Exhibit 10.4

 

 

INTERCREDITOR AGREEMENT

 

by and among

 

BANK OF AMERICA, N.A.,

 

as First Lien Agent,

 

and

 

PATHLIGHT CAPITAL, LLC,

 

as Second Lien Agent,

 

 

 

dated as of March 28, 2013

 

 

 

 

 

 

TABLE OF CONTENTS

Page No.

 

ARTICLE 1. DEFINITIONS 2        Section 1.1.  UCC Definitions 2 Section 1.2. 
Other Definitions 2 Section 1.3.  Rules of Construction 11        ARTICLE 2.
LIEN PRIORITY 11        Section 2.1.  Priority of Liens. 11 Section 2.2.  Waiver
of Right to Contest Liens. 14 Section 2.3.  Remedies Standstill. 14 Section
2.4.  Release of Liens. 16 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 18 Section 3.4.  Insurance
20 Section 3.5.  No Additional Rights For the Loan Parties Hereunder 20 Section
3.6.  Payments Over. 20 Section 3.7.  Additional Advances by First Lien Lenders
20 Section 3.8.  Legends 20        ARTICLE 4. APPLICATION OF PROCEEDS 21       
Section 4.1.  Application of Proceeds. 21 Section 4.2.  Specific Performance 22
       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 23 Section 5.3.  Reinstatement
and Continuation of Agreement 26        ARTICLE 6. INSOLVENCY PROCEEDINGS 27   
    Section 6.1.  DIP Financing. 27 Section 6.2.  Relief From Stay 28 Section
6.3.  No Contest; Adequate Protection 28 Section 6.4.  Asset Sales 29 Section
6.5.  Separate Grants of Security and Separate Classification 29 Section 6.6. 
Enforceability 30 Section 6.7.  First Lien Obligations Unconditional 30 Section
6.8.  Second Lien Obligations Unconditional 30 Section 6.9.  Reorganization
Securities 30 Section 6.10.  Rights as Unsecured Creditors 31

 

 

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       ARTICLE 7. PURCHASE OPTION 31        Section 7.1.  Right to Purchase 31
Section 7.2.  Payments 31 Section 7.3.  Documentation 32 Section 7.4.  Retained
Interest of First Lien Lenders 32        ARTICLE 8. MISCELLANEOUS 33       
Section 8.1.  Rights of Subrogation 33 Section 8.2.  Further Assurances 33
Section 8.3.  Representations 33 Section 8.4.  Amendments 33 Section 8.5. 
Addresses for Notices 34 Section 8.6.  No Waiver; Remedies 34 Section 8.7. 
Continuing Agreement, Transfer of Secured Obligations 34 Section 8.8.  Governing
Law; Entire Agreement 35 Section 8.9.  Counterparts 35 Section 8.10.  No Third
Party Beneficiaries 35 Section 8.11.  Headings 35 Section 8.12.  Severability 35
Section 8.13.  VENUE; JURY TRIAL WAIVER. 35 Section 8.14.  Intercreditor
Agreement 36 Section 8.15.  No Warranties or Liability 36 Section 8.16. 
Conflicts 37 Section 8.17.  Information Concerning Financial Condition of the
Loan Parties 37

 

 

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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 March 28, 2013 among (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”), and (b) PATHLIGHT
CAPITAL, LLC, 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) SEQUENTIAL BRANDS GROUP,
INC. (the “Borrower”), a Delaware corporation, and (d) each of the Guarantors
(as defined below) which are signatories to this Agreement.

 

RECITALS

 

A. Pursuant to that certain First Lien Term Loan Agreement dated as of the date
hereof, 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 Guaranty (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.

 

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.

 

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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.

 

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.

 

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

 

“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 mean any cash management services provided to
any Loan Party by the First Lien Agent or any First Lien Lender or any of their
respective Affiliates, including, without limitation, automated clearinghouse
transfer transactions, controlled disbursement services, treasury, depository,
overdraft, and electronic funds transfer services, but excluding for purposes of
determining the Maximum First Lien Facility Amount, all credit card processing
services and credit or debit cards.

 

“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.

 

“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).

 

 

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“Discharge of First Lien Obligations” shall mean the payment in full in cash of
all outstanding First Lien Obligations (other than contingent indemnity
obligations with respect to then unasserted claims). 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 the payment in full in cash of
all outstanding Second Lien Obligations (other than contingent indemnity
obligations with respect to then unasserted claims). If, at any time prior to or
simultaneously with the occurrence of the Discharge of Second Lien Obligations,
the Loan Parties enter into any refinancing of the Second Lien Obligations,
which refinancing is permitted under the terms of this Agreement, then the
Discharge of Second Lien Obligations shall automatically be deemed not to have
occurred for all purposes of this Agreement.

 

“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.

 

“Domain Names” shall mean all Internet domain names and associated URL addresses
in or to which any Loan Party now or hereafter has any right, title or interest.

 

“Excess First Lien Obligations” shall mean First Lien Obligations constituting
(a) the aggregate outstanding principal amount of loans made pursuant to the
First Lien Loan Documents (including under any DIP Financing provided by any
First Lien Secured Party) in excess of the Maximum First Lien Facility Amount
and any interest, fees or reimbursement obligations accrued on or with respect
to such amounts, (b) any early termination fee, make-whole payment or prepayment
fee payable under the First Lien Credit Agreement, (c) all Bank Products
Obligations, and (d) all Obligations on account of credit card processing
services and credit or debit cards.

 

“Excess Second Lien Obligations” shall mean Second Lien Obligations constituting
(a) the aggregate outstanding principal amount of loans made pursuant to the
Second Lien Loan Documents (including under any DIP Financing provided by any
Second Lien Secured Party) in excess of the Maximum Second Lien Facility Amount
and any interest, fees or reimbursement obligations accrued on or with respect
to such amounts and (b) any early termination fee, make-whole payment or
prepayment fee payable under the Second Lien Credit Agreement.

 

“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;

 

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(b) the consent by the First Lien Agent to a Disposition by any Loan Party of
any of the Collateral during the continuance of any First Lien Event of Default;

 

(c) 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;

 

(d) 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;

 

(e) the exercise of rights by the First Lien Agent under the First Lien Loan
Documents to require certain depository institutions to deliver Proceeds of
Collateral to the First Lien Agent; and

 

(f) 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, or (ii) the filing of a proof of claim in any
Insolvency Proceeding or seeking adequate protection.

 

“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 a 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 and whether or not increasing the amount of any Indebtedness that may be
incurred thereunder; provided that any such increase shall be in accordance with
the terms and conditions of this Agreement.

 

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“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
an Guarantor guaranteeing, inter alia, 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 First Lien Security 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 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, whether for principal,
interest (including interest which, but for the filing of a petition in
bankruptcy with respect to such First Lien Loan Party, would have accrued on any
First Lien Obligation), 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.

 

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

 

“First Lien Secured Parties” shall have the meaning 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.

 

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“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.

 

“Inadvertent Overadvances” shall mean the funding of any loan under the First
Lien Credit Agreement which did not result in an Overadvance when made but which
has, on the relevant date of determination, become an Overadvance as the result
of circumstances beyond the reasonable control of the First Lien Agent or the
First Secured Parties (including as the result of the entry of an adverse order
for use of cash collateral by the United States Bankruptcy Court), including (i)
a decline in the value of the Collateral, (ii) errors or fraud on any report
produced by the Loan Parties calculating the covenants set forth in Section
7.15(b) of the First Lien Credit Agreement and Section 7.15(b) of the Second
Lien Credit Agreement, (iii) any failure of the First Lien Loan Parties to
comply with Section 6.18(b) of the First Lien Credit Agreement, (iv) the return
of uncollected checks or other items of payment applied to the reduction of
Loans (as defined in the First Lien Credit Agreement) or other similar
involuntary or unintentional actions, or (v) any other circumstance beyond the
reasonable control of the First Lien Agent or the First Lien Secured Parties
that results in the reduction of the Realizable Orderly Liquidation Value (as
defined in the First Lien Credit Agreement) of the Collateral.

 

“Inadvertent Overadvance Amounts” shall mean the aggregate amount of
Overadvances which have resulted from any and all Inadvertent Overadvances.

 

“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.

 

“Intellectual Property” shall have the meaning given to such term in the First
Lien Credit Agreement.

 

“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.

 

 

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“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, an amount equal to (a) $45,000,000, plus (b) the aggregate amount of
all Indebtedness advanced by any First Lien Secured Party pursuant to the right
of first refusal set forth in Section 6.17 of the First Lien Credit Agreement,
provided that any such Indebtedness under this clause (b) that would cause the
Loan to Value Percentage (as defined in the Second Lien Credit Agreement as in
effect on the Closing Date) to be greater than the maximum amount permitted
pursuant to Section 7.15(b) of the Second Lien Credit Agreement (as such Section
7.15(b) is in effect on the Closing Date without giving effect to any amendments
thereto) at the time of, and after giving effect to, any such advance made
pursuant to Section 6.17 of the First Lien Credit Agreement and the acquisition
of any Intellectual Property by the Borrower or any of its Subsidiaries shall
not be included in the Maximum First Lien Facility Amount; for clarity any
Inadvertent Overadvance shall not be deemed violative of this proviso, plus (c)
First Lien Obligations under Cash Management Services Agreement, plus (d) any
additional principal amount extended pursuant to a DIP Financing permitted
pursuant to Section 6.1(a) hereof, minus (e) the amount of any permanent
repayment of the First Lien Obligations made after the date hereof.

 

“Maximum Second Lien Facility Amount” shall mean (a) $20,000,000, plus (b) any
additional principal amount extended pursuant to a DIP Financing permitted
pursuant to Section 6.1(c) hereof, minus (c) the amount of any permanent
repayment of the Second Lien Obligations made after the date hereof.

 

“Overadvance” shall mean the principal amount of all Loans under the First Lien
Credit Agreement which exceed the sum of the amounts set forth in clauses (a)
and (b) of the definition of “Maximum First Lien Facility Amount”.

 

“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.

 

“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.

 

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

 

“Remedy Standstill Period” shall mean, so long as no Insolvency Proceeding has
been commenced by or against any Loan Party (in which case, the provisions of
Article 6 shall apply), with respect to a Second Lien Event of Default, 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 ending on earlier to occur of (i) with respect
to a Second Lien Event of Default under Section 8.01(a) of the Second Lien
Credit Agreement (as in effect on the Closing Date), the date which is ten (10)
days after receipt of such notice, (ii) with respect to any other Second Lien
Event of Default, the date which is thirty (30) days after receipt of such
notice and (iii) the date on which the Discharge of First Lien Obligations has
occurred. Such written notice from the Second Lien Agent to the First Lien Agent
shall reference this Agreement, 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 (including any credit agreement in connection with a DIP
Financing provided by any Second Lien Secured Party pursuant to Section 6.1(c)
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 increase 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.

 

“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, inter alia, 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.

 

 

9

 

 

“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 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, 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 Prepayment Fee” shall mean any prepayment premium, make-whole
obligation, or early termination fee payable pursuant to the Second Lien Loan
Documents.

 

“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 prior to the expiration of the Remedy Standstill Period the First Lien Agent
is diligently pursuing in good faith the exercise of its enforcement rights and
remedies against all or a material portion of the Collateral (as to which
enforcement the First Lien Agent will consult with (but not require the consent
of) the Second Lien Agent in order to maximize the recovery value of the
Collateral) or if 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.

 

“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.

 

“Triggering Event” means (a) the acceleration of the First Lien Obligations, (b)
the First Lien Agent’s Exercise of Secured Creditor Remedies with respect to any
portion of the Collateral, (c) the occurrence of a Second Lien Event of Default
as a result of a failure to make payment of any Second Lien Obligation when due
under the terms of the Second Lien Loan Documents, or (d) the commencement of an
Insolvency Proceeding with respect to any Loan Party.

 

 

10

 

 

“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, 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) Subject to the proviso in subclause (a) of Section 4.1, 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, or (v) the date on which
the First Lien Obligations or the Second Lien Obligations are advanced or made
available to the Loan Parties, 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:

 

11

 

 

 

(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, except as provided in clauses
(5) and (7), below, 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;

 

(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, except as provided in clause
(6), below, 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 set forth in clause (b) of the
definition thereof 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 Excess Second Lien Obligations;

 

 

12

 

 

(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 set forth in clause (b) of the
definition thereof 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 set
forth in clause (b) of the definition thereof, and 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 set forth in clauses (a), (c), and (d) of the definition
thereof;

 

(7) 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 set forth in clauses (a), (c),
and (d) of the definition thereof shall in all respects be junior and
subordinate 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 set forth in clause (b) of the definition thereof, and
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 set forth in clause (a) of
the definition thereof; and

 

(8) 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 set forth in clause (a) of the
definition thereof 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 set
forth in clauses (a), (c), and (d) of the definition thereof.

 

(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.

 

13

 

 

 

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), 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. 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) 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 2.3. Remedies Standstill.

 

(a) Following the occurrence of any Second Lien Event of Default and until the
expiration of the Remedy Standstill Period, 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 notice
may be delivered to the First Lien Agent during the Remedy Standstill Period but
in no event more than fifteen (15) days prior to the expiration thereof), 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 in respect
of the Second Lien Event of Default that was the subject of the notice giving
rise to such Remedy Standstill Period:

 

14

 

 

 

(1) the Exercise of Any Secured Creditor Remedies (including, without
limitation, foreclosure upon and taking possession of the Collateral); provided,
however, that until the earlier of the date on which the Discharge of First Lien
Obligations has occurred and the Second Lien Remedies Exercise Date, the Second
Lien Agent will not commence or continue the Exercise of Any Secured Creditor
Remedies or seek or continue remedies under the Second Lien Loan Documents on
account 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, all subject to the proviso set forth in Section 2.3(a)(1) above.

 

(b) All Proceeds of the Collateral received by the Second Lien Agent shall be
turned over to the First Lien Agent for prompt application in accordance with
Section 4.1(a) 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 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
or, after the expiration of the Remedy Standstill Period, the filing, or the
participation in a filing, of any involuntary bankruptcy petition or other
Insolvency Proceeding in respect of any Credit Party; 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 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 and value of, the Liens of the First Lien
Agent, or the rights of the First 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; (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 of a secured creditor or in any
other capacity by the terms of this Agreement; and (x) 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.

 

15

 

 

 

(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 (including the filing, or the
participation in a filing, of any involuntary bankruptcy petition or other
Insolvency Proceeding in respect of any Loan Party); (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 and value 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 of a secured creditor or
in any other capacity by the terms 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 the
terms of this Agreement.

 

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
(other than in connection with a refinancing as described in Section 5.2(c)), 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 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, for the
avoidance of doubt, the Second Lien Secured Parties’ Liens in respect of the
Proceeds of such Collateral so sold, transferred, or disposed shall continue to
exist to the same extent, and with the same relative priorities, as the First
Lien Secured Parties’ Liens on such Proceeds; and provided, further, that to the
extent Proceeds are required to repay obligations, such Proceeds shall be
applied in accordance with Section 4.1(a). 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 five (5) 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
sole 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 or desirable to accomplish the
purposes of this paragraph, including any financing statements, endorsements,
assignments, releases or other documents or instruments of transfer (which
appointment, being coupled with an interest, is irrevocable).

 

16

 

 

 

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. 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, 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.

 

(a) 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.

 

17

 

 

 

Section 2.6. Waiver of Marshalling.

 

Until the Discharge of First Lien Obligations, 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 the exercise by the Second Lien Agent or
any Second Lien Secured Party of rights or remedies as a secured creditor
(including set-off) with respect to the Collateral or enforcement in
contravention of this Agreement of any Lien held by any of them. 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 for
the benefit of, and on behalf of, the Second Lien 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. 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 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.

 

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(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 any material enforcement rights or remedies 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.

 

(c) The First Lien Agent shall promptly provide to the Second Lien Agent copies
of all collateral reports, appraisals and results of field examinations that it
receives. Prior to the Discharge of First Lien Obligations, the First Lien Agent
agrees that in the event it does not arrange for at least one appraisal of the
trade names and brands and other Intellectual Property of the Loan Parties
during any twelve-month period, the Second Lien Agent shall have the right to
direct the First Lien Agent to engage Hilco Appraisal Services or other
appraisers reasonably acceptable to the First Lien Agent and the Second Lien
Agent to conduct such appraisal, and the First Lien Agent agrees to promptly
commence such engagement; provided that to the extent the First Lien Agent does
not engage an appraiser to conduct such appraisal, the Second Lien Agent may
engage an appraiser on behalf of the First Lien Agent. In addition, in the event
that the Second Lien Agent requires a second appraisal of the trade names and
brands and other Intellectual Property of the Loan Parties during any such
twelve-month period, the Second Lien Agent shall have the right to direct the
First Lien Agent to engage Hilco Appraisal Services or other appraisers
reasonably acceptable to the First Lien Agent and the Second Lien Agent to
conduct such appraisal, and the First Lien Agent agrees to promptly commence
such engagement. The parties hereby acknowledge that the First Lien Agent’s
obligations under this Section 3.3(c) are subject to the Loan Parties’
compliance with their respective obligations under the First Lien Credit
Agreement (including as to cooperation with the First Lien Agent) with respect
to such appraisals and examinations.

 

 

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(d) Upon the reasonable request of the Second Lien Agent, the First Lien Agent
shall promptly, but in any event within ten (10) days after such request (but in
no event more frequently than once each month), provide to Second Lien Agent
copies of reports setting forth all amounts deposited by the Second Lien Loan
Parties in any accounts maintained by the Borrower or any Guarantor with the
First Lien Agent.

 

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. 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(a) hereof.

 

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 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 for the benefit of the
First Lien Secured Parties in the same form as received, with any necessary
endorsements or as a court of competent jurisdiction may otherwise direct. The
First Lien Agent is hereby authorized to make any such endorsements as agent for
the Second Lien Agent or any such Second Lien Secured Parties. This
authorization is coupled with an interest and is irrevocable until such time as
this Agreement is terminated in accordance with its terms.

 

Section 3.7. Additional Advances by First Lien Lenders. The First Lien Agent, on
behalf of the First Lien Lenders, hereby acknowledges and agrees that any
additional loans made by the First Lien Agent and the First Lien Lenders
constituting First Lien Obligations under the First Lien Credit Agreement
pursuant to the right of first refusal set forth in Section 6.17 of the First
Lien Credit Agreement (x) shall not be made to the extent that such loans would
cause the Maximum First Lien Facility Amount to be exceeded, and (y) shall
amortize at the times and in an amount determined on substantially the same
basis with the amortization schedule set forth in Section 2.04 of the First Lien
Credit Agreement with respect to the loans made under the First Lien Credit
Agreement on the Closing Date.

 

Section 3.8. Legends. The First Lien Agent acknowledges with respect to the
First Lien Security Documents, on the one hand, and the Second Lien Agent
acknowledges with respect to the Second Lien Security Documents, on the other
hand, that such documents will contain the following legend:

 

20

 

 

 

Second Lien Intercreditor Agreement. Notwithstanding anything herein to the
contrary, the security interest granted to the Agent, for the benefit of the
Loan Parties, herein and the exercise of any right or remedy by the Agent
hereunder are subject to the provisions of the Second Lien Intercreditor
Agreement. In the event of any conflict between the terms of the Second Lien
Intercreditor Agreement and this Agreement, the terms of the Second Lien
Intercreditor Agreement shall govern and control.

 

ARTICLE 4.
APPLICATION OF PROCEEDS

 

Section 4.1. Application of Proceeds.

 

(a) Application of Proceeds of Collateral. The First Lien Agent and the Second
Lien Agent hereby agree that all Collateral and all Proceeds thereof received by
either of them (other than with respect to any adequate protection payments
received pursuant to Section 6.3 hereof) (i) in connection with any Exercise of
Secured Creditor Remedies with respect to the Collateral, (ii) in connection
with the exercise of any right or remedy (including set off) relating to the
Collateral, or (iii) following the commencement of any Insolvency Proceeding or
any other First Lien Event of Default, 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 set forth in clause
(b) of the definition thereof in accordance with the First Lien Loan Documents,

 

fifth, to the payment of the Excess Second Lien Obligations set forth in clause
(b) of the definition thereof in accordance with the Second Lien Loan Documents,

 

sixth, to the payment of the Excess First Lien Obligations set forth in clauses
(a), (c), and (d) of the definition thereof in accordance with the First Lien
Loan Documents until the Discharge of First Lien Obligations shall have
occurred,

 

seventh, to the payment of the Excess Second Lien Obligations set forth in
clause (a) of the definition thereof in accordance with the Second Lien Loan
Documents until the Discharge of Second Lien Obligations shall have occurred,
and

 

21

 

 

 

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

 

provided that if, in connection with an Insolvency Proceeding, (x) the Lien
granted in favor of the First Lien Agent or the First Lien Secured Parties in
respect of the Collateral has been voided, avoided, subordinated, or otherwise
invalidated by a court of competent jurisdiction and the provisions of Section
5.3 would not be effective, the Proceeds received with respect to the Collateral
subject to avoidance, subordination or invalidation shall be applied, to the
extent permitted under applicable law, to the payment of the Second Lien
Obligations in accordance with the Second Lien Loan Documents until Discharge of
Second Lien Obligations shall have occurred, and (y) the Lien granted in favor
of the Second Lien Agent or the Second Lien Secured Parties in respect of the
Collateral has been voided, avoided, subordinated, or otherwise invalidated by a
court of competent jurisdiction and the provisions of Section 5.3 would not be
effective, the Proceeds received with respect to the Collateral subject to
avoidance, subordination or invalidation shall be applied, to the extent
permitted under applicable law, to the payment of the First Lien Obligations in
accordance with the First Lien Loan Documents until Discharge of First Lien
Obligations shall have occurred.

 

(b) 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.

 

(c) Turnover of Collateral After Discharge. Upon the Discharge of First Lien
Obligations, 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.

 

Section 4.2. 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.

 

 

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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.

 

(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 Section 4.1(b), 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:

 

 

 

23

 

 

(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 rates of interest set forth in the definition of “Applicable
Margin” as defined in the First Lien Credit Agreement by more than 2.00% per
annum (other than any increase occurring because of fluctuations in underlying
rate indices or the imposition of the Default Rate, or increase the Default Rate
by more than 2.00% per annum above the rate applicable thereto (other than any
increase occurring because of fluctuations in underlying rate indices);

 

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

 

(4) reduce the amount, or extend the time for payment, of any excess cash flow
payment set forth in Section 2.03 of the First Lien Credit Agreement or any
scheduled amortization set forth in Section 2.04(a) or otherwise in the First
Lien Credit Agreement, or amend in any manner Sections 2.03(b) – (e) or Section
2.04 of the First Lien Credit Agreement; provided that, if the First Lien Agent
elects, in violation of this Section 5.2(a)(4) or otherwise with the consent of
the Second Lien Agent, to waive any mandatory prepayment or scheduled
amortization payment required under the First Lien Credit Agreement, then the
Second Lien Lenders shall have the option to accept such payment from the
Borrower as a prepayment of the Second Lien Obligations, without giving regard
to Section 4.1 hereof;

 

(5) change any conditions, covenants, defaults or events of default thereunder
that expressly 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;

 

(6) waive any mandatory or scheduled repayments of the First Lien Obligations
pursuant to Section 2.04 of the First Lien Credit Agreement or any mandatory
prepayments required pursuant to Section 2.03 of the First Lien Credit
Agreement;

 

(7) waive the implementation of control over and automatic sweep of cash from
the Blocked Accounts (as defined in the First Lien Credit Agreement) pursuant to
Section 6.12(b) of the First Lien Credit Agreement at any time that a First Lien
Event of Default is continuing, or otherwise amend the provisions of Section
6.12 of the First Lien Credit Agreement; or

 

 

24

 

 

(8) 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 rate of interest set forth in Section 2.05 of the Second Lien
Credit Agreement by more than 2.00% per annum (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 2.00% per annum above the rate applicable thereto on the date hereof;

 

(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 payment on the Second Lien Obligations be
made earlier than the date originally scheduled for such payment;

 

(5) 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; or

 

(6) 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).

 

25

 

 

 

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 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,
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, 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.

 

 

26

 

 

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 the Discharge of First Lien Obligations, 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 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), 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 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)(i)), 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 does
not exceed five (5%) percent of the appraised value of such Collateral, (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; provided that 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 First Lien Agent and the First Lien Secured Parties shall not seek to
provide the Borrower or any Guarantor with a DIP Financing following such
purchase.

 

(b) 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.

 

(c) If the Borrower or any Guarantor shall be subject to any Insolvency
Proceeding at any time prior to the Discharge of Second Lien Obligations, and
the Second Lien Agent or the Second Lien Secured Parties shall seek to provide
the Borrower or any Guarantor with a DIP Financing to be secured by 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), then the First Lien Agent, on behalf
of itself and the First Lien Secured Parties, agrees that it will raise no
objection and will not support any objection to such DIP Financing or to the
Liens securing the same on any grounds, including a failure to provide “adequate
protection” for the Liens of the First Lien Agent securing the First Lien
Obligations so long as all Liens on the Collateral securing any such DIP
Financing shall be subordinate to the Liens of the First Lien Agent and the
First Lien Secured Parties securing any DIP Financing provided by the First Lien
Agent and the First Lien Secured Parties and to the Liens securing the First
Lien Obligations on the Collateral. For the avoidance of doubt, the Second Lien
Agent and the Second Lien Secured Parties hereby agree that they shall not
offer, and shall not permit any Affiliate of any of them to offer, to provide
any DIP Financing to the Loan Parties in any Insolvency Proceeding or endorse
the provision of any DIP Financing to the Loan Parties in any Insolvency
Proceeding pursuant to which Liens that are senior or pari passu in priority to
the Liens securing the First Lien Obligations are granted on the Collateral.

 

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Section 6.2. Relief From Stay. Until the Discharge of First Lien Obligations has
occurred, 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 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.

 

Section 6.3. No Contest; Adequate Protection.

 

(a) 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) 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) The First Lien Agent, on behalf of itself and the First Lien Secured
Parties, agrees that, prior to the Discharge of Second Lien Obligations, none of
them shall contest (or support any other Person contesting) (i) any request by
the Second Lien Agent or any Second Lien Secured Party for adequate protection
of its interest in the Collateral (unless in contravention of Section 6.1(a)
above), (ii) any proposed provision of DIP Financing by the Second Lien Agent
and some or all of the Second Lien Secured Parties consistent with Section
6.1(c), or (iii) any objection by the Second Lien Agent or any Second Lien
Secured Party to any motion, relief, action or proceeding based on a claim by
the Second Lien Agent or any Second Lien Secured Party that its interests in the
Collateral (unless in contravention of Section 6.1(a) above) are not adequately
protected (or any other similar request under any law applicable to an
Insolvency Proceeding), so long as (x) any Liens granted to the Second Lien
Agent as adequate protection of its interests are subject to this Agreement and
(y) any payments with respect to such adequate protection are limited to
payments of interest (without giving effect to any default rate of interest
under the Second Lien Credit Agreement) and reasonable attorneys fees and other
reasonable out of pocket expenses of the Second Lien Secured Parties and are not
made with the Proceeds from the Disposition of any Collateral so long as the
Proceeds of such Disposition are utilized to permanently reduce the First Lien
Obligations.

 

 

28

 

 

(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 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 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.

 

(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 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 the law applicable to any
Insolvency Proceeding) so long as the Proceeds of such sale are applied in
accordance with this Agreement.

 

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 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 and expense reimbursements that is available
from the Collateral 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 amounts 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.

 

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Section 6.6. Enforceability. 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 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 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 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, to the Liens securing such debt obligations and
the distribution of Proceeds thereof.

 

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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.

 

ARTICLE 7.
PURCHASE OPTION

 

Section 7.1. Right to Purchase. Upon the occurrence and during the continuation
of a Triggering Event, then, in any such case, 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 (each Second Lien
Secured Party having a ratable right to make the purchase, with each Second Lien
Secured Party’s right to purchase being automatically proportionately increased
by the amount not purchased by another Second Lien Secured Party), upon written
notice from (or 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 fifteen (15) 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).

 

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, (y) other than First Lien Obligations cash
collateralized in accordance with Section 7.2(b) below), and (z) at the option
of the purchasing Second Lien Lenders, any Excess First Lien Obligations) then
outstanding and unpaid; provided that, if any Excess First Lien Obligations are
outstanding at such time and the purchasing Second Lien Lenders decline to pay
such Excess First Lien Obligations in connection with any purchase of the First
Lien Obligations pursuant to this Article VII, the First Lien Agent and the
First Lien Lenders shall have the right, but not the obligation, to cancel any
such purchase and to purchase the full amount of the Second Lien Obligations
(other than (x) indemnification obligations for which no claim or demand for
payment has been made at such time, and (y) any Excess First Lien Obligations
set forth in clause (a) of the definition thereof) then outstanding and unpaid
pursuant to the procedures set forth in the final paragraph of this Section 7.2
and the documentation requirements set forth in Section 7.3 below.

 

 

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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 in respect of any Cash Management Obligations
(such cash collateral shall be applied to the reimbursement of the 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), provided that the amount of such cash
collateral in respect of this clause (i) shall not exceed $1,000,000 in the
aggregate, and (ii) furnish cash collateral to the First Lien Agent in such
amounts as the First Lien Agent and the Second Lien Agent shall reasonably
determine is necessary to secure the First Lien Agent and the First Lien Lenders
in respect of any asserted or threatened (in writing) 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 in accordance with the First Lien Loan Documents (including the
reimbursement of 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 as reflected on its books
and records, and (ii) it owns, or has the right to transfer to the purchasing
Second Lien Lenders, the rights being transferred.

 

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 for acts, omissions
or other matters arising on or prior to the date of such purchase.

 

 

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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.

 

Section 8.4. Amendments. No amendment or waiver of any provision of this
Agreement nor consent to any departure by any Party hereto shall be effective
unless it is in a written agreement executed by the Second Lien Agent and the
First Lien Agent and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; 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.

 

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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: Andrew Cerussi   
Andrew.cerussi@baml.com      Second Lien Agent:  Pathlight Capital, LLC    One
Post Office Square    Suite 3765    Boston, Massachusetts 02110    Attention:
Daniel Platt    dplatt@pathlightcapital.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.

 

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
Affiliate of the Borrower or any Guarantor and any subsidiary 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.

 

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Section 8.8. Governing Law; Entire Agreement. The validity, performance, and
enforcement of 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.

 

Section 8.13. VENUE; JURY TRIAL WAIVER.

 

(a) EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF
AND ITS PROPERTY, TO THE NONEXCLUSIVE 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, 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 SUCH NEW
YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF
THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT 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.

 

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(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.

 

Section 8.14. Intercreditor Agreement. This Agreement is the Intercreditor
Agreement referred to in the First Lien Credit Agreement and 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.

 

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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 Financial Condition of 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 nonpayment 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.

 

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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/
Andrew Cerussi   Name: Andrew Cerussi   Title: Director

 

 

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  PATHLIGHT CAPITAL, LLC, in its capacity as
the Second Lien Agent       By: /s/ Katie Hendricks   Name: Katie Hendricks  
Title: 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.

 

  SEQUENTIAL BRANDS GROUP, INC.         By: /s/ Gary Klein     Name: Gary Klein
    Title: Chief Financial Officer         VERSATILE ENTERTAINMENT, INC.        
By: /s/ Gary Klein     Name: Gary Klein     Title: Chief Financial Officer      
  BELLA ROSE, LLC         By: /s/ Gary Klein     Name: Gary Klein     Title:
Chief Financial Officer         WILLIAM RAST SOURCING, LLC         By: /s/ Gary
Klein     Name: Gary Klein     Title: Chief Financial Officer         WILLIAM
RAST LICENSING, LLC         By: /s/ Gary Klein     Name: Gary Klein     Title:
Chief Financial Officer

 

 

 

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  WILLIAM RAST RETAIL, LLC   By: William Rast Sourcing, LLC, as the Manager    
    By: /s/ Gary Klein     Name:Gary Klein     Title: Chief Financial Officer  
      WILLIAM RAST EUROPE HOLDINGS, LLC   By: William Rast Sourcing, LLC, as the
Manager         By: /s/ Gary Klein     Name:Gary Klein     Title: Chief
Financial Officer         HEELYS, INC.         By: /s/ Gary Klein     Name:Gary
Klein     Title: Chief Financial Officer         HEELING MANAGEMENT CORP.      
  By: /s/ Gary Klein     Name:Gary Klein     Title: Chief Financial Officer    
    HEELING HOLDING CORPORATION         By: /s/ Gary Klein     Name:Gary Klein  
  Title: Chief Financial Officer         HEELING SPORTS LIMITED   By: Heeling
Management Corp., as the General Partner         By: /s/ Gary Klein    
Name:Gary Klein     Title:  Chief Financial Officer            

 

 

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              By: Heeling Holding Corporation, as the Limited Partner        
By: /s/ Gary Klein     Name:Gary Klein     Title: Chief Financial Officer      
  B©AND MATTER, LLC         By: /s/ Gary Klein     Name:Gary Klein     Title:
Chief Financial Officer            

 

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