EXHIBIT 99.2
EXECUTION VERSION
INTERCREDITOR AGREEMENT
This INTERCREDITOR AGREEMENT (this "Agreement"), dated as of August
26, 2005, is made by and between SILVER POINT FINANCE, LLC, a Delaware limited
liability company, as the co-agent, syndication agent, and documentation agent
under and pursuant to the First Lien Credit Agreement (as hereinafter defined)
(in such capacity, together with its successors and assigns, the "Original First
Lien Co-Agent"), and XXXXX FARGO FOOTHILL, INC., a California corporation, as
administrative agent and collateral agent under and pursuant to the First Lien
Credit Agreement (in such capacity, together with its successors and assigns,
the "Original First Lien Agent"), on the one hand, and THE BANK OF NEW YORK, a
national banking association, as agent under and pursuant to the Second Lien
Credit Agreement (as hereinafter defined) (in such capacity, together with its
successors and assigns, the "Original Second Lien Agent"), on the other hand,
and is acknowledged by Salton, Inc., a Delaware corporation ("Parent"), each of
Parent's Subsidiaries identified on the signature pages of the First Lien Credit
Agreement or otherwise made a party thereto, as Borrowers (collectively with
Parent, the "Borrowers") and each of Parent's Subsidiaries identified on the
signature pages of the First Lien Credit Agreement, or otherwise made a party
thereto, as Guarantors (collectively, the "Guarantors"):
WHEREAS, Parent, the Borrowers, the Guarantors, the Original First
Lien Co-Agent, the Original First Lien Agent, and the lenders party thereto (the
"Original First Lien Lenders") have entered into that certain Credit Agreement
dated as of May 9, 2003 and amended and restated as of June 15, 2004 (as amended
as of August 30, 2004, May 11, 2005, and July 8, 2005 and as it may be further
amended, modified, supplemented or amended and restated from time to time, the
"Original First Lien Credit Agreement") pursuant to which such lenders have
agreed, upon the terms and conditions stated therein, to make loans and advances
to and to issue letters of credit (or guarantees or other undertakings in
respect thereof) for the account of the Borrowers up to a principal amount (such
amount, the "First Lien Amount") equal to $287,000,000 minus the original
principal amount of the Second Lien Term Loan (as defined in the First Lien
Credit Agreement) as of the Second Lien Closing Date (as defined in the First
Lien Credit Agreement) at any time outstanding. The repayment of the Obligations
(as that term is defined in the Original First Lien Credit Agreement) is secured
by security interests in and liens on substantially all of the assets of the
Borrowers and the Guarantors pursuant to certain collateral documents in favor
of the Original First Lien Agent, which documents, together with the other
collateral and loan documents executed and delivered in connection with the
Original First Lien Credit Agreement, each as in effect on the date hereof, are
referred to herein as the "Original First Lien Loan Documents";
WHEREAS, Parent, the Borrowers, the Guarantors, the Original Second
Lien Agent, and the lenders party thereto (the "Original Second Lien Lenders")
have entered into a Credit Agreement dated as of the date hereof (such agreement
as in effect on the date hereof, the "Original Second Lien Credit Agreement")
pursuant to which such lenders have agreed, upon the terms and conditions stated
therein, to make loans and advances to the Borrowers up to the principal amount
of $110,000,000 at any time outstanding. The repayment of the Obligations (as
that term is defined in the Original Second Lien Credit Agreement) is secured by
security interests in and liens on substantially all of the assets of the
Borrowers and the Guarantors
pursuant to certain collateral documents in favor of the Original Second Lien
Agent, which documents, together with the other collateral and loan documents
executed and delivered in connection with the Original Second Lien Credit
Agreement, each as in effect on the date hereof, are referred to herein as the
"Original Second Lien Loan Documents"; and
WHEREAS, each of the Original First Lien Agent and the Original
First Lien Co-Agent, for and on behalf of itself and the First Lien Lenders, and
the Original Second Lien Agent, for and on behalf of itself and the Second Lien
Lenders, wish to enter into this Agreement to establish their respective rights
and priorities in the Collateral.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the Original First Lien Agent and the Original
Second Lien Agent hereby agree as follows:
1. Definitions; Rules of Construction.
a. Terms Defined Above and in the Recitals. As used in this
Agreement, the following terms shall have the respective meanings indicated in
the opening paragraph hereof and in the above Recitals:
"Agreement"
"Borrowers"
"First Lien Amount"
"Guarantors"
"Original First Lien Agent"
"Original First Lien Co-Agent"
"Original First Lien Credit Agreement"
"Original First Lien Lenders"
"Original First Lien Loan Documents"
"Original Second Lien Agent"
"Original Second Lien Credit Agreement"
"Original Second Lien Lenders"
"Original Second Lien Loan Documents"
"Parent"
b. Other Definitions. As used in this Agreement, the following terms
shall have the following meanings:
"Adequate Protection Lien" has the meaning set forth in Section 5.d.
"Agent" means First Lien Agent, First Lien Co-Agent and/or Second
Lien Agent, as the context may require.
"Application of Proceeds Blockage Event" has the meaning set forth
in Section 4.a.
"Application of Proceeds Blockage Period" has the meaning set forth
in Section 4.a.
"Bank Product Obligations" has the meaning set forth in the Original
First Lien Credit Agreement.
"Bankruptcy Code" shall mean title 11 of the United States Code, as
in effect from time to time.
"Capital Stock" means (a) in the case of a corporation, corporate
stock, (b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (c) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited) and (d) any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of property of, the issuing
Person.
"Cash Collateral" means any Collateral consisting of money or cash
equivalents, any security entitlement (as defined in the UCC) and any financial
assets (as defined in the UCC).
"Collateral" means all assets and properties upon which either First
Lien Agent or First Lien Co-Agent, on the one hand, or Second Lien Agent, on the
other hand, now has or hereafter acquires a Lien, whether now owned or hereafter
acquired by the Borrowers, any Guarantor or any other Person, together with all
rents, issues, profits, products, and Proceeds thereof.
"Control Collateral" means any Collateral consisting of a
certificated security (as defined in the UCC), investment property (as defined
in the UCC), a deposit account (as defined in the UCC) and any other Collateral
as to which a Lien may be perfected through physical possession or control by
the secured party or any agent therefor.
"DIP Financing" has the meaning set forth in Section 5.d.
"Discharge of First Lien Indebtedness" means payment in full in cash
(or in the case of letters of credit or Bank Product Obligations, the cash
collateralization as required by the Original First Lien Loan Documents) of the
First Lien Indebtedness (other than First Lien Indebtedness consisting solely of
contingent indemnification obligations under the First Lien Loan Documents for
which no claim has been asserted in writing) after or concurrently with
termination of all commitments to extend credit under any First Lien Credit
Agreement.
"Discharge of Second Lien Indebtedness" means payment in full in
cash of the Second Lien Indebtedness (other than Second Lien Indebtedness
consisting solely of contingent indemnification obligations under the Second
Lien Loan Documents for which no claim has been asserted in writing) after or
concurrently with termination of all commitments to extend credit under any
Second Lien Credit Agreement.
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"Equity Interests" means Capital Stock and all warrants, options, or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Event of Default" means "Event of Default" as defined in the First
Lien Credit Agreement and/or "Event of Default" as defined in the Second Lien
Credit Agreement.
"Exercise Any Secured Creditor Remedies" or "Exercise of Secured
Creditor Remedies" means (a) the taking of any action to enforce or realize upon
any Lien, including the institution of any foreclosure proceedings or the
noticing of any public or private sale or other disposition pursuant to Article
9 of the UCC, (b) the exercise of any right or remedy provided to a secured
creditor or otherwise on account of a Lien under the First Lien Loan Documents,
the Second Lien Loan Documents, applicable law, in an Insolvency Proceeding or
otherwise, including the election to retain Collateral in satisfaction of a
Lien, (c) the taking of any action or the exercise of any right or remedy in
respect of the collection on, set off against, marshaling of, or foreclosure on
the Collateral or the Proceeds of Collateral, (d) the sale, lease, license, or
other disposition of all or any portion of the Collateral, by private or public
sale, other disposition or any other means permissible under applicable law, (e)
the solicitation of bids from third parties to conduct the liquidation of all or
a material portion of Collateral to the extent undertaken and being diligently
pursued in good faith to consummate the sale of such Collateral within a
commercially reasonable time, (f) the engagement or retention of sales brokers,
marketing agents, investment bankers, accountants, appraisers, auctioneers or
other third parties for the purposes of valuing, marketing, promoting and
selling the Collateral to the extent undertaken and being diligently pursued in
good faith to consummate the sale of such Collateral within a commercially
reasonable time, and (g) the exercise of any other enforcement right relating to
the Collateral (including the exercise of any voting rights relating to any
Capital Stock and including any right of recoupment or set-off) whether under
the First Lien Loan Documents, the Second Lien Loan Documents, applicable law,
in an Insolvency Proceeding or otherwise.
"First Lien Agent" means the Original First Lien Agent, together
with its successors, assigns and transferees under any First Lien Credit
Agreement.
"First Lien Co-Agent" means the Original First Lien Co-Agent,
together with its successors, assigns and transferees under any First Lien
Credit Agreement.
"First Lien Credit Agreement" means the Original First Lien Credit
Agreement as amended, restated, modified, renewed, refunded, replaced, or
refinanced in whole or in part from time to time, and any other agreement
extending the maturity of, consolidating, otherwise restructuring (including
adding Subsidiaries or affiliates of any Obligor or any other Persons as parties
thereto), renewing, replacing or refinancing all or any portion of the
Obligations or Commitments as those terms are defined in the Original First Lien
Credit Agreement or all or any portion of the amounts owed under any other
agreement that itself is a First Lien Credit Agreement hereunder and whether by
the same or any other agent, lender, or group of lenders and whether or not
increasing the amount of First Lien Indebtedness that may be incurred
thereunder, in each case, to the extent that any such amendment, restatement,
modification, renewal, refunding, replacement, or refinancing is permitted under
this Agreement.
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"First Lien Default" means any Event of Default under the First Lien
Credit Agreement.
"First Lien Indebtedness" means all obligations and all other
amounts owing, due or secured under the terms of the First Lien Credit Agreement
or any other First Lien Loan Document, including any and all amounts payable to
any First Lien Lender, all principal, premium, interest, fees, attorneys fees,
costs, charges, expenses, reimbursement obligations, any obligation to post cash
collateral in respect of letters of credit or indemnities in respect thereof,
indemnities, guarantees, the Make-Whole Amount, Bank Product Obligations, Ledger
Product Obligations and all other amounts payable under any First Lien Loan
Document or in respect thereof (including, in each case, all amounts accruing on
or after the commencement of any Insolvency Proceeding relating to any Obligor,
or that would have accrued or become due under the terms of the First Lien Loan
Documents but for the effect of the Insolvency Proceeding or other applicable
law, and irrespective of whether a claim for all or any portion of such amounts
is allowable or allowed in such Insolvency Proceeding).
"First Lien Lender Sale" has the meaning set forth in Section
2.c(1).
"First Lien Lenders" means the Original First Lien Lenders, together
with the lenders under any First Lien Credit Agreement or First Lien Loan
Documents.
"First Lien Loan Documents" means the First Lien Credit Agreement
and the other Loan Documents (as such term is defined in the Original First Lien
Credit Agreement), or any other security, collateral, ancillary or other
document entered into in connection with or related to any agreement that is a
First Lien Credit Agreement, as such documents may be amended, restated,
modified, renewed, refunded, replaced, or refinanced in whole or in part from
time to time, in accordance with this Agreement.
"First Lien Modification" has the meaning set forth in Section 6.a.
"Forced Obligor Sale" has the meaning set forth in Section 2.c(2).
"Insolvency Proceeding" means any proceeding commenced by or against
any Person under any provision of the Bankruptcy Code or under any other state,
federal or foreign bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
"Ledger Product Obligations" has the meaning set forth in the
Original First Lien Credit Agreement.
"Lender" means a First Lien Lender and/or a Second Lien Lender, as
the context may require.
"Lien" means any interest in an asset securing an obligation owed
to, or a claim by, any Person other than the owner of the asset, irrespective of
whether (a) such interest is based on the common law, statute, or contract, (b)
such interest is recorded or perfected, and (c) such interest is contingent upon
the occurrence of some future event or events or the existence of
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some future circumstance or circumstances. Without limiting the generality of
the foregoing, the term "Lien" includes the lien or security interest arising
from a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment,
deposit arrangement, security agreement, conditional sale or trust receipt, or
from a lease, consignment, or bailment for security purposes and also includes
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases, and other title exceptions and encumbrances
affecting real property.
"Notice of Intent to Exercise" means a written notice from or on
behalf of Second Lien Agent to First Lien Agent and First Lien Co-Agent (a)
stating that Second Lien Agent intends to Exercise Secured Creditor Remedies,
(b) stating that it is a "Notice of Intent to Exercise Secured Creditor
Remedies" and (c) describing the Event(s) of Default under the Second Lien
Credit Agreement that is(are) the basis for delivering such notice.
"Obligor" means the Borrowers, each Guarantor and any other Person
that now or hereafter is, or whose assets now or hereafter are, liable for all
or any portion of the First Lien Indebtedness or the Second Lien Indebtedness,
as applicable.
"Payment Collateral" means all accounts, instruments, chattel paper,
letters of credit, deposit accounts, securities accounts, and payment
intangibles, together with all supporting obligations (as those terms are
defined in the UCC), in each case composing a portion of the Collateral.
"Permitted Application of Proceeds of Collateral" has the meaning
set forth in Section 3.
"Permitted Replacement Lien" has the meaning set forth in Section
5.i.
"Person" means any natural person, corporation, limited liability
company, limited partnership, general partnership, limited liability
partnership, joint venture, trust, land trust, business trust, or other
organization, irrespective of whether such organization is a legal entity, and
shall include a government and any agency or political subdivision thereof.
"Proceeds" means (a) all "proceeds" as defined in Article 9 of the
UCC with respect to the Collateral, and (b) whatever is recoverable or recovered
when Collateral is sold, exchanged, collected, or disposed of, whether
voluntarily or involuntarily.
"Purchase Notice" has the meaning set forth in Section 10.a.
"Recovery" has the meaning set forth in Section 5.c.
"Reorganization Debt Securities" has the meaning set forth in
Section 5.a.
"Second Lien Agent" means the Original Second Lien Agent, together
with its successors, assigns and transferees under any Second Lien Credit
Agreement.
"Second Lien Credit Agreement" means the Original Second Lien Credit
Agreement as amended, restated, modified, renewed, refunded, replaced, or
refinanced in whole
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or in part from time to time, and any other agreement extending the maturity of,
consolidating, otherwise restructuring (including adding Subsidiaries or
affiliates of any Obligor or any other Persons as parties thereto), renewing,
replacing or refinancing all or any portion of the Obligations or Commitments as
those terms are defined in the Original Second Lien Credit Agreement or all or
any portion of the amounts owed under any other agreement that itself is a
Second Lien Credit Agreement hereunder and whether by the same or any other
agent, lender, or group of lenders and whether or not increasing the amount of
Second Lien Indebtedness that may be incurred thereunder, in each case, to the
extent that any such amendment, restatement, modification, renewal, refunding,
replacement, or refinancing is permitted under this Agreement. "Second Lien
Indebtedness" means all obligations and all other amounts owing, due or secured
under the terms of the Second Lien Credit Agreement or any other Second Lien
Loan Document, including any and all amounts payable to Second Lien Agent or to
any Second Lien Lender, all principal, premium, interest, fees, attorneys fees,
costs, charges, expenses, reimbursement obligations, any obligation to post cash
collateral in respect of letters of credit or indemnities in respect thereof,
indemnities, guarantees, any prepayment or early termination premium, and all
other amounts payable under any Second Lien Loan Document or in respect thereof
(including, in each case, all amounts accruing on or after the commencement of
any Insolvency Proceeding relating to any Obligor, or that would have accrued or
become due under the terms of the Second Lien Loan Documents but for the effect
of the Insolvency Proceeding or other applicable law, and irrespective of
whether a claim for all or any portion of such amounts is allowable or allowed
in such Insolvency Proceeding).
"Second Lien Lenders" means the Original Second Lien Lenders,
together with the lenders under any Second Lien Credit Agreement or Second Lien
Loan Documents.
"Second Lien Loan Documents" means the Second Lien Credit Agreement
and the other Loan Documents (as such term is defined in the Original Second
Lien Credit Agreement), or any other security, collateral, ancillary or other
document entered into in connection with or related to any agreement that is a
Second Lien Credit Agreement, as such documents may be amended, restated,
modified, renewed, refunded, replaced, or refinanced in whole or in part from
time to time in accordance with this Agreement.
"Standstill Notice" means a written notice from First Lien Agent or
First Lien Co-Agent to Second Lien Agent stating that a First Lien Default has
occurred and is continuing and stating that it is a "Standstill Notice".
"Standstill Period" means the period beginning on the date that a
Standstill Notice is received by Second Lien Agent through and including the
first to occur of (a) the date upon which the Discharge of First Lien
Indebtedness shall have occurred, (b) the date upon which First Lien Agent or
First Lien Co-Agent shall have waived or acknowledged in writing the termination
of the First Lien Default that gave rise to such Standstill Period, or (c) the
date that is 270 days after the receipt of such Standstill Notice by Second Lien
Agent.
"Trigger Event" has the meaning set forth in Section 10.a.
"Trigger Notice" has the meaning set forth in Section 10.a.
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"UCC" means the Uniform Commercial Code as enacted and in effect
from time to time in the State of New York; provided, however, that in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection, priority, or remedies with respect to Agent's Lien on any Collateral
is governed by the Uniform Commercial Code as enacted and in effect in a
jurisdiction other than the State of New York, the term "UCC" shall mean the
Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions thereof relating to such attachment,
perfection, priority, or remedies.
c. Terms Defined in the Original First Lien Credit Agreement. Unless
otherwise defined in this Agreement, any and all initially capitalized terms set
forth in this Agreement shall have the meaning ascribed thereto in the Original
First Lien Credit Agreement.
d. Rules of Construction. Unless the context of this Agreement
clearly requires otherwise, references to the plural include the singular,
references to the singular include the plural, the term "including" is not
limiting, and the term "or" has, except where otherwise indicated, the inclusive
meaning represented by the phrase "and/or." The words "hereof," "herein,"
"hereby," "hereunder," and similar terms in this Agreement refer to this
Agreement as a whole and not to any particular provision of this Agreement.
Article, section, subsection, clause, schedule, and exhibit references herein
are to this Agreement unless otherwise specified. Any reference herein to any
Person shall be construed to include such Person's successors and assigns.
2. Subordination and Standstill.
a. Lien Subordination. Notwithstanding (i) the date, time, method,
manner or order of grant, attachment, or perfection of any Liens granted to
First Lien Agent (or First Lien Co-Agent or any First Lien Lender) or Second
Lien Agent (or any Second Lien Lender) in respect of all or any portion of the
Collateral, (ii) the order or time of filing or recordation of any document or
instrument for perfecting the Liens in favor of First Lien Agent (or First Lien
Co-Agent or any First Lien Lender) or Second Lien Agent (or any Second Lien
Lender) in any Collateral, (iii) any provision of the UCC, any other applicable
law, any of the First Lien Loan Documents or the Second Lien Loan Documents,
(iv) irrespective of whether the Liens securing the First Lien Loan Documents
are valid, perfected, enforceable, void, avoidable, subordinated, disputed or
allowed, or (v) any other circumstance whatsoever, each of First Lien Agent and
First Lien Co-Agent, on behalf of itself and the First Lien Lenders, and Second
Lien Agent, on behalf of itself and the Second Lien Lenders, hereby agree that:
(1) any Lien in respect of all or any portion of the Collateral now
or hereafter held by or on behalf of Second Lien Agent or any Second Lien Lender
that secures all or any portion of the Second Lien Indebtedness, shall in all
respects be junior and subordinate to all Liens granted to First Lien Agent,
First Lien Co-Agent and the First Lien Lenders in the Collateral to secure all
or any portion of the First Lien Indebtedness, and
(2) any Lien in respect of all or any portion of the Collateral now
or hereafter held by or on behalf of First Lien Agent, First Lien Co-Agent or
any First Lien Lender that secures all or any portion of the First Lien
Indebtedness shall in all respects be senior and prior to
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all Liens granted to Second Lien Agent and the Second Lien Lenders in the
Collateral to secure all or any portion of the Second Lien Indebtedness.
b. Remedies Standstill. At any time that a Standstill Period is in
effect, Second Lien Agent and Second Lien Lenders shall not, without the prior
written consent of First Lien Co-Agent (acting upon the direction of the
requisite First Lien Lenders),
(1) commence, prosecute, or participate in any lawsuit, action, or
proceeding, whether private, judicial, equitable, administrative or otherwise
(including any bankruptcy case against any Obligor or any Obligor's assets) to
the extent that any such action could reasonably be expected, in any material
respect, to restrain, hinder, limit, delay for any material period or otherwise
interfere with the Exercise of Secured Creditor Remedies by First Lien Co-Agent,
First Lien Agent or First Lien Lenders; provided that (A) to the extent that
commencing, prosecuting, or participating in any such lawsuit, action, or
proceeding could not reasonably be expected, in any material respect, to
restrain, hinder, limit, delay for any material period or otherwise interfere
with the Exercise of Secured Creditor Remedies by First Lien Co-Agent, First
Lien Agent or First Lien Lenders and Second Lien Agent does, in fact, commence,
prosecute, or participate in any such lawsuit, action, or proceeding, then
Second Lien Agent shall give First Lien Co-Agent and First Lien Agent prompt
written notice of any such action, and (B) as more fully set forth in Section 5,
Second Lien Agent and the Second Lien Lenders may file a proof of claim (such
proof of claim to indicate the subordination set forth herein) in any Insolvency
Proceeding involving any Obligor,
(2) Exercise Any Secured Creditor Remedies,
(3) send any notice to or otherwise seek to obtain payment directly
from any account debtor of any Obligor, xxx for an attachment, an injunction to
enjoin any Exercise of Secured Creditor Remedies by First Lien Co-Agent, First
Lien Agent or First Lien Lenders, a keeper, a receiver or any other similar
legal or equitable remedy, exercise any rights of set off or recoupment as
against any Obligor, or
(4) commence or cause to be commenced or join with any creditor in
commencing any Insolvency Proceeding against any Obligor or any Obligor's
assets.
Notwithstanding any other provision hereof, (i) Second Lien Agent
and Second Lien Lenders may not Exercise Any Secured Creditor Remedies with
respect to any Payment Collateral at any time unless and until the Discharge of
First Lien Indebtedness shall have occurred; (ii) Second Lien Agent may not
exercise any of the remedies described in clauses (1) through (4) above so long
as (A) First Lien Co-Agent or First Lien Agent at such time has commenced and
diligently is pursuing in good faith any Exercise of Secured Creditor Remedies
with respect to all or a material portion of the Collateral or (B) First Lien
Co-Agent, First Lien Agent and Second Lien Agent are enjoined from the Exercise
of Secured Creditor Remedies, in each case, unless and until the Discharge of
First Lien Indebtedness shall have occurred; and (iii) Second Lien Agent may not
exercise any of the remedies described in clauses (1) through (4) above without
first providing First Lien Co-Agent and First Lien Agent at least 10 days prior
written notice in the form of a Notice of Intent to Exercise (it being
understood that (x) notwithstanding anything to the contrary contained herein,
such Notice of Intent to Exercise may
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only be delivered by Second Lien Agent if there is an Event of Default under
Section 9.1(a), Section 9.1(c) (solely with respect to a default under Section
7.23 of the Second Lien Credit Agreement), or Section 9.1(d) (solely with
respect to a default in the payment when due of interest or principal on the
Senior Notes under the Indentures) of the Second Lien Credit Agreement; and (y)
if First Lien Co-Agent or First Lien Agent does not deliver a Standstill Notice
to Second Lien Agent by the end of such 10 day period, Second Lien Agent may
proceed with the exercise of such remedies, and if Second Lien Agent elects to
exercise such remedies, neither First Lien Agent nor First Lien Co-Agent may
exercise any of the remedies of the type described in clauses (1) through (4)
above so long as Second Lien Agent at such time has commenced and diligently is
pursuing in good faith any Exercise of Secured Creditor Remedies with respect to
all or a material portion of the Collateral, unless and until the Discharge of
Second Lien Indebtedness shall have occurred); provided, that Second Lien Agent
shall not be required to provide a Notice of Intent to Exercise to First Lien
Agent and First Lien Co-Agent in connection with a permitted Exercise of Secured
Creditor Remedies upon the termination of any Standstill Period.
c. Limitation on Standstill Periods. Subject to clause (ii) in the
last paragraph of Section 2.b, in no event shall a Standstill Period extend
beyond 270 days from the date of receipt by Second Lien Agent from First Lien
Agent or First Lien Co-Agent of a Standstill Notice initiating such Standstill
Period. Any number of notices of a First Lien Default may be given during a
Standstill Period, but no such notice shall extend such Standstill Period. Only
2 Standstill Periods may be commenced within any 360 day period, and no
subsequent Standstill Period may be commenced within 60 days after the
termination of the immediately preceding Standstill Period. No First Lien
Default that existed or was continuing on the date of the commencement of any
Standstill Period and that was known to First Lien Agent, First Lien Co-Agent or
any First Lien Lender will be, or can be, made the basis for the commencement of
a second Standstill Period, whether or not within a period of 360 consecutive
days, unless such First Lien Default has been cured or waived for a period of
not less than 60 consecutive days.
d. Release of Liens.
(1) In the event of any private or public sale or other disposition
of all or any portion of the Collateral by First Lien Agent or First Lien
Co-Agent after the occurrence and during the continuance of a First Lien Default
(and prior to the date upon which the Discharge of First Lien Indebtedness shall
have occurred) in connection with the liquidation by First Lien Agent or First
Lien Co-Agent of all or any material portion of the Collateral and the
collection by First Lien Agent or First Lien Co-Agent of the First Lien
Indebtedness through the sale or other disposition of such Collateral (whether
prior to or after the occurrence of an Insolvency Proceeding) (any such sale or
other disposition, a "First Lien Lender Sale"), then Second Lien Agent, on
behalf of itself and the Second Lien Lenders, agrees that such First Lien Lender
Sale will be free and clear of the Liens securing the Second Lien Indebtedness
(and, if the First Lien Lender Sale includes Equity Interests in any Obligor,
Second Lien Agent, on behalf of itself and the Second Lien Lenders, further
agrees to release the entities whose Equity Interests are sold from all Second
Lien Indebtedness); provided that (x) First Lien Agent, First Lien Co-Agent and
the First Lien Lenders also release their Liens on such Collateral (and, if the
First Lien Lender Sale includes Equity Interests in any Obligor, the entities
whose Equity Interests are sold from all First Lien Indebtedness), (y) the
Proceeds of any such First Lien Lender Sale are applied in
9
accordance with Section 9, and (z) First Lien Agent or First Lien Co-Agent shall
have conducted such First Lien Lender Sale in a commercially reasonable manner
and in accordance with the UCC.
(2) In the event of any private or public sale or other disposition
of all or substantially all of the Collateral by any Obligor with the consent of
First Lien Co-Agent and/or First Lien Agent after the occurrence and during the
continuance of a First Lien Default (and prior to the date upon which the
Discharge of First Lien Indebtedness shall have occurred), which sale or other
disposition is conducted by such Obligor with the consent of First Lien Co-Agent
and/or First Lien Agent (any such sale or other disposition, a "Forced Obligor
Sale"), then Second Lien Agent, on behalf of itself and the Second Lien Lenders,
agrees that such Forced Obligor Sale will be free and clear of the Liens
securing the Second Lien Indebtedness (and, if the Forced Obligor Sale includes
Equity Interests in any Obligor, Second Lien Agent, on behalf of itself and the
Second Lien Lenders, further agrees to release the entities whose Equity
Interests are sold from all Second Lien Indebtedness); provided that (x) First
Lien Agent, First Lien Co-Agent and the First Lien Lenders also release their
Liens on such Collateral (and, if the Forced Obligor Sale includes Equity
Interests in any Obligor, the entities whose Equity Interests are sold from all
First Lien Indebtedness), (y) the Proceeds of any such Forced Obligor Sale are
applied in accordance with Section 9 (as if it were Proceeds received in
connection with any Exercise of Secured Creditor Remedies), and (z) the Obligor
conducting such Forced Obligor Sale shall have conducted such Forced Obligor
Sale in a commercially reasonable manner as if such Forced Obligor Sale were
being conducted by a secured creditor in accordance with the UCC.
(3) Second Lien Agent agrees that, in connection with any First Lien
Lender Sale or Forced Obligor Sale, upon the prior written request of First Lien
Co-Agent or First Lien Agent (which request shall specify the proposed terms of
the sale and the type and amount of consideration to be received in connection
therewith), it will execute and/or file any and all Lien releases or other
documents reasonably requested by First Lien Co-Agent or First Lien Agent in
connection therewith (copies of which are provided to Second Lien Agent) without
recourse, representation or warranty and at the sole expense of the Obligors;
provided, that (w) in the case of a First Lien Lender Sale, no such release
documents shall be delivered to any Obligor, (x) in the case of a Forced Obligor
Sale, no such release documents shall be delivered to any Obligor unless First
Lien Co-Agent or First Lien Agent has delivered its release documents to such
Obligor, (y) no such release documents shall be delivered to Second Lien Agent
for execution more than 5 days prior to the anticipated closing date of such
sale or disposition, and (z) the effectiveness of any such release or
termination by Second Lien Agent shall be subject to the sale or other
disposition of the Collateral described in such request and on the terms
described in such request or on substantially similar terms and shall lapse in
the event such sale or other disposition does not occur within 10 days of the
anticipated closing date (at which time First Lien Co-Agent, First Lien Agent or
the Obligors, as the case may be, shall promptly return all release documents to
Second Lien Agent). Subject to the proviso in the immediately preceding
sentence, in the event that Second Lien Agent fails to so execute or file any
such Lien releases or other documents within 5 Business Days after receipt of
written request from First Lien Agent or First Lien Co-Agent, each of First Lien
Co-Agent and First Lien Agent is hereby irrevocably authorized to execute and/or
file such Lien releases and other documents (provided that such Lien releases
and other documents shall not be filed or recorded except substantially
10
contemporaneous with such sale or disposition or until such sale or disposition
has been consummated).
e. Waiver of Right to Contest First Lien Indebtedness. Second Lien
Agent agrees that it and the Second Lien Lenders shall not, and hereby waives
any right to, take any action to contest or challenge (or assist or support any
other Person in contesting or challenging), directly or indirectly, whether or
not in any proceeding (including in any Insolvency Proceeding), the validity,
priority, enforceability, or perfection of the Liens of First Lien Agent (on
behalf of itself, the First Lien Co-Agent and the First Lien Lenders) in any
Collateral, the validity, priority, enforceability or allowance of any of the
claims of First Lien Agent or any holder of First Lien Indebtedness against any
Obligor or the validity or enforceability of this Agreement or any of the
provisions hereof. Second Lien Agent agrees that neither it nor the Second Lien
Lenders will take any action that would interfere with any Exercise of Secured
Creditor Remedies undertaken by First Lien Co-Agent or First Lien Agent under
the First Lien Loan Documents, including any public or private sale, lease,
exchange, transfer, or other disposition of any Collateral, whether by
foreclosure or otherwise, in any case so long as First Lien Co-Agent or First
Lien Agent does not act in contravention of this Agreement or applicable law.
Second Lien Agent hereby waives any and all rights it and the Second Lien
Lenders may have as a junior lien creditor or otherwise to contest, protest,
object to, interfere with the manner in which First Lien Co-Agent or First Lien
Agent seeks to enforce the Liens in any Collateral so long as First Lien
Co-Agent or First Lien Agent does not act in contravention of this Agreement or
applicable law.
f. Waiver of Right to Contest Second Lien Indebtedness. Each of
First Lien Agent and First Lien Co-Agent agrees that it and the First Lien
Lenders shall not, and hereby waives any right to, take any action to contest or
challenge (or assist or support any other Person in contesting or challenging),
directly or indirectly, whether or not in any proceeding (including in any
Insolvency Proceeding), the validity, priority (except to the extent expressly
provided by this Agreement), enforceability, or perfection of the Liens of
Second Lien Agent (on behalf of itself and the Second Lien Lenders) in any
Collateral, the validity, priority (except to the extent expressly provided by
this Agreement), enforceability or allowance of any of the claims of Second Lien
Agent or any holder of Second Lien Indebtedness against any Obligor or the
validity or enforceability of this Agreement or any of the provisions hereof.
Solely to the extent that Second Lien Agent is permitted to Exercise Secured
Creditor Remedies under this Agreement, each of First Lien Agent and First Lien
Co-Agent agrees that neither it nor the First Lien Lenders will take any action
that would interfere with any Exercise of Secured Creditor Remedies undertaken
by Second Lien Agent under the Second Lien Loan Documents, including any public
or private sale, lease, exchange, transfer, or other disposition of any
Collateral, whether by foreclosure or otherwise, in any case so long as Second
Lien Agent does not act in contravention of this Agreement or applicable law.
g. Acknowledgement of Liens. The Second Lien Agent acknowledges and
agrees that the First Lien Agent, for the benefit of itself, the First Lien
Co-Agent and the First Lien Lenders, has been and may be granted Liens upon all
of the Collateral in which the Second Lien Agent has been granted Liens and the
Second Lien Agent hereby consents thereto. Each of First Lien Agent and First
Lien Co-Agent acknowledges and agrees that Second Lien Agent, for the benefit of
itself and the Second Lien Lenders, has been or, subject to the terms of this
11
Agreement, may be granted Liens upon all of the Collateral in which the First
Lien Agent and First Lien Co-Agent has been granted Liens and each of the First
Lien Agent and First Lien Co-Agent hereby consents thereto. The Second Lien
Agent agrees that neither it nor any Second Lien Lender shall obtain a Lien on
any asset or Collateral to secure all or any portion of the Second Lien
Indebtedness unless concurrently therewith, the First Lien Agent (on behalf of
itself, the First Lien Co-Agent and the First Lien Lenders) obtains a Lien on
such asset or Collateral and the parties hereby agree that all such Liens are
and will be subject to this Agreement. The subordination of Liens by the Second
Lien Agent in favor of the First Lien Agent, the First Lien Co-Agent and the
First Lien Lenders shall not be deemed to subordinate the Second Lien Agent's
Liens to the Liens of any other Person that is not a holder of First Lien
Indebtedness.
h. Agent for Perfection. First Lien Agent and First Lien Co-Agent,
on the one hand, and Second Lien Agent, on the other hand, each agree to hold
all Control Collateral and Cash Collateral, as applicable, in their respective
possession, custody, or control (or in the possession, custody, or control of
agents or bailees for either) as a non-fiduciary agent for the other solely for
the purpose of perfecting the security interest granted to each in such Control
Collateral or Cash Collateral subject to the terms and conditions of this
Section 2.h. None of First Lien Agent, First Lien Co-Agent or the First Lien
Lenders, on the one hand, or Second Lien Agent or the Second Lien Lenders, on
the other hand, as applicable, shall have any obligation whatsoever to the
others to assure that the Control Collateral is genuine or owned by any Obligor
or any other Person or to preserve their respective rights or benefits or those
of any Person. The duties or responsibilities of First Lien Agent, First Lien
Co-Agent and Second Lien Agent under this Section 2.h are and shall be limited
solely to holding or maintaining control of the Control Collateral and the Cash
Collateral as a non-fiduciary agent for the other for purposes of perfecting the
Lien held by Second Lien Agent, on the one hand, or First Lien Agent or First
Lien Co-Agent, on the other hand, as applicable. Neither First Lien Agent nor
First Lien Co-Agent is and shall not be deemed to be a fiduciary of any kind for
Second Lien Agent or any other Person. Second Lien Agent is not and shall not be
deemed to be a fiduciary of any kind for First Lien Agent, First Lien Co-Agent
or any other Person.
After the Discharge of First Lien Indebtedness shall have occurred, First
Lien Agent and First Lien Co-Agent, upon the reasonable request of Second Lien
Agent, (a) shall promptly deliver any Cash Collateral or Control Collateral, if
any, in their possession to Second Lien Agent, and (b) will reasonably cooperate
(subject to First Lien Agent and First Lien Co-Agent obtaining satisfactory
indemnity agreements from the Obligors and/or such other Persons as First Lien
Agent or First Lien Co-Agent may reasonably require) with the Obligors and
Second Lien Agent in order to transfer or assign (to the extent permitted by the
applicable agreement) control of the remainder of the Cash Collateral or Control
Collateral, if any, under either of First Lien Agent's or First Lien Co-Agent's
control to Second Lien Agent, in each case, at the sole cost and expense of the
Obligors and except as may otherwise be required by applicable law or court
order. Notwithstanding the foregoing, if this Agreement is reinstated pursuant
to Section 5.c hereof and any Cash Collateral or Control Collateral has
heretofore been delivered to the Second Lien Agent pursuant to this Section 2.h
or is otherwise in the possession or control of Second Lien Agent or any Second
Lien Lender, then, upon such reinstatement, (i) Second Lien Agent and each
Second Lien Lender shall promptly deliver any Cash Collateral or Control
Collateral, if any, in their possession to First Lien Agent, and First Lien
Agent shall hold any such Cash
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Collateral or Control Collateral in accordance with the first sentence of this
Section 2.h, and (ii) the Obligors and Second Lien Agent will reasonably
cooperate with First Lien Agent and First Lien Co-Agent in order to transfer or
assign (to the extent permitted by the applicable agreement) control of any Cash
Collateral or Control Collateral, if any, under Second Lien Agent's or any
Second Lien Lender's control to First Lien Agent (to be held in accordance with
the first sentence of this Section 2.h), in each case, at the sole cost and
expense of the Obligors and except as may otherwise be required by applicable
law or court order.
3. Permitted Applications of Proceeds of Collateral. So long as an
Application of Proceeds Blockage Period is not then in effect, the Borrowers may
pay or apply, and Second Lien Agent and the Second Lien Lenders may accept and
receive on account of the Second Lien Indebtedness, any Proceeds of Collateral
whatsoever on account of the Second Lien Indebtedness in accordance with the
terms of the Second Lien Loan Documents (any such application being referred to
as a "Permitted Application of Proceeds of Collateral").
4. Application of Proceeds after Exercise of Remedies.
a. In the event that (i) a First Lien Default shall have occurred
and be continuing and (ii) First Lien Agent or First Lien Co-Agent shall have
commenced and shall be diligently pursuing any Exercise of Secured Creditor
Remedies against all or a material portion of the Collateral and shall be
applying all Proceeds of Collateral (to the extent received) in accordance with
Section 9 (the occurrence and continuance of items (i) and (ii), collectively,
an "Application of Proceeds Blockage Event"), then from and after the
commencement of such Application of Proceeds Blockage Event, no Proceeds of
Collateral shall be paid or applied by any Obligor, and neither Second Lien
Agent nor any Second Lien Lender shall accept, take or receive, any Proceeds of
Collateral, on account of the Second Lien Indebtedness until the earlier to
occur of (a) the date of the Discharge of First Lien Indebtedness and (b) the
date of termination (including, without limitation, as a result of the failure
of any of items (i) or (ii) above to be continuing) or written waiver by First
Lien Agent or First Lien Co-Agent of such Application of Proceeds Blockage Event
(such period of time being an "Application of Proceeds Blockage Period").
b. In the event that, notwithstanding the terms of the foregoing
Section 4a, the Obligors shall pay or apply or Second Lien Agent or the Second
Lien Lenders shall receive any Proceeds of Collateral on account of the Second
Lien Indebtedness during an Application of Proceeds Blockage Period, then and in
such event the turn-over and other obligations of Second Lien Agent set forth in
Section 8 shall apply.
c. In the case of any Permitted Application of Proceeds of
Collateral on or in respect of any Second Lien Indebtedness that would (in the
absence of any Application of Proceeds Blockage Period) have been made during
any Application of Proceeds Blockage Period, the provisions of this Section 4
shall not prevent the application of (and the Obligor may pay or apply and
Second Lien Agent and the Second Lien Lenders may accept, take and receive) such
Permitted Application of Proceeds of Collateral on or after the date immediately
following the termination of such Application of Proceeds Blockage Period.
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5. Insolvency Proceeding.
a. Continuing Priority. This Agreement shall be applicable both
before and after the filing of any Insolvency Proceeding against any Obligor and
all converted or succeeding cases in respect thereof. The relative rights of the
Agents and the Lenders in or to any distributions from or in respect of any
Collateral or Proceeds of Collateral, shall continue after the filing thereof on
the same basis as prior to the date of the petition, subject to any court order
approving the financing of, or use of cash collateral by, the Borrowers or any
other Obligor as debtor-in-possession. Second Lien Agent acknowledges and agrees
that, in the event of a distribution of any notes or other debt securities under
a plan of reorganization under any such Insolvency Proceeding (such notes or
other debt securities, "Reorganization Debt Securities") to each of (i) First
Lien Agent, First Lien Co-Agent and the First Lien Lenders and (ii) Second Lien
Agent and the Second Lien Lenders, such Reorganization Debt Securities received
by Second Lien Agent and the Second Lien Lenders shall be subordinated to the
Reorganization Debt Securities received by First Lien Agent, First Lien Co-Agent
and the First Lien Lenders on terms acceptable to First Lien Agent, First Lien
Co-Agent and the First Lien Lenders.
b. Proof of Claim. Subject to the restrictions set forth in this
Agreement, in the event of any Insolvency Proceeding involving any Obligor or
any property of any Obligor, Second Lien Agent shall retain the right to vote on
behalf of Second Lien Lenders with respect to the Second Lien Indebtedness. If
Second Lien Agent or any Second Lien Lender does not file a proper claim or
proof of debt or other document or amendment thereof in the form required in any
Insolvency Proceeding prior to 5 days before the expiration of time to file such
claim or other document or amendment thereof, then First Lien Agent or First
Lien Co-Agent shall have the right (but not the obligation) in any such
Insolvency Proceeding, and Second Lien Agent, on behalf of itself and each
Second Lien Lender, hereby irrevocably appoints each of First Lien Agent and
First Lien Co-Agent as Second Lien Agent's and Second Lien Lenders' lawful
attorney in fact, to file and prove all claims therefor.
c. Reinstatement. If First Lien Agent, First Lien Co-Agent, any
First Lien Lender or any other holder of any First Lien Indebtedness is required
in any Insolvency Proceeding or otherwise to turn over or otherwise pay any
amount (a "Recovery") to the estate or to any creditor or representative of an
Obligor or any other Person, then the First Lien Indebtedness shall be
reinstated to the extent of such Recovery. If this Agreement shall have been
terminated prior to such Recovery, this Agreement shall be reinstated in full
force and effect, and such prior termination shall not diminish, release,
discharge, impair, or otherwise affect the obligations of the parties hereto
from such date of reinstatement. All rights, interests, agreements, and
obligations of First Lien Agent, First Lien Co-Agent, the First Lien Lenders and
Second Lien Agent and the Second Lien Lenders under this Agreement shall remain
in full force and effect and shall continue irrespective of the commencement of,
or any discharge, confirmation, conversion, or dismissal of any Insolvency
Proceeding by or against any Obligor or any other Person and irrespective of any
other circumstance which otherwise might constitute a defense available to, or a
discharge of any Obligor or any other Person in respect of the First Lien
Indebtedness. No priority or right of First Lien Agent, First Lien Co-Agent, the
First Lien Lenders or any other holder of First Lien Indebtedness shall at any
time be prejudiced or impaired in any way by any act or failure to act on the
part of any Obligor or any other Person or by the noncompliance by any Person
with the terms, provisions, or covenants of the First Lien
14
Loan Documents or the Second Lien Loan Documents, regardless of any knowledge
thereof which First Lien Agent, First Lien Co-Agent, the First Lien Lenders or
any holder of First Lien Indebtedness may have.
d. DIP Financing. If any Borrower or any other Obligor shall be
subject to any Insolvency Proceeding and First Lien Co-Agent and/or First Lien
Agent shall desire, prior to the Discharge of First Lien Indebtedness, to permit
the use of cash collateral or to provide any such Obligor financing (or to
permit any such Obligor to obtain financing) (collectively, "DIP Financing")
under Section 363 or Section 364 of the Bankruptcy Code (or any similar
provision under the law applicable to any Insolvency Proceeding) to be secured
by all or any portion of the Collateral, then Second Lien Agent, on behalf of
itself and the Second Lien Lenders, agrees that, so long as (i) the aggregate
principal amount of Indebtedness incurred pursuant to such DIP Financing,
together with the aggregate principal amount of all other outstanding First Lien
Indebtedness, does not exceed the sum of $85,000,000, plus the First Lien
Amount, (ii) Second Lien Agent retains a Lien on the Collateral (including
Proceeds thereof arising after the commencement of such proceeding) with the
same priority as existed prior to the commencement of the case under applicable
law (an "Adequate Protection Lien"), and (iii) such use of cash collateral or
DIP Financing is subject to the terms of this Agreement, it will raise no
objection to such DIP Financing. Second Lien Agent, on behalf of itself and the
Second Lien Lenders, hereby agrees that its Liens in the Collateral shall be
subordinated to such DIP Financing (and all obligations relating thereto) to the
same extent and upon the same terms and conditions specified in this Agreement.
e. Alternative DIP Financings. Nothing in this Agreement shall limit
the rights of any Lender to object to post-petition financing or the use of cash
collateral that is provided on terms in contravention of Section 5.d.
f. Priming DIP Financing. Second Lien Agent, on behalf of itself and
the Second Lien Lenders, agrees that it shall not, directly or indirectly,
provide, offer to provide or support any DIP Financing secured by a Lien senior
to or pari passu with the Liens securing the First Lien Indebtedness. Each of
First Lien Agent and First Lien Co-Agent, on behalf of itself and the First Lien
Lenders, agrees that it shall not, directly or indirectly, provide, offer to
provide or support any DIP Financing on terms in contravention of Section 5.d.
g. Other Waivers by Second Lien Agent. Second Lien Agent, on behalf
of itself and the Second Lien Lenders, agrees that it shall not (without the
First Lien Agent's and First Lien Co-Agent's prior written consent), in any
capacity, in connection with an Insolvency Proceeding of any Obligor: (i) seek
relief from the automatic stay of Section 362 of the Bankruptcy Code or any
other stay in any Insolvency Proceeding in respect of any portion of the
Collateral on which First Lien Agent or First Lien Co-Agent then has or purports
to have a Lien; (ii) seek or request any adequate protection, other than
Adequate Protection Liens, Permitted Replacement Liens and Permitted Interest
Payments, as expressly provided herein; (iii) object to any sale of all or any
portion of the Collateral in accordance with Sections 363 or 365 of the
Bankruptcy Code other than (A) any objection that an unsecured creditor could
assert or (B) if First Lien Agent, First Lien Co-Agent or any First Lien Lender
objects to any such sale to the same extent as such objection; (iv) seek, or
support any request, to dismiss any Insolvency Proceeding or to convert any
chapter 11 case of any such party from chapter 11 to chapter 7 of
15
the Bankruptcy Code; (v) seek, or support any request for, the appointment of a
trustee pursuant to section 1104(a)(1) of the Bankruptcy Code; (vi) seek, or
support any request for, the appointment of any examiner or such other
disinterested person with expanded powers pursuant to section 1104(c) of the
Bankruptcy Code; (vii) seek, or support any request for, the entry of any order
modifying, reversing, revoking, staying, rescinding, vacating or amending any
DIP Financing order pursuant to which the First Lien Agent, First Lien Co-Agent
and/or the First Lien Lenders have provided such financing; (viii) propose, vote
in favor of or otherwise approve or support any plan of reorganization,
arrangement or liquidation, or file any motion or pleading in support of any
plan of reorganization, arrangement or liquidation, unless it provides for the
Discharge of First Lien Debt; (ix) object to the treatment under a plan of
reorganization or arrangement of the First Lien Lenders' claims with respect to
the First Lien Debt; (x) take any action or vote in any way so as to directly or
indirectly challenge or contest (A) the validity or the enforceability of the
First Lien Credit Agreement, the other First Lien Loan Documents or the liens
and security interests granted to First Lien Agent, First Lien Co-Agent and the
First Lien Lenders with respect to the First Lien Indebtedness, (B) the rights
and duties of First Lien Agent, First Lien Co-Agent and the First Lien Lenders
established in the First Lien Credit Agreement or any other First Lien Loan
Document, or (C) the validity or enforceability of this Agreement; or (xi) take
any other action which would reasonably be expected to have a material adverse
effect on the validity of, or the value of, the First Lien Agent's or First Lien
Co-Agent's security interest in the Collateral or the claims of the First Lien
Lenders. Without in any way limiting the foregoing, Second Lien Lenders, in
their capacity as unsecured creditors in connection with an Insolvency
Proceeding of any Borrower or Guarantor, shall be permitted to exercise all
other rights as unsecured creditors, including, without limitation, the right to
take the following actions (but with respect to the exercise of any such rights,
only to the extent that doing so would not be inconsistent with clauses (i)
through (xi) of the foregoing sentence): (I) object to or support the retention
of one or more professionals for the Borrowers, Guarantors or any committee
appointed in an Insolvency Proceeding (the "Insolvency Professionals"); (II)
object to or support the fees and expenses of Insolvency Professionals; (III)
object to or support the approval of settlements and compromises of claims of
parties (other than First Lien Agent, First Lien Co-Agent and the First Lien
Lenders); (IV) object to motions for relief from the automatic stay (other than
any such motion filed by First Lien Agent, First Lien Co-Agent and/or the First
Lien Lenders); (V) object to or support motions to assume or reject or compel
assumption or rejection of executory contracts and leases of non-residential
real property; (VI) seek to terminate any exclusive periods for filing or
soliciting acceptances to a plan or plans of reorganization; and (VII) take
actions similar to the actions described in the clauses (I) through (VI) of this
sentence.
h. Other Waivers by First Lien Agent and First Lien Co-Agent. Until
the Discharge of Second Lien Indebtedness has occurred, each of First Lien Agent
and First Lien Co-Agent, on behalf of itself and the First Lien Lenders, agrees
that it shall not without Second Lien Agent's written consent to the contrary,
take any action or vote in any way so as to directly or indirectly challenge or
contest (A) the validity or the enforceability of the Second Lien Credit
Agreement, the other Second Lien Loan Documents or the liens and security
interests granted to Second Lien Agent and the Second Lien Lenders with respect
to the Second Lien Indebtedness, (B) the rights and duties of Second Lien Agent
and the Second Lien Lenders established in the Second Lien Credit Agreement or
any other Second Lien Loan Document to the extent that such
16
rights and duties are not and/or have not been exercised in contravention of
this Agreement, or (C) the validity or enforceability of this Agreement.
i. Rights of Second Lien Agent and Second Lien Lenders to Adequate
Protection. Each of First Lien Agent and First Lien Co-Agent, on behalf of
itself and the First Lien Lenders, agrees that it will raise no objection to a
request for adequate protection by Second Lien Agent and the Second Lien Lenders
in the form of (i) payment of interest on the Second Lien Indebtedness during
the pendency of an Insolvency Proceeding so long as (A) the rate of interest so
requested by Second Lien Agent and the Second Lien Lenders does not exceed the
default rate of interest applicable to the Second Lien Indebtedness immediately
prior to the commencement of such Insolvency Proceeding and (B) the First Lien
Agent, First Lien Co-Agent and the First Lien Lenders receive adequate
protection in the form of payment of interest on the First Lien Indebtedness
during the pendency of such Insolvency Proceeding at a rate at least equal to
the greater of (x) the non-default contractual rate of interest applicable to
the First Lien Indebtedness immediately prior to the commencement of such
Insolvency Proceeding and (y) the rate of interest so requested by the Second
Lien Agent and the Second Lien Lenders ("Permitted Interest Payments"), (ii)
Adequate Protection Liens and (iii) a replacement lien on post-petition assets
to the same extent granted to First Lien Agent, with the same priority as
existed prior to the commencement of the case under applicable law (a "Permitted
Replacement Lien").
6. Modifications of Indebtedness.
a. First Lien Indebtedness. All First Lien Indebtedness at any time
incurred by any Obligor shall be deemed to have been incurred, and all First
Lien Indebtedness held by any First Lien Lender or other holder of First Lien
Indebtedness shall be deemed to have been extended, acquired or obtained, as
applicable, in reliance upon this Agreement, and, to the extent not otherwise
required herein, Second Lien Agent, on behalf of itself and each Second Lien
Lender, hereby waives (i) notice of acceptance, or proof of reliance, by First
Lien Agent, First Lien Co-Agent, the First Lien Lenders or any other holder of
First Lien Indebtedness of this Agreement, and (ii) notice of the existence,
renewal, extension, accrual, creation, or non-payment of all or any part of the
First Lien Indebtedness. Nothing contained in this Agreement shall preclude
First Lien Agent, First Lien Co-Agent, First Lien Lenders or any other holder of
First Lien Indebtedness from discontinuing the extension of credit to any
Obligor (whether under the First Lien Credit Agreement or otherwise). Anything
in the Second Lien Loan Documents to the contrary notwithstanding, Second Lien
Agent, on behalf of itself and each Second Lien Lender, hereby agrees that First
Lien Agent and First Lien Co-Agent shall have the right, at any time and from
time to time, in its sole discretion without the consent of or notice to Second
Lien Agent or any Second Lien Lender (except to the extent such notice or
consent is required pursuant to the express provisions of this Agreement), and
without incurring any liability to Second Lien Agent or any Second Lien Lender
amend, restate, waive, supplement, replace, refinance, extend, consolidate,
restructure, or otherwise modify (collectively, any "First Lien Modification")
the First Lien Loan Documents, in any manner whatsoever, including any renewals,
extensions or shortening of time of payments (even if such shortening causes any
First Lien Indebtedness to be due on demand or otherwise), and Second Lien
Agent, on behalf of itself and each Second Lien Lender, consents and agrees to
any such First Lien Modification. Second Lien Agent, on behalf of itself and
each Second Lien Lender, waives notice of any such
17
First Lien Modification, and agrees that no such First Lien Modification shall
affect, release, or impair the subordinations or any other obligations of Second
Lien Agent or any Second Lien Lender contained herein.
b. Second Lien Indebtedness. Anything in the First Lien Loan
Documents to the contrary notwithstanding, Second Lien Agent shall not amend,
restate, waive, supplement, replace, refinance, extend, consolidate,
restructure, or otherwise modify the Second Lien Loan Documents in any manner
whatsoever without the prior written consent of the First Lien Agent or First
Lien Co-Agent (acting upon the direction of the requisite First Lien Lenders).
c. Notice of Acceptance and Other Waivers.
(1) To the fullest extent permitted by applicable law, Second Lien
Agent, on behalf of itself and each Second Lien Lender, hereby waives: (i)
notice of acceptance hereof; (ii) notice of any loans or other financial
accommodations made or extended under the First Lien Credit Agreement, or the
creation or existence of any First Lien Indebtedness; (iii) notice of the amount
of the First Lien Indebtedness; (iv) notice of any adverse change in the
financial condition of any Obligor or of any other fact that might increase such
Second Lien Agent's or such Second Lien Lender's risk hereunder; (v) notice of
presentment for payment, demand, protest, and notice thereof as to any
instrument among the First Lien Loan Documents; (vi) notice of any Default or
Event of Default under the First Lien Loan Documents or otherwise relating to
the First Lien Indebtedness; and (vii) all other notices (except if such notice
is specifically required to be given to Second Lien Agent under this Agreement)
and demands to which Second Lien Agent or any Second Lien Lender might otherwise
be entitled. To the fullest extent permitted by applicable law, Second Lien
Agent, on behalf of itself and each Second Lien Lender, waives the right by
statute or otherwise to require First Lien Agent, First Lien Co-Agent or any
holder of First Lien Indebtedness to institute suit against any Obligor or to
exhaust any rights and remedies which First Lien Agent, First Lien Co-Agent, any
First Lien Lender or any holder of First Lien Indebtedness has or may have
against any Obligor. Second Lien Agent, on behalf of itself and each Second Lien
Lender, further waives any defense arising by reason of any disability or other
defense of any Obligor or by reason of the cessation from any cause whatsoever
of the liability of such Obligor in respect thereof.
(2) To the fullest extent permitted by applicable law, Second Lien
Agent, on behalf of itself and each Second Lien Lender, hereby waives: (i) any
rights to assert against First Lien Agent, First Lien Co-Agent, the First Lien
Lenders or any other holder of First Lien Indebtedness any defense (legal or
equitable), set-off, counterclaim, or claim which such Second Lien Agent or any
Second Lien Lender may now or at any time hereafter have against any Obligor;
(ii) except as otherwise set forth in this Agreement, any defense, set-off,
counterclaim, or claim, of any kind or nature, arising directly or indirectly
from the present or future lack of perfection, sufficiency, validity, or
enforceability of any First Lien Indebtedness, any Second Lien Indebtedness or
any security for either; and (iii) the benefit of any statute of limitations
affecting Second Lien Agent's or any Second Lien Lender's obligations hereunder
or the enforcement thereof, and any act which shall defer or delay the operation
of any statute of limitations applicable to the First Lien Indebtedness shall
similarly operate to defer or delay the operation of such statute of limitations
applicable to such Second Lien Agent's or any such Second Lien Lender's
obligations hereunder.
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(3) Until such time as the Discharge of First Lien Indebtedness
shall have occurred, Second Lien Agent, on behalf of itself and each Second Lien
Lender, hereby postpones any right of subrogation Second Lien Agent or any
Second Lien Lender has or may have as against any Obligor with respect to any
First Lien Indebtedness.
(4) None of First Lien Agent, First Lien Co-Agent, any First Lien
Lender or any other holder of First Lien Indebtedness or any of their respective
affiliates, directors, officers, employees, or agents shall be liable for
failure to demand, collect, or realize upon any of the Collateral or any
Proceeds or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral or Proceeds thereof or to take any other
action whatsoever with regard to the Collateral or any part or Proceeds thereof.
If First Lien Agent, First Lien Co-Agent or any First Lien Lender honors (or
fails to honor) a request by the Borrowers for an extension of credit pursuant
to the First Lien Credit Agreement or any of the other First Lien Loan
Documents, whether First Lien Agent, First Lien Co-Agent or any First Lien
Lender has knowledge that the honoring of (or failure to honor) any such request
would constitute a default under the terms of the Second Lien Loan Documents or
an act, condition, or event that, with the giving of notice or the passage of
time, or both, would constitute such a default, or if First Lien Agent, First
Lien Co-Agent or any First Lien Lender otherwise should exercise any of its
contractual rights or remedies under the First Lien Loan Documents (subject to
the express terms and conditions hereof), neither First Lien Agent, First Lien
Co-Agent nor any First Lien Lender shall have any liability whatsoever to Second
Lien Agent or any Second Lien Lender as a result of such action, omission, or
exercise. Each of First Lien Agent, First Lien Co-Agent and each First Lien
Lender will be entitled to manage and supervise its loans and extensions of
credit under the First Lien Loan Documents as First Lien Agent, First Lien
Co-Agent and First Lien Lenders may, in their sole discretion, deem appropriate,
and First Lien Agent, First Lien Co-Agent, each First Lien Lender and each other
holder of First Lien Indebtedness may manage their loans and extensions of
credit without regard to any rights or interests that Second Lien Agent or any
Second Lien Lender may have in the Collateral or otherwise except as otherwise
expressly set forth in this Agreement. Second Lien Agent, on behalf of itself
and each Second Lien Lender, agrees that none of First Lien Agent, First Lien
Co-Agent, any First Lien Lender or any other holder of First Lien Indebtedness
shall incur any liability as a result of a sale, lease, license, application or
other disposition of all or any portion of the Collateral or any part or
Proceeds thereof conducted in accordance with applicable law and the terms
hereof. Subject to the express terms and conditions of this Agreement, First
Lien Agent, First Lien Co-Agent, each First Lien Lender and each other holder of
First Lien Indebtedness may, from time to time, enter into agreements and
settlements with Obligors as it may determine in its sole discretion without
impairing any of the subordinations, priorities, rights or obligations of the
parties under this Agreement, including substituting Collateral, releasing any
Lien and releasing any Obligor. Second Lien Agent, on behalf of itself and each
Second Lien Lender, waives any and all rights it may have to require First Lien
Agent, First Lien Co-Agent, any First Lien Lender or any holder of First Lien
Indebtedness to marshal assets, to exercise rights or remedies in a particular
manner, or to forbear from exercising such rights and remedies in any particular
manner or order.
7. Indebtedness Owed Only to Lenders. The entire Second Lien Indebtedness
is owing only to the Second Lien Agent and the Second Lien Lenders. None of
Second Lien Agent nor the Second Lien Lenders may sell or assign or otherwise
transfer any part of its interest in the Second Lien Indebtedness or the
Collateral, other than (a) assignments to entities that are Second
19
Lien Lenders prior to such assignment and (b) participations in accordance with
the Second Lien Credit Agreement, unless, in each case, the transferee executes
and delivers to First Lien Agent and First Lien Co-Agent a written
acknowledgment in which the transferee acknowledges in writing its agreement to
be bound by the terms hereof. Any assignment in violation of the immediately
preceding sentence shall be null and void (it being understood and agreed that
if Second Lien Agent resigns and no successor Agent is appointed in accordance
with Section 12.9 of the Second Lien Credit Agreement, such resignation shall be
effective so long as such resignation is effective under the Second Lien Credit
Agreement and the resigning Second Lien Agent shall have no further obligation
hereunder (other than its obligations pursuant to the last sentence of Section
2.h hereof, after this Agreement has been reinstated pursuant to Section 5.c
hereof, to deliver possession, or transfer or assign control, as the case may
be, of any Cash Collateral or Control Collateral then held or controlled by the
resigning Second Lien Agent in respect of the resigning Second Lien Agent's
obligation to continue to hold any collateral security held by the resigning
Second Lien Agent on behalf of the Second Lien Lenders under any Second Lien
Loan Document until such time as a successor Agent under the Second Lien Credit
Agreement is appointed), provided that, if at any subsequent time, any person is
appointed as successor Agent under the Second Lien Credit Agreement or any other
Second Lien Loan Document, such appointment shall not be effective unless and
until such successor Agent acknowledges in writing its agreement to be bound by
the terms hereof; provided that such acknowledgment shall not be required to the
extent the Required Lenders (as defined in the Second Lien Credit Agreement)
serve as successor Second Lien Agent under the Second Lien Credit Agreement;
provided, however, that, notwithstanding anything to the contrary contained in
this Agreement, if at any time such Required Lenders under the Second Lien
Credit Agreement serve as successor Second Lien Agent, then, during such period,
the term "Second Lien Agent" used throughout this Agreement shall mean, and
shall include, for all purposes, such Required Lenders under the Second Lien
Credit Agreement). Second Lien Agent under any Second Lien Credit Agreement that
replaces or refinances the Original Second Lien Credit Agreement shall not be
entitled to any of the benefits of this Agreement unless and until such Second
Lien Agent acknowledges its agreement to be bound by the terms hereof, but shall
be subject to the burdens and obligations, including, without limitation, the
lien subordination, provided for herein.
8. Payments Received by Second Lien Agent or the Second Lien Lenders. If at
any time prior to the date upon which the Discharge of First Lien Indebtedness
shall have occurred, Second Lien Agent or any Second Lien Lender receives any
payment or distribution of any kind or character, whether as a result of an
Exercise of Any Secured Creditor Remedies or otherwise, whether in cash,
property or securities, from or of any assets of any Obligor (or any Obligor's
Subsidiaries), irrespective of whether such payment or distribution was of
Collateral or of Proceeds thereof, in each case, in contravention of the express
terms of this Agreement, Second Lien Agent or such Second Lien Lender shall be
deemed to receive and hold the same in trust as trustee for the benefit of First
Lien Agent, First Lien Co-Agent and the First Lien Lenders and shall forthwith
deliver such payment, distribution, or proceeds to First Lien Agent in precisely
the form received (except for the endorsement or assignment by Second Lien Agent
or such Second Lien Lender where necessary), for application on any of the First
Lien Indebtedness, whether then due or yet to become due. In the event of the
failure of Second Lien Agent or any Second Lien Lender to make any such
endorsement or assignment to First Lien Agent within five (5) Business Days
after receipt of written request therefor from First Lien Agent or
20
First Lien Co-Agent, First Lien Agent, First Lien Co-Agent and any of their
respective officers or agents are hereby irrevocably authorized to make such
endorsement or assignment and Second Lien Agent, on behalf of itself and each
Second Lien Lender, hereby irrevocably appoints each of First Lien Agent and
First Lien Co-Agent as the lawful attorney in fact of Second Lien Agent and
Second Lien Lenders solely for the purpose of enabling First Lien Agent and/or
First Lien Co-Agent to make such endorsement or assignment in the name of Second
Lien Agent or any Second Lien Lender.
9. Application of Proceeds.
a. Revolving Nature of First Lien Indebtedness. Second Lien Agent,
for and on behalf of itself and the Second Lien Lenders, expressly acknowledges
and agrees that (i) a portion of the First Lien Credit Agreement is a revolving
commitment, that in the ordinary course of business First Lien Agent, First Lien
Co-Agent and the First Lien Lenders will apply payments and make advances
thereunder, and that no application of any Payment Collateral or Cash Collateral
in the ordinary course of business and absent any affirmative enforcement action
or remedies by First Lien Agent, First Lien Co-Agent or any First Lien Lender to
collect or otherwise realize upon such Payment Collateral or Cash Collateral
(such Payment Collateral or Cash Collateral, "Ordinary Course Collections")
shall constitute the Exercise of Secured Creditor Remedies under this Agreement;
and (ii) all Ordinary Course Collections received by First Lien Agent, First
Lien Co-Agent or First Lien Lenders may be applied, reversed, reapplied,
credited, or reborrowed, in whole or in part, to the portion of the First Lien
Credit Agreement that is a revolving commitment without reducing the Maximum
Amount at any time. Notwithstanding anything to the contrary contained in this
Agreement, the parties hereto hereby agree that all applications of Payment
Collateral or Cash Collateral by First Lien Agent, First Lien Co-Agent or any
First Lien Lender to First Lien Indebtedness (x) from and after an Exercise of
Secured Creditor Remedies by First Lien Agent, First Lien Co-agent or any First
Lien Lender (it being understood and agreed that, subject to clause (y) below,
First Lien Agent shall not be obligated to apply Ordinary Course Collections in
accordance with Section 9.b even if First Lien Agent, First Lien Co-Agent or any
First Lien Lender is otherwise Exercising Secured Creditor Remedies at such time
so long as such Ordinary Course Collections do not arise from such Exercise of
Secured Creditor Remedies) or (y) from and after the termination or expiration
of the Application of Proceeds Blockage Period (if at such time any payment
default has occurred and is continuing with respect to the Second Lien
Indebtedness) shall constitute Proceeds of Collateral and shall be applied in
accordance with Section 9.b.
b. All Collateral and all Proceeds, received by any of First Lien
Agent, First Lien Co-Agent, First Lien Lenders, Second Lien Agent or Second Lien
Lenders in connection with any Exercise of Secured Creditor Remedies shall be
applied:
first, to the payment of costs and expenses of First Lien Agent and
First Lien Co-Agent in connection with such Exercise of Secured
Creditor Remedies,
second, to the payment of the First Lien Indebtedness in accordance
with the First Lien Loan Documents, together with the concurrent
permanent reduction of any credit commitment thereunder in an amount
equal to the amount of such payment, and
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third, to the payment of the Second Lien Indebtedness in accordance
with the Second Lien Loan Documents.
10. Second Lien Lender Purchase Option.
a. Upon (i) receipt by Second Lien Agent of a notice (a "Trigger
Notice") by First Lien Agent or First Lien Co-Agent of the intent of First Lien
Agent, First Lien Co-Agent and the First Lien Lenders to Exercise Any Secured
Creditor Remedies, (ii) the commencement of an Insolvency Proceeding with
respect to any Obligor, or (iii) receipt by Second Lien Agent of a Standstill
Notice (each a "Trigger Event"), Second Lien Agent and the Second Lien Lenders
shall have the option, exercised by delivery of written notice by Second Lien
Agent to First Lien Agent and First Lien Co-Agent (a "Purchase Notice"), to
purchase all (but not less than all) of the First Lien Indebtedness from First
Lien Agent, First Lien Co-Agent and the First Lien Lenders. The Purchase Notice
shall be irrevocable.
b. First Lien Agent or First Lien Co-Agent shall deliver to Second
Lien Agent any Trigger Notice referred to in Section 10.a(i) above (i) in the
absence of an Exigent Circumstance (defined below), not less than 5 Business
Days prior to the taking of the actions described in Section 10.a(i) or (ii) if
Exigent Circumstances exist, as soon as practicable and in any event
contemporaneously with the taking of such action. Second Lien Agent may send to
First Lien Agent and First Lien Co-Agent a Purchase Notice within 5 Business
Days of the occurrence of a Trigger Event, in which event, First Lien Agent,
First Lien Co-Agent and the First Lien Lenders shall not Exercise Any Secured
Creditor Remedies, to the extent such action has not been taken, provided, that,
the purchase and sale with respect to the First Lien Indebtedness provided for
in this Section 10 shall have closed within 5 Business Days after receipt by
First Lien Agent and First Lien Co-Agent of the Purchase Notice and First Lien
Agent (on behalf of itself and First Lien Co-Agent and the First Lien Lenders)
shall have received payment in full of the First Lien Indebtedness as provided
for herein within such 5 Business Day period. As used herein, "Exigent
Circumstance" shall mean an event or circumstance that materially and imminently
threatens the ability of First Lien Agent or First Lien Co-Agent to realize upon
all or a material part of the Collateral, such as, without limitation,
fraudulent removal, concealment, or abscondment thereof, destruction (other than
to the extent covered by insurance) or material waste thereof, or the failure of
any Obligor after reasonable demand to maintain or reinstate adequate casualty
insurance coverage with respect thereto.
c. On the date specified by Second Lien Agent in the Purchase Notice
(which shall not be more than 5 Business Days after the receipt by First Lien
Agent and First Lien Co-Agent of the Purchase Notice), First Lien Agent, First
Lien Co-Agent and the First Lien Lenders shall sell to the Second Lien Lenders,
and the Second Lien Lenders shall purchase from First Lien Agent, First Lien
Co-Agent and the First Lien Lenders, the First Lien Indebtedness.
d. Upon the date of such purchase and sale, the Second Lien Lenders
shall (i) pay to First Lien Agent, First Lien Co-Agent and the First Lien
Lenders as the purchase price therefor the full amount of all the First Lien
Indebtedness then outstanding and unpaid, (ii) furnish cash collateral to First
Lien Agent, First Lien Co-Agent and the First Lien Lenders in such amounts as
First Lien Agent and First Lien Co-Agent determine is reasonably necessary to
secure First Lien Agent, First Lien Co-Agent and the First Lien Lenders in
connection with (A)
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any issued and outstanding letters of credit provided by First Lien Agent, First
Lien Co-Agent or any First Lien Lender (or letters of credit that First Lien
Agent, First Lien Co-Agent or any First Lien Lender has arranged to be provided
by third parties pursuant to the First Lien Loan Documents) to any Obligor (but
not in any event in an amount greater than 105% of the aggregate undrawn face
amount of such letters of credit), (B) Bank Product Obligations owing to the
Bank Product Providers (as defined in the Original First Lien Credit Agreement)
(but not in any event in an amount greater than the Bank Product Reserve (as
defined in the Original First Lien Credit Agreement) established in respect
thereof in accordance with the Original First Lien Credit Agreement), or (C)
Ledger Product Obligations owing to the providers of Ledger Products (as defined
in the Original First Lien Credit Agreement) (but not in any event in an amount
greater than any reserves established in respect thereof in accordance with the
Original First Lien Credit Agreement), and (iii) agree to reimburse First Lien
Agent, First Lien Co-Agent and the First Lien Lenders for all expenses to the
extent earned or due and payable in accordance with the First Lien Loan
Documents (including the reimbursement of extraordinary expenses, financial
examination expenses and appraisal fees), including principal, interest and fees
thereon and costs and expense of collection thereof (including reasonable
attorneys' fees and legal expenses). Such purchase price and cash collateral
shall be remitted by wire transfer in federal funds to such bank account of
First Lien Agent as First Lien Agent may designate in writing to Second Lien
Agent for such purpose. Interest shall be calculated to but excluding the
Business Day on which such purchase and sale shall occur if the amounts so paid
by Second Lien Agent and the Second Lien Lenders to the bank account designated
by First Lien Agent are received in such bank account prior to 2:00 p.m., New
York City time, and interest shall be calculated to and including such Business
Day if the amounts so paid by Second Lien Agent and the Second Lien Lenders to
the bank account designated by First Lien Agent are received in such bank
account later than 2:00 p.m., New York City time.
e. Such purchase shall be expressly made without representation or
warranty of any kind by First Lien Agent, First Lien Co-Agent and the First Lien
Lenders as to the First Lien Indebtedness so purchased or otherwise and without
recourse to First Lien Agent, First Lien Co-Agent or any First Lien Lender,
except that each First Lien Lender shall represent and warrant: (i) the amount
of the First Lien Indebtedness being purchased from it, (ii) that such First
Lien Lender owns its portion of the First Lien Indebtedness so purchased free
and clear of any Liens or encumbrances and (iii) such First Lien Lender has the
right to assign such First Lien Indebtedness and the assignment is duly
authorized by such First Lien Lender.
11. Representations. Each of First Lien Agent and First Lien Co-Agent
represents and warrants to Second Lien Agent that it has the requisite power and
authority to enter into, execute, deliver, and carry out the terms of this
Agreement on behalf of itself and the First Lien Lenders. Second Lien Agent
represents and warrants that it has the requisite power and authority to enter
into, execute, deliver, and carry out the terms of this Agreement on behalf of
itself and the Second Lien Lenders.
12. Additional Remedies. If Second Lien Agent or any Second Lien Lender
violates any of the terms of this Agreement, in addition to any remedies in law,
equity, or otherwise, First Lien Agent or First Lien Co-Agent may restrain such
violation in any court of law and may, in its own or in any Obligor's name,
interpose this Agreement as a defense in any action by Second Lien Agent or any
Second Lien Lender. Upon First Lien Agent's or First Lien Co-Agent's
23
written request and at the sole expense of Borrowers, Second Lien Agent and the
Second Lien Lenders will promptly take all actions reasonably requested by First
Lien Agent or First Lien Co-Agent, as the case may be, to carry out the purposes
and provisions of this Agreement.
13. Amendments. No amendment or waiver of any provision of this Agreement
nor consent to any departure by any party hereto shall be effective unless it is
in a written agreement executed by Second Lien Agent, First Lien Agent and First
Lien Co-Agent, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
14. Instrument Legends. Second Lien Agent agrees that the Second Lien
Credit Agreement, the face of each promissory note evidencing the Second Lien
Indebtedness or any portion thereof and any agreement purporting to grant any
security therefor, shall be inscribed with a legend (or otherwise contain a
provision) conspicuously indicating that such Second Lien Credit Agreement,
promissory note or security agreement is subject to the terms of this Agreement.
Any promissory note evidencing any of the Second Lien Indebtedness or any
portion thereof, and any agreement granting any security therefor, which is
hereafter executed will, on the date thereof, be inscribed with a similar legend
(or otherwise contain a similar provision). The Second Lien Credit Agreement
shall provide that each Second Lien Lender shall be required to execute a
writing, which may include the Second Lien Credit Agreement, agreeing to be
bound by the terms hereof, and providing that any assignment or transfer of any
or all of the Second Lien Indebtedness to any other Person without such other
Person's written agreement to be bound hereby shall be null and void.
15. Information Concerning Financial Condition. Each of Second Lien Agent
and each Second Lien Lender hereby assumes responsibility for keeping itself
informed of the financial condition of Obligors and of all other circumstances
bearing upon the risk of nonpayment of the Second Lien Indebtedness, and agrees
that First Lien Agent, First Lien Co-Agent and the First Lien Lenders have and
shall have no duty to advise Second Lien Agent or any Second Lien Lender of
information known to First Lien Agent, First Lien Co-Agent or any First Lien
Lender regarding such condition or any such circumstances. In the event First
Lien Agent, First Lien Co-Agent or any First Lien Lender, in their sole
discretion, undertake, at any time or from time to time, to provide any such
information to Second Lien Agent or the Second Lien Lenders, none of First Lien
Agent, First Lien Co-Agent or the First Lien Lenders shall be under any
obligation (i) to provide any such information to Second Lien Agent or Second
Lien Lenders on any subsequent occasion, (ii) to undertake any investigation, or
(iii) to disclose any information which, pursuant to its commercial finance
practices, First Lien Agent, First Lien Co-Agent or any First Lien Lender wishes
to maintain confidential. Second Lien Agent, on behalf of itself and the Second
Lien Lenders, acknowledges and agrees that none of First Lien Agent, First Lien
Co-Agent or any First Lien Lender has made any warranties or representations
with respect to the legality, validity, enforceability, collectability or
perfection of the First Lien Indebtedness or any liens or security interests
held in connection therewith.
16. Third Party Beneficiaries. This Agreement is solely for the benefit of
First Lien Agent, First Lien Co-Agent, First Lien Lenders, Second Lien Agent,
and the Second Lien Lenders, and their respective successors and assigns, and
neither any Obligor nor any other Persons are intended to be a third party
beneficiary hereunder or to have any right, benefit,
24
priority or interest under, or because of the existence of, or to have any right
to enforce, this Agreement. Nothing in this Agreement is intended to or shall be
deemed to amend or modify the terms and conditions of the First Lien Loan
Documents or the Second Lien Loan Documents. First Lien Agent, First Lien
Co-Agent and Second Lien Agent shall have the right to modify or terminate this
Agreement at any time without notice to or approval of any Obligor or any other
Person. The Obligors and the Second Lien Agent, on behalf of itself and each
Second Lien Lender, hereby agree that First Lien Agent, First Lien Co-Agent and
the First Lien Lenders are entitled to rely on and are intended beneficiaries of
each of Section 7.28 and Section 9.3 of the Second Lien Credit Agreement and
shall have the right to enforce such provisions against the Obligors, Second
Lien Agent and the Second Lien Lenders.
17. No Impairment. Nothing in this Agreement is intended to or shall
impair, as between Obligors and Second Lien Agent and the Second Lien Lenders,
the obligation of Obligors, which is absolute and unconditional, to pay the
Second Lien Indebtedness as and when the same shall become due and payable in
accordance with its terms, or affect the relative rights of Second Lien Agent
and the Second Lien Lenders and creditors of Obligors other than First Lien
Agent, First Lien Co-Agent and the First Lien Lenders.
18. Subrogation. Solely after the Discharge of First Lien Indebtedness
shall have occurred, Second Lien Agent and the Second Lien Lenders shall be
subrogated to the rights of First Lien Agent, First Lien Co-Agent and the First
Lien Lenders to the extent that distributions otherwise payable to Second Lien
Agent or any Second Lien Lender have been applied to the payment of the First
Lien Indebtedness in accordance with the provisions of this Agreement. First
Lien Agent, First Lien Co-Agent and the First Lien Lenders shall have no
obligation or duty to protect Second Lien Agent and the Second Lien Lenders'
rights of subrogation arising pursuant to this Agreement or under any applicable
law, nor shall First Lien Agent, First Lien Co-Agent, First Lien Lenders or any
other holder of First Lien Indebtedness be liable for any loss to, or impairment
of, any subrogation rights held by Second Lien Agent or any Second Lien Lender.
19. Notices. All demands, notices, and other communications provided for
hereunder shall be in writing and, if to Second Lien Agent, mailed or sent by
telecopy or delivered to it, addressed to it as follows:
THE BANK OF NEW YORK
000 X. Xxx Xxxxxxx Xxxx.
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Administrative Agent Services
Fax No. (000) 000-0000
With a copy to:
Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
25
Attn: Xxxxxx X. Xxxx
Fax No. (000) 000-0000
and if to First Lien Agent, mailed, sent or delivered thereto, addressed to it
as follows:
XXXXX FARGO FOOTHILL, INC.
0000 Xxxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Business Finance Division Manager
Fax No.: (000) 000-0000
With a copy to:
XXXXXXX XXXX & XXXXX LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx X. Xxxxxxx, Esq.
Fax No.: (000) 000-0000
and if to First Lien Co-Agent, mailed, sent or delivered thereto, addressed to
it as follows:
SILVER POINT FINANCE, LLC
Two Xxxxxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Fax No.: (000) 000-0000
With a copy to:
Xxxxxxxx & Xxxxxxxx LLP
1290 Avenue of the Americas, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxx X. Xxxxxxx, Esq.
Fax No.: (000) 000-0000
or as to any party at such other address as shall be designated by
such party in a written notice to the other parties complying as to delivery
with the terms of this Section 19. All such demands, notices and other
communications shall be effective, when mailed, three Business Days after
deposit in the mails, postage prepaid, when sent by telecopy, when receipt is
acknowledged by the receiving telecopy equipment (or at the opening of the next
Business Day if receipt is after normal business hours), or when delivered, as
the case may be, addressed as aforesaid.
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20. Costs and Attorneys Fees. In the event it becomes necessary for First
Lien Agent, First Lien Co-Agent, any First Lien Lender, Second Lien Agent, or
any Second Lien Lender to commence or become a party to any proceeding or action
to enforce the provisions of this Agreement, the court or body before which the
same shall be tried shall award to the prevailing party all costs and expenses
thereof, including reasonable attorneys' fees, the usual and customary and
lawfully recoverable court costs, and all other expenses in connection
therewith.
21. Consent to Jurisdiction; Waiver of Jury Trial and Other Waivers. Second
Lien Agent, First Lien Agent and First Lien Co-Agent each consent to the
jurisdiction of any state or federal court located within the County of New
York, State of New York. Each Agent waives personal service of any and all
process upon it, and consents that all service of process be made in the manner
set forth in Section 19 of this Agreement for notices. Each Agent waives, to the
fullest extent each may effectively do so, any defense or objection based upon
forum non conveniens and any defense or objection to venue of any action
instituted within the County of New York, State of New York. EACH OF THE PARTIES
HERETO WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION TO ENFORCE OR DEFEND
ANY MATTER ARISING FROM OR RELATED TO THIS AGREEMENT.
22. Governing Law. This Agreement has been delivered and accepted at and
shall be deemed to have been made in the State of New York, and shall be
interpreted, and the rights and liabilities of the parties hereto determined, in
accordance with the laws of the State of New York.
23. Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties and their respective successors and assigns,
subject to the provisions hereof.
24. Integrated Agreement. This Agreement sets forth the entire
understanding of the parties with respect to the within matters and may not be
modified or amended except upon a writing signed by all parties.
25. Authority. Each of the parties hereto certifies that such party has all
necessary authority to execute this Agreement.
26. Counterparts. This Agreement may be executed in one or more
counterparts, each one of which when so executed shall be deemed to be an
original, and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of this Agreement by facsimile or
electronic mail shall be equally as effective as delivery of an original
executed counterpart.
27. Headings. The headings contained in this Agreement are for convenience
only and shall not affect the interpretation of this Agreement.
28. Severability. Any provision of this Agreement that is prohibited by law
or unenforceable shall be ineffective to the extent of such prohibition or
unenforceability, without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision. To the extent
permissible, the parties waive any law that prohibits any provision of this
Agreement or renders any provision hereof unenforceable.
27
29. Conflicts. To the extent that there is a conflict or inconsistency
between any provision hereof, on the one hand, and any provision of any First
Lien Loan Document or any Second Lien Loan Document, on the other hand, this
Agreement shall control and prevail. The foregoing to the contrary
notwithstanding, a covenant in the First Lien Loan Documents prohibiting the
Obligors from voluntarily prepaying the Second Lien Indebtedness shall not be
deemed to be in conflict with or inconsistent with the terms of this Agreement.
With respect to the rights, remedies and obligations of the First Lien Agent,
First Lien Co-Agent and the First Lien Lenders, to the extent that there is a
conflict or inconsistency between any provision hereof, on the one hand, and any
provision of that certain Agreement Among Lenders dated as of August 30, 2004
among First Lien Agent, First Lien Co-Agent and the First Lien Lenders (the
"First Lien Lender Side Letter Agreement"), on the other hand, the First Lien
Lender Side Letter Agreement shall control and prevail, and, without limiting
the foregoing, First Lien Agent (as opposed to First Lien Co-Agent) shall only
have the ability to deliver a Standstill Notice and to exercise remedies under
this Agreement to the extent otherwise permitted under the First Lien Loan
Documents and the First Lien Lender Side Letter Agreement.
30. Termination. This Agreement shall continue in full force and effect
until the Discharge of First Lien Indebtedness shall have occurred and shall
thereafter be revived to the extent provided for in Section 5.c.
[Remainder of page left intentionally blank]
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IN WITNESS WHEREOF, First Lien Agent and First Lien Co-Agent, for
and on behalf of itself and the First Lien Lenders, and Second Lien Agent, for
and on behalf of itself and the Second Lien Lenders, have caused this Agreement
to be duly executed and delivered as of the date first above written.
XXXXX FARGO FOOTHILL, INC., a California
corporation, as First Lien Agent
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
SIGNATURE PAGE - INTERCREDITOR AGREEMENT
S-1
SILVER POINT FINANCE, LLC, a Delaware limited
liability company, as First Lien
Co-Agent
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
SIGNATURE PAGE - INTERCREDITOR AGREEMENT
S-2
THE BANK OF NEW YORK, a New York corporation,
as Second Lien Agent
By: ____________________________________
Name: Xxxxxxx X. Xxxxxxxx, XX
Title: Vice President
SIGNATURE PAGE - INTERCREDITOR AGREEMENT
S-3
ACKNOWLEDGEMENT
Each Borrower and each Guarantor hereby acknowledges that it has
received a copy of the foregoing Intercreditor Agreement, consents thereto and
agrees to recognize all rights granted thereby to First Lien Agent, First Lien
Co-Agent, the First Lien Lenders, Second Lien Agent, and the Second Lien Lenders
and will not do any act or perform any obligation which is not in accordance
with the agreements set forth therein. Each Borrower and each Guarantor further
acknowledge and agree that they are not an intended beneficiary or third party
beneficiary under this Agreement.
ACKNOWLEDGED AS OF THE DATE FIRST WRITTEN ABOVE:
BORROWERS:
SALTON, INC., a Delaware corporation
By: _____________________________
Name: Xxxxx Xxxxxx
Title: Executive Vice President
TOASTMASTER INC., a Missouri corporation
By: _____________________________
Name: Xxxxx Xxxxxx
Title: Executive Vice President
SALTON TOASTMASTER LOGISTICS LLC, a
Delaware limited liability company
By: _____________________________
Name: Xxxxx Xxxxxx
Title: Executive Vice President
GUARANTORS:
HOME CREATIONS DIRECT, LTD.,
a Delaware corporation
By: _____________________________
Name: Xxxxx Xxxxxx
Title: Executive Vice President
SONEX INTERNATIONAL CORPORATION, a
Delaware corporation
By: _____________________________
Name: Xxxxx Xxxxxx
Title: Executive Vice President
ICEBOX, LLC, an Illinois limited liability company
By: _____________________________
Name: Xxxxx Xxxxxx
Title: Executive Vice President
FAMILY PRODUCTS INC., a Delaware corporation
By: _____________________________
Name: Xxxxx Xxxxxx
Title: Executive Vice President
SALTON HOLDINGS, INC., a Delaware
corporation
By: _____________________________
Name: Xxxxx Xxxxxx
Title: Executive Vice President
SIGNATURE PAGE - ACKNOWLEDGEMENT - INTERCREDITOR AGREEMENT
S-1
