65% of all of the Stock of Blount
Europe, S.A., a company formed under the laws of Belgium, (ii) that
certain Quota Pledge Agreement executed by Blount, Inc. in favor of Agent,
on behalf of itself and Lenders, pledging 65% of all of the Stock of Blount
Industrial, Ltda., a company formed under the laws of Brazil, (iii) that
certain Share Pledge Agreement executed by Blount, Inc. in favor of Agent,
on behalf of itself and Lenders, pledging 65% of all of the Stock of Svenska
Blount Aktiebolag, a company formed under the laws of Sweden, (iv) that
certain Agreement on the Pledge of Shares executed by Blount, Inc. in
favor of Agent, on behalf of itself and Lenders, pledging 65% of all of the
Stock of Blount GmbH, a company formed under the laws of Germany, and (v) that
certain Pledge Over Interests executed by Blount, Inc. in favor of Agent,
on behalf of itself and Lenders, pledging 65% of all of the Stock of Blount
China.

 

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

 

A-13

 

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

 

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

 

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

 

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

 

“GE
Capital” means General Electric Capital Corporation, a Delaware
corporation.

 

“GE
Capital Fee Letter” has the meaning ascribed to it in Section 1.9(a) of
the Agreement.

 

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

 

A-14

 

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

 

“Governmental
Authority” means any nation or government, any state or other political
subdivision thereof, and any agency, department or other entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.

 

“Guaranteed
Indebtedness” means as to any Person, any obligation of such Person
guaranteeing, providing comfort or otherwise supporting any Indebtedness,
lease, dividend, or other obligation (“primary obligation”) of any other
Person (the “primary obligor”) in any manner, including any obligation
or arrangement of such Person to (a) purchase or repurchase any such
primary obligation, (b) advance or supply funds (i) for the purchase
or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency or any balance sheet condition of the primary obligor, (c) purchase
property, securities or services primarily for the purpose of assuring the
owner of any such primary obligation of the ability of the primary obligor to
make payment of such primary obligation, (d) protect the beneficiary of
such arrangement from loss (other than product warranties given in the ordinary
course of business) or (e) indemnify the owner of such primary obligation
against loss in respect thereof except for such indemnifications created in the
ordinary course of business pursuant to transactions that are not otherwise
prohibited hereunder or under the other Loan Documents.  The amount of any Guaranteed Indebtedness at
any time shall be deemed to be an amount equal to the lesser at such time of (x) the
stated or determinable amount of the primary obligation in respect of which
such Guaranteed Indebtedness is incurred and (y) the maximum amount for
which such Person may be liable pursuant to the terms of the instrument
embodying such Guaranteed Indebtedness, or, if not stated or determinable, the
maximum reasonably anticipated liability (assuming full performance) in respect
thereof.

 

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

 

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

 

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

 

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

 

A-15

 

or other similar term or phrase under any
Environmental Laws, or (b) petroleum or any fraction or by-product
thereof, asbestos, polychlorinated biphenyls (PCB’s), or any radioactive
substance.

 

“Hedge
Agreement” shall mean any and all transactions, agreements or documents now
existing or hereafter entered into between or among any Credit Party, on the
one hand, and a Lender (or an Affiliate of a Lender), on the other hand, which
provides for an interest rate, credit or equity swap, cap, floor, collar,
forward foreign exchange transaction, currency swap, cross currency rate swap,
currency option, or any combination of, or option with respect to, these or
similar transactions, for the purpose of hedging such Credit Party’s exposure
to fluctuations in interest or exchange rates, loan, credit exchange, security
or currency valuations.

 

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

 

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

 

“Indebtedness”
means, with respect to any Person, without duplication, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property payment for which is deferred 6 months or more, but excluding
obligations to trade creditors incurred in the ordinary course of business, (b) all
reimbursement and other obligations with respect to letters of credit, bankers’
acceptances and surety bonds, whether or not matured, (c) all obligations
evidenced by notes, bonds, debentures or similar instruments, (d) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (e) all
Capital Lease Obligations and the present value (discounted at the Index Rate
as in effect on the Closing Date) of future rental payments under all synthetic
leases, (f) all obligations of such Person under commodity purchase or
option agreements or other commodity price hedging arrangements, in each case
whether contingent or matured, (g) all obligations of such Person under
any foreign exchange contract, currency swap agreement, interest rate swap, cap
or collar agreement or other similar agreement or arrangement designed to alter
the risks of that Person arising from fluctuations in currency values or
interest rates, in each case whether contingent or matured, (h) all
Indebtedness referred to above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property or other assets (including accounts and contract
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness, and (i) the Obligations.

 

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

 

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

 

“Index
Rate” means:

 

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

 

A-16

 

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

 

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

 

(c) with
respect to any Existing Term Loan bearing interest at the Index Rate, for any
day, a floating rate equal to the higher of (i) the rate publicly quoted
from time to time by The Wall Street Journal as the “base rate on corporate
loans posted by at least 75.00% of the nation’s 30 largest banks” (or, if The
Wall Street Journal ceases quoting a base rate of the type described, the
highest per annum rate of interest published by the Federal Reserve Board in
Federal Reserve statistical release H.15 (519) entitled “Selected Interest
Rates” as the Bank prime loan rate or its equivalent), and (ii) the
Federal Funds Rate plus 50 basis points per annum.

 

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

 

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

 

“Insolvency
Laws” means any of the Bankruptcy Code, as now and hereafter in effect, any
successors to such statutes and any other applicable insolvency or other
similar law of any jurisdiction including, without limitation, any law of any
jurisdiction permitting a debtor to obtain a stay or a compromise of the claims
of its creditors against it.

 

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

 

A-17

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“IRS”
means the Internal Revenue Service.

 

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

 

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

 

A-18

 

“Lender-Related Distress
Event” means,
with respect to any Lender or any Person that directly or indirectly controls
such Lender (each a “Distressed Person”), a voluntary or involuntary
case with respect to such Distressed Person under the Bankruptcy Code or any
similar bankruptcy laws of its jurisdiction of formation, or a custodian,
conservator, receiver or similar official is appointed for such Distressed
Person or any substantial part of such Distressed Person’s assets, or such
Distressed Person or any Person that directly or indirectly controls such
Distressed Person is subject to a forced liquidation, merger, sale or other
change of majority control supported in whole or in part by guaranties or other
support (including, without limitation, the nationalization or assumption of
majority ownership or operating control by) the U.S. government or other
Governmental Authority, or such Distressed Person makes a general assignment
for the benefit of creditors or is otherwise adjudicated as, or determined by any
Governmental Authority having regulatory authority over such Distressed Person
or its assets to be, insolvent, bankrupt, or deficient in meeting any capital
adequacy or liquidity standard of any such Governmental Authority.  For purposes of this definition, control of a
Person shall have the same meaning as in the second sentence of the definition
of “Affiliate”.

 

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

 

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

 

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

 

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

 

“Letters
of Credit” means documentary or standby letters of credit issued for the
account of any Borrower by any L/C Issuer, and bankers’ acceptances issued by
any Borrower, for which Agent and Lenders have incurred Letter of Credit
Obligations.  The term does not include a
Swap Related L/C.

 

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

 

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

 

A-19

 

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

 

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

 

(a)           if any LIBOR Period would otherwise
end on a day that is not a LIBOR Business Day, such LIBOR Period shall be
extended to the next succeeding LIBOR Business Day unless the result of such
extension would be to carry such LIBOR Period into another calendar month in
which event such LIBOR Period shall end on the immediately preceding LIBOR
Business Day;

 

(b)           any LIBOR Period that would otherwise
extend beyond the Commitment Termination Date shall end 2 LIBOR Business Days
prior to such date;

 

(c)           any LIBOR Period that begins on the
last LIBOR Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such LIBOR
Period) shall end on the last LIBOR Business Day of a calendar month;

 

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

 

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

 

“LIBOR
Rate” means for each LIBOR Period, a rate of interest determined by Agent
equal to:

 

(a) with
respect to each Revolving Loan bearing interest at the LIBOR Rate, for each
LIBOR Period, a rate of interest determined by Agent equal to the greater of
(i)(A) the offered rate for deposits of Dollars for a three-month LIBOR
Period that appears on Reuters Screen LIBOR01 Page as of 11:00 A.M.
(London, England time) two (2) Business Days prior to the first day in
each LIBOR Period; divided by (B) a number equal to 1.0 minus the
aggregate (but without duplication) of the rates (expressed as a decimal
fraction) of reserve requirements in effect on the day that is 2 LIBOR Business
Days prior to the beginning of such LIBOR Period (including basic,
supplemental, marginal and emergency reserves under any regulations of the
Federal Reserve Board or other Governmental Authority having jurisdiction with
respect thereto, as now and from time to time in effect) for Eurocurrency
funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of
the Federal Reserve Board that are required to be maintained by a member bank
of the Federal Reserve System; and (ii) 2.50%.  If no such offered rate exists with respect to
any Revolving Loan,
such rate shall be the rate of interest per annum, as determined by Agent and
Borrower Representative (rounded upwards, if necessary, to the nearest 1/100 of
1.00%) at which deposits of Dollars in immediately available funds are offered
at 11:00 A.M. (London, England time) two (2) Business Days prior to
the first day in the 

 

A-20

 

applicable LIBOR Period by major financial
institutions reasonably satisfactory to Agent in the London interbank market
for the applicable LIBOR Period and for an amount equal or comparable to the
principal amount of the Revolving Loans to be borrowed, converted or continued
as a LIBOR Loan on such date of determination;

 

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

 

(c) 
with respect to each term loan comprising the Existing Term Loan bearing
interest at the LIBOR Rate, for each LIBOR Period, a rate of interest
determined by Agent equal to: (i) the offered rate for deposits in US
Dollars for the applicable LIBOR Period that appears on Telerate Page 3750
as of 11:00 a.m. (London time), on the second full LIBOR Business Day next
preceding the first day of such LIBOR Period (unless such date is not a
Business Day, in which event the next succeeding Business Day will be used);
divided by (ii) a number equal to 1.0 minus the aggregate (but
without duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day that is 2 LIBOR Business Days prior to the
beginning of such LIBOR Period (including basic, supplemental, marginal and
emergency reserves under any regulations of the Federal Reserve Board or other
Governmental Authority having jurisdiction with respect thereto, as now and from
time to time in effect) for Eurocurrency funding (currently referred to as “Eurocurrency
Liabilities” in Regulation D of the Federal Reserve Board that are required to
be maintained by a member bank of the Federal Reserve System.  With respect to the loans comprising the
Existing Term Loan, if such interest rates shall cease to be available from
Reuters, the LIBOR Rate shall be determined from such financial reporting
service or other information as shall be mutually acceptable to Agent and
Borrower Representative.

 

A-21

 

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

 

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

 

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

 

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

 

“Loan
Documents” means the Agreement, any Notes, the Collateral Documents, the
Master Standby Agreement, the Master Documentary Agreement, and all other
agreements, instruments, documents and certificates identified in the Closing
Checklist executed and delivered to, or in favor of, Agent or any Lenders and
including all other pledges, powers of attorney, consents, assignments,
contracts, notices, and all other written matter whether heretofore, now or
hereafter executed by or on behalf of any Credit Party, or any employee of any
Credit Party, and delivered to 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.  Notwithstanding the
foregoing, none of the Hedge Agreements shall constitute Loan Documents.

 

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

 

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

 

“Margin
Stock” has the meaning ascribed to in Section 3.10.

 

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

 

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

 

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

 

A-22

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“New
Subordinated Debt” means the Indebtedness evidenced by the New Subordinated
Debt Documents.

 

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

 

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

 

“New
Subordinated Notes” means those certain 8.875% Senior Subordinated Notes
due 2012 issued by Blount, Inc. in an aggregate original principal amount
of $175,000,000.

 

“Non-Funding
Lender” means any Lender (a) that has failed to fund any payments
required to be made by it  within three (3) Business
Days after any such payment is due, (b) that has given verbal or written
notice to a Borrower, Agent or any Lender or has otherwise publicly announced
that such Lender believes it will fail to fund all payments required to be made
by it or fund all purchases of participations required to be funded by it under
this Agreement and the other Loan Documents as of any Settlement Date, (c) as
to which Agent or any L/C Issuer has a good faith belief that such Lender has
defaulted in fulfilling its obligations (as a lender, agent or letter of credit
issuer) under one or more other syndicated credit facilities or (d) with
respect to which one or more Lender-Related Distress Events has occurred with
respect to such Person or any Person that directly or indirectly controls such
Lender and Agent has 

 

A-23

 

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

 

“Notes”
means, collectively, the Revolving Notes, the Swing Line Notes and the Existing
Term Loan Notes and the Extending Term Loan Notes; and “Note” means any
one of the foregoing Notes.

 

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

 

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

 

“Obligations” means all loans, advances, debts, liabilities and obligations for the
performance of covenants, tasks or duties or for payment of monetary amounts
(whether or not such performance is then required or contingent, or such amounts
are liquidated or determinable) owing by any Credit Party to Agent or any
Lender, and all covenants and duties regarding such amounts, of any kind or
nature, present or future, whether or not evidenced by any note, agreement,
letter of credit agreement or other instrument, arising under the Agreement or
any of the other Loan Documents.  This
term includes all principal, interest, Fees, expenses, attorneys’ fees and any
other sum chargeable to any Credit Party under the Agreement or any of the
other Loan Documents (including all interest, fees and expenses that
accrue after the commencement of any case or proceeding by or against any
Credit Party in bankruptcy or any similar proceeding, whether or not allowed in
such case or proceeding) and all Swap
Related Reimbursement Obligations and all
debts, liabilities and obligations of any kind or nature, present or future, of
any Credit Party to any Lender (or any Affiliate of any Lender) arising in
connection with any Hedge Agreement and if any Person ceases to be a Lender
hereunder, any debts, liabilities and obligations of any kind or nature,
present or future, of any Credit Party to such Person (or an Affiliate of such
Person) arising in connection with any Hedge Agreement entered into at a time
when such Person was a Lender hereunder.

 

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

 

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

 

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

 

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

 

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

 

A-24

 

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

 

“PBGC”
means the Pension Benefit Guaranty Corporation.

 

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

 

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

 

“Permitted
Encumbrances” means the following encumbrances: (a) Liens for taxes or
assessments or other governmental Charges not yet due and payable or which are
being contested in accordance with Section 5.2(b); (b) pledges
or deposits of money securing statutory obligations under workmen’s
compensation, unemployment insurance, social security or public liability laws
or similar legislation (excluding Liens under ERISA); (c) pledges or
deposits of money securing bids, tenders, contracts (other than contracts for
the payment of money) or leases to which any Credit Party is a party as lessee
made in the ordinary course of business; (d) inchoate and unperfected
workers’, mechanics’ or similar liens arising in the ordinary course of
business, so long as such Liens attach only to Equipment, Fixtures and/or Real
Estate; (e) carriers’, warehousemen’s, suppliers’ or other similar
possessory liens arising in the ordinary course of business and securing
liabilities in an outstanding aggregate amount not in excess of $100,000 at any
time; (f) deposits securing, or in lieu of, surety, appeal or customs
bonds in proceedings to which any Credit Party is a party; (g) any
attachment or judgment lien not constituting an Event of Default under Section 8.1(j);
(h) zoning restrictions, easements, licenses, or other restrictions on the
use of any Real Estate or other minor irregularities in title (including
leasehold title) thereto, so long as the same do not materially impair the use,
value, or marketability of such Real Estate; (i) presently existing or
hereafter created Liens in favor of Agent, on behalf of itself and Lenders; (j) Liens
expressly permitted under clauses (b), (c) and (d) of
Section 6.7 of the Agreement; (k) [Reserved]; (l) Liens
or other encumbrances for which exceptions are included in the title insurance
policies accepted by Agent involving the Mortgages; (m) any interest or
title of a lessor under any lease entered into by any Credit Party or
Subsidiary of a Credit Party in the ordinary course of business and covering
only the assets so leased; (n) Liens arising from precautionary Uniform
Commercial Code financing statement filings with respect to operating leases or
consignment arrangements entered into by any Credit Party or any Subsidiary of
any Credit Party in the ordinary course of business and only covering the
assets so leased or consigned; (o) subject to the requirements of Annex
C, Liens in favor of any banking institution arising by operation of law encumbering
deposits (including the right of set-off) held by such banking institutions
incurred in the ordinary course of business and which are within the general
parameters customary in the banking industry; (p) leases and subleases of
Real Estate not materially interfering with the ordinary conduct of business of
the applicable Credit Parties and otherwise consented to by Agent which consent
will not be unreasonably withheld; and (q) Liens under Section 412 of
the IRC or Section 302 of ERISA so long as such Liens secure liabilities
not in excess of $250,000 and so long as the PBGC has not taken any affirmative
action to perfect such Liens.

 

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

 

A-25

 

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

 

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

 

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

 

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

 

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

 

“Pro
Forma” means the unaudited consolidated balance sheet of Holdings and its
Subsidiaries as of September 30, 2009 after giving pro  forma
effect to the Related Transactions.

 

“Pro
Rata Share” means with respect to all matters relating to any Lender, (a) with
respect to the Revolving Loan, the percentage obtained by dividing (i) the
Revolving Loan Commitment of that Lender by (ii) the aggregate Revolving
Loan Commitments of all Lenders, as any such percentages may be adjusted by
assignments permitted pursuant to Section 9.1, (b) with
respect to the Term Loan B, the percentage obtained by dividing (i) the Term
Loan B Commitment of that Lender by (ii) the aggregate Term Loan B
Commitments of all Lenders, as any such percentages may be adjusted by
assignments permitted pursuant to Section 9.1, (c) with
respect to all Loans prior to the Commitment Termination Date, the percentage
obtained by dividing (i) the aggregate Commitments of that Lender by (ii) the
aggregate Commitments of all Lenders, and (d) with respect to all Loans on
and after the Commitment Termination Date, the percentage obtained by dividing (i) the
aggregate outstanding principal balance of the Loans held by that Lender, by (ii) the
outstanding principal balance of the Loans held by all Lenders.

 

“Proceeds”
means “proceeds,” as such term is defined in the Code, including (a) any
and all proceeds of any insurance, indemnity, warranty or guaranty payable to
any Credit Party from time to time with respect to any of the Collateral, (b) any
and all payments (in any form whatsoever) made or due and payable to any Credit
Party from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
Governmental Authority (or any Person acting under color of governmental
authority), (c) any claim of any Credit Party against third parties (i) for
past, present or future infringement of any Patent or Patent License, or  (ii) for past, present or future
infringement or dilution of any Copyright, Copyright License, Designs, Design
Licenses, Trademark or Trademark License, or for injury to the goodwill
associated with any Trademark or Trademark License, (d) any recoveries by
any Credit Party against third parties with respect to any litigation or
dispute concerning any of the Collateral including claims arising out of the
loss or nonconformity of, interference with the use of, defects in, or
infringement of rights in, or damage to, Collateral, (e) all amounts
collected on, or distributed on account of, other Collateral, 

 

A-26

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Requisite
Revolving Lenders” means Lenders having (a) 50.1% or more of the
Revolving Loan Commitments, or (b) if the Revolving Loan Commitments have
been 

 

A-27

 

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

 

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

 

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

 

“Revolving
Lender” means, as of any date of determination, a Lender having a Revolving
Loan Commitment.

 

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

 

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

 

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

 

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

 

A-28

 

 

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

 

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

 

“Solvent”
means, with respect to any Person organized under the laws of the United States
or any state thereof, on a particular date, that on such date (a) the fair
value of the property of such Person is greater than the total amount of
liabilities, including contingent liabilities, of such Person; (b) the
present fair salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on
its debts as they become absolute and matured; (c) such Person does not
intend to, and does not believe that it will, incur debts or liabilities beyond
such Person’s ability to pay as such debts and liabilities mature; and (d) such
Person is not engaged in a business or transaction, and is not about to engage
in a business or transaction, for which such Person’s property would constitute
an unreasonably small capital. The amount of contingent liabilities (such as
litigation, guaranties and pension plan liabilities) at any time shall be
computed as the amount that, in light of all the facts and circumstances
existing at the time, represents the amount that can be reasonably be expected
to become an actual or matured liability.

 

“SPV” means any
special purpose funding vehicle identified as such in a writing by any Lender
to Agent.

 

“Sterling” means
the lawful money of the United Kingdom.

 

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

 

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

 

“Subordinated
Debt” means the Indebtedness evidenced by the New Subordinated Debt
Documents and any other Indebtedness of any Credit Party subordinated to the
Obligations in a manner and form satisfactory to Agent and Lenders in their
sole discretion, as to right and time of payment and as to any other rights and
remedies thereunder.

 

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

 

A-29

 

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

 

“Supporting
Obligations” means all “supporting obligations” as such term is defined in
the Code, including letters of credit and guaranties issued in support of
Accounts, Chattel Paper, Documents, General Intangibles, Instruments, or
Investment Property.

 

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

 

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

 

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

 

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

 

“Swing
Line Commitment” means, as to the Swing Line Lender, the commitment of the
Swing Line Lender to make Swing Line Advances as set forth on Annex J
to the Agreement, which commitment constitutes a subfacility of the Revolving
Loan Commitment of the Swing Line Lender.

 

“Swing
Line Lender” means GE Capital.

 

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

 

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

 

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

 

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

 

A-30

 

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

 

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

 

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

 

“Termination
Date” means the date on which (a) the Loans have been indefeasibly
repaid in full, (b) except as set forth in clause (c) below, all
other Obligations under the Agreement and the other Loan Documents have been
completely discharged (other than contingent indemnification obligations so
long as no suits, actions, proceedings or claims are pending or threatened
against any Indemnified Person asserting any damages, losses and liabilities
that are Indemnified Liabilities), (c) all Letter of Credit Obligations
have been cash collateralized, cancelled or backed by standby letters of credit
in accordance with Annex B, and (d) none of Borrowers shall have
any further right to borrow any monies under the Agreement.

 

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

 

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

 

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

 

“Trademarks”
means all of the following now owned or hereafter existing or adopted or
acquired by any Credit Party: (a) all trademarks, trade names, corporate
names, business names, trade styles, service marks, logos, other source or
business identifiers, prints and labels on which any of the foregoing have
appeared or appear, designs and general intangibles of like nature (whether
registered or unregistered), all registrations and recordings thereof, and all
applications in connection therewith, including registrations, recordings and
applications in the 

 

A-31

 

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

 

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

 

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

 

Rules of
construction with respect to accounting terms used in the Agreement or the
other Loan Documents shall be as set forth in Annex G.  All other undefined terms contained in any of
the Loan Documents shall, unless the context indicates otherwise, have the
meanings provided for by the Code to the extent the same are used or defined
therein; in the event that any term is defined differently in different
Articles or Divisions of the Code, the definition contained in Article or
Division 9 shall control.  Unless
otherwise specified, references in the Agreement or any of the Appendices to a
Section, subsection or clause refer to such Section, subsection or clause as
contained in the Agreement.  The words “herein,”
“hereof” and “hereunder” and other words of similar import refer to the
Agreement as a whole, including all Annexes, Exhibits and Schedules, as the
same may from time to time be amended, restated, modified or supplemented, and
not to any particular section, subsection or clause contained in the Agreement
or any such Annex, Exhibit or Schedule. 
An Event of Default shall “exist”, “continue” or be “continuing” until
such Event of Default is waived in writing in accordance with Section 11.2
of the Agreement.

 

Wherever
from the context it appears appropriate, each term stated in either the
singular or plural shall include the singular and the plural, and pronouns
stated in the masculine, feminine or neuter gender shall include the masculine,
feminine and neuter genders.  The words “including”,
“includes” and “include” shall be deemed to be followed by the words “without
limitation”; the word “or” is not exclusive; references to Persons include
their respective successors and assigns (to the extent and only to the extent
permitted by the Loan Documents) or, in the case of governmental Persons,
Persons succeeding to the relevant functions of such Persons; and all
references to statutes and related regulations shall include any amendments of
the same and any successor statutes and regulations.  Whenever any provision in any Loan Document
refers to the knowledge (or an analogous phrase) of any Credit Party, such
words are intended to signify that such Credit Party has actual knowledge or
awareness of a particular fact 

 

A-32

 

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

 

A-33

 

ANNEX E (SECTION 4.1(A))

TO

CREDIT AGREEMENT

 

FINANCIAL STATEMENTS AND
PROJECTIONS — REPORTING

 

Borrowers
shall deliver or cause to be delivered to Agent or to Agent and Lenders, as
indicated, the following:

 

(a)           Monthly Financials.  To Agent and Lenders, within 30 days after
the end of each Fiscal Month, financial information regarding Holdings and its
Subsidiaries, certified by the Chief Financial Officer of Holdings, consisting
of consolidated (i) unaudited balance sheets as of the close of such
Fiscal Month and the related statements of income and cash flows for that
portion of the Fiscal Year ending as of the close of such Fiscal Month; (ii) unaudited
statements of income and cash flows for such Fiscal Month, setting forth in
comparative form the figures for the corresponding period in the prior year and
the figures contained in the Projections for such Fiscal Year, all prepared in
accordance with GAAP (subject to normal year-end adjustments); and (iii) a
summary of the outstanding balance of all Intercompany Notes as of the last day
of that Fiscal Month; provided, however, Holdings and its
Subsidiaries shall not be required to deliver such monthly financial reports
unless EBITDA for the 4 Fiscal Quarter period ended as of the last Fiscal
Quarter for which financial statements have been delivered pursuant to clause (b) of
this Annex E is less than $75,000,000. 
If required, such financial information shall be accompanied by the
certification of the Chief Financial Officer of Holdings that (i) such
financial information presents fairly in accordance with GAAP (subject to
normal year-end adjustments) the financial position and results of operations
of Holdings and its Subsidiaries, on a consolidated basis as at the end of such
Fiscal Month and for that portion of the Fiscal Year then ended and (ii) any
other information presented is true, correct and complete in all material
respects and that there was no Default or Event of Default in existence as of
such time or, if a Default or Event of Default has occurred and is continuing,
describing the nature thereof and all efforts undertaken to cure such Default
or Event of Default.  In addition, such
financial information shall be accompanied by the information and reports
required by clause (a) of Annex F.

 

(b)           Quarterly Financials.  To Agent and Lenders, within 45 days after
the end of each Fiscal Quarter, consolidated financial information regarding
Holdings and its Subsidiaries, certified by the Chief Financial Officer of
Holdings, including (i) unaudited balance sheets as of the close of such
Fiscal Quarter and the related statements of income and cash flow for that
portion of the Fiscal Year ending as of the close of such Fiscal Quarter and (ii) unaudited
statements of income and cash flows for such Fiscal Quarter, in each case
setting forth in comparative form the figures for the corresponding period in
the prior year and the figures contained in the Projections for such Fiscal
Year, all prepared in accordance with GAAP (subject to normal year-end
adjustments).  Such financial information
shall be accompanied by (A) a statement in reasonable detail (each, a “Compliance
Certificate”) showing the calculations used in determining compliance with
each of the Financial Covenants that is tested on a quarterly basis and (B) the
certification of the Chief Financial Officer of Holdings that (i) such
financial information presents fairly in accordance with GAAP (subject to
normal year-end adjustments) the financial position, results of operations and
statements of cash flows of Holdings and its 

 

E-1

 

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

 

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

 

(d)           Annual Audited Financials. To
Agent and Lenders, within 90 days after the end of each Fiscal Year, audited
Financial Statements for Holdings and its Subsidiaries on a consolidated basis,
consisting of balance sheets and statements of income and retained earnings and
cash flows, setting forth in comparative form in each case the figures for the
previous Fiscal Year, which Financial Statements shall be prepared in
accordance with GAAP and certified without qualification, by an independent
certified public accounting firm of national standing or otherwise acceptable
to Agent.  Such Financial Statements shall
be accompanied by (i) a statement prepared in reasonable detail showing
the calculations used in determining compliance with each of the Financial
Covenants, (ii) a report from such accounting firm to the effect that, in
connection with their audit examination, nothing has come to their attention to
cause them to believe that a Default or Event of Default has occurred (or
specifying those Defaults and Events of Default that they became aware of), it
being understood that such audit examination extended only to accounting
matters and that no special investigation was made with respect to the
existence of Defaults or Events of Default, (iii) if available, a letter
addressed to Agent, on behalf of itself, and Lenders, in form and substance
reasonably satisfactory to Agent and subject to standard qualifications
required by nationally recognized accounting firms, signed by such accounting
firm acknowledging that Agent and Lenders are entitled to rely upon such
accounting firm’s certification of such audited Financial Statements, (iv) the
annual letters to such accountants in connection with their audit examination
detailing contingent liabilities and material litigation matters, and (v) the
certification of the Chief Executive Officer or Chief Financial Officer of
Holdings and its Subsidiaries that all such Financial Statements present fairly
in accordance with GAAP the financial position, results of operations and
statements of cash flows of Holdings and its Subsidiaries on a consolidated
basis, as at the end of such Fiscal Year and for the period then ended, and
that there was no Default or Event of Default in existence as of such time or,
if a Default or Event of Default has occurred and is continuing, describing the
nature thereof and all efforts undertaken to cure such Default or Event of
Default.

 

E-2

 

(e)           Management Letters.  To Agent and Lenders, within a reasonable
period of time (in no event in excess of 30 days) after delivery thereof to any
Credit Party or the audit committee of Holdings for review, copies of all
management letters, exception reports or similar letters or reports received by
such audit committee or Credit Party from its independent certified public
accountants.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

E-3

 

leased location or public warehouse where Collateral
is located, and (ii) such other notices or documents as Agent may
reasonably request.

 

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

 

(n)           Indemnification Agreements.  To Agent, within two (2) Business Days
after receipt of any claim, Blount, Inc. shall provide to Agent a report
of any claims, individually or in the aggregate, in excess of $1,000,000 (and
any payments made by any Credit Party in connection therewith) pursuant to any
indemnification obligations with respect to any sale or purchase documents
executed by any Credit Party.

 

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

 

E-4

 

ANNEX G (SECTION 6.10)

TO

CREDIT AGREEMENT

 

FINANCIAL COVENANTS

 

Borrowers
shall not breach or fail to comply with any of the following financial
covenants, each of which shall be calculated in accordance with GAAP
consistently applied:

 

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

 

	
  Fiscal
  Year Ending:

  	
   

  	
  Maximum Capital

  Expenditures:

  	
   

  
	
  December 31,
  2009 and each Fiscal Year thereafter

  	
   

  	
  $

  	
  32,500,000

  	
   

  
					

 

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

 

	
  Fiscal
  Quarters Ending:

  	
   

  	
  Minimum Fixed Charge Coverage Ratio:

  	
   

  
	
  September 30,
  2009 and each Fiscal Quarter thereafter

  	
   

  	
  1.15 to 1.00

  	
   

  

 

(c)           Intentionally Omitted.

 

(d)           Maximum Leverage.  Holdings and its Subsidiaries shall not
permit, at any time, the Leverage Ratio to exceed the applicable amount set
forth below:

 

	
  Period:

  	
   

  	
  Maximum Leverage Ratio:

  	
   

  
	
  September 30, 2009 and thereafter

  	
   

  	
  4.50 to 1.00

  	
   

  

 

(e)           Maximum Credit Facility Leverage.  Holdings and its Subsidiaries shall not
permit, at any time, the Credit Facility Leverage Ratio to exceed the
applicable amount set forth below:

 

G-1

 

	
  Period:

  	
   

  	
  Maximum Leverage Ratio:

  	
   

  
	
  September 30, 2009 and thereafter

  	
   

  	
  2.50 to 1.00

  	
   

  

 

Unless
otherwise specifically provided herein, any accounting term used in the
Agreement shall have the meaning customarily given such term in accordance with
GAAP, and all financial computations hereunder shall be computed in accordance
with GAAP consistently applied.  That
certain items or computations are explicitly modified by the phrase “in
accordance with GAAP” shall in no way be construed to limit the foregoing.  If any “Accounting Changes” (as defined
below) occur and such changes result in a change in the calculation of the
financial covenants, standards or terms used in the Agreement or any other Loan
Document, then Borrowers, Agent and Lenders agree to enter into negotiations in
order to amend such provisions of the Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating
Holdings’ and its Subsidiaries’ financial condition shall be the same after
such Accounting Changes as if such Accounting Changes had not been made; provided,
however, that the agreement of Requisite Lenders to any required
amendments of such provisions shall be sufficient to bind all Lenders.  Any amendments to the Financial Covenants or
the definitions used therein pursuant to the foregoing (including the proviso)
or otherwise shall not be deemed to result in a reduction in the rate of
interest for purposes of Section 11.2(c)(ii) of the Credit
Agreement.  “Accounting Changes”
means (i) changes in accounting principles required by the promulgation of
any rule, regulation, pronouncement or opinion by the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants (or
successor thereto or any agency with similar functions), (ii) changes in
accounting principles concurred in by any Credit Party’s certified public
accountants; (iii) purchase accounting adjustments under A.P.B. 16 or 17
and EITF 88-16, and the application of the accounting principles set forth in
FASB 109, including the establishment of reserves pursuant thereto and any
subsequent reversal (in whole or in part) of such reserves; and (iv) the
reversal of any reserves established as a result of purchase accounting
adjustments.  If Agent, Borrowers and
Requisite Lenders agree upon the required amendments, then after appropriate
amendments have been executed and the underlying Accounting Change with respect
thereto has been implemented, any reference to GAAP contained in the Agreement
or in any other Loan Document shall, only to the extent of such Accounting
Change, refer to GAAP, consistently applied after giving effect to the
implementation of such Accounting Change. 
If Agent, Borrowers and Requisite Lenders cannot agree upon the required
amendments within 30 days following the date of implementation of any
Accounting Change, then all Financial Statements delivered and all calculations
of financial covenants and other standards and terms in accordance with the
Agreement and the other Loan Documents shall be prepared, delivered and made
without regard to the underlying Accounting Change.  For purposes of Section 8.1, a
breach of a Financial Covenant contained in this Annex G (other
than clause (a) of this Annex G) shall be deemed to have occurred
as of any date of reasonable determination by Agent or as of the last day of any
specified measurement period, regardless of when the Financial Statements
reflecting such breach are delivered to Agent.

 

G-2ex101.htm

    DELTA
OIL & GAS, INC

     

    AMENDED
AND RESTATED CONSULTING AGREEMENT

     

     

    THIS
AMENDED AND RESTATED CONSULTING AGREEMENT (the “Agreement”) is
entered into as of this 8th day
of March, 2010 (the “Effective Time”), by
and between DELTA OIL &
GAS, INC., a Colorado corporation, (the “Company”) and Warwick Management Services
(the “Consultant”).

     

    WHEREAS,
the Company and the Consultant have previously entered into a Consulting
Agreement, dated October 14, 2009 (the “Previous Agreement”),
pursuant to which the Company retained the Consultant to serve as its Chief
Financial Officer upon the terms and conditions therein; and

     

    WHEREAS,
the parties wish to amend and restate the Previous Agreement in its entirety
upon the terms and conditions set forth herein.

     

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

     

    1. Position.  The
Company retains Consultant to serve as its Chief Financial Officer.

     

    2. Duties.  Consultant
agrees to discharge the duties, functions and responsibilities commensurate with
his position and such other duties and responsibilities as may be prescribed
from time to time by the Board of Directors of the Company (the “Board”).  Consultant
shall devote such business time, attention and energies reasonably necessary to
the diligent and faithful performance of its duties hereunder.

     

    3. Term.  This
Agreement shall commence as of the Effective Time and, unless terminated as set
forth in Section 7, continue through the second anniversary of the Effective
Time; provided, however, that on each anniversary of the Effective Time the term
of the Agreement shall automatically be extended for an additional one-year
period (restoring the initial two-year term), unless either party notifies the
other party in writing at least 60 days prior to such
anniversary.  The term of this Agreement as in effect from time to
time shall be referred to as the “Term.”

     

    4. Compensation.  During
the Term, the Company shall pay Consultant an annual base compensation of no
less than $90,000.00 Canadian Dollars per year plus applicable taxes, payable
monthly in advance on the first of each calendar month.  Such minimum
annual base compensation may be periodically reviewed and increased (but not
decreased without Consultant’s express written consent) at the discretion of the
Board or Compensation Committee of the Board (the “Committee”) to
reflect, among other matters, cost of living increases and performance results
(such annual base compensation, including any increases pursuant to this
Section 4, the “Annual Base
Compensation”).

     

     

    
      
        
        

      

      
        - 1
-

        
          

        

      

      
        
        

      

    

     

    5. Other Compensation and
Fringe Benefits.  Consultant shall be entitled to the following
during the Term:

     

    
      	
              (a)  

            	
              100,000
      common shares in the capital stock of the Company issued to the Consultant
      on an annual basis, payable in advance on January 1 of each year;
      and

            

    

     

    
      	
              (b)  

            	
              the
      standard Company benefits enjoyed by the Company’s other top executives as
      a group.

            

    

     

    6. Expense
Reimbursement.  In addition to the compensation and benefits
provided herein, the Company shall, upon receipt of appropriate documentation,
reimburse Consultant each month for his reasonable travel, lodging,
entertainment, promotion and other ordinary and necessary business expenses to
the extent such reimbursement is permitted under the Company’s expense
reimbursement policy.

     

    7. Termination of
Consultant.  The Company or Consultant may terminate
Consultant's service with the Company at any time and for any reason in
accordance with Subsection 7(a) below.  The Term shall be deemed to
have ended on the last day of Consultant’s service with the
Company.  The Term shall terminate automatically upon Consultant’s
death.

     

    
      	
              (a)  

            	
              Notice of
      Termination.  Any purported termination of Consultant
      (other than by reason of death) shall be communicated by written Notice of
      Termination (as defined herein) from one party to the other in accordance
      with the notice provisions contained in Section 23.  For
      purposes of this Agreement, a “Notice of
      Termination” shall mean a notice that indicates the Date of
      Termination (as that term is defined in Subsection 7(b)) and, with respect
      to a termination due to Cause (as that term is defined in Subsection
      7(d)), Disability (as that term is defined in Subsection 8(e)) or Good
      Reason (as that term is defined in Subsection 7(f)), sets forth in
      reasonable detail the facts and circumstances that are alleged to provide
      a basis for such termination.  A Notice of Termination from the
      Company shall specify whether the termination is with or without Cause or
      due to Consultant’s Disability.  A Notice of Termination from
      Consultant shall specify whether the termination is with or without Good
      Reason or due to Disability.

            

    

     

    
      	
              (b)  

            	
              Date of
      Termination.  For purposes of this Agreement, the “Date of
      Termination” shall mean the date specified in the Notice of
      Termination (but in no event shall such date be earlier than the thirtieth
      (30th)
      day following the date the Notice of Termination is given) or the date of
      Consultant’s death.  Notwithstanding the foregoing, in no event
      shall the Date of Termination occur until Consultant experiences a
      “separation from service” within the meaning of Code Section 409A,
      and notwithstanding anything contained herein to the contrary, the date on
      which such separation from service takes place shall be the “Date of
      Termination.”

            

    

     

    
      	
              (c)  

            	
              No
      Waiver.  The failure to set forth any fact or
      circumstance in a Notice of Termination, which fact or circumstance was
      not known to the party giving the Notice of Termination when the notice
      was given, shall not constitute a waiver of the right to assert such fact
      or circumstance in an attempt to enforce any right under or provision of
      this Agreement.

            

    

     

    
      	
              (d)  

            	
              Cause.  For
      purposes of this Agreement, a termination for “Cause” means a
      termination by the Company based upon
      Consultant’s:  (i) persistent failure to perform duties
      consistent with a commercially reasonable standard of care (other than due
      to a physical or mental impairment or due to an action or inaction
      directed by the Company that would otherwise constitute Good Reason); (ii)
      willful neglect of duties (other than due to a physical or mental
      impairment or due to an action or inaction directed by the Company that
      would otherwise constitute Good Reason); (iii) conviction of, or
      pleading nolo contendere to, criminal or other illegal activities
      involving dishonesty; (iv) material breach of this Agreement; or
      (v) failure to materially cooperate with or impeding an investigation
      authorized by the Board.

            

    

     

    
      
        
        

      

      
        - 2
-

        
          

        

      

      
        
        

      

    

     

    
      	
              (e)  

            	
              Disability.  For
      purposes of this Agreement, a termination based upon “Disability”
      means a termination by the Company based upon Consultant’s entitlement to
      long-term disability benefits under the Company’s long-term disability
      plan or policy, as the case may be, as in effect on the Date of
      Termination.

            

    

     

    
      	
              (f)  

            	
              Good
      Reason.  For purposes of this Agreement, a termination
      for “Good
      Reason” means a termination by Consultant during the Term based
      upon the occurrence (without Consultant’s express written consent) of any
      of the following:

            

    

     

    
      	
              (i)  

            	
              a
      material diminution in Consultant’s position or title, or the assignment
      of duties to Consultant that are materially inconsistent with Consultant’s
      position or title in effect as of immediately following the Effective
      Time;

            

    

     

    
      	
              (ii)  

            	
              a
      material diminution in Consultant’s Annual Base Compensation or bonus
      opportunity;

            

    

     

    
      	
              (iii)  

            	
              within
      six (6) months immediately preceding or within two (2) years immediately
      following a Change in Control: (A) a material adverse change in
      Consultant’s status, authority or responsibility (e.g. The Company has
      determined that a change in the department or functional group over which
      Consultant has managerial authority would constitute such a material
      adverse change); (B) a requirement that Consultant report to a corporate
      officer or consultant instead of reporting directly to the Board; (C) a
      material diminution in the budget over which Consultant has managing
      authority; or (D) a material change in the geographic location of
      Consultant’s principal place of service with the Company;
    or

            

    

     

    
      	
              (iv)  

            	
              a
      material breach by the Company of any of its obligations under this
      Agreement.

            

    

     

    Notwithstanding
the foregoing, Consultant being placed on a paid leave for up to sixty
(60) days pending a determination of whether there is a basis to terminate
Consultant for Cause shall not constitute Good Reason.  Consultant’s
continued service with the Company shall not constitute consent to, or a waiver
of rights with respect to, any act or failure to act constituting Good Reason
hereunder; provided, however, that no such
event described above shall constitute Good Reason
unless:  (1) Consultant gives Notice of Termination to the
Company specifying the condition or event relied upon for such termination
either:  (x) within ninety (90) days of the initial
existence of such event; or (y) in the case of an event predating a Change
in Control, within ninety (90) days of the Change in Control; and
(2) the Company fails to cure the condition or event constituting Good
Reason within thirty (30) days following receipt of Consultant’s Notice of
Termination (the “Cure
Period”).  In the event that the Company fails to remedy the
condition constituting Good Reason during the applicable Cure Period,
Consultant’s “separation from service” (within the meaning of Code
Section 409A) must occur, if at all, within one-hundred fifty (150) days
following such Cure Period in order for such termination as a result of such
condition to constitute a termination for Good Reason.

     

    8. Obligations of the Company
Upon Termination.

     

    
      	
              (a)  

            	
              Termination by the
      Company for a Reason Other than Cause, Death or Disability and Termination
      by Consultant for Good Reason.  Subject to Sections 8(e)
      and 17, if Consultant is terminated by:  (1) the Company
      for any reason other than Cause, Death or Disability; or
      (2) Consultant for Good
Reason:

            

    

     

     

    
      
        
        

      

      
        - 3
-

        
          

        

      

      
        
        

      

    

     

    
      
        	
                (i)  

              	
                The
      Company shall pay Consultant the following (collectively, the “Accrued
      Obligations”):  (A) within five (5) business
      days after the Date of Termination, any earned but unpaid Annual Base
      Compensation; (B) within five (5) business days after the Date of
      Termination, any earned but unissued stock awards; (C) within a reasonable
      time following submission of all applicable documentation, any expense
      reimbursement payments owed to Consultant for expenses incurred prior to
      the Date of Termination; and (D) no later than March 15th of the
      year in which the Date of Termination occurs, any earned but unpaid Annual
      Bonus payments relating to the prior calendar year;
  and

              

      

       

    

    
      	
              (ii)  

            	
              The Company shall pay Consultant,
      within thirty (30) business days after the Date of Termination, a lump-sum
      payment equal to 150% of Consultant’s Annual Base Compensation in effect
      immediately prior to the Date of Termination (disregarding any reduction
      in Annual Base Compensation to which Consultant did not expressly consent
      in writing), including all stock awards which would have been earned
      during the eighteen (18) months immediately following the Date of
      Termination.

            

    

     

    
      	
              (b)  

            	
              Termination by the
      Company for Cause and by Consultant without Good
      Reason.  If Consultant is terminated by the Company for
      Cause or by Consultant without Good Reason, the Company’s only obligation
      under this Agreement shall be payment of any Accrued
      Obligations.

            

    

     

    
      	
              (c)  

            	
              Termination due to
      Death or Disability.  Subject to Sections 8(e), if
      Consultant is terminated due to death or Disability, the Company shall pay
      Consultant (or to Consultant’s estate or personal representative in the
      case of death) any Accrued
Obligations.

            

    

     

    
      	
              (d)  

            	
              Definition of Change
      in Control.  For purposes of this Agreement, the term
      “Change in
      Control” shall mean that the conditions set forth in any one of the
      following subsections shall have been
satisfied:

            

    

     

    
      	
              (i)  

            	
              the
      acquisition, directly or indirectly, by any “person” (within the meaning
      of Section 3(a)(9) of the Securities and Exchange Act of 1934, as
      amended (the “Exchange Act”)
      and used in Sections 13(d) and 14(d) thereof) of “beneficial ownership”
      (within the meaning of Rule 13d-3 of the Exchange Act) of securities
      of the Company possessing more than 50% of the total combined voting power
      of all outstanding securities of the
Company;

            

    

     

    
      	
              (ii)  

            	
              a
      merger or consolidation in which the Company is not the surviving entity,
      except for a transaction in which the holders of the outstanding voting
      securities of the Company immediately prior to such merger or
      consolidation hold, in the aggregate, securities possessing more than 50%
      of the total combined voting power of all outstanding voting securities of
      the surviving entity immediately after such merger or
      consolidation;

            

    

     

    
      	
              (iii)  

            	
              a
      reverse merger in which the Company is the surviving entity but in which
      securities possessing more than 50% of the total combined voting power of
      all outstanding voting securities of the Company are transferred to or
      acquired by a person or persons different from the persons holding those
      securities immediately prior to such
merger;

            

    

     

    
      	
              (iv)  

            	
              during
      any period of two (2) consecutive years during the Term or any
      extensions thereof, individuals, who, at the beginning of such period,
      constitute the Board, cease for any reason to constitute at least a
      majority thereof, unless the election of each director who was not a
      director at the beginning of such period has been approved in advance by
      directors representing at least two-thirds of the directors then in office
      who were directors at the beginning of the
  period;

            

    

     

     

    
      
        
        

      

      
        - 4
-

        
          

        

      

      
        
        

      

    

     

    
      
        	
                (v)  

              	
                the
      sale, transfer or other disposition (in one transaction or a series of
      related transactions) of assets of the Company that have a total fair
      market value equal to or more than one-third of the total fair market
      value of all of the assets of the Company immediately prior to such sale,
      transfer or other disposition, other than a sale, transfer or other
      disposition to an entity (x) which immediately following such sale,
      transfer or other disposition owns, directly or indirectly, at least 50%
      of the Company’s outstanding voting securities or (y) 50% or more of
      whose outstanding voting securities is immediately following such sale,
      transfer or other disposition owned, directly or indirectly, by the
      Company.  For purposes of the foregoing clause, the sale of
      stock of a subsidiary of the Company (or the assets of such subsidiary)
      shall be treated as a sale of assets of the Company;
  or

              

      

       

      
        	
                (vi)  

              	
                the
      approval by the stockholders of a plan or proposal for the liquidation or
      dissolution of the Company.

              

      

       

    

    
      	
              (e)  

            	
              Six-Month
      Delay.  To the extent Consultant is a “specified
      employee,” as defined in Section 409A(a)(2)(B)(i) of the Code
      and the regulations and other guidance promulgated thereunder and any
      elections made by the Company in accordance therewith, notwithstanding the
      timing of payment provided in any other Section of this Agreement, no
      payment, distribution or benefit under this Agreement that constitutes a
      distribution of deferred compensation (within the meaning of Treasury
      Regulation Section 1.409A-1(b)) upon Consultant’s “separation from
      service” (within the meaning of Treasury
      Regulation Section 1.409A-1(h)), after taking into account all
      available exemptions, that would otherwise be payable during the six-month
      period after separation from service, will be made during such six-month
      period, and any such payment, distribution or benefit will instead be paid
      on the first business day after such six-month period (the “Delayed Payment
      Date”); provided, however, that
      if Consultant dies following the Date of Termination but prior to the
      Delayed Payment Date, such amounts shall be paid to the personal
      representative of Consultant’s estate within thirty (30) days following
      the Consultant’s death.

            

    

     

    9. Parachute Payment
Limit.  If any payments or benefits paid or provided or to be
paid or provided to Consultant or for his benefit pursuant to the terms of this
Agreement or otherwise in connection with, or arising out of, his service with
the Company or its subsidiaries or the termination thereof (a “Payment” and,
collectively, the “Payments”) would be
subject to the excise tax (the “Excise Tax”) imposed
by Section 4999 of the Code, then, the Payments shall be reduced to one
dollar less than what would constitute a “parachute payment” under
Section 280G of the Code (the “Scaled Back
Amount”).

     

    10. Adjustment for Changes in
Capitalization. In the event of any  increase or decrease in
the capital of the Company resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the shares or like change to
the capital of the Company, the number of shares of common stock issuable to the
Consultant pursuant to Subsection 5(a) of this Agreement shall be
proportionately adjusted.

     

    11. Non-Delegation of
Consultant’s Rights.  The obligations, rights and benefits of
Consultant hereunder are personal and may not be delegated, assigned or
transferred in any manner whatsoever, nor are such obligations, rights or
benefits subject to involuntary alienation, assignment or transfer.

     

    12. Confidential
Information.  Consultant acknowledges that he will occupy a
position of trust and confidence and will have access to and learn substantial
information about the Company and its affiliates and their operations that is
confidential or not generally known in the industry including, without
limitation, information that relates to purchasing, sales, customers, marketing,
and the financial positions and financing arrangements of the Company and its
affiliates.  Consultant agrees that all such information is
proprietary or confidential, or constitutes trade secrets and is the sole
property of the Company and/or its affiliates, as the case may
be.  Consultant will keep confidential, and will not reproduce, copy
or disclose to any other person or firm, any such information or any documents
or information relating to the Company’s or its affiliates’ methods, processes,
customers, accounts, analyses, systems, charts, programs, procedures,
correspondence or records, or any other documents used or owned by the Company
or any of its affiliates, nor will Consultant advise, discuss with or in any way
assist any other person, firm or entity in obtaining or learning about any of
the items described in this Section 12.  Accordingly, Consultant
agrees that during the Term and at all times thereafter he will not disclose, or
permit or encourage anyone else to disclose, any such information, nor will he
utilize any such information, either alone or with others, outside the scope of
his duties and responsibilities with the Company and its
affiliates.

     

    
      
        
        

      

      
        - 5
-

        
          

        

      

      
        
        

      

    

     

    
      13. Return of the Company
Documents.  Upon termination of the Term, Consultant shall
return immediately to the Company all records and documents of or pertaining to
the Company or its affiliates and shall not make or retain any copy or extract
of any such record or document, or any other property of the Company or its
affiliates.

       

    

    14. Purchase of Consultant's
Company Stock.  Provided that notice is given to Company by
Consultant within ten (10) days following the Date of Termination, any shares of
Company stock held by, or due to Consultant by the Company on the Date of
Termination shall be sold by Consultant and purchased by the
Company.  The closing for the sale and purchase shall take place
thirty (30) days following the Date of Termination (the “Purchase
Date”).  The purchase price shall be paid in cash and the purchase
price per share shall be determined by the Board in good faith based upon the
average closing price per share on the ten business days preceding the Purchase
Date.

     

    15. Actions.  The
parties agree and acknowledge that the rights conveyed by this Agreement are of
a unique and special nature and that the Company will not have an adequate
remedy at law in the event of a failure by Consultant to abide by its terms and
conditions, nor will money damages adequately compensate for such
injury.  Therefore, it is agreed between and hereby acknowledged by
the parties that, in the event of a breach by Consultant of any of the
obligations of this Agreement, the Company shall have the right, among other
rights, to damages sustained thereby and to obtain an injunction or decree of
specific performance from any court of competent jurisdiction to restrain or
compel Consultant to perform as agreed herein.  Consultant hereby
acknowledges that obligations under Sections and Subsections 12 and 13 shall
survive the Term of the Agreement and be binding by their terms at all times
subsequent to the termination of Consultant for the periods specified
therein.  Nothing herein shall in any way limit or exclude any other
right granted by law or equity to the Company.

     

    16. Release.  Notwithstanding
any provision herein to the contrary, the Company may require that, prior to
payment of any amount or provision of any benefit under Section 8,
Consultant shall have executed a complete release of the Company and its
affiliates and related parties in such form as is reasonably required by
Company, and any waiting periods contained in such release shall have expired;
provided that the release shall not apply to Consultant's rights under the
Company's benefit plans and programs, which rights shall be determined in
accordance with the terms of such plans and programs.  With respect to
any release required to receive payments owed pursuant to Section 9, the
Company must provide Consultant with the form of release no later than seven
(7) days after the Date of Termination and the release must be signed by
Consultant and returned to Company, unchanged, effective and irrevocable, no
later than sixty (60) days after the Date of Termination.

     

    17. No
Mitigation.  The Company agrees that, if Consultant is
terminated during the Term, Consultant is not required to seek other service or
employment or to attempt in any way to reduce any amounts payable to Consultant
by the Company hereunder.

     

    18. Entire Agreement and
Amendment.  This Agreement embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter of this
Agreement, and supersedes and replaces all prior agreements, understandings and
commitments with respect to such subject matter.  This Agreement may
be amended only by a written document signed by both parties to this
Agreement.

     

    19. Governing
Law.  This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Colorado, excluding any conflicts or
choice of law rule or principle that might otherwise refer construction or
interpretation of this Agreement to the substantive law of another
jurisdiction.

     

    
      
        
        

      

      
        - 6
-

        
          

        

      

      
        
        

      

    

     

    
      20. Successors.  This
Agreement may not be assigned by Consultant.  In addition to any
obligations imposed by law upon any successor to the Company, the Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the stock, business
and/or assets of the Company, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.  Failure
of the Company to obtain such assumption by a successor shall be a material
breach of this Agreement.  Consultant agrees and consents to any such
assumption by a successor or parent of the Company, as well as any assignment of
this Agreement by the Company for that purpose.  As used in this
Agreement, “Company” shall mean
the Company as herein before defined as well as any such successor or parent
that expressly assumes this Agreement or otherwise becomes bound by all of its
terms and provisions by operation of law.

    

     

    21. Counterparts.  This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.

     

    22. Severability.  If
any section, subsection or provision hereof is found for any reason whatsoever
to be invalid or inoperative, that section, subsection or provision shall be
deemed severable and shall not affect the force and validity of any other
provision of this Agreement.  If any covenant herein is determined by
a court to be overly broad thereby making the covenant unenforceable, the
parties agree and it is their desire that such court shall substitute a
reasonable judicially enforceable limitation in place of the offensive part of
the covenant and that as so modified the covenant shall be as fully enforceable
as if set forth herein by the parties themselves in the modified
form.  The covenants of Consultant in this Agreement shall each be
construed as an agreement independent of any other provision in this Agreement,
and the existence of any claim or cause of action of Consultant against the
Company, whether predicated on this Agreement or otherwise, shall not constitute
a defense to the enforcement by the Company of the covenants in this
Agreement.

     

    23. Notices.  Any
notice, request, or instruction to be given hereunder shall be in writing and
shall be deemed given when personally delivered or three (3) days after
being sent by United States Certified Mail, postage prepaid, with Return Receipt
Requested, to the parties at their respective addresses set forth
below:

     

    To
Company:

     

    Delta Oil
& Gas, Inc.

    Suite
604-700 West Pender Street

    Vancouver,
British Columbia, Canada, V6C 1G8

    Phone:  604.602.1500

    Fax:      604.602.1625

     

    To
Consultant:

     

    Warwick
Management Services

    At the
most recent address on file at the Company.

     

    24. Waiver of
Breach.  The waiver by any party of any provisions of this
Agreement shall not operate or be construed as a waiver of any prior or
subsequent breach by the other party.

     

    
      
        
        

      

      
        - 7
-

        
          

        

      

      
        
        

      

    

     

    
       

      25. Tax
Withholding.  The Company or an affiliate may deduct from all
compensation and benefits payable under this Agreement any taxes or withholdings
the Company is required to deduct pursuant to state, federal or other
laws.

       

    

    26. Code
Section 409A.  To the extent applicable, it is intended
that this Agreement and any payment made hereunder shall comply with the
requirements of Section 409A of the Code or an exemption or exclusion
therefrom, and any related regulations or other guidance promulgated with
respect to such Section by the U.S. Department of the Treasury or the Internal
Revenue Service (“Code
Section 409A”) and shall in all respects be administered in
accordance with Code Section 409A.  Any provision that would
cause the Agreement or any payment hereof to fail to satisfy Code
Section 409A shall have no force or effect until amended to comply with
Code Section 409A in the least restrictive manner necessary and without any
diminution in the value of the payments to Consultant, which amendment may be
retroactive to the extent permitted by Code Section 409A.

     

    IN
WITNESS WHEREOF the parties have executed this Agreement to be effective as of
immediately following the Effective Time.

     

    DELTA OIL
& GAS, INC.

     

    By: 
/s/  Christopher
Paton-Gay                                      

                  
Christopher Paton-Gay

    Its:         Director
and Chief Executive Officer

     

    Warwick
Management Services

     

    By:  /s/ 
Kulwant
Sandher                                                

                  
Kulwant Sandher

    Its:        
President

     

    

     

    
      
         

      

      
        - 8
-

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