Exhibit 10.2

EXECUTION

INTERCREDITOR AGREEMENT

by and among

BANK OF AMERICA, N. A.,

as First Lien Agent,

and

WILMINGTON TRUST, N.A.,

as Second Lien Agent,

dated as of July 7, 2017

 

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TABLE OF CONTENTS

 

     Page No.  

ARTICLE 1. DEFINITIONS

     2  

Section 1.1. UCC Definitions

     2  

Section 1.2. Other Definitions

     3  

Section 1.3. Rules of Construction

     11  

ARTICLE 2. LIEN PRIORITY

     12  

Section 2.1. Priority of Liens

     12  

Section 2.2. Waiver of Right to Contest Liens

     13  

Section 2.3. Remedies Standstill

     15  

Section 2.4. Release of Liens

     17  

Section 2.5. No New Liens

     17  

Section 2.6. Waiver of Marshalling

     18  

ARTICLE 3. ACTIONS OF THE PARTIES

     18  

Section 3.1. Certain Actions Permitted

     18  

Section 3.2. Agent for Perfection

     18  

Section 3.3. Sharing of Information and Access; Notices of Default

     19  

Section 3.4. Insurance

     20  

Section 3.5. No Additional Rights For the Loan Parties Hereunder

     21  

Section 3.6. Payments Over

     21  

Section 3.7. Revolving Nature of Certain First Lien Obligations

     21  

ARTICLE 4. APPLICATION OF PROCEEDS

     22  

Section 4.1. Application of Proceeds

     22  

Section 4.2. Turnover of Collateral After Discharge

     23  

Section 4.3. Limited Obligation or Liability

     23  

Section 4.4. Specific Performance

     23  

ARTICLE 5. INTERCREDITOR ACKNOWLEDGEMENTS AND WAIVERS

     23  

Section 5.1. Notice of Acceptance and Other Waivers

     23  

Section 5.2. Modifications to First Lien Documents and Second Lien Documents

     24  

Section 5.3. Reinstatement and Continuation of Agreement

     26  

ARTICLE 6. INSOLVENCY PROCEEDINGS

     28  

Section 6.1. DIP Financing

     28  

Section 6.2. Relief From Stay

     29  

Section 6.3. No Contest; Adequate Protection

     30  

Section 6.4. Asset Sales

     31  

Section 6.5. Separate Grants of Security and Separate Classification

     31  

Section 6.6. Enforceability

     32  

Section 6.7. First Lien Obligations Unconditional

     32  

Section 6.8. Second Lien Obligations Unconditional

     32  

Section 6.9. Reorganization Securities

     32  

Section 6.10. Rights as Unsecured Creditors

     33  

 

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TABLE OF CONTENTS (Cont’d)

 

     Page No.  

ARTICLE 7. PURCHASE OPTION

     33  

Section 7.1. Right to Purchase

     33  

Section 7.2. Payments

     33  

Section 7.3. Documentation

     34  

Section 7.4. Retained Interest of First Lien Lenders

     34  

ARTICLE 8. MISCELLANEOUS

     35  

Section 8.1. Rights of Subrogation

     35  

Section 8.2. Further Assurances

     35  

Section 8.3. Representations

     35  

Section 8.4. Amendments

     36  

Section 8.5. Addresses for Notices

     36  

Section 8.6. No Waiver; Remedies

     36  

Section 8.7. Continuing Agreement, Transfer of Secured Obligations

     37  

Section 8.8. Governing Law; Entire Agreement

     37  

Section 8.9. Counterparts

     37  

Section 8.10. No Third Party Beneficiaries

     37  

Section 8.11. Headings

     37  

Section 8.12. Severability

     37  

Section 8.13. VENUE; JURY TRIAL WAIVER

     38  

Section 8.14. Intercreditor Agreement

     39  

Section 8.15. No Warranties or Liability

     39  

Section 8.16. Conflicts

     39  

Section 8.17. Information Concerning the Loan Parties

     39  

 

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INTERCREDITOR AGREEMENT

THIS INTERCREDITOR AGREEMENT (as amended, supplemented, restated or otherwise
modified from time to time pursuant to the terms hereof, this “Agreement”) is
entered into as of July 7, 2017, between:

(a) BANK OF AMERICA, N.A., in its capacity as administrative agent and
collateral agent (together with its successors and assigns in such capacity, the
“First Lien Agent”) for (i) the financial institutions party from time to time
to the First Lien Credit Agreement referred to below (such financial
institutions, together with their respective successors, assigns and
transferees, the “First Lien Lenders”) and (ii) any First Lien Bank Products
Affiliates and First Lien Cash Management Affiliates (each as defined below)
(such First Lien Bank Products Affiliates and First Lien Cash Management
Affiliates, together with the First Lien Agent and the First Lien Lenders, the
“First Lien Secured Parties”);

(b) WILMINGTON TRUST, N.A., in its capacity as administrative agent and
collateral agent (together with its successors and assigns in such capacity, the
“Second Lien Agent”) for the financial institutions party from time to time to
the Second Lien Credit Agreement referred to below (such financial institutions,
together with their respective successors, assigns and transferees, the “Second
Lien Lenders” and together with the Second Lien Agent and the Second Lenders,
the “Second Lien Secured Parties”); and acknowledged by

(c) RESTORATION HARDWARE, INC., a Delaware corporation, as a Domestic Borrower
and the Lead Borrower (as those terms are defined in the First Lien Credit
Agreement), the Other Domestic Borrowers (as defined in the First Lien Credit
Agreement), RESTORATION HARDWARE CANADA, INC., a British Columbia company, as
the Canadian Borrower (as defined in the First Lien Credit Agreement, and
collectively with the Lead Borrower and the Other Domestic Borrowers, the
“Borrower”), and the Guarantors (as defined in the First Lien Credit Agreement).

RECITALS

A. Pursuant to that certain Eleventh Amended and Restated Credit Agreement dated
as of June 28, 2017, by and among the Borrower, the Guarantors (as hereinafter
defined), the First Lien Lenders and the First Lien Agent (as such agreement may
be amended, supplemented, restated or otherwise modified from time to time in
accordance with the terms hereof, the “First Lien Credit Agreement”), the First
Lien Lenders have agreed to make certain loans to or for the benefit of the
Borrower.

B. Pursuant to the Amended and Restated Guaranty dated as of January 30, 2015
(as the same may be amended, supplemented, restated and/or otherwise modified in
accordance with the terms hereof, the “First Lien Guaranty”) by certain
subsidiaries of the Borrower (the “Guarantors”) in favor of the First Lien
Secured Parties, the Guarantors have agreed to guarantee the payment and
performance of the Borrower’s obligations under the First Lien Loan Documents
(as hereinafter defined) as provided in the First Lien Guaranty.

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C. Pursuant to that certain Guaranty dated as of August 3, 2011 (as the same may
be amended, supplemented, restated and/or otherwise modified in accordance with
the terms hereof, the “Canadian Guaranty”) by the Borrower in favor of the First
Lien Secured Parties, the Borrower has agreed to guarantee the payment and
performance of the Canadian Borrower’s obligations under the First Lien Loan
Documents (as hereinafter defined) as provided in the Canadian Guaranty.

C. As a condition to the effectiveness of the First Lien Credit Agreement and to
secure the obligations of the Borrower and the Guarantors (the Borrower, the
Guarantors and each other direct or indirect subsidiary of the Borrower that is
now or hereafter becomes a party to any First Lien Loan Document, collectively,
the “First Lien Loan Parties”) under and in connection with the First Lien Loan
Documents, the First Lien Loan Parties have granted to the First Lien Agent (for
the benefit of the First Lien Secured Parties) Liens on the Collateral (as
hereinafter defined).

D. Pursuant to that certain Second Lien Term Loan Agreement dated as of the date
hereof, by and among the Borrower, the Guarantors, the Second Lien Lenders and
the Second Lien Agent (as such agreement may be amended, supplemented, restated
or otherwise modified from time to time in accordance with the terms hereof, the
“Second Lien Loan Agreement”), the Second Lien Lenders have agreed to make
certain loans to the Borrower.

E. Pursuant to the Guaranty (as the same may be amended, supplemented, restated
and/or otherwise modified in accordance with the terms hereof, the “Second Lien
Guaranty”) by the Guarantors in favor of the Second Lien Secured Parties, the
Guarantors have agreed to guarantee the payment and performance of the
Borrower’s obligations under the Second Lien Loan Documents (as hereinafter
defined) as provided in the Second Lien Guaranty.

F. As a condition to the effectiveness of the Second Lien Credit Agreement and
to secure the obligations of the Borrower and the Guarantors (the Borrower, the
Guarantors and each other direct or indirect subsidiary of the Borrower that is
now or hereafter becomes a party to any Second Lien Loan Document, collectively,
the “Second Lien Loan Parties”) under and in connection with the Second Lien
Loan Documents, the Second Lien Loan Parties have granted to the Second Lien
Agent (for the benefit of the Second Lien Secured Parties) Liens on the
Collateral.

G. Each of the First Lien Agent (on behalf of the First Lien Secured Parties)
and the Second Lien Agent (on behalf of the Second Lien Secured Parties) and, by
their acknowledgment hereof, the First Lien Loan Parties and the Second Lien
Loan Parties, desire to agree to the relative priority of Liens on the
Collateral and certain other rights, priorities and interests as provided
herein.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, receipt of which is hereby acknowledged, the parties hereto agree
as follows:

ARTICLE 1.

DEFINITIONS

Section 1.1. UCC Definitions. The following terms which are defined in the
Uniform Commercial Code are used herein as so defined: Accounts, Chattel Paper,
Commercial Tort Claims, Deposit Accounts, Documents, Electronic Chattel Paper,
Equipment, Financial Assets, Fixtures, General Intangibles, Goods, Instruments,
Inventory, Investment Property, Letter-of-Credit Rights, Payment Intangibles,
Proceeds, Promissory Notes, Records, Securities Accounts, Security, Security
Entitlements, Supporting Obligations and Tangible Chattel Paper.

 

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Section 1.2. Other Definitions. Subject to Section 1.1, as used in this
Agreement, the following terms shall have the meanings set forth below:

“Affiliate” shall mean, any Person which, directly or indirectly, controls, is
controlled by or is under common control with any Person.

“Agent(s)” means individually the First Lien Agent or the Second Lien Agent and
collectively means both the First Lien Agent and the Second Lien Agent.

“Agreement” shall have the meaning assigned to that term in the introduction to
this Agreement.

“Bank Products” shall have the meaning assigned to that term in the First Lien
Credit Agreement as in effect on the date hereof.

“Bank Product Obligations” shall mean all obligations with respect to Bank
Product Agreements.

“Bank Product Agreement” shall mean any agreement pursuant to which a First Lien
Bank Product Affiliate agrees to provide Bank Products to a Loan Party.

“Bankruptcy Code” shall mean Title 11 of the United States Code, as now or
hereafter in effect or any successor thereto.

“Borrower” shall have the meaning assigned to that term in the introduction to
this Agreement.

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

“Cash Management Services” shall have the meaning assigned to that term in the
First Lien Credit Agreement as in effect on the date hereof.

“Cash Management Services Agreement” shall mean any agreement pursuant to which
any First Lien Cash Management Affiliate agrees to provide Cash Management
Services.

“Collateral” shall mean all Property now owned or hereafter acquired by the
Borrower or any Guarantor in or upon which a Lien is granted to the First Lien
Agent or the Second Lien Agent under any of the First Lien Security Documents or
the Second Lien Security Documents, together with all rents, issues, profits,
products and Proceeds thereof, other than the Excluded Term Loan Collateral,
which shall neither constitute Collateral for any purposes of this Agreement,
nor otherwise be subject to the term, conditions or provisions of this
Agreement.

 

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“Control Collateral” shall mean any Collateral consisting of any Certificated
Security (as defined in Section 8-102 of the Uniform Commercial Code),
Investment Property, Deposit Account, Instruments and any other Collateral as to
which a Lien may be perfected through possession or control by the secured
party, or any agent therefor.

“Debtor Relief Laws” shall mean the Bankruptcy Code of the United States, and
all other liquidation, conservatorship, bankruptcy, assignment for the benefit
of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the rights of
creditors generally.

“DIP Financing” shall have the meaning set forth in Section 6.1(a).

“Discharge of First Lien Obligations” shall mean (a) the payment in full in cash
of all outstanding First Lien Obligations (other than (i) contingent indemnity
obligations with respect to then unasserted claims (ii) any First Lien
Obligations relating to Bank Products (including Swap Contracts) that, at such
time, are allowed by the applicable Bank Product provider to remain outstanding
without being required to be repaid or cash collateralized, and (iii) any First
Lien Obligations relating to Cash Management Services that, at such time, are
allowed by the applicable provider of such Cash Management Services to remain
outstanding without being required to be repaid); and (b) the termination of all
commitments to make Loans or issue Letters of Credit under the First Lien Credit
Agreement. If, at any time prior to or simultaneously with the occurrence of the
Discharge of First Lien Obligations, the Loan Parties enter into (x) any
refinancing of the First Lien Obligations, which refinancing is permitted under
the terms of this Agreement or (y) DIP Financing provided by one or more of the
First Lien Lenders and the First Lien Agent to one or more Loan Parties and such
DIP Financing is entered into in accordance with Section 6.1, then, in each
case, the Discharge of First Lien Obligations shall automatically be deemed not
to have occurred for all purposes of this Agreement.

“Discharge of Second Lien Obligations” shall mean (a) the payment in full in
cash of all outstanding Second Lien Obligations (other than (i) contingent
indemnity obligations with respect to then unasserted claims, (ii) any Second
Lien Obligations relating to Bank Products (including Swap Contracts) that, at
such time, are allowed by the applicable Bank Product provider to remain
outstanding without being required to be repaid or cash collateralized, and
(iii) any Second Lien Obligations relating to Cash Management Services that, at
such time, are allowed by the applicable provider of such Cash Management
Services to remain outstanding without being required to be repaid); and (b) the
termination of all commitments to make Loans or otherwise extend credit under
the Second Lien Loan Documents. If, at any time prior to or simultaneously with
the occurrence of the Discharge of Second Lien Obligations, the Loan Parties
enter into (x) any refinancing of the Second Lien Obligations, which refinancing
is permitted under the terms of this Agreement, or (y) DIP Financing provided by
one or more of the Second Lien Lenders and/or the Second Lien Agent to one or
more Loan Parties and such DIP Financing is entered into in accordance with
Section 6.1, then the Discharge of Second Lien Obligations shall automatically
be deemed not to have occurred for all purposes of this Agreement.

 

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“Disposition” shall mean the sale, transfer, license, sublicense, lease or other
disposition of any property by any Person, whether in one transaction or in a
series of transactions.

“Due Diligence” shall have the meaning given such term in Section 3.3(c).

“Excess First Lien Obligations” shall mean First Lien Obligations constituting
the aggregate outstanding principal amount of loans and outstanding amount of
letters of credit made, issued or incurred pursuant to the First Lien Loan
Documents in excess of the Maximum First Lien Facility Amount and any interest,
fees (including early termination fee, make-whole payment or prepayment fee) or
reimbursement obligations accrued on or with respect to such excess amounts.

“Excess Second Lien Obligations” shall mean Second Lien Obligations constituting
the aggregate outstanding principal amount of loans made pursuant to the Second
Lien Loan Documents in excess of the Maximum Second Lien Facility Amount and any
interest, fees or reimbursement obligations accrued on or with respect to such
excess amounts.

“Excluded Term Loan Collateral” shall mean any leasehold interest of any Second
Lien Loan Party, to the extent that such leasehold constitutes Collateral under
the Second Lien Loan Documents.

“Exercise of Any Secured Creditor Remedies” or “Exercise of Secured Creditor
Remedies” shall mean, except as otherwise provided in the final sentence of this
definition:

(a) the taking by any Secured Party of any action to enforce or realize upon any
Lien in the Collateral, including the institution of any foreclosure proceedings
or the noticing of any public or private sale pursuant to Article 9 of the
Uniform Commercial Code or other applicable law;

(b) the exercise by any Secured Party of any right or remedy provided to a
secured creditor on account of a Lien in the Collateral under any of the Loan
Documents, under applicable law, in an Insolvency Proceeding or otherwise,
including, without limitation, the exercise by a Secured Party of any voting
rights relating to any equity interests included in the Collateral;

(c) the appointment on the application of a Secured Party, of a receiver,
receiver and manager, or interim receiver of all or part of the Collateral; and

(d) the exercise of any other right of a secured creditor under Part 6 of
Article 9 of the Uniform Commercial Code or under provisions of similar effect
under other applicable law in respect of the Collateral.

For the avoidance of doubt, none of the following shall be deemed to constitute
an Exercise of Secured Creditor Remedies: (i) acceleration by the relevant
Secured Parties of the maturity of the First Lien Obligations or the Second Lien
Obligations, as the case may be, (ii) the filing of a proof of claim in any
Insolvency Proceeding or seeking adequate protection, (iii) the exercise of
rights by the First Lien Agent upon the occurrence of a Cash Dominion Event (as
defined in the First Lien Credit Agreement as in effect on the date hereof)
including the notification of

 

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licensees or other account debtors, depository institutions or any other Person
to deliver Proceeds of Collateral to the First Lien Agent, or (iv) the consent
by the First Lien Agent to a disposition by any Loan Party of any of the
Collateral, other than in connection with clauses (a), (b) or (d) above.

“First Lien Agent” shall have the meaning assigned to that term in the
introduction to this Agreement and shall include any successor thereto as well
as any Person designated as the “Agent” under any First Lien Credit Agreement.

“First Lien Bank Products Affiliate” shall mean the First Lien Agent, any First
Lien Lender or any Affiliate of any First Lien Lender or First Lien Agent that
has entered into an agreement relating to Bank Products with a First Lien Loan
Party with the obligations of such First Lien Loan Party thereunder being
secured by one or more First Lien Security Documents, together with their
respective successors, assigns and transferees.

“First Lien Cash Management Affiliate” shall mean any First Lien Agent, First
Lien Lender or any Affiliate of an First Lien Lender or First Lien Agent that
provides Cash Management Services to any of the First Lien Loan Parties with the
obligations of such First Lien Loan Parties thereunder being secured by one or
more First Lien Security Documents, together with their respective successors,
assigns and transferees.

“First Lien Credit Agreement” shall have the meaning assigned to such term in
the recitals to this Agreement and shall include any other agreement extending
the maturity of, consolidating, restructuring, refunding, replacing or
refinancing all or any portion of the First Lien Obligations in accordance with
the terms hereof (including any credit agreement in connection with a DIP
Financing provided by any of the First Lien Secured Parties pursuant to
Section 6.1(a) hereof), whether by the same or any other agent, lender or group
of lenders; provided that any such amendment, modification or refinancing shall
be in accordance with the terms and conditions of this Agreement.

“First Lien Event of Default” shall mean an “Event of Default” as defined in the
First Lien Credit Agreement.

“First Lien Guaranty” shall have the meaning assigned to that term in the
recitals to this Agreement and shall also include any further guaranty made by
any Guarantor guaranteeing the payment and performance of the First Lien
Obligations.

“First Lien Lenders” shall have the meaning assigned to that term in the
introduction to this Agreement, as well as any Person designated as a “Lender”
under any First Lien Credit Agreement.

“First Lien Loan Documents” shall mean the First Lien Credit Agreement, the
First Lien Guaranty, the Canadian Guaranty, the First Lien Security Documents,
the Issuer Documents, all agreements relating to Bank Products between any First
Lien Loan Party and any First Lien Bank Products Affiliate, all Cash Management
Services Agreements between any First Lien Loan Party and any First Lien Cash
Management Affiliate, those other ancillary agreements as to which any First
Lien Secured Party is a party or a beneficiary and all other related agreements,
instruments, documents and certificates, now or hereafter executed by or on
behalf

 

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of any First Lien Loan Party or any of its respective subsidiaries or
Affiliates, and delivered to the First Lien Agent or any other First Lien
Secured Party, in connection with any of the foregoing or any First Lien Credit
Agreement, in each case as the same may be amended, supplemented, restated or
otherwise modified from time to time in accordance with the terms hereof.

“First Lien Loan Parties” shall have the meaning assigned to that term in the
recitals to this Agreement.

“First Lien Obligations” shall mean all obligations (including all “Obligations”
under and as defined in the First Lien Credit Agreement) of every nature of each
First Lien Loan Party from time to time owed to the First Lien Secured Parties,
or any of them, under any First Lien Loan Document (including any obligations in
connection with a DIP Financing provided by any of the First Lien Secured
Parties pursuant to Section 6.1(a) hereof), whether for principal, interest,
reimbursement of amounts drawn under letters of credit, payments for early
termination of Bank Products, Cash Management Services, fees, expenses,
indemnification or otherwise, and all other amounts owing or due under the terms
of the First Lien Loan Documents, as amended, restated, modified, renewed,
refunded, replaced or refinanced in whole or in part from time to time. For
clarity, First Lien Obligations include interest, fees, expenses, indemnities
and all other amounts owing or due under the terms of the First Lien Credit
Agreement or any other First Lien Loan Documents regardless of whether such
claim is allowed or allowable in any Insolvency Proceeding.

“First Lien Recovery” shall have the meaning set forth in Section 5.3(a).

“First Lien Secured Parties” shall have the meaning assigned to that term in the
introduction to this Agreement.

“First Lien Security Documents” shall mean all “Security Documents” as defined
in the First Lien Credit Agreement, and all other security agreements,
mortgages, deeds of trust and other security documents executed and delivered in
connection with the First Lien Loan Documents, in each case as the same may be
amended, supplemented, restated or otherwise modified from time to time in
accordance with the terms of this Agreement.

“Governmental Authority” shall mean any foreign, federal, state, regional,
local, municipal or other government, or any department, commission, board,
bureau, agency, public authority or instrumentality thereof, or any court or
arbitrator.

“Guarantor” shall have the meaning assigned to such term in the recitals to this
Agreement.

“Insolvency Proceeding” shall mean (a) any case, action or proceeding before any
court or other Governmental Authority relating to bankruptcy, reorganization,
insolvency, liquidation, administration, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors or other similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors; in each case covered by clauses (a) and (b) undertaken under any
Debtor Relief Laws.

 

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“Lender(s)” means individually, the First Lien Lenders or the Second Lien
Lenders and collectively means all of the First Lien Lenders and the Second Lien
Lenders.

“Lien” shall mean, with respect to any asset, any mortgage, deed of trust,
security interest, charge, pledge, hypothecation, assignment, attachment,
deposit arrangement, encumbrance, lien (statutory, judgment or otherwise, but
excluding any right of set off arising by operation of law or pursuant to
agreements entered into in the ordinary course of business), or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any conditional sale) or other title retention agreement, any
capitalized lease, any synthetic lease, any financing lease involving
substantially the same economic effect as any of the foregoing and the filing of
any financing statement under the Uniform Commercial Code or comparable law of
any jurisdiction in respect of the foregoing.

“Lien Priority” shall mean with respect to any Lien of the First Lien Secured
Parties or the Second Lien Secured Parties in the Collateral, the order of
priority of such Lien as specified in Section 2.1.

“Loan Documents” shall mean the First Lien Loan Documents and the Second Lien
Loan Documents.

“Loan Parties” shall mean the First Lien Loan Parties and the Second Lien Loan
Parties.

“Maximum First Lien Facility Amount” shall mean, on any date of determination
thereof, a principal amount equal to (a) $680,000,000, plus (b) First Lien
Obligations under Bank Product Agreements and Cash Management Services
Agreements, plus (c) an amount not to exceed $68,000,000 from time to time that
may be borrowed or incurred as loans prior to any Insolvency Proceeding with
respect to the Lead Borrower, plus (d) after the occurrence of an Insolvency
Proceeding, up to an additional 10% of the aggregate Commitments of the First
Lien Secured Parties outstanding under the First Lien Credit Agreement
immediately prior to the commencement of such Insolvency Proceeding, extended
pursuant to DIP Financing permitted under Section 6.1(a) hereof, minus (e) the
amount of any permanent repayment of the First Lien Obligations made after the
date hereof or any commitment reduction of the First Lien Obligations after the
date hereof.

“Maximum Second Lien Facility Amount” shall mean, on any date of determination
thereof, a principal amount equal to (a) $110,000,000, plus (b) the greater of
(x) the aggregate principal amount of Indebtedness that may be incurred under
Section 2.15 of the Second Lien Credit Agreement, and (y) an additional
$100,000,000 in aggregate principal amount of second lien indebtedness as may be
incurred pursuant to clause (s) of the definition of Permitted Indebtedness
pursuant to the First Lien Credit Agreement, plus (c) any additional principal
amount extended pursuant to DIP Financing permitted under Sections 6.1(b) or
6.1(e) hereof.

“Party” shall mean the First Lien Agent or the Second Lien Agent, and “Parties”
shall mean both the First Lien Agent and the Second Lien Agent.

“Payment of Maximum First Lien Facility Amount” shall mean (a) the payment in
full in cash of all First Lien Obligations not to exceed the Maximum First Lien
Facility Amount and (b) the termination of all commitments to make Loans of
issue Letters of Credit under the First

 

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Lien Credit Agreement. If, at any time prior to or simultaneously with the
occurrence of the Payment of Maximum First Lien Facility Amount, the Loan
Parties enter into any refinancing of the First Lien Obligations, which
refinancing is permitted under the terms of this Agreement, then, in each case,
Payment of Maximum First Lien Facility Amount shall automatically be deemed not
to have occurred for all purposes of this Agreement.

“Payment of Maximum Second Lien Facility Amount” shall mean the payment in full
in cash of all Second Lien Obligations not to exceed to the Maximum Second Lien
Facility Amount. If, at any time prior to or simultaneously with the occurrence
of the Payment of Maximum Second Lien Facility Amount, the Loan Parties enter
into any refinancing of the Second Lien Obligations, which refinancing is
permitted under the terms of this Agreement, then, in each case, Payment of
Maximum Second Lien Facility Amount shall automatically be deemed not to have
occurred for all purposes of this Agreement.

“Person” shall mean an individual, corporation, limited liability company,
partnership, limited liability partnership, trust, other unincorporated
association, business, or other legal entity, and any Governmental Authority.

“Property” shall mean any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.

“Purchase Notice” shall have the meaning set forth in Section 7.1.

“Remedy Standstill Period” shall mean the period commencing on the date of the
First Lien Agent’s receipt of written notice from the Second Lien Agent that a
Second Lien Event of Default has occurred and is continuing and that the Second
Lien Agent intends to commence the Exercise of Secured Creditor Remedies, and
ending on the earliest to occur of (i) the date which is 180 days after receipt
of such notice, (ii) the “Maturity Date” under the Second Lien Credit Agreement,
and (iii) the date on which the Payment of Maximum First Lien Facility Amount
has occurred. Such written notice from the Second Lien Agent to the First Lien
Agent shall reference this Agreement, and shall declare a “Remedy Standstill
Period” to commence.

“Second Lien Agent” shall have the meaning assigned to that term in the
introduction to this Agreement and shall include any successor thereto as well
as any Person designated as the “Agent” under any Second Lien Credit Agreement.

“Second Lien Credit Agreement” shall have the meaning assigned to such term in
the recitals to this Agreement and shall include any other agreement extending
the maturity of, consolidating, restructuring, refunding, replacing or
refinancing all or any portion of the Second Lien Obligations in accordance with
the terms hereof, whether by the same or any other agent, lender or group of
lenders and whether or not increasing the amount of any Indebtedness that may be
incurred thereunder; provided that any such amendment, modification or
refinancing shall be in accordance with the terms and conditions of this
Agreement.

“Second Lien Event of Default” shall mean an “Event of Default” as defined in
the Second Lien Credit Agreement.

 

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“Second Lien Guaranty” shall have the meaning assigned to that term in the
recitals to this Agreement and shall also include any further guaranty made by a
Guarantor guaranteeing the payment and performance of the Second Lien
Obligations.

“Second Lien Lenders” shall have the meaning assigned to that term in the
introduction to this Agreement, as well as any Person designated as a “Lender”
under any Second Lien Credit Agreement.

“Second Lien Loan Documents” shall mean the Second Lien Credit Agreement, the
Second Lien Guaranty, the Second Lien Security Documents, those other ancillary
agreements as to which any Second Lien Secured Party is a party or a beneficiary
and all other related agreements, instruments, documents and certificates, now
or hereafter executed by or on behalf of any Second Lien Loan Party or any of
its respective subsidiaries or Affiliates, and delivered to the Second Lien
Agent, in connection with any of the foregoing or any Second Lien Credit
Agreement, in each case as the same may be amended, supplemented, restated or
otherwise modified from time to time in accordance with the terms hereof.

“Second Lien Loan Parties” shall have the meaning assigned to that term in the
recitals to this Agreement.

“Second Lien Obligations” shall mean all obligations (including all
“Obligations” under and defined in the Second Lien Loan Agreement) of every
nature of each Second Lien Loan Party from time to time owed to the Second Lien
Secured Parties or any of them, under any Second Lien Loan Document (including
any obligations in connection with a DIP Financing provided by any of the Second
Lien Secured Parties pursuant to Section 6.1 hereof), whether for principal,
interest (including interest which, but for the filing of a petition in
bankruptcy with respect to such Second Lien Loan Party, would have accrued on
any Second Lien Obligation), fees, expenses, indemnification or otherwise, and
all other amounts owing or due under the terms of the Second Lien Loan
Documents, as amended, restated, modified, renewed, refunded, replaced or
refinanced in whole or in part from time to time. Second Lien Obligations shall
include all of the foregoing regardless of whether such amount or claim is
allowed or allowable in any Insolvency Proceeding.

“Second Lien Recovery” shall have the meaning set forth in Section 5.3(b).

“Second Lien Remedies Exercise Date” shall mean the date following the Remedy
Standstill Period and identified in the prior written notice delivered by the
Second Lien Agent to the First Lien Agent as provided in Section 2.3, provided
that the Second Lien Remedies Exercise Date shall not be deemed to have occurred
if: (i) upon the expiration of the Remedy Standstill Period the First Lien Agent
is diligently pursuing in good faith the Exercise of Secured Creditor Remedies
against all or a material portion of the Collateral; or (ii) the Second Lien
Event of Default giving rise to the Remedy Standstill Period is no longer
continuing at the time of such Second Lien Remedies Exercise Date.

“Second Lien Secured Parties” shall have the meaning assigned to that term in
the introduction to this Agreement.

 

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“Second Lien Security Documents” shall mean all “Security Documents” as defined
in the Second Lien Credit Agreement, and all other security agreements,
mortgages, deeds of trust and other security documents executed and delivered in
connection with any Second Lien Credit Agreement, in each case as the same may
be amended, supplemented, restated or otherwise modified from time to time.

“Secured Parties” shall mean the First Lien Secured Parties and the Second Lien
Secured Parties.

“Swap Contract” shall have the meaning assigned to that term in the First Lien
Credit Agreement.

“Triggering Event” means (a) the acceleration of the First Lien Obligations and
notification by the First Lien Agent to the Second Lien Agent that the First
Lien Agent intends to commence the Exercise of Secured Creditor Remedies with
respect to any material portion of the Collateral, or (b) the commencement of an
Insolvency Proceeding with respect to any Loan Party.

“Uniform Commercial Code” shall mean the Uniform Commercial Code as the same
may, from time to time, be in effect in the State of New York; provided that to
the extent that the Uniform Commercial Code is used to define any term in any
security document and such term is defined differently in differing Articles of
the Uniform Commercial Code, the definition of such term contained in Article 9
shall govern; provided, further, that, in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection, publication or
priority of, or remedies with respect to, Liens of any Party is governed by the
Uniform Commercial Code as enacted and in effect in a jurisdiction other than
the State of New York, the term “Uniform Commercial Code” will 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 and for purposes of definitions related to such provisions.

Section 1.3. 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 shall
be deemed to be followed by the phrase “without limitation,” 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 in this Agreement to any agreement,
instrument, or document shall include all alterations, amendments, changes,
restatements, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, restatements, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein); provided that any terms used herein which are defined by
reference to the First Lien Credit Agreement or the Second Lien Credit Agreement
and are subject to the modification restrictions set forth in Section 5.2 of
this Agreement shall mean such terms as defined in the First Lien Credit
Agreement as of the date hereof or the Second Lien Credit Agreement as of the
date hereof, as the case may be,

 

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without giving effect to any modifications or amendments thereto except to the
extent that such definitions have been modified or amended in accordance with
this Agreement; and provided further that any such modifications or amendments
shall be deemed to be automatically incorporated herein by reference. Any
reference herein to any Person shall be construed to include such Person’s
successors and assigns. Any reference herein to the repayment in full of an
obligation shall mean the payment in full in cash of such obligation, or in such
other manner as may be approved in writing by the requisite holders or
representatives in respect of such obligation.

ARTICLE 2.

LIEN PRIORITY

Section 2.1. Priority of Liens.

(a) Notwithstanding (i) the date, time, method, manner, or order of grant,
attachment, or perfection of any Liens granted to the First Lien Agent or the
First Lien Secured Parties in respect of all or any portion of the Collateral or
of any Liens granted to the Second Lien Agent or the Second Lien Secured Parties
in respect of all or any portion of the Collateral and regardless of how any
such Lien was acquired (whether by grant, statute, operation of law, subrogation
or otherwise), (ii) the order or time of filing or recordation of any document
or instrument for perfecting the Liens in favor of the First Lien Agent or the
Second Lien Agent (or First Lien Secured Parties or Second Lien Secured Parties)
in any Collateral, (iii) any provision of the Uniform Commercial Code, Debtor
Relief Laws or any other applicable law, or of the First Lien Loan Documents or
the Second Lien Loan Documents, (iv) whether the First Lien Agent or the Second
Lien Agent, in each case, either directly or through agents, holds possession
of, or has control over, all or any part of the Collateral, (v) the date on
which the First Lien Obligations or the Second Lien Obligations are advanced or
made available to the Loan Parties, or (vi) any failure of the First Lien Agent
or the Second Lien Agent to perfect its Lien in the Collateral, the
subordination of any Lien on the Collateral securing any First Lien Obligations
or Second Lien Obligations, as applicable, to any Lien securing any other
obligation of the Borrower or any Guarantor, or the avoidance, invalidation or
lapse of any Lien on the Collateral securing any First Lien Obligations or
Second Lien Obligations, the First Lien Agent, on behalf of itself and the First
Lien Secured Parties, and the Second Lien Agent, on behalf of itself and the
Second Lien Secured Parties, 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 the Second Lien Agent or any Second Lien Secured Party
that secures all or any portion of the Second Lien Obligations shall in all
respects be junior and subordinate to all Liens granted to the First Lien Agent
and the First Lien Secured Parties in the Collateral to secure all or any
portion of the First Lien Obligations (other than the Excess First Lien
Obligations);

(2) any Lien in respect of all or any portion of the Collateral now or hereafter
held by or on behalf of the First Lien Agent or any First Lien Secured Party
that secures all or any portion of the First Lien Obligations (other than the
Excess First Lien Obligations) shall in all respects be senior and prior to all
Liens granted to the Second Lien Agent or any Second Lien Secured Party in the
Collateral to secure all or any portion of the Second Lien Obligations;

 

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(3) any Lien in respect of all or any portion of the Collateral now or hereafter
held by or on behalf of the First Lien Agent or any First Lien Secured Party
that secures all or any portion of the Excess First Lien Obligations shall in
all respects be junior and subordinate to all Liens granted to the Second Lien
Agent or any Second Lien Secured Party in the Collateral to secure all or any
portion of the Second Lien Obligations (other than the Excess Second Lien
Obligations);

(4) any Lien in respect of all or any portion of the Collateral now or hereafter
held by or on behalf of the Second Lien Agent or any Second Lien Secured Party
that secures all or any portion of the Second Lien Obligations (other than
Excess Second Lien Obligations) shall in all respects be senior and prior to all
Liens granted to the First Lien Agent and the First Lien Secured Parties in the
Collateral to secure all or any portion of the Excess First Lien Obligations;

(5) any Lien in respect of all or any portion of the Collateral now or hereafter
held by or on behalf of the First Lien Agent or any First Lien Secured Party
that secures the Excess First Lien Obligations shall in all respects be senior
and prior to all Liens granted to the Second Lien Agent and the Second Lien
Secured Parties in the Collateral to secure all or any portion of the Excess
Second Lien Obligations; and

(6) any Lien in respect of all or any portion of the Collateral now or hereafter
held by or on behalf of the Second Lien Agent or any Second Lien Secured Party
that secures the Excess Second Lien Obligations shall in all respects be junior
and subordinate to all Liens granted to the First Lien Agent and the First Lien
Secured Parties in the Collateral to secure all or any portion of the Excess
First Lien Obligations.

(b) The Second Lien Agent, for and on behalf of itself and the Second Lien
Secured Parties, acknowledges and agrees that, prior to or concurrently
herewith, the First Lien Agent, for the benefit of itself and the First Lien
Secured Parties, has been, or 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. The First Lien Agent, for and on behalf of itself and
the First Lien Secured Parties, acknowledges and agrees that, concurrently
herewith, the Second Lien Agent, for the benefit of itself and the Second Lien
Secured Parties, has been, or may be, granted Liens upon all of the Collateral
in which the First Lien Agent has been granted Liens and the First Lien Agent
hereby consents thereto. The subordination of Liens by the Second Lien Agent and
the First Lien Agent in favor of one another as set forth herein shall not be
deemed to subordinate the Second Lien Agent’s Liens or the First Lien Agent’s
Liens to the Liens of any other Person nor be affected by the subordination of
such Liens to any other Lien.

Section 2.2. Waiver of Right to Contest Liens.

(a) The Second Lien Agent, for and on behalf of itself and the Second Lien
Secured Parties, agrees that it and they 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),

 

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directly or indirectly, whether or not in any proceeding (including in any
Insolvency Proceeding), the validity, priority, enforceability, or perfection of
the Liens of the First Lien Agent and the First Lien Secured Parties in respect
of the Collateral or the provisions of this Agreement. The Second Lien Agent,
for itself and on behalf of the Second Lien Secured Parties, agrees that none of
the Second Lien Agent or the Second Lien Secured Parties will take any action
that would interfere with any Exercise of Secured Creditor Remedies undertaken
by the First Lien Agent or any First Lien Secured Party under the First Lien
Loan Documents with respect to the Collateral, subject to and in accordance with
the terms of this Agreement. The Second Lien Agent, for itself and on behalf of
the Second Lien Secured Parties, hereby waives any and all rights it or the
Second Lien Secured Parties may have as a junior lien creditor or otherwise to
contest, protest, object to, or interfere with the manner in which the First
Lien Agent or any First Lien Secured Party seeks to enforce its Liens in any
Collateral. The foregoing shall not be construed to prohibit the Second Lien
Agent from enforcing the provisions of this Agreement.

(b) The First Lien Agent, for and on behalf of itself and the First Lien Secured
Parties, agrees that it and they 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 the Second Lien Agent or the
Second Lien Secured Parties in respect of the Collateral or the provisions of
this Agreement. The First Lien Agent, for itself and on behalf of the First Lien
Secured Parties, agrees that none of the First Lien Agent or the First Lien
Secured Parties will take any action that would interfere with any Exercise of
Secured Creditor Remedies undertaken by the Second Lien Agent or any Second Lien
Secured Party under the Second Lien Loan Documents with respect to the
Collateral, subject to and in accordance with the terms of this Agreement. The
foregoing shall not be construed to prohibit the First Lien Agent from enforcing
the provisions of this Agreement.

(c) Each of the Second Lien Agent, each Second Lien Secured Party, the First
Lien Agent and each First Lien Secured Party agrees (i) that it will not
institute any suit or other proceeding or assert in any suit, Insolvency
Proceeding or other proceeding any claim, in the case of the Second Lien Agent
and each Second Lien Secured Party, against either the First Lien Agent or any
other First Lien Secured Party, and in the case of the First Lien Agent and each
other First Lien Secured Party, against either the Second Lien Agent or any
other Second Lien Secured Party, seeking damages from or other relief by way of
specific performance, instructions or otherwise, with respect to, any action
taken or omitted to be taken by such Person with respect to the Collateral which
is consistent with the terms of this Agreement, and none of such Parties shall
be liable for any such action taken or omitted to be taken, or (ii) it will not
be a petitioning creditor or otherwise assist in the filing of an involuntary
Insolvency Proceeding.

(d) Notwithstanding anything to the contrary herein contained, none of the
Parties hereto waives any claim that it may have against a Secured Party on the
grounds that any sale, transfer or other disposition by the Secured Party was
not commercially reasonable in every respect as required by the Uniform
Commercial Code.

 

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Section 2.3. Remedies Standstill.

(a) Following the occurrence of any Second Lien Event of Default and until the
Second Lien Remedies Exercise Date, the Second Lien Agent may not commence or
continue the Exercise of Any Secured Creditor Remedies in respect of the
Collateral. On or after the Second Lien Remedies Exercise Date, upon ten
(10) Business Days prior written notice to the First Lien Agent (which may be
given prior to the Second Lien Remedies Exercise Date), the Second Lien Agent
may take, for the benefit of the Second Lien Secured Parties, one or more of the
following actions at the same or different times:

(1) the Exercise of Any Secured Creditor Remedies (including, without
limitation, foreclosure upon and taking possession of the Collateral); and

(2) exercise any and all other remedies under the Second Lien Loan Documents and
applicable law available to the Second Lien Secured Parties with respect to the
Collateral.

In no event shall the Second Lien Agent commence or continue an Exercise of Any
Secured Creditor Remedies where the Second Lien Event of Default giving rise to
the Standstill Period solely resulted from a cross-default to a First Lien Event
of Default that is cured or waived by the First Lien Agent, in which case such
corresponding Second Lien Event of Default resulting solely from the
cross-default, shall be deemed cured or waived by the Second Lien Agent;
provided that, if an independent Second Lien Event of Default exists and remains
uncured under the Second Lien Credit Agreement, the Second Lien Agent may
exercise remedies to the extent permitted pursuant to this Section 2.3.

(b) Prior to the Payment of Maximum First Lien Facility Amount, all Proceeds of
the Collateral received by the Second Lien Agent (other than reorganization
securities) shall be turned over to the First Lien Agent for prompt application
in accordance with Section 4.1 hereof. This Section 2.3 shall not be construed
to in any way limit or impair the rights of the Second Lien Agent to join (but
not control or object to in any way) any foreclosure or other Exercise of
Secured Creditor Remedies with respect to the Collateral initiated by the First
Lien Agent, so long as it does not delay or interfere in any material respect
with the exercise by the First Lien Secured Parties of their respective rights
as provided in this Agreement.

(c) Nothing contained herein shall impair the Second Lien Agent’s or any Second
Lien Secured Party’s rights (i) to exercise any remedies against any of the Loan
Parties (other than any Exercise of Secured Creditor Remedies against any the
Collateral) pursuant to the Second Lien Loan Documents; (ii) to accelerate any
of the Second Lien Obligations; (iii) to make demand upon any Loan Party or any
other Person liable on the Second Lien Obligations; (iv) to institute a lawsuit
to collect its debt; provided, however, that in the event that the Second Lien
Agent or any Second Lien Secured Party becomes a judgment Lien creditor in
respect of the Collateral as a result of its enforcement of its rights as an
unsecured creditor with respect to the Second Lien Obligations, such judgment
Lien shall be subject to the terms of this Agreement for all purposes as the
other Liens securing the Second Lien Obligations are subject to this Agreement;
(v) to exercise any of its rights or remedies with respect to the Collateral as
and

 

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when permitted by Section 2.3(a), (vi) to file a claim or statement of interest
with respect to the Second Lien Obligations; (vii) to take any action (not
adverse to the priority and perfection status of, and validity of, the Liens of
the First Lien Agent, or the rights of the First Lien Agent in its Exercise of
Secured Creditor Remedies in respect thereof, as permitted hereunder) in order
to create, perfect, preserve or protect its Lien on the Collateral; (viii) to
file any necessary responsive or defensive pleadings in opposition to any
motion, claim, adversary proceeding or other pleading made by any Person
objecting to or otherwise seeking the disallowance of the claims of the Second
Lien Secured Parties, including, without limitation, any claims secured by the
Collateral, if any, in each case not otherwise in contravention of the terms of
this Agreement; (ix) to exercise any rights or remedies available to unsecured
creditors or file any pleadings, objections, motions, or agreements which assert
rights or interests available to unsecured creditors arising under the Second
Lien Loan Documents, any Insolvency Proceeding or applicable non-bankruptcy law,
in each case, not otherwise prohibited in its capacity as a secured creditor by
the terms of this Agreement and so long as it is not otherwise inconsistent with
the terms of this Agreement; (x) to bid for or purchase any Collateral at any
public, private or judicial foreclosure upon such Collateral initiated by the
First Lien Agent or any sale of any Collateral during an Insolvency Proceeding;
provided that such bid may not include a “credit bid” unless the cash proceeds
of such bid paid on the closing date of the purchase are otherwise sufficient to
cause the Payment of Maximum First Lien Facility Amount; or (xi) to vote on any
plan of reorganization, arrangement or compromise or any proposal, file any
proof of claim, make other filings and make any arguments and motions in any
Insolvency Proceeding that are, in each case, not otherwise prohibited by the
terms of this Agreement.

(d) Nothing contained herein shall impair the First Lien Agent’s or any First
Lien Secured Party’s rights (i) to exercise any remedies against any of the Loan
Parties or the Collateral pursuant to the First Lien Loan Documents; (ii) to
accelerate any of the First Lien Obligations; (iii) to make demand upon any Loan
Party or any other Person liable on the First Lien Obligations; (iv) to
institute a lawsuit to collect its debt; provided that any Lien resulting from
any judgment Lien that shall secure any Excess First Lien Obligations shall be
subject to the lien priority and other terms of this Agreement; (v) to file a
claim or statement of interest with respect to the First Lien Obligations;
(vi) to take any action (not adverse to the perfection status of, and validity
of, the Liens of the Second Lien Agent, or the rights of the Second Lien Agent
to exercise remedies in respect thereof) in order to create, perfect, preserve
or protect its Lien on the Collateral subject to the other terms of this
Agreement; (vii) to file any necessary responsive or defensive pleadings in
opposition to any motion, claim, adversary proceeding or other pleading made by
any Person objecting to or otherwise seeking the disallowance of the claims of
the First Lien Secured Parties, including, without limitation, any claims
secured by the Collateral, if any, in each case not otherwise in contravention
of the terms of this Agreement; (viii) to exercise any rights or remedies
available to unsecured creditors or file any pleadings, objections, motions, or
agreements which assert rights or interests available to unsecured creditors
arising under the First Lien Loan Documents, any Insolvency Proceeding or
applicable non-bankruptcy law, in each case, not otherwise prohibited in its
capacity as a secured creditor or in any other capacity by the terms of this
Agreement and so long as it is not otherwise inconsistent with the terms and
conditions of this Agreement; and (ix) to vote on any plan of reorganization,
arrangement or compromise or any proposal, file any proof of claim, make other
filings and make any arguments and motions in any Insolvency Proceeding that
are, in each case, not otherwise prohibited by or inconsistent with the terms of
this Agreement.

 

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Section 2.4. Release of Liens.

In the event of (A) any private or public sale of all or any portion of the
Collateral in connection with any Exercise of Secured Creditor Remedies by the
First Lien Agent or with the consent of the First Lien Agent after the
occurrence and during the continuance of a First Lien Event of Default, or
(B) any sale, transfer or other disposition of all or any portion of the
Collateral, so long as such sale, transfer or other disposition is then
permitted by the First Lien Loan Documents and the Second Lien Loan Documents or
consented to by the requisite First Lien Lenders and the requisite Second Lien
Lenders, the Second Lien Agent agrees, on behalf of itself and the Second Lien
Lenders that such sale, transfer or other disposition will be free and clear of
the Liens on such Collateral securing the Second Lien Obligations, and the
Second Lien Agent’s and the Second Lien Secured Parties’ Liens with respect
solely to the Collateral so sold, transferred, or disposed shall terminate and
be automatically released without further action concurrently with, and to the
same extent as, the release of the First Lien Secured Parties’ Liens on such
Collateral; provided that, such release by the Second Lien Agent is also
conditioned on (i) the Second Lien Secured Parties’ Liens in respect of the
Proceeds of such Collateral so sold, transferred, or disposed shall continue to
exist with the priority of such Liens remaining subject to the terms of this
Agreement; and (ii) the Proceeds of such Collateral shall be applied on a dollar
for dollar basis to permanently reduce the First Lien Obligations and the Second
Lien Obligations in accordance with Section 4.1. In furtherance of, and subject
to, the foregoing, the Second Lien Agent agrees that it will promptly execute
any and all Lien releases or other documents reasonably requested by the First
Lien Agent in connection therewith. The Second Lien Agent hereby appoints the
First Lien Agent and any officer or duly authorized person of the First Lien
Agent, with full power of substitution, as its true and lawful attorney-in-fact
with full irrevocable power of attorney to be exercised if the Second Lien Agent
does not take such action within ten (10) Business Days after written notice, in
the place and stead of the Second Lien Agent and in the name of the Second Lien
Agent or in the First Lien Agent’s own name, from time to time, in the First
Lien Agent’s reasonable discretion, for the purposes of carrying out the terms
of this paragraph, to take any and all appropriate action and to execute and
deliver any and all documents and instruments as may be necessary to accomplish
the purposes of this paragraph, including any financing statements,
endorsements, assignments, releases or other documents or instruments of
transfer.

Section 2.5. No New Liens. (a) Until the date upon which the Discharge of First
Lien Obligations shall have occurred, the parties hereto agree that no Second
Lien Secured Party shall acquire or hold any Lien (other than any judgment lien
as set forth in Section 2.3(c) above) on any assets of any Loan Party securing
any Second Lien Obligation which assets are not also subject to the Lien of the
First Lien Agent under the First Lien Loan Documents, other than the Excluded
Term Loan Collateral. If any Second Lien Secured Party shall (nonetheless and in
breach hereof) acquire or hold any Lien on any assets of any Loan Party securing
any Second Lien Obligation which assets are not also subject to the Lien of the
First Lien Agent under the First Lien Loan Documents (other than the Excluded
Term Loan Collateral), then the Second Lien Agent (or the relevant Second Lien
Secured Party) shall, without the need for any further consent of any other
Second Lien Secured Party, the Borrower or any Guarantor and notwithstanding
anything to the contrary in any other Second Lien Loan Document, be deemed to
also hold and have held such Lien as agent or bailee for the benefit of the
First Lien Agent as security for the First Lien Obligations (subject to the Lien
Priority and other terms hereof) and shall promptly notify the First Lien Agent
in writing of the existence of such Lien.

 

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(b) Until the date upon which the Discharge of Second Lien Obligations shall
have occurred, the parties hereto agree that no First Lien Secured Party shall
acquire or hold any Lien (other than any judgment lien as set forth in
Section 2.3(c) above) on any assets of any Loan Party securing any First Lien
Obligation which assets are not also subject to the Lien of the Second Lien
Agent under the Second Lien Loan Documents. If any First Lien Secured Party
shall (nonetheless and in breach hereof) acquire or hold any Lien on any assets
of any Loan Party securing any First Lien Obligation which assets are not also
subject to the Lien of the Second Lien Agent under the Second Lien Loan
Documents, then the First Lien Agent (or the relevant First Lien Secured Party)
shall, without the need for any further consent of any other First Lien Secured
Party, the Borrower or any Guarantor and notwithstanding anything to the
contrary in any other First Lien Loan Document be deemed to also hold and have
held such Lien as agent or bailee for the benefit of the Second Lien Agent as
security for the Second Lien Obligations (subject to the Lien Priority and other
terms hereof) and shall promptly notify the Second Lien Agent in writing of the
existence of such Lien.

Section 2.6. Waiver of Marshalling.

Until the Payment of Maximum First Lien Facility Amount, the Second Lien Agent,
on behalf of itself and the Second Lien Secured Parties, agrees not to assert
and hereby waives, to the fullest extent permitted by law, any right to demand,
request, plead or otherwise assert or otherwise claim the benefit of, any
marshalling, appraisal, valuation or other similar right that may otherwise be
available under applicable law with respect to the Collateral or any other
similar rights a junior secured creditor may have under applicable law.

ARTICLE 3.

ACTIONS OF THE PARTIES

Section 3.1. Certain Actions Permitted. The Second Lien Agent and the First Lien
Agent may make such demands or file such claims in respect of the Second Lien
Obligations or the First Lien Obligations, as applicable, as are necessary to
prevent the waiver or bar of such claims under applicable statutes of
limitations or other statutes, court orders, or rules of procedure at any time.
Nothing in this Agreement shall prohibit the receipt by the Second Lien Agent or
any Second Lien Secured Party of the payments of interest, principal and other
amounts owed in respect of the Second Lien Obligations so long as such receipt
is not the direct or indirect result of (a) the Exercise of any Secured Creditor
Remedies in violation of this Agreement, or (b) the enforcement of any Lien held
by the Second Lien Agent or any Second Lien Secured Party in contravention of
this Agreement. Nothing in this Agreement shall prohibit the receipt by the
First Lien Agent or any First Lien Secured Party of the payments of interest,
principal and other amounts owed in respect of the First Lien Obligations.

Section 3.2. Agent for Perfection. The First Lien Agent, for and on behalf of
itself and each First Lien Secured Party, acknowledges and agrees to hold all
Control Collateral in its possession, custody, or control (or in the possession,
custody, or control of agents or bailees for the First Lien Agent) as agent and
bailee for the benefit of, and on behalf of, the Second Lien

 

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Agent and the Second Lien Secured Parties solely for the purpose of perfecting
the security interest granted to the Second Lien Agent in such Collateral,
subject to the terms and conditions of this Section 3.2. In furtherance of the
foregoing, Second Lien Agent, on behalf of the Second Lien Secured Parties,
hereby appoints First Lien Agent as bailee for purposes of maintaining a
perfected Lien on behalf of such Second Lien Secured arties in such Control
Collateral. None of the First Lien Agent or the First Lien Secured Parties shall
have any obligation whatsoever to the Second Lien Agent or the Second Lien
Secured Parties to assure that the Collateral is genuine or owned by the
Borrower, any Guarantor, or any other Person or to preserve rights or benefits
of any Person. The duties or responsibilities of the First Lien Agent under this
Section 3.2 are and shall be limited solely to holding or maintaining control of
the Control Collateral as agent for the Second Lien Agent for purposes of
perfecting the Lien held by the Second Lien Agent. The First Lien Agent is not
and shall not be deemed to be a fiduciary of any kind for the Second Lien
Secured Parties or any other Person.

Section 3.3. Sharing of Information and Access; Notices of Default.

(a) In the event that the First Lien Agent shall, in the exercise of its rights
under the First Lien Security Documents or otherwise, receive possession or
control of any books and records of any Loan Party which contain information
identifying or pertaining to the Collateral, the First Lien Agent shall, upon
request from the Second Lien Agent and as promptly as practicable thereafter,
either make available to the Second Lien Agent such books and records for
inspection and duplication or provide to the Second Lien Agent copies thereof.
In the event that the Second Lien Agent shall, in the exercise of its rights
under the Second Lien Security Documents or otherwise, receive possession or
control of (i) any books and records of any Loan Party which contain information
identifying or pertaining to any of the Collateral, the Second Lien Agent shall,
upon request from the First Lien Agent and as promptly as practicable
thereafter, either make available to the First Lien Agent such books and records
for inspection and duplication or provide the First Lien Agent copies thereof or
(ii) any Excluded Term Loan Collateral prior to Second Lien Remedies Exercise
Date, Second Lien Agent and First Lien Agent shall use commercially reasonable
efforts to enter into an access agreement, to the extent that First Lien Agent
has notified Second Lien Agent of its intention to Exercise Secured Creditor
Remedies requiring access to such Excluded Term Loan Collateral.

(b) Each Agent shall give to the other Agent concurrently with the giving
thereof to any Loan Party (a) a copy of any written notice by such Agent of an
First Lien Event of Default or a Second Lien Event of Default, as the case may
be, or a written notice of demand for payment from any Loan Party and (b) a copy
of any written notice sent by such Agent to any Loan Party stating such Agent’s
intention to Exercise of any Secured Creditors’ Remedies or to exercise any
other material enforcement rights or remedies with respect to the Collateral
against such Loan Party, including written notice pertaining to any foreclosure
on all or any material part of its Liens or other judicial or non-judicial
remedy in respect thereof, and any legal process served or filed in connection
therewith; provided that the failure of any Agent to give such required notice
shall not result in any liability to such Agent or affect the enforceability of
any provision of this Agreement, including the relative priorities of the Liens
of the Agents and Secured Parties as provided herein, and shall not affect the
validity or effectiveness of any such notice as against any Loan Party or of any
action taken pursuant to such notice or in relation to the events giving rise
thereto; provided, further, that the foregoing shall not in any way impair any
claims that any Agent may have against the other Agent as a result of any
failure of such Agent to provide any notice in connection with a foreclosure
against the Collateral by such Agent as required under applicable law.

 

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(c) Each Agent agrees to promptly provide the other Agent copies of all
collateral appraisals, results of field examinations, results of physical
inventories and tax and other lien searches, in each case, to the extent
requested by the other Agent (collectively “Due Diligence”) with respect to the
Loan Parties or the Collateral (to the extent not prohibited by any third
parties that prepared such materials) and each Agent consents to the Loan
Parties providing the other Agent with copies of such Due Diligence (to the
extent not prohibited by any third parties that prepared such materials). The
failure of any Agent to provide Due Diligence materials shall not, in any case,
(a) any of the rights, privileges or obligations under this Agreement or
(b) give rise to any claim, cause of action or liability by any Agent or Secured
Party or any person conducting such appraisals and commercial finance audits.
Each Agent, for itself and on behalf of its respective Secured Parties,
acknowledges and agrees that the preparation of Due Diligence may be subject to
the cooperation of the cooperation of the Loan Parties and neither the other
Agent, such Agent’s respective Secured Parties nor any of their respective
agents, consultants, advisors, counsel or employees make any representation or
warranties whatsoever, including, without limitation, any representation as to
the completeness or accuracy of the Due Diligence, either at the time the Due
Diligence was prepared or at the present time and such information is provided
for informational purposes only, and may not be relied upon by such other Agent,
such other Secured Parties or any other party, in any manner whatsoever. Each
Agent, for itself and on behalf of its respective Secured Parties, further
acknowledges and agrees that the Due Diligence shall not give rise to any claim
or cause of action or liability against, and shall be provided without recourse
to, the other Agent, such other Agent’s respective Secured Parties or any agent,
consultant, advisor, counsel or employees thereof. Each Agent, for itself and on
behalf of its respective Secured Parties, agrees that it shall use such Due
Diligence in connection with its administration under the applicable Credit
Documents. The Loan Parties irrevocably authorize each Agent to provide the
other Agent with copies of Due Diligence.

Section 3.4. Insurance. Proceeds of Collateral include insurance proceeds and,
therefore, the Lien Priority shall govern the ultimate disposition of casualty
insurance proceeds. The First Lien Agent and the Second Lien Agent shall each be
named as additional insured or loss payee, as applicable, with respect to all
insurance policies relating to the Collateral. Prior to the Payment of Maximum
First Lien Facility Amount, the First Lien Agent shall have the sole and
exclusive right, as against the Second Lien Agent, to adjust settlement of
insurance claims with respect to the Collateral in a commercially reasonable
manner. After the Payment of Maximum First Lien Facility Amount but prior to the
Payment of Maximum Second Lien Facility Amount, the Second Lien Agent shall have
the sole and exclusive right, as against the First Lien Agent, to adjust
settlement of insurance claims with respect to the Collateral in a commercially
reasonable manner. After the Payment of Maximum Second Lien Facility Amount, the
First Lien Agent shall have the sole and exclusive right, as against the Second
Lien Agent, to adjust settlement of insurance claims with respect to the
Collateral in a commercially reasonable manner. Upon the receipt of any proceeds
of insurance by the First Lien Agent or the Second Lien Agent, such proceeds
shall be applied as set forth in Section 4.1 hereof. Prior to the Payment of
Maximum First Lien Facility Amount, the Second Lien Agent hereby appoints the

 

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First Lien Agent and any officer or duly authorized person of the First Lien
Agent, with full power of substitution, as its true and lawful attorney-in-fact
with full irrevocable power of attorney to make any endorsements as agent for
the Second Lien Agent or any such other Second Lien Secured Parties; provided
that such appointment shall be exercised only if the Second Lien Agent does not
make such endorsement within ten (10) Business Days after written notice. After
the Payment of Maximum First Lien Facility Amount, the First Lien Agent hereby
appoints the Second Lien Agent and any officer or duly authorized person of the
Second Lien Agent, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power of attorney to make any
endorsements as agent for the First Lien Agent or any such other First Lien
Secured Parties; provided that such appointment shall be exercised only if the
First Lien Agent does not make such endorsement within ten (10) Business Days
after written notice.

Section 3.5. No Additional Rights For the Loan Parties Hereunder. If any First
Lien Secured Party or Second Lien Secured Party shall enforce its rights or
remedies in violation of the terms of this Agreement, the Loan Parties shall not
be entitled to use such violation as a defense to any action by any First Lien
Secured Party or Second Lien Secured Party, nor to assert such violation as a
counterclaim or basis for set off or recoupment against any First Lien Secured
Party or Second Lien Secured Party.

Section 3.6. Payments Over.

So long as the Discharge of First Lien Obligations has not occurred, any
Collateral or Proceeds thereof received by the Second Lien Agent or any Second
Lien Secured Parties in connection with the Exercise of Secured Creditor
Remedies or any other exercise of any right or remedy (including set off)
relating to the Collateral shall be segregated and held in trust and forthwith
paid over to the First Lien Agent in the same form as received, with any
necessary endorsements for application in accordance with the provisions of
Section 4.1 hereof or as a court of competent jurisdiction may otherwise direct;
provided that after Payment of Maximum First Lien Facility Amount, the Second
Lien Agent may retain such Proceeds for application to the Maximum Second Lien
Facility Amount until Payment of Maximum Second Lien Facility Amount has
occurred.

Section 3.7. Revolving Nature of Certain First Lien Obligations. The Second Lien
Agent, for and on behalf of itself and the Second Lien Secured Parties,
expressly acknowledges and agrees that (i) the First Lien Credit Agreement
includes a revolving commitment, that in the ordinary course of business the
First Lien Agent and the First Lien Lenders will apply payments and make
advances thereunder, and that no application of any Collateral or the release of
any Lien by the First Lien Agent upon any portion of the Collateral in
connection with a permitted disposition by the Loan Parties under the First Lien
Credit Agreement as in effect on the date hereof, prior to a First Lien Event of
Default shall constitute the Exercise of Secured Creditor Remedies under this
Agreement; (ii) the amount of the First Lien Obligations that may be outstanding
at any time or from time to time may be increased or reduced and subsequently
reborrowed, and that the terms of the First Lien Obligations may be modified,
extended or amended from time to time (in accordance with Section 5.2), and that
the aggregate amount of the First Lien Obligations may be increased, replaced or
refinanced, in each event, without notice to or consent by the Second Lien
Secured Parties and without affecting the provisions hereof; and (iii) all
Collateral received by the First Lien Agent may be applied,

 

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reversed, reapplied or credited, in whole or in part, to the First Lien
Obligations at any time. The Lien Priority shall not be altered or otherwise
affected by any such amendment, modification, supplement, extension, repayment,
reborrowing, increase, replacement, renewal, restatement or refinancing of
either the First Lien Obligations or the Second Lien Obligations, or any portion
thereof.

ARTICLE 4.

APPLICATION OF PROCEEDS

Section 4.1. Application of Proceeds.

The First Lien Agent and the Second Lien Agent hereby agree that (i) all
Collateral and all Proceeds thereof received by either of them in connection
with any Exercise of Secured Creditor Remedies with respect to the Collateral,
(ii) all Collateral and all Proceeds thereof received by either of them in
connection with the exercise of any right or remedy (including set off) relating
to the Collateral, or (iii) all Collateral and all Proceeds thereof received by
either of them following the commencement of any Insolvency Proceeding or other
payments received from any source derived, other than (a) reorganization
securities, (b) proceeds of Excluded Term Loan Collateral, (c) cash payments
received pursuant to Section 6.3(c)(ii) of this Agreement, and (c) after the
completion of the liquidation or sale of all or substantially all of the
Collateral or a refinancing of the First Lien Obligations, any other payments
generally paid or payable to general unsecured creditors not having any priority
under Sections 364(c)(1) and 507 of the Bankruptcy Code) in each case, shall be
applied,

first, to the payment of reasonable costs and expenses of the First Lien Agent,

second, to the payment of the First Lien Obligations (other than the Excess
First Lien Obligations) in accordance with the First Lien Loan Documents until
the Discharge of First Lien Obligations (other than the Excess First Lien
Obligations) shall have occurred;

third, to the payment of the Second Lien Obligations (other than the Excess
Second Lien Obligations) in accordance with the Second Lien Loan Documents until
the Discharge of Second Lien Obligations (other than the Excess Second Lien
Obligations) shall have occurred,

fourth, to the payment of the Excess First Lien Obligations in accordance with
the First Lien Loan Documents until the Discharge of First Lien Obligations
shall have occurred,

fifth, to the payment of the Excess Second Lien Obligations in accordance with
the Second Lien Loan Documents until the Discharge of Second Lien Obligations
shall have occurred, and

sixth, the balance, if any, to the Loan Parties or as a court of competent
jurisdiction may direct.

 

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Section 4.2. Turnover of Collateral After Discharge. Upon the Payment of Maximum
First Lien Facility Amount, the First Lien Agent shall deliver to the Second
Lien Agent or shall execute such documents as the Second Lien Agent may
reasonably request (at the expense of the Borrower) to enable the Second Lien
Agent to have control over any Control Collateral still in the First Lien
Agent’s possession, custody, or control in the same form as received with any
necessary endorsements, or as a court of competent jurisdiction may otherwise
direct. Thereafter, upon the Payment of Maximum Second Lien Facility Amount, the
Second Lien Agent shall deliver to the First Lien Agent or shall execute such
documents as the First Lien Agent may reasonably request (at the expense of the
Borrower) to enable the First Lien Agent to have control over any Control
Collateral still in the Second Lien Agent’s possession, custody, or control in
the same form as received with any necessary endorsements, or as a court of
competent jurisdiction may otherwise direct.

Section 4.3. Limited Obligation or Liability. In exercising remedies, whether as
a secured creditor or otherwise, the First Lien Agent shall have no obligation
or liability to the Second Lien Agent or to any Second Lien Secured Party
regarding the adequacy of any Proceeds or for any action or omission, except
solely for an action or omission that breaches the express obligations
undertaken by the First Lien Agent under the terms of this Agreement.
Notwithstanding anything to the contrary herein contained, none of the Parties
hereto waives any claim that it may have against a Secured Party on the grounds
that any sale, transfer or other disposition by the Secured Party was not
commercially reasonable in every respect as required by the Uniform Commercial
Code.

Section 4.4. Specific Performance. Each of the First Lien Agent and the Second
Lien Agent is hereby authorized to demand specific performance of this
Agreement, whether or not the Borrower or any Guarantor shall have complied with
any of the provisions of any of the Loan Documents, at any time when the other
Party shall have failed to comply with any of the provisions of this Agreement
applicable to it. Each of the First Lien Agent, for and on behalf of itself and
the First Lien Secured Parties, and the Second Lien Agent, for and on behalf of
itself and the Second Lien Secured Parties, hereby irrevocably waives any
defense based on the adequacy of a remedy at law that might be asserted as a bar
to such remedy of specific performance.

ARTICLE 5.

INTERCREDITOR ACKNOWLEDGEMENTS AND WAIVERS

Section 5.1. Notice of Acceptance and Other Waivers.

(a) All First Lien Obligations at any time made or incurred by the Borrower or
any Guarantor shall be deemed to have been made or incurred in reliance upon
this Agreement, and the Second Lien Agent, on behalf of itself and the Second
Lien Secured Parties, hereby waives notice of acceptance, or proof of reliance
by the First Lien Agent or any First Lien Secured Party of this Agreement, and
notice of the existence, increase, renewal, extension, accrual, creation, or
non-payment of all or any part of the First Lien Obligations. All Second Lien
Obligations at any time made or incurred by the Borrower or any Guarantor shall
be deemed to have been made or incurred in reliance upon this Agreement, and the
First Lien Agent, on behalf of itself and the First Lien Secured Parties, hereby
waives notice of acceptance, or proof of reliance, by the Second Lien Agent or
any Second Lien Secured Party of this Agreement, and notice of the existence,
increase, renewal, extension, accrual, creation, or non-payment of all or any
part of the Second Lien Obligations.

 

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(b) None of the First Lien Agent, any First Lien Secured Party, 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,
except as specifically provided in this Agreement. If the First Lien Agent or
any First Lien Secured Party otherwise should exercise any of its contractual
rights or remedies under any First Lien Loan Documents (subject to the terms and
conditions hereof), neither the First Lien Agent nor any First Lien Secured
Party shall have any liability whatsoever to the Second Lien Agent or any Second
Lien Secured Party as a result of such action, omission, or exercise (so long as
any such exercise does not breach the terms and provisions of this Agreement).
The First Lien Agent and the First Lien Secured Parties shall be entitled to
manage and supervise their loans under any First Lien Credit Agreement and any
of the other First Lien Loan Documents as they may, in their sole discretion,
deem appropriate, and may manage their loans without regard to any rights or
interests that the Second Lien Agent or any of the Second Lien Secured Parties
have in the Collateral, except as otherwise expressly set forth in this
Agreement. Subject to Sections 2.4 and 4.1, the Second Lien Agent, on behalf of
itself and the Second Lien Secured Parties, agrees that neither the First Lien
Agent nor any First Lien Secured Party 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 Proceeds thereof, pursuant to the First Lien Loan
Documents, so long as such disposition is conducted in accordance with
applicable law and does not breach the provisions of this Agreement.

Section 5.2. Modifications to First Lien Documents and Second Lien Documents.

(a) The First Lien Agent and the First Lien Secured Parties may at any time and
from time to time and without the consent of or notice to the Second Lien Agent
or any Second Lien Secured Party, without incurring any liability to the Second
Lien Agent or any Second Lien Secured Party and without impairing or releasing
any rights or obligations hereunder or otherwise, amend, restate, supplement,
modify, waive, substitute, renew, refinance, or replace any or all of the First
Lien Loan Documents; provided, however, that without the consent of the Second
Lien Agent, the First Lien Secured Parties shall not amend, restate, supplement,
modify, waive, substitute, renew, refinance or replace any or all of the First
Lien Loan Documents to:

(1) increase the sum of the then outstanding aggregate principal amount of the
loans made under the First Lien Credit Agreement in excess of the amount of the
Maximum First Lien Facility Amount;

(2) increase the effective yield on Indebtedness under the First Lien Credit
Agreement by more than 400 basis points, including (i) by increasing floors or
the aggregate amount of the rates of interest set forth in the definition of
“Applicable

 

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Margin” as defined in the First Lien Credit Agreement as in effect on the date
hereof, and (ii) any fees that are similar to interest and/or that are recurring
through the term of the First Lien Credit Agreement, that, together with any
increase in clause (i), by an amount that corresponds to 400 or more basis
points in yield per annum at any level of the pricing grid applicable thereto
(other than any increase occurring because of fluctuations in underlying rate
indices or the imposition of the Default Rate);

(3) subordinate all of the Liens securing the First Lien Obligations to any
other Lien, or the right to payment of all of the First Lien Obligations to any
other indebtedness (other than in connection with the Carve Out in an Insolvency
Proceeding as permitted in Section 6.1(c) below); provided that the holder(s) of
the First Lien Obligations shall be permitted to subordinate their Liens or
rights to payment with respect to each other;

(4) modify any provision in the First Lien Credit Agreement as in effect on the
date hereof that restricts purchases of First Lien Obligations, or voting rights
related thereto, by any Loan Party or any Affiliate of any Loan Party;

(5) shorten the scheduled payments or maturity or change the average weighted
life of the First Lien Obligations;

(6) modify any provision thereunder that restricts any Loan Party from making
payments of the Second Lien Obligations that would otherwise be permitted under
the First Lien Credit Agreement as in effect on the date hereof; or

(7) make any other amendment or modification in contravention of this Agreement.

(b) The Second Lien Agent and the Second Lien Secured Parties may at any time
and from time to time and without consent of or notice to the First Lien Secured
Parties, without incurring any liability to the First Lien Secured Parties and
without impairing or releasing any rights or obligations hereunder or otherwise,
amend, restate, supplement, modify, waive, substitute, renew, refinance or
replace any or all of the Second Lien Loan Documents; provided, however, that
without the consent of the First Lien Agent, the Second Lien Agent and the
Second Lien Secured Parties shall not amend, restate, supplement, modify, waive,
substitute, renew, refinance or replace any or all of the Second Lien Loan
Documents to:

(1) increase the aggregate outstanding principal amount of the Second Lien
Obligations in excess of the amount of the Maximum Second Lien Facility Amount;

(2) increase the effective yield on Indebtedness under the Second Lien Credit
Agreement by more than 200 basis points, including by increasing the aggregate
amount of the rates of interest set forth in the definition of “Applicable
Margin” as defined in the Second Lien Credit Agreement, together with any fees
that are similar to interest that are recurring through the term of the Second
Lien Credit Agreement, in an amount that would increase the effective yield on
Indebtedness under the Second Lien Credit Agreement by more than 200 basis
points (other than any increase occurring because of fluctuations in underlying
rate indices or the imposition of the Default Rate) or increase the percentage
with respect to the Default Rate by more than 200 basis points per annum above
the rate applicable thereto on the date hereof;

 

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(3) shorten the scheduled maturity of the Second Lien Obligations;

(4) require any mandatory prepayments or scheduled repayments of the Second Lien
Obligations except as provided in the Second Lien Loan Documents as in effect on
the date hereof or require that any scheduled payment on the Second Lien
Obligations be made earlier than the date originally scheduled for such payment;

(5) increase the amount of any prepayment premium or call protection;

(6) change any conditions, covenants, defaults or events of default thereunder
that expressly restricts any Loan Party from making payments of the First Lien
Obligations that would otherwise be permitted under the Second Lien Loan
Documents as in effect on the date hereof;

(7) amends any covenant or financial covenant in manner that makes it more
restrictive or less favorable to any Loan Party; or

(8) make any other amendment or modification in contravention of this Agreement.

(c) Subject to Sections 5.2(a) and (b) above, the First Lien Obligations and the
Second Lien Obligations may be refinanced, in whole or in part, in each case,
without notice to, or the consent (except to the extent a consent is required to
permit the refinancing transaction under any First Lien Loan Document or any
Second Lien Loan Document) of the First Lien Agent, the First Lien Secured
Parties, the Second Lien Agent or the Second Lien Secured Parties, as the case
may be, all without affecting the Lien Priority provided for herein or the other
provisions hereof, provided, however, that the holders of such refinancing
indebtedness (or an authorized agent or trustee on their behalf) bind themselves
in writing to the terms of this Agreement pursuant to such documents or
agreements (including amendments or supplements to this Agreement) as the First
Lien Agent or the Second Lien Agent, as the case may be, shall reasonably
request and in form and substance reasonably acceptable to the First Lien Agent
or the Second Lien Agent, as the case may be, and any such refinancing
transaction shall be in accordance with any applicable provisions of both the
First Lien Loan Documents and the Second Lien Loan Documents (to the extent such
documents survive the refinancing).

Section 5.3. Reinstatement and Continuation of Agreement.

(a) If the First Lien Agent or any First Lien Secured Party is required in any
Insolvency Proceeding or otherwise to turn over or otherwise pay to the estate
of the Borrower, any Guarantor, or any other Person any payment made in
satisfaction of all or any portion of the First Lien Obligations (a “First Lien
Recovery”), then the First Lien Obligations shall be reinstated to the extent of
such First Lien Recovery. If this Agreement shall have been terminated prior to
such First Lien Recovery, this Agreement shall be reinstated in full force and
effect in the event of such First Lien Recovery, and such prior termination
shall not diminish, release, discharge, impair, or otherwise affect the
obligations of the Parties from such date of

 

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reinstatement, but such reinstatement shall not impose an obligation on the
Second Lien Agent or Second Lien Secured Parties to disgorge payments received
by the Second Lien Agent prior to such reinstatement, including from the
Proceeds of Collateral, in accordance with the terms of Section 4.1 hereof. All
rights, interests, agreements, and obligations of the First Lien Agent, the
Second Lien Agent, the First Lien Secured Parties, and the Second Lien Secured
Parties 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 the
Borrower or any Guarantor or any other circumstance which otherwise might
constitute a defense available to, or a discharge of the Borrower or any
Guarantor in respect of the First Lien Obligations or the Second Lien
Obligations. No priority or right of the First Lien Agent or any First Lien
Secured Party shall at any time be prejudiced or impaired in any way by any act
or failure to act on the part of the Borrower or any Guarantor or by the
noncompliance by any Person with the terms, provisions, or covenants of any of
the First Lien Loan Documents, regardless of any knowledge thereof which the
First Lien Agent or any First Lien Secured Party may have.

(b) If the Second Lien Agent or any Second Lien Secured Party is required in any
Insolvency Proceeding or otherwise to turn over or otherwise pay to the estate
of the Borrower, any Guarantor, or any other Person any payment made in
satisfaction of all or any portion of the Second Lien Obligations (a “Second
Lien Recovery”), then the Second Lien Obligations shall be reinstated to the
extent of such Second Lien Recovery. If this Agreement shall have been
terminated prior to such Second Lien Recovery, this Agreement shall be
reinstated in full force and effect in the event of such Second Lien Recovery,
and such prior termination shall not diminish, release, discharge, impair, or
otherwise affect the obligations of the Parties from such date of reinstatement,
but such reinstatement shall not impose an obligation on the First Lien Agent or
First Lien Secured Parties to disgorge payments received by the First Lien Agent
prior to such reinstatement, including from the Proceeds of Collateral, in
accordance with the terms of Section 4.1 hereof. All rights, interests,
agreements, and obligations of the First Lien Agent, the Second Lien Agent, the
First Lien Secured Parties, and the Second Lien Secured Parties 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 the Borrower or any Guarantor or any
other circumstance which otherwise might constitute a defense available to, or a
discharge of the Borrower or any Guarantor in respect of the First Lien
Obligations or the Second Lien Obligations. No right of the Second Lien Agent or
any Second Lien Secured Party shall at any time be prejudiced or impaired in any
way by any act or failure to act on the part of the Borrower or any Guarantor or
by the noncompliance by any Person with the terms, provisions, or covenants of
any of the Second Lien Loan Documents, regardless of any knowledge thereof which
the Second Lien Agent or any Second Lien Secured Party may have.

 

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ARTICLE 6.

INSOLVENCY PROCEEDINGS

Section 6.1. DIP Financing.

(a) If the Borrower or any Guarantor shall be subject to any Insolvency
Proceeding at any time prior to Payment of Maximum First Lien Facility Amount,
and the First Lien Agent or the First Lien Secured Parties shall seek to provide
the Borrower or any Guarantor with, or consent to a third party providing, any
financing under Section 364 of the Bankruptcy Code or consent to any order for
the use of cash collateral constituting Collateral under Section 363 of the
Bankruptcy Code (each, a “DIP Financing”), with such DIP Financing to be secured
by Liens on all or any portion of the Collateral (including assets that, but for
the application of Section 552 of the Bankruptcy Code (or any similar provision
of any foreign Debtor Relief Laws) would be Collateral and assets constituting
Excluded Term Loan Collateral), then the Second Lien Agent, on behalf of itself
and the Second Lien Secured Parties, agrees that it will raise no objection and
will not support any objection as a secured creditor, to such DIP Financing or
use of cash collateral or to the Liens securing the same on any grounds,
including a failure to provide “adequate protection” for the Liens of the Second
Lien Agent securing the Second Lien Obligations (and will not request any
adequate protection solely as a result of such DIP Financing or use of cash
collateral except as permitted by Section 6.3(b) and will not offer or support
any debtor-in-possession financing that would compete with such DIP Financing),
and will subordinate the Liens of the Second Lien Secured Parties in the
Excluded Term Loan Collateral to the Liens securing such DIP Financing, so long
as (i) the Second Lien Agent retains its Lien on the Collateral to secure the
Second Lien Obligations (in each case, including Proceeds thereof arising after
the commencement of the case under any Debtor Relief Laws), (ii) the additional
amount advanced against the Collateral pursuant to any such DIP Financing plus
the amount of First Lien Obligations outstanding under the First Lien Credit
Agreement as of the commencement of the Insolvency Proceeding, together with any
Carve Out (defined below) does not exceed the Maximum First Lien Facility
Amount, (iii) all Liens on the Collateral securing any such DIP Financing shall
be senior to or on a parity with the Liens of the First Lien Agent and the First
Lien Secured Parties securing the First Lien Obligations on the Collateral;
(iv) the DIP Financing does not compel any Borrower or any Guarantor to seek
confirmation of a specific plan of reorganization for which all or substantially
all of the material terms are set forth in the DIP Financing documentation;
(v) such DIP Financing shall be maintained as an “asset-based” loan; (vi) the
advance rates, fees and other terms of such DIP Financing shall be commercially
reasonable and the advance rates therein shall not be increased above 100% of
any eligible asset category; and (vii) such DIP Financing shall be subject to
the terms of this Agreement; provided, however, that nothing herein shall
prevent the Second Lien Agent or the Second Lien Secured Parties from
(x) objecting to any provision in any DIP Financing relating to any provision or
content of a plan of reorganization to the extent that such objection is not
inconsistent with the terms of this Agreement, (y) objecting to any agreement or
arrangements that require a specific treatment of the claim in the Insolvency
Proceeding for purposes of a plan of reorganization or contravene the terms of
this Agreement in any material respect, or (z) objecting on any grounds
available to an unsecured creditor. If the Second Lien Agent and the Second Lien
Secured Parties exercise the purchase option set forth in Article 7 hereof with
respect to the First Lien Obligations, the First Lien Agent agrees, on behalf of
the First Lien Secured Parties, that the Persons being the First Lien Agent and
the First Lien Secured Parties prior to giving effect to the purchase, shall not
seek to provide the Borrower or any Guarantor with a DIP Financing following
such purchase.

(b) Notwithstanding the provisions of Section 6.1(a), the Second Lien Agent or
any or all of the Second Lien Secured Parties may propose to provide (or support
any other Person in providing) any DIP Financing that does not compete with the
DIP Financing provided by the First Lien Secured Parties; provided that the
Liens on the Collateral securing such DIP Financing are not pari passu or senior
to the Liens on the Collateral that secure the First Lien Obligations and such
DIP Financing shall be subject to the terms of this Agreement.

 

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(c) In connection with the approval of any DIP Financing, (i) the First Lien
Agent and the First Lien Secured Parties may consent, in their commercially
reasonable discretion, to the use of cash collateral or use of DIP Financing
proceeds to pay “Section 503(b)(9)” claims, “stub rent” claims, claims of
creditors having or claiming to have Liens having priority over the Liens
securing the First Lien Obligations and Second Lien Obligations, and other
similar types of claims that may be customarily required to be paid in order for
such DIP Financing to be approved; and (ii) any Liens on the Collateral held by
the First Lien Agent and the First Lien Secured Parties may be subject to a
carve-out amount granted with respect to professional fees and expenses, court
costs, filing fees and fees and costs of the Office of the United States
Trustee, as approved by the bankruptcy court (collectively, the “Carve Out”). In
such circumstances, unless the Second Lien Agent and the Second Lien Secured
Creditor Parties have provided DIP Financing, the Second Lien Agent and the
Second Lien Secured Parties shall not object to the payment of any such
Carve-Out, and the Liens on the Collateral of the Second Lien Agent and the
Second Lien Secured Parties shall be subject to such Carve-Out to the same
extent as, and maintaining the same relative priority to, the Liens on the
Collateral of the First Lien Agent.

(d) All Liens granted to the First Lien Agent or the Second Lien Agent in any
Insolvency Proceeding, whether as adequate protection or otherwise, are intended
by the Parties to be and shall be deemed to be subject to the Lien Priority and
the other terms and conditions of this Agreement.

(e) Nothing in this Agreement shall prevent First Lien Agent or any First Lien
Lender or Second Lien Agent or any Second Lien Lender from proposing a DIP
Facility that is not conforming to the provisions of this Section 6.1 if such
alternative DIP Financing has been requested by the Borrower (the “Nonconforming
DIP Facility”); provided that the amount of such Nonconforming DIP Facility,
together with the First Lien Obligations or the Second Lien Obligations, as the
case may be, shall not exceed the Maximum First Lien Facility Amount or the
Maximum Second Lien Facility Amount, as applicable. In such circumstances, the
Borrower and the party proposing such Nonconforming DIP Facility shall provide
notice to the other parties to this Agreement that a Nonconforming DIP Facility
is being proposed, in which case the limitations and agreements of this
Section 6.1 with respect to First Lien Agent or Second Lien Agent (or any First
Lien Lender or Second Lien Lender) objecting to such DIP Facility or seeking
other remedies or protection shall be inapplicable.

Section 6.2. Relief From Stay. Until the Second Lien Remedies Exercise Date, the
Second Lien Agent, on behalf of itself and the Second Lien Secured Parties,
agrees not to seek relief from the automatic stay or any other stay in any
Insolvency Proceeding in respect of any portion of the Collateral (other than in
connection with the provision of DIP Financing) without the First Lien Agent’s
express written consent. In addition, neither the First Lien Agent nor the
Second Lien Agent shall seek any relief from the automatic stay with respect to
any Collateral without providing three (3) days’ prior written notice to the
other, unless such period is agreed by both the First Lien Agent and the Second
Lien Agent to be modified or unless, with respect to the First Lien Agent, it
makes a good faith determination that either (A) the Collateral will decline
speedily in value or (B) the failure to take any action will have a reasonable
likelihood of endangering the First Lien Agent’s ability to realize upon the
Collateral.

 

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Section 6.3. No Contest; Adequate Protection.

(a) In any Insolvency Proceeding, the Second Lien Agent, on behalf of itself and
the Second Lien Secured Parties, agrees that, prior to the Discharge of First
Lien Obligations, none of them shall contest (or support any other Person
contesting) (i) any request by the First Lien Agent or any First Lien Secured
Party for adequate protection of its interest in the Collateral in compliance
with the terms of this Agreement, (ii) except as otherwise expressly provided
herein, any proposed provision of DIP Financing by the First Lien Agent and some
or all of the First Lien Secured Parties consistent with Section 6.1(a), or
(iii) any objection by the First Lien Agent or any First Lien Secured Party to
any motion, relief, action, or proceeding based on a claim by the First Lien
Agent or any First Lien Secured Party that its interests in the Collateral are
not adequately protected (or any other similar request under any law applicable
to an Insolvency Proceeding), so long as any Liens granted to the First Lien
Agent as adequate protection of its interests are subject to this Agreement.

(b) In any Insolvency Proceeding, the First Lien Agent, on behalf of itself or
any of the First Lien Secured Parties, agrees that if the First Lien Secured
Parties are granted adequate protection in the form of:

(1) an additional or replacement Lien in connection with any DIP Financing or
use of cash collateral that constitutes Collateral, then First Lien Agent agrees
that Second Lien Agent shall also be entitled to seek, without objection from
the First Lien Agent, adequate protection in the form of an additional or
replacement Lien, which additional or replacement Lien, if obtained, shall be
junior to the Liens securing the First Lien Obligations (including those under a
DIP Financing) on the same basis as the other Liens securing the Second Lien
Obligations are junior to Liens securing the First Lien Obligations under this
Agreement; and

(2) a superpriority or other administrative expense claim in connection with any
DIP Financing or use of cash collateral that constitutes Collateral, then First
Lien Agent agrees that Second Lien Agent shall also be entitled to seek, without
objection from First Lien Agent, adequate protection in the form of a
superpriority or other administrative expense claim (as applicable), which
superpriority or other administrative expense claim, if obtained, shall be
treated as Proceeds of Collateral for all purposes under this Agreement and
shall be junior to the superpriority or other administrative expense claim of
the First Lien Claimholders.

(c) Notwithstanding the foregoing provisions in this Section 6.3, in any
Insolvency Proceeding, in the event that the First Lien Agent, on behalf of
itself or any of the First Lien Secured Parties, is granted adequate protection
with respect to the Collateral in the form of (i) additional collateral (even if
such collateral is not of a type which would otherwise have constituted
Collateral), then the First Lien Agent, on behalf of itself and the First Lien
Secured Parties, agrees that the Second Lien Agent, on behalf of itself or any
of the Second Lien Secured Parties, may seek or request (and the First Lien
Secured Parties will not oppose such

 

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request) adequate protection with respect to its interests in such Collateral in
the form of a Lien on the same additional collateral, which Lien will be
subordinated to the Liens securing the First Lien Obligations on the same basis
as the other Liens of the Second Lien Agent on the Collateral, or (ii) cash
payments of interest and reasonable fees and expenses of the First Lien Parties
in connection with their interests in the Collateral, then the Second Lien
Agent, on behalf of itself or the other Second Lien Secured Parties, may seek or
request cash payments of interest and reasonable fees and expenses of the Second
Lien Secured Parties in connection with their interests in the Collateral, to
the extent supported by a debtor-in-possession budget as agreed by the
applicable debtor and the First Lien Agent (it being understood that the First
Lien Agent will not object to the inclusion of such amounts in such
debtor-in-possession budget).

(d) Neither the Second Lien Agent nor any Second Lien Secured Party shall oppose
or seek to challenge any claim by the First Lien Agent or any First Lien Secured
Party for allowance in any Insolvency Proceeding of First Lien Obligations
consisting of post-petition interest, fees or expenses to the extent of the
value of the Lien securing any First Lien Secured Party’s claim, without regard
to the existence of the Lien of the Second Lien Agent on behalf of the Second
Lien Secured Parties on the Collateral.

(e) Neither the First Lien Agent nor any other First Lien Secured Party shall
oppose or seek to challenge any claim by the Second Lien Agent or any Second
Lien Secured Party for allowance in any Insolvency Proceeding of Second Lien
Obligations consisting of post-petition interest, fees or expenses to the extent
of the value of the Lien securing any Second Lien Secured Party’s claim.

Section 6.4. Asset Sales. The Second Lien Agent agrees, on behalf of itself and
the Second Lien Secured Parties, that it will not oppose on the grounds
available to a secured creditor, any sale consented to by the First Lien Agent
of any Collateral pursuant to Section 363(f) of the Bankruptcy Code (or any
similar provision under any law applicable to any Insolvency Proceeding) so long
as the Proceeds of such sale are applied in accordance with Section 4.1;
provided that (i) the First Lien Agent has agreed to release the Liens securing
the First Lien Obligations on such Collateral, (ii) the Second Lien Agent may
request the Bankruptcy Court in the Insolvency Proceeding to grant the Second
Lien Agent a Lien in the excess proceeds from such sale or disposition (and the
First Lien Agent and the other First Lien Secured Parties shall not object
thereto), (iv) the Second Lien Agent shall have had an opportunity to object to
any bidding procedures motion filed in the Insolvency Proceeding and the sale is
conducted in compliance with the bidding procedures approved by the Bankruptcy
Court in such Insolvency Proceeding, (v) such motion does not impair the rights
of the Second Lien Secured Parties under Section 363(k) of the Bankruptcy Code,
and (vi) the conditions and requirements for the release of the Second Lien
Secured Parties’ Liens set forth in section 2.4 shall be satisfied.

Section 6.5. Separate Grants of Security and Separate Classification. Each
Second Lien Secured Party and each First Lien Secured Party acknowledges and
agrees that (i) the grants of Liens pursuant to the First Lien Security
Documents and the Second Lien Security Documents constitute two separate and
distinct grants of Liens and (ii) because of, among other things, their
differing rights in the Collateral, the Second Lien Obligations are
fundamentally different from the First Lien Obligations and must be separately
classified in any plan of

 

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reorganization (or other plan of similar effect under any Debtor Relief Laws)
proposed or adopted in an Insolvency Proceeding. To further effectuate the
intent of the parties as provided in the immediately preceding sentence, if it
is held that the claims of the First Lien Secured Parties and the Second Lien
Secured Parties in respect of the Collateral constitute only one secured claim
(rather than separate classes of senior and junior secured claims), then the
Second Lien Secured Parties hereby acknowledge and agree that all distributions
shall be made as if there were separate classes of First Lien Obligation claims
and Second Lien Obligation claims against the Loan Parties, with the effect
being that, to the extent that the aggregate value of the Collateral is
sufficient (for this purpose ignoring all claims held by the Second Lien Secured
Parties), the First Lien Secured Parties shall be entitled to receive, in
addition to amounts distributed to them in respect of principal, pre-petition
interest and other claims, all amounts owing in respect of post-petition
interest, fees, expense reimbursements and other claims that are available from
the Collateral up to the Maximum First Lien Facility Amount, before any
distribution is made in respect of the claims held by the Second Lien Secured
Parties from the Collateral, with the Second Lien Secured Parties hereby
acknowledging and agreeing to turn over to the First Lien Secured Parties
payments from proceeds of the Collateral (other than reorganization securities)
otherwise received or receivable by them to the extent necessary to effectuate
the intent of this sentence, even if such turnover has the effect of reducing
the aggregate recoveries of the Second Lien Secured Parties.

Section 6.6. Enforceability. This Agreement is intended to be a “subordination
agreement” within the meaning of, and the provisions of this Agreement are
intended to be and shall be enforceable under, Section 510(a) of the Bankruptcy
Code.

Section 6.7. First Lien Obligations Unconditional. All rights of the First Lien
Agent hereunder, and all agreements and obligations of the Second Lien Agent and
the Loan Parties (to the extent applicable) hereunder, shall remain in full
force and effect irrespective of any change in the time, place or manner of
payment of, or in any other term of, all or any portion of the First Lien
Obligations, or any amendment, waiver or other modification, whether by course
of conduct or otherwise, or any refinancing, replacement, refunding or
restatement of any First Lien Loan Document, in each case, in accordance with
the terms hereof.

Section 6.8. Second Lien Obligations Unconditional. All rights of the Second
Lien Agent hereunder, all agreements and obligations of the First Lien Agent and
the Loan Parties (to the extent applicable) hereunder, shall remain in full
force and effect irrespective of any change in the time, place or manner of
payment of, or in any other term of, all or any portion of the Second Lien
Obligations, or any amendment, waiver or other modification, whether by course
of conduct or otherwise, or any refinancing, replacement, refunding or
restatement of any Second Lien Loan Document, in each case, in accordance with
the terms hereof.

Section 6.9. Reorganization Securities. Subject to the ability of the First Lien
Secured Parties and the Second Lien Secured Parties, as applicable, to support
or oppose confirmation or approval of any plan of reorganization as provided
herein, if, in any Insolvency Proceeding, debt obligations of the reorganized
debtor secured by Liens upon any property of the reorganized debtor are
distributed pursuant to a plan of reorganization, both on account of First Lien
Obligations and on account of Second Lien Obligations, then, to the extent the
debt obligations distributed on account of the First Lien Obligations and on
account of the Second

 

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Lien Obligations are secured by Liens upon the same property, the provisions of
this Agreement will survive the distribution of such debt obligations pursuant
to such plan and will apply with like effect to the debt obligations so
distributed and to the Liens securing such debt obligations and the distribution
of Proceeds thereof.

Section 6.10. Rights as Unsecured Creditors. Except as expressly provided in
this Agreement, nothing contained herein shall affect the rights or claims of
any Agent or any Secured Party as an unsecured creditor in any Insolvency
Proceeding, and the Agents and the Secured Parties shall retain all such rights
and claims (it being understood that the Secured Parties may not directly or
indirectly exercise rights as an unsecured creditor which such Secured Party is
expressly prohibited from exercising as a secured creditor hereunder or which
are inconsistent with the terms of this Agreement).

ARTICLE 7.

PURCHASE OPTION

Section 7.1. Right to Purchase. Upon the occurrence and during the continuation
of a Triggering Event, any one or more of the Second Lien Lenders (acting in
their individual capacity or through one or more affiliates) shall have the
right, but not the obligation, upon written notice from the Second Lien Agent on
behalf of such Second Lien Lenders (a “Purchase Notice”) to First Lien Agent to
acquire from the First Lien Lenders all (but not less than all) of the right,
title, and interest of the First Lien Lenders in and to the First Lien
Obligations and the First Lien Loan Documents. The Purchase Notice, if given,
shall be irrevocable. On the date specified by the Second Lien Agent in the
Purchase Notice (which shall not be more than ten (10) Business Days after the
receipt by First Lien Agent of the Purchase Notice), the First Lien Lenders
shall sell to the purchasing Second Lien Lenders and the purchasing Second Lien
Lenders shall purchase from the First Lien Lenders, the First Lien Obligations.
During the period commencing on the date such notice is received by the First
Lien Agent and ending on the date specified in such notice for the consummation
of the purchase, the First Lien Agent shall not Exercise Any Secured Creditor
Remedies without the consent of the Second Lien Agent (such consent not to be
unreasonably withheld or delayed). For the avoidance of doubt, each Triggering
Event shall be deemed to be an independent event and shall in each case
independently trigger the right of the Second Lien Agent and the Second Lien
Lenders to purchase all of the First Lien Obligations, notwithstanding the prior
occurrence of another Trigger Event.

Section 7.2. Payments. On the date of such purchase and sale, the purchasing
Second Lien Lenders shall:

(a) pay to First Lien Agent, for the benefit of the First Lien Lenders, as the
purchase price therefor, the full amount of all the First Lien Obligations
(other than (x) indemnification obligations for which no claim or demand for
payment has been made at such time, and (y) First Lien Obligations cash
collateralized in accordance with Section 7.2(b) below) then outstanding and
unpaid;

 

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(b) (i) furnish cash collateral to the First Lien Agent in such amounts as the
First Lien Agent determines is reasonably necessary to secure the First Lien
Agent and the First Lien Lenders (and their respective affiliates) in respect of
any Cash Management Obligations (such cash collateral shall be applied to the
reimbursement of Bank Product Obligations and Cash Management Obligations as and
when such obligations become due and payable and, at such time as all of the
Cash Management Obligations are paid in full, the remaining cash collateral held
by First Lien Agent in respect of Cash Management Obligations shall be remitted
to the Second Lien Agent for the benefit of the purchasing Second Lien Lenders),
and (ii) furnish cash collateral to the First Lien Agent in such amounts as the
First Lien Agent reasonably determines is necessary to secure the First Lien
Agent and the First Lien Lenders in respect of any asserted claims, demands,
actions, suits, proceedings, investigations, liabilities, fines, costs,
penalties, or damages that are the subject of the indemnification provisions of
the First Lien Credit Agreement (such cash collateral shall be applied to the
reimbursement of such obligations as and when they become due and payable and,
at such time as all of such obligations are paid in full, the remaining cash
collateral held by First Lien Agent in respect of indemnification obligations
shall be remitted to the Second Lien Agent for the benefit of the purchasing
Second Lien Lenders), or make such other accommodations as are reasonably agreed
between the First Lien Agent and the Second Lien Agent with respect to such
obligations; and

(c) pay to First Lien Agent and the other First Lien Lenders the amount of all
expenses that are reimbursable by the Loan Parties in accordance with the First
Lien Loan Documents (including the reimbursement of reasonable attorneys’ fees,
field examination expenses, and appraisal fees).

Such purchase price and cash collateral shall be remitted by wire transfer of
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 the purchasing Second Lien Lenders to the
bank account designated by First Lien Agent are received in such bank account
prior to 2:00 p.m., Eastern time, and interest shall be calculated to and
including such Business Day if the amounts so paid by the purchasing Second Lien
Lenders to the bank account designated by First Lien Agent are received in such
bank account later than 2:00 p.m., Eastern time.

Section 7.3. Documentation. Any such purchase under this Article 7 shall be
effected by the execution and delivery of a customary form of assignment and
acceptance agreement and shall be expressly made without representation or
warranty of any kind by First Lien Agent and the other First Lien Lenders as to
the First Lien Obligations so purchased, or otherwise, and without recourse to
First Lien Agent or any other First Lien Secured Party, except that each First
Lien Lender shall represent and warrant: (i) that the amount quoted by such
First Lien Lender as its portion of the purchase price represents the amount
shown as owing with respect to the claims transferred, and (ii) it owns, or has
the full right, power and authority (not subject to any consent) to transfer to
the purchasing Second Lien Lenders, the rights being transferred, free and clear
of Liens.

Section 7.4. Retained Interest of First Lien Lenders. In the event that any one
or more of the Second Lien Lenders exercises and consummates the purchase option
set forth in this Article 7, the First Lien Lenders shall retain their
indemnification rights under the First Lien Credit Agreement and shall, to the
extent otherwise indemnified under the First Lien Credit Agreement by or on
behalf of any Loan Party, promptly return any cash collateral held, or payment
received and applied, by any of them, pursuant to Section 7.2, to the Second
Lien Agent for distribution to the purchasing Second Lien Lenders, upon receipt
thereof.

 

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ARTICLE 8.

MISCELLANEOUS

Section 8.1. Rights of Subrogation. The Second Lien Agent, for and on behalf of
itself and the Second Lien Secured Parties, agrees that no payment to the First
Lien Agent or any First Lien Secured Party pursuant to the provisions of this
Agreement shall entitle the Second Lien Agent or any Second Lien Secured Party
to exercise any rights of subrogation in respect thereof until the Discharge of
First Lien Obligations shall have occurred. Following the Discharge of First
Lien Obligations, the First Lien Agent agrees to execute such documents,
agreements, and instruments as the Second Lien Agent or any Second Lien Secured
Party may reasonably request to evidence the transfer by subrogation to any such
Person of an interest in the First Lien Obligations resulting from payments to
the First Lien Agent by such Person, so long as all costs and expenses
(including all reasonable legal fees and disbursements) incurred in connection
therewith by the First Lien Agent are paid by such Person upon request for
payment thereof.

Section 8.2. Further Assurances. The Parties will, at their own expense and at
any time and from time to time, promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that either Party may reasonably request, in order to protect any
right or interest granted or purported to be granted hereby or to enable the
First Lien Agent or the Second Lien Agent to exercise and enforce its rights and
remedies hereunder; provided, however, that no Party shall be required to pay
over any payment or distribution, execute any instruments or documents, or take
any other action referred to in this Section 8.2, to the extent that such action
would contravene any law, order or other legal requirement or any of the terms
or provisions of this Agreement, and in the event of a controversy or dispute,
such Party may interplead any payment or distribution in any court of competent
jurisdiction, without further responsibility in respect of such payment or
distribution under this Section 8.2.

Section 8.3. Representations. The Second Lien Agent represents and warrants to
the First Lien Agent that it has the requisite power and authority under the
Second Lien Loan Documents to enter into, execute, deliver, and carry out the
terms of this Agreement on behalf of itself and the Second Lien Secured Parties
and that this Agreement shall be binding obligations of the Second Lien Agent
and the Second Lien Secured Parties, enforceable against the Second Lien Agent
and the Second Lien Secured Parties in accordance with its terms. The First Lien
Agent represents and warrants to the Second Lien Agent that it has the requisite
power and authority under the First Lien Loan Documents to enter into, execute,
deliver, and carry out the terms of this Agreement on behalf of itself and the
First Lien Secured Parties and that this Agreement shall be binding obligations
of the First Lien Agent and the First Lien Secured Parties, enforceable against
the First Lien Agent and the First Lien Secured Parties in accordance with its
terms.

 

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Section 8.4. Amendments. No amendment, modification or waiver of any provision
of this Agreement nor any consent to any departure by any Party hereto shall be
effective unless (i) it is in a written agreement executed by the Second Lien
Agent and the First Lien Agent, and (ii) to the extent that such amendment,
modification, waiver or consent directly and adversely affects

the rights of the Borrower; provided, however, that this Agreement may be
amended from time to time, without the consent of either Agent, to add
additional Loan Parties, whereupon such Person will be bound by the terms hereof
to the same extent as if it had executed and delivered this Agreement as of the
date hereof.

Section 8.5. Addresses for Notices. Unless otherwise specifically provided
herein, any notice or other communication herein required or permitted to be
given shall be in writing and may be personally served, telecopied, sent
electronically in PDF or similar format or sent by overnight express courier
service or United States mail and shall be deemed to have been given when
delivered in person or by courier service, upon receipt of a telecopy or
electronic transmission or five (5) days after deposit in the United States mail
(certified, with postage prepaid and properly addressed). For the purposes
hereof, the addresses of the parties hereto (until notice of a change thereof is
delivered as provided in this Section) shall be as set forth below or, as to
each party, at such other address as may be designated by such party in a
written notice to all of the other parties.

 

  First Lien Agent:    Bank of America, N. A.      100 Federal Street      MA5
100 09-09      Boston, Massachusetts 02110      Attention: Stephen Garvin     
Stephen.garvin@baml.com   Second Lien Agent:    Wilmington Trust, N. A.     
Rodney Square North      1100 North Market Street      Wilmington, DE 19890     
Attention: Jennifer K. Anderson, Asst. Vice President      Facsimile:
(302) 636-4145      Telephone: (302) 636-5048      Email:
jkanderson@wilmingtontrust.com   Borrower:    Restoration Hardware, Inc.      15
Koch Road, Suite J      Corte Madera, California 94925      Attention: Jack
Preston      Facsimile: (415) 927-9133      Telephone: (415) 945-3535     
Email: jp@rh.com

Section 8.6. No Waiver; Remedies. No failure on the part of any Party to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.

 

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Section 8.7. Continuing Agreement, Transfer of Secured Obligations. This
Agreement is a continuing agreement and shall (a) remain in full force and
effect until the Discharge of First Lien Obligations and the Discharge of Second
Lien Obligations shall have occurred, (b) be binding upon the Parties and their
successors and assigns, and (c) inure to the benefit of and be enforceable by
the Parties and their respective successors, transferees and assigns. Nothing
herein is intended, or shall be construed to give, any other Person any right,
remedy or claim under, to or in respect of this Agreement or any Collateral. All
references to any Loan Party shall include any Loan Party as
debtor-in-possession and any receiver or trustee for such Loan Party in any
Insolvency Proceeding. Without limiting the generality of the foregoing clause
(c), the First Lien Agent, any First Lien Secured Party, the Second Lien Agent,
or any Second Lien Secured Party may assign or otherwise transfer all or any
portion of the First Lien Obligations or the Second Lien Obligations, as
applicable, to any other Person (other than the Borrower, any Guarantor or any
subsidiary or Affiliate of the Borrower or any Guarantor), and such other Person
shall thereupon become vested with all the rights and obligations in respect
thereof granted to the First Lien Agent, the Second Lien Agent, any First Lien
Secured Party, or any Second Lien Secured Party, as the case may be, herein or
otherwise. The First Lien Secured Parties and the Second Lien Secured Parties
may continue, at any time and without notice to the other parties hereto, to
extend credit and other financial accommodations, lend monies and provide
indebtedness to, or for the benefit of, any Loan Party on the faith hereof.

Section 8.8. Governing Law; Entire Agreement. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. This
Agreement constitutes the entire agreement and understanding among the Parties
with respect to the subject matter hereof and supersedes any prior agreements,
written or oral, with respect thereto.

Section 8.9. Counterparts. This Agreement may be executed in any number of
counterparts, and it is not necessary that the signatures of all Parties be
contained on any one counterpart hereof, each counterpart will be deemed to be
an original, and all together shall constitute one and the same document.

Section 8.10. No Third Party Beneficiaries. This Agreement is solely for the
benefit of the First Lien Agent, the First Lien Secured Parties, the Second Lien
Agent and the Second Lien Secured Parties. No other Person (including the
Borrower, any Guarantor or any Affiliate of the Borrower or any Guarantor, or
any subsidiary of the Borrower or any Guarantor) shall be deemed to be a third
party beneficiary of this Agreement.

Section 8.11. Headings. The headings of the articles and sections of this
Agreement are inserted for purposes of convenience only and shall not be
construed to affect the meaning or construction of any of the provisions hereof.

Section 8.12. Severability. If any of the provisions in this Agreement shall,
for any reason, be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other provision
of this Agreement and shall not invalidate the Lien Priority or the application
of Proceeds and other priorities set forth in this Agreement.

 

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Section 8.13. VENUE; JURY TRIAL WAIVER.

(a) EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF
AND ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE
STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT
COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY
THEREOF (OR IF THE APPLICABLE LOAN PARTY IS THEN SUBJECT TO AN INSOLVENCY
PROCEEDING, THE NON-EXCLUSIVE JURISDICTION OF SUCH BANKRUPTCY COURT HAVING
JUISDICTION OVER SUCH LOAN PARTY), IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT,
AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES
THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN NEW YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL
COURT (OR BANKRUPTCY COURT, IF APPLICABLE). EACH OF THE PARTIES HERETO AGREES
THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT
ANY FIRST LIEN SECURED PARTY OR ANY SECOND LIEN SECURED PARTY MAY OTHERWISE HAVE
TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, ANY FIRST LIEN
LOAN DOCUMENTS, OR ANY SECOND LIEN LOAN DOCUMENTS AGAINST ANY LOAN PARTY OR ITS
PROPERTIES IN THE COURTS OF ANY JURISDICTION.

(b) EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF
THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY
HERETO REPRESENTS THAT IT HAS REVIEWED THIS WAIVER AND IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.

(c) EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN
THE MANNER PROVIDED FOR NOTICES IN SECTION 8.5. NOTHING IN THIS AGREEMENT WILL
AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW.

 

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Section 8.14. Intercreditor Agreement. This Agreement is the Intercreditor
Agreement referred to in the First Lien Credit Agreement and the ABL
Intercreditor Agreement referred to in the Second Lien Credit Agreement. Nothing
in this Agreement shall be deemed to subordinate the obligations due to (i) any
First Lien Secured Party to the obligations due to any Second Lien Secured Party
or (ii) any Second Lien Secured Party to the obligations due to any First Lien
Secured Party (in each case, whether before or after the occurrence of an
Insolvency Proceeding), it being the intent of the Parties that this Agreement
shall effectuate a subordination of Liens but not a subordination of
indebtedness.

Section 8.15. No Warranties or Liability. The Second Lien Agent and the First
Lien Agent acknowledge and agree that neither has made any representation or
warranty with respect to the execution, validity, legality, completeness,
collectability or enforceability of any other First Lien Loan Document or any
Second Lien Loan Document. Except as otherwise provided in this Agreement, the
Second Lien Agent and the First Lien Agent will be entitled to manage and
supervise their respective extensions of credit to any Loan Party in accordance
with law and their usual practices, modified from time to time as they deem
appropriate.

Section 8.16. Conflicts. In the event of any conflict between the provisions of
this Agreement and the provisions of any First Lien Loan Document or any Second
Lien Loan Document, the provisions of this Agreement shall govern.

Section 8.17. Information Concerning the Loan Parties. Each of the Second Lien
Agent and the First Lien Agent hereby assumes responsibility for keeping itself
informed of the financial condition of the Loan Parties and all other
circumstances bearing upon the risk of non-payment of the First Lien Obligations
or the Second Lien Obligations. The Second Lien Agent and the First Lien Agent
hereby agree that no party shall have any duty to advise any other party of
information known to it regarding such condition or any such circumstances. In
the event the Second Lien Agent or the First Lien Agent, in its sole discretion,
undertakes at any time or from time to time to provide any information to any
other party to this Agreement, (a) it shall be under no obligation (i) to
provide any such information to such other party or any other party on any
subsequent occasion except as required pursuant to Section 3.3, (ii) to
undertake any investigation not a part of its regular business routine, or
(iii) to disclose any other information, or (b) it makes no representation as to
the accuracy or completeness of any such information and shall not be liable for
any information contained therein, and (c) the Party receiving such information
hereby to hold the other Party harmless from any action the receiving Party may
take or conclusion the receiving Party may reach or draw from any such
information, as well as from and against any and all losses, claims, damages,
liabilities, and expenses to which such receiving Party may become subject
arising out of or in connection with the use of such information.

[Remainder of page intentionally left blank.]

 

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IN WITNESS WHEREOF, the First Lien Agent, for and on behalf of itself and the
First Lien Lenders, and the 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.

 

BANK OF AMERICA, N.A., in its capacity as the First Lien Agent By:  

/s/ Stephen J. Garvin

  Name: Stephen J. Garvin   Title:   Managing Director

 

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WILMINGTON TRUST, N.A., in its capacity as the Second Lien Agent By:  

/s/ Jennifer Anderson

  Name: Jennifer Anderson   Title:   Assistant Vice President

 

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ACKNOWLEDGMENT

The Borrower and each Guarantor hereby acknowledges that it has received a copy
of this Agreement and consents thereto, agrees to recognize all rights granted
thereby to the First Lien Agent, the First Lien Secured Parties, the Second Lien
Agent, and the Second Lien Secured Parties and will not do any act or perform
any obligation which is not in accordance with the agreements set forth in this
Agreement. The Borrower and each Guarantor further acknowledges and agrees that
it is not an intended beneficiary or third party beneficiary under this
Agreement and (i) as between the First Lien Secured Parties, the Borrower and
the Guarantors, the First Lien Loan Documents remain in full force and effect as
written and are in no way modified hereby, and (ii) as between the Second Lien
Secured Parties, the Borrower and the Guarantors, the Second Lien Loan Documents
remain in full force and effect as written and are in no way modified hereby.

 

RESTORATION HARDWARE, INC., By:  

/s/ Karen Boone

Name:   Karen Boone Title:   Co-President, Chief Financial and Administrative
Officer, Treasurer and Secretary RH US, LLC, as a Guarantor By:  

/s/ Karen Boone

Name:   Karen Boone Title:   Co-President, Chief Financial and Administrative
Officer, Treasurer and Secretary WATERWORKS OPERATING CO., LLC, as a Guarantor
By:  

/s/ Karen Boone

Name:   Karen Boone Title:   Co-President, Treasurer and Secretary WATERWORKS IP
CO., LLC, as a Guarantor By:  

/s/ Karen Boone

Name:   Karen Boone Title:   Co-President, Treasurer and Secretary

 

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RH YOUNTVILLE, INC., as a Guarantor By:  

/s/ Karen Boone

Name:   Karen Boone Title:   President and Treasurer RHM, LLC, as a Guarantor
By:  

/s/ Karen Boone

Name:   Karen Boone Title:   Co-President, Chief Financial and Administrative
Officer, Treasurer and Secretary RESTORATION HARDWARE CANADA, INC. By:  

/s/ Karen Boone

Name:   Karen Boone Title:   Co-President, Chief Financial and Administrative
Officer, Treasurer and Secretary

 

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