Exhibit 10.8

 

 

INTERCREDITOR AGREEMENT

 

by and between

 

BANK OF AMERICA, N.A.,

 

as ABL Agent,

 

and

 

Z INVESTMENT HOLDINGS, LLC,

 

as Term Agent

 

 

Dated as of May 10, 2010

 

 

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TABLE OF CONTENTS

 

 

 

Page No.

 

 

 

ARTICLE 1 DEFINITIONS

4

 

 

Section 1.1

UCC Definitions

4

Section 1.2

Other Definitions

4

Section 1.3

Rules of Construction

14

 

 

 

ARTICLE 2 LIEN PRIORITY

15

 

 

 

Section 2.1

Priority of Liens

15

Section 2.2

Waiver of Right to Contest Liens

16

Section 2.3

Remedies Standstill

17

Section 2.4

Exercise of Rights

18

Section 2.5

No New Liens

20

Section 2.6

Waiver of Marshalling

20

 

 

 

ARTICLE 3 ACTIONS OF THE PARTIES

21

 

 

 

Section 3.1

Certain Actions Permitted

21

Section 3.2

Agent for Perfection

21

Section 3.3

Insurance

22

Section 3.4

No Additional Rights For the Loan Parties Hereunder

22

Section 3.5

Inspection and Access Rights

22

Section 3.6

Tracing of and Priorities in Proceeds

24

Section 3.7

Payments Over

25

 

 

 

ARTICLE 4 APPLICATION OF PROCEEDS

25

 

 

 

Section 4.1

Application of Proceeds

25

Section 4.2

Specific Performance

27

 

 

 

ARTICLE 5 INTERCREDITOR ACKNOWLEDGEMENTS AND WAIVERS

27

 

 

 

Section 5.1

Notice of Acceptance and Other Waivers

27

Section 5.2

Modifications to ABL Documents and Term Documents

29

Section 5.3

Reinstatement and Continuation of Agreement

31

 

 

 

ARTICLE 6 INSOLVENCY PROCEEDINGS

32

 

 

 

Section 6.1

DIP Financing

32

Section 6.2

Relief From Stay

33

Section 6.3

No Contest; Adequate Protection

34

Section 6.4

Asset Sales

35

Section 6.5

Separate Grants of Security and Separate Classification

36

Section 6.6

Enforceability

36

Section 6.7

ABL Obligations Unconditional

36

Section 6.8

Term Obligations Unconditional

37

 

 

 

ARTICLE 7 PURCHASE OPTION

37

 

 

Section 7.1

Option to Purchase ABL Obligations

37

 

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ARTICLE 8 MISCELLANEOUS

39

 

 

Section 8.1

Rights of Subrogation

39

Section 8.2

Further Assurances

39

Section 8.3

Representations

39

Section 8.4

Amendments

40

Section 8.5

Addresses for Notices

40

Section 8.6

No Waiver; Remedies

41

Section 8.7

Continuing Agreement, Transfer of Secured Obligations

41

Section 8.8

Governing Law; Entire Agreement

41

Section 8.9

Counterparts

42

Section 8.10

No Third Party Beneficiaries

42

Section 8.11

Headings

42

Section 8.12

Severability

42

Section 8.13

Attorneys’ Fees

42

Section 8.14

VENUE; JURY TRIAL WAIVER

42

Section 8.15

Intercreditor Agreement

43

Section 8.16

No Warranties or Liability

43

Section 8.17

Conflicts

43

Section 8.18

Information Concerning Financial Condition of the Obligors

43

 

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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 May 10, 2010 between BANK OF AMERICA, N.A. (“Bank of
America”), in its capacity as administrative agent and collateral agent
(together with its respective successors and assigns in such capacities, the
“ABL Agent”) for (i) the financial institutions party from time to time to the
ABL Credit Agreement referred to below (such financial institutions, together
with their respective successors, assigns and transferees, the “ABL Lenders”)
and (ii) any ABL Bank Product Affiliates and ABL Cash Management Affiliates
(each as defined below) (such ABL Bank Product Affiliates and ABL Cash
Management Affiliates, together with the ABL Agent and the ABL Lenders, the “ABL
Secured Parties”) and Z INVESTMENT HOLDINGS, LLC in its capacity as
administrative agent (together with its successors and assigns in such
capacities, the “Term Agent”) for the financial institutions party from time to
time to the Term Credit Agreement referred to below (such financial
institutions, together with their respective successors, assigns and
transferees, the “Term Lenders”) (such Term Agent and the Term Lenders, the
“Term Secured Parties”).

 

RECITALS

 

A.            Pursuant to that certain Amended and Restated Credit Agreement
dated as of May 10, 2010 by and among the ABL Borrowers, the ABL Guarantors, the
ABL Lenders and the ABL Agent (as such agreement may be amended, supplemented,
restated or otherwise modified from time to time in accordance with the terms
hereof and thereof, the “ABL Credit Agreement”), the ABL Lenders have agreed to
make certain loans and provide other financial accommodations to or for the
benefit of the ABL Borrowers.

 

B.            Pursuant to certain Facility Guarantees dated as of the date
hereof (collectively, the “ABL Guaranty”), certain Subsidiaries of the ABL
Borrowers (the “ABL Guarantors”) have guaranteed all of the obligations
outstanding under the ABL Credit Agreement.

 

C.            Pursuant to the ABL Collateral Documents (as hereinafter defined)
by the ABL Borrowers and the ABL Guarantors in favor of the ABL Agent for the
benefit of the ABL Secured Parties, the ABL Borrowers and the ABL Guarantors
have granted a security interest and lien in certain of their assets (including,
without limitation, accounts receivables, inventory and other assets related
thereto) to secure the respective obligations of each of the ABL Borrowers and
ABL Guarantors under the ABL Documents.

 

C.            Pursuant to that certain Credit Agreement dated as of May 10, 2010
by and among Zale Corporation (the “Term Borrower”), the Term Lenders and the
Term Agent (as such agreement may be amended, supplemented, restated or
otherwise modified from time to time in accordance with the terms hereof and
thereof, the “Term Credit Agreement”), the Term Lenders have agreed to make a
certain term loan to the Term Borrower in the principal amount of $150,000,000.

 

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D.            Pursuant to a certain guaranties dated as of the date hereof
(collectively, the “Term Guaranty”), certain Subsidiaries of the Term Borrower
(the “Term Guarantors”) have guaranteed all of the obligations outstanding under
the Term Credit Agreement.

 

E.             Pursuant to those certain security agreements dated as of the
date hereof (collectively, the “Term Security Agreement) by the Term Borrower
and the Term Guarantors in favor of the Term Agent for the benefit of the Term
Secured Parties, the Term Borrower and the Term Guarantors have granted a
security interest and lien in certain of their assets to secure the obligations
of the Term Borrower and Term Guarantors under the Term Documents.

 

E.             Each of the ABL Agent (on behalf of the ABL Secured Parties) and
the Term Agent (on behalf of the Term Secured Parties) desire to agree to the
relative priority of Liens on the Collateral (as defined below) 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. Unless otherwise defined herein, all
capitalized terms used herein shall have the same meaning herein as in the
Uniform Commercial Code.

 

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:

 

“ABL Agent” shall have the meaning assigned to that term in the introduction to
this Agreement and shall include any successors thereto as well as any Person
designated as the “Agent”, “Administrative Agent”, or “Collateral Agent” under
any ABL Credit Agreement.

 

“ABL Bank Products Affiliate” shall mean any ABL Lender or any branch or
Affiliate of any ABL Lender that has entered into a Hedging Agreement or other
Bank Product with an ABL Obligor with the obligations of such ABL Obligor
thereunder being secured by one or more ABL Collateral Documents, together with
their respective successors, assigns and transferees.

 

“ABL Borrowers” shall mean, collectively, Zale Delaware, Inc., Zale Corporation,
ZGCO, LLC, TXDC, L.P., and Zale Puerto Rico, Inc. and any other Person who
hereafter becomes a “Borrower” under the ABL Credit Agreement.

 

“ABL Cash Management Affiliate” shall mean any ABL Lender or any branch or
Affiliate of an ABL Lender that provides Cash Management Services to any of the
ABL Obligors with the obligations of such ABL Obligors thereunder being secured
by one or more ABL Collateral Documents, together with their respective
successors, assigns and transferees.

 

“ABL Collateral Documents” shall mean the ABL Security Agreements, together with
all other security agreements, mortgages, deeds of trust, account control
agreements, freight forwarder and/or customs broker’s agreements, collateral
access agreements, license agreements

 

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and other collateral documents executed and delivered in connection with the ABL
Credit Agreement, in each case as the same may be amended, supplemented,
restated or otherwise modified from time to time.

 

“ABL 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 ABL Obligations, whether by the same or any other
agent, lender or group of lenders.

 

“ABL Documents” shall mean the ABL Credit Agreement, any ABL Notes, the ABL
Collateral Documents, all Hedging Agreements and other Bank Products between any
ABL Obligor and any ABL Bank Products Affiliate, all Cash Management Services
agreements between any ABL Obligor and any ABL Cash Management Affiliate, those
other ancillary agreements to which any ABL Secured Party is a party or
beneficiary and all other agreements, instruments, documents and certificates,
now or hereafter executed by or on behalf of any ABL Obligor and delivered to
the ABL Agent or any other ABL Secured Party, in connection with any of the
foregoing or with the ABL Credit Agreement or the ABL Security 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 and thereof.

 

“ABL Guarantors” shall have the meaning assigned to such term in the recitals to
this Agreement and any other Person who hereafter becomes a “Facility Guarantor”
under the ABL Credit Agreement.

 

“ABL Guaranty” shall have the meaning assigned to such term in the recitals to
this Agreement as the same may be amended, supplemented, restated or otherwise
modified from time to time and shall also include any other agreement amending
or replacing such guaranty, whether with the same or any other agent, lender or
group of lenders.

 

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

 

“ABL Note” shall mean any promissory note executed and delivered by the ABL
Borrowers to evidence any loan made pursuant to the ABL Credit Agreement, as the
same may be amended, modified, extended, renewed, refunded, consolidated,
replaced, restructured or refinanced from time to time in accordance with the
terms hereof and thereof.

 

“ABL Obligations” shall mean, collectively, all “Obligations” as such term is
defined in the ABL Credit Agreement, and all obligations of the ABL Guarantors
under the ABL Guaranty.

 

“ABL Obligors” means collectively, the ABL Borrowers and the ABL Guarantors.

 

“ABL Priority Collateral” shall mean all Collateral consisting of the following:

 

(1)           all Accounts;

 

(2)           all Inventory;

 

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(3)           all Deposit Accounts, Concentration Accounts, and Securities
Accounts consisting of Account No. 487498743 maintained with Fidelity Brokerage
Services LLC or any other account which replaces such Securities Account with
Fidelity Brokerage Services LLC and used for short term investments for cash
management purposes (including in order to minimize LIBOR breakage costs), but
excluding the Term Securities Accounts (as defined in the ABL Credit Agreement
as of the date hereof);

 

(4)           all Documents relating to Inventory, (b) all Chattel Paper,
Instruments, General Intangibles, Supporting Obligations and Letter-of-Credit
Rights arising from the sale of Inventory and/or from Accounts, and (c) all
Commercial Tort Claims relating to Inventory or Accounts;

 

(5)           all books and Records relating to the items referred to in the
preceding clauses (including all books, databases, and Records, whether tangible
or electronic, which contain any information relating to any of the items
referred to in the preceding clauses (1) through (4)); and

 

(6)           all guarantees with respect to any of the foregoing and all cash,
cash equivalents, money, insurance proceeds and other proceeds of any of the
foregoing (such proceeds, “ABL Priority Proceeds”).

 

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

 

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

 

“ABL Security Agreements” shall mean collectively, (a) a certain Amended and
Restated Security Agreement dated as of May 10, 2010, and (b) an Amended and
Restated General Security Agreement dated as of May 10, 2010, in each case
executed by any or all of the ABL Obligors in favor of the ABL Agent for the
benefit of the ABL Secured Parties (as each of the same may be amended,
supplemented, restated and/or otherwise modified), and shall also include any
other agreement amending, restating, replacing or otherwise modifying such
agreement, whether with the same or any other agent, lender or group of lenders.

 

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

 

“Agent(s)” means individually the ABL Agent or the Term Agent and collectively
means both the ABL Agent and the Term Agent.

 

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

 

“Ancillary Cap” means the aggregate of any amounts due or to become due with
respect to those Bank Products, not to exceed (a) the sum of $10,000,000, plus
(b) the amount of any Reserves (as defined in the ABL Credit Agreement), if any,
established and maintained by the ABL Agent with respect to Bank Products and
Cash Management Services.

 

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“Asserted Known Bank Indemnification Claim” means any matters or circumstances
for which notice of demand has been made, asserted or threatened against the ABL
Agent or any ABL Secured Party whether in writing or orally that at the time of
determination could reasonably be expected to result in direct or actual damages
and expenses (including, without limitation, reasonable and documented
attorneys’ fees and disbursements but excluding special, indirect, consequential
or punitive damages to the ABL Agent or any ABL Secured Party) to the ABL Agent
or any ABL Secured Party and which are subject to indemnification by the ABL
Obligors pursuant to the terms of the ABL Credit Agreement or the ABL Documents.

 

“Bank Products” shall have the meaning provided in the ABL Credit Agreement.

 

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

 

“Borrowers” shall mean collectively the ABL Borrowers and the Term Borrower.

 

“Business Day” shall mean any day other than (a) Saturday or Sunday; (b) any day
on which banks in Boston, Massachusetts or New York City, New York, generally
are not open to the general public for the purpose of conducting commercial
banking business; or (c) a day on which the principal office of the Term Agent
or the ABL Agent is not open to the general public to conduct business, if such
office is ordinarily open to the general public to conduct business.

 

“Cash Management Services” shall have the meaning provided in the ABL Credit
Agreement.

 

“Collateral” shall mean all Property now owned or hereafter acquired by any
Obligor in or upon which a Lien is granted or purported to be granted to the ABL
Agent or the Term Agent under any of the ABL Collateral Documents or the Term
Collateral Documents, together with all substitutions, additions, products and
Proceeds thereof.

 

“Concentration Accounts” shall have the meaning provided in the ABL Credit
Agreement as in effect on the date hereof.

 

“Control Collateral” shall mean any Collateral consisting of any 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.

 

“Copyright License” shall mean any written agreement, now or hereafter in
effect, granting any right to any third party under any Copyright now or
hereafter owned by any Obligor or that such Obligor otherwise has the right to
license, or granting any right to any Obligor under any Copyright now or
hereafter owned by any third party, and all rights of such Obligor under any
such agreement.

 

“Copyrights” shall have the meaning assigned to such term in the Term Security
Agreement as in effect on the date hereof.

 

“Credit Documents” shall mean, collectively, the ABL Documents and the Term
Documents.

 

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“Debtor Relief Laws” shall mean the Bankruptcy Code, the Bankruptcy and
Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada) and
the Winding-up and Restructuring Act (Canada), as now or hereafter in effect or
any successor thereto, as well as all other liquidation, conservatorship,
bankruptcy, assignment for benefit of creditors, moratorium, rearrangement,
receivership, insolvency, reorganization, winding-up, or similar debtor relief
laws of the United States federal or state law or of any applicable foreign law
from time to time in effect affecting the rights of creditors generally.

 

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

 

“Discharge of ABL Obligations” shall mean (a) the payment in full in cash of all
ABL Obligations including, without limitation, with respect to (i) amounts
available to be drawn under outstanding letters of credit issued thereunder (or
indemnities or other undertakings issued pursuant thereto in respect of
outstanding letters of credit), the cancellation of such letters of credit or
the delivery or provision of money or backstop letters of credit in respect
thereof in compliance with the terms of any ABL Credit Agreement (which shall
not exceed an amount equal to 103% of the aggregate undrawn amount of such
letters of credit), (ii) outstanding ABL Obligations with respect to Bank
Products and Cash Management Services (or indemnities or other undertakings
issued pursuant thereto in respect of outstanding Bank Products and Cash
Management Services) or the delivery or provision of cash collateral in respect
thereof in compliance with the terms of any ABL Credit Agreement; and (iii) the
delivery or provision of money or backstop letters of credit for any Asserted
Known Bank Indemnification Claims, in an amount reasonably estimated by the ABL
Agent but in any event not to exceed 100% of the ABL Obligors’ obligations to
the ABL Agent and the ABL Secured Parties in respect thereof; and (b) the
termination of all commitments to extend credit under the ABL Documents. If, at
any time prior to or simultaneously with the occurrence of the Discharge of ABL
Obligations, the ABL Obligors enter into (x) any refinancing of the ABL
Obligations in accordance with this Agreement, or (y) DIP Financing is entered
into in accordance with this Agreement, then, in each case, the Discharge of ABL
Obligations shall automatically be deemed not to have occurred for all purposes
of this Intercreditor Agreement.

 

“Discharge of Term Obligations” shall mean the payment in full in cash of all
outstanding Term Obligations.

 

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

 

“Enforcement Notice” shall mean a written notice delivered by the ABL Agent or
the Term Agent to the other applicable party announcing that an Enforcement
Period has commenced and specifying the relevant Event of Default.

 

“Enforcement Period” shall mean the period of time following the receipt by
either the ABL Agent or the Term Agent of an Enforcement Notice from the other
and continuing until the earliest of (a) in case of an Enforcement Period
commenced by the Term Agent, the Discharge of Term Obligations, (b) in the case
of an Enforcement Period commenced by the ABL Agent, the Discharge of ABL
Obligations, or (c) the ABL Agent or the Term Agent (as applicable) terminates,
or agrees in writing to terminate, the Enforcement Period.

 

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“Event of Default” shall mean an Event of Default as defined in the ABL Credit
Agreement or the Term Credit Agreement, as applicable.

 

“Excess ABL Obligations” shall mean, at any time of calculation, the portion, if
any, of the ABL Obligations in excess of the Maximum ABL Obligations.

 

“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, including the institution of any foreclosure proceedings
or the noticing of any public or private sale pursuant to Article 9 of the
Uniform Commercial Code or other applicable law;

 

(b)           the exercise by any Secured Party of any right or remedy provided
to a secured creditor on account of a Lien under any of the Credit Documents,
under applicable law, in an Insolvency Proceeding or otherwise, including the
election to retain any of the Collateral in satisfaction of a Lien;

 

(c)           the taking of any action by any Secured Party or the exercise of
any right or remedy by any Secured Party in respect of the collection on, set
off against, marshaling of, injunction respecting or foreclosure on the
Collateral or the Proceeds thereof;

 

(d)           the appointment on the application of a Secured Party, of a
receiver, receiver and manager, interim receiver, national receiver, monitor,
trustee or similar official in respect of all or part of the Collateral;

 

(e)           the sale, lease, license, or other disposition of all or any
portion of the Collateral by private or public sale conducted by a Secured Party
or any other means at the direction of a Secured Party permissible under
applicable law; 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.

 

For the avoidance of doubt, none of the following shall be deemed to constitute
an Exercise of Secured Creditor Remedies: (i) the filing of a proof of claim in
any Insolvency Proceeding or seeking adequate protection (subject to Section 6.3
below), (ii) the collection and application of the ABL Priority Proceeds against
the ABL Obligations or the delivery of any activation notice with respect to any
Deposit Accounts or Securities Accounts (including, without limitation, with
respect to any account control agreements relating thereto), in each case by the
ABL Agent during the continuance of a Cash Control Event (as defined in the ABL
Credit Agreement), including, without limitation, the notification of account
debtors, depository institutions or any other Person to deliver proceeds of ABL
Priority Collateral to the ABL Agent, (iii) the reduction of advance rates or
sub-limits by the ABL Agent, (iv) the consent by the ABL Agent to a store
closing sale, going out of business sale or other disposition by any ABL Obligor
of any of the ABL Priority Collateral, (v) the consent by a Secured Party
pursuant to the applicable Credit

 

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Documents to any other sale or disposition by an ABL Obligor or any Term Obligor
of any of its assets or properties, (vi) the acceleration of all or any portion
of the ABL Obligations or the Term Obligations, or (vii) subject to the
provisions of Section 5.2(a) hereof, the imposition or modification of Reserves
(as defined in the ABL Credit Agreement) by the ABL Agent.

 

“Exigent Circumstances” means an event or circumstance that either (a) would
result in a material deterioration of the value of the Collateral or
(b) materially and imminently threatens the ability of the ABL Agent to realize
upon all or a material part of the Collateral, such as, without limitation,
fraudulent removal or concealment thereof, destruction (other than to the extent
covered by insurance) or material waste thereof.

 

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

 

“Hedging Agreement” shall have the meaning provided in the ABL Credit Agreement.

 

“Inadvertent Overadvances” shall have the meaning provided in the ABL Credit
Agreement as in effect on the date hereof..

 

“Indebtedness”  shall have the meaning provided in the Term Credit Agreement (as
in effect on the date hereof).

 

“Insolvency Proceeding” shall mean (a) any case, action, filing or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, 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 assigned to such term in the Term
Security Agreement as in effect on the date hereof.

 

“Lender(s)” means individually, the ABL Lenders or the Term Lenders and
collectively means all of the ABL Lenders and the Term Lenders.

 

“License” means any Patent License, Trade Secret License, Trademark License,
Copyright License or other license or sublicense agreement to which any Obligor
is a party.

 

“Lien” shall mean, with respect to any asset, any mortgage, deed of trust, lien
(statutory or otherwise), imposition of a trust (statutory or otherwise),
pledge, hypothecation, encumbrance, collateral assignment, charge or security
interest in, on or of such asset.

 

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

 

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“Maximum ABL Obligations” means, on any date of determination thereof, an amount
equal to the result of (a) the principal sum of $750,000,000, plus (b) ABL
Obligations with respect to Bank Products and Cash Management Services  provided
that the maximum amount of Bank Products shall, for purposes of this definition,
not exceed the Ancillary Cap, plus (c) interest, fees, expenses, and
indemnification obligations under the ABL Documents (including interest, fees,
expenses, and indemnification obligations which, but for the filing of an
Insolvency Proceeding with respect any ABL Obligor, would have accrued or been
payable with respect to any ABL Obligation, whether or not such claim is allowed
or allowable against any ABL Obligor in any Insolvency Proceeding).  For clarity
and without limiting the foregoing, as long as the amounts set forth in clause
(a) are not exceeded, and subject to the provisions of Section 5.2(a), the ABL
Obligations equal to the sum of amounts available under the Borrowing Base
(subject to increase by the Permitted Insolvency Increase Amount), plus the
amount of Permitted Overadvances, plus the amount of Inadvertent Overadvances
shall not be violative of this Agreement.

 

“Obligors” means, collectively, the ABL Obligors and the Term Obligors.

 

“Overadvance” shall have the meaning provided in the ABL Credit Agreement as in
effect on the date hereof.

 

“Party” shall mean the ABL Agent or the Term Agent, and “Parties” shall mean
both the ABL Agent and the Term Agent.

 

“Patent License” shall mean any written agreement, now or hereafter in effect,
granting to any third party any right to make, use or sell any invention on
which a Patent, now or hereafter owned by any Obligor or that any Obligor
otherwise has the right to license, is in existence, or granting to any Obligor
any right to make, use or sell any invention on which a Patent, now or hereafter
owned by any third party, is in existence, and all rights of any Obligor under
any such agreement.

 

“Patents” shall have the meaning assigned to such term in the Term Security
Agreement as in effect on the date hereof.

 

“Permitted Insolvency Increase Amount” means, at any time any Obligor is the
subject of an Insolvency Proceeding, an amount equal to five percent (5%) of the
Borrowing Base at such time (calculated for purposes hereof, without giving
effect to the Term Reserve, if then in effect).

 

“Permitted Overadvances” shall have the meaning provided in the ABL Credit
Agreement as in effect on the date hereof.

 

“Person” shall mean an individual, partnership, corporation, limited liability
company, unlimited liability company, business trust, joint stock company,
trust, unincorporated association, joint venture, Governmental Authority or
other entity of whatever nature.

 

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“Priority Collateral” shall mean the ABL Priority Collateral or the Term
Priority Collateral, as applicable.

 

“Proceeds” shall mean (a) all “proceeds,” as defined in Article 9 of the Uniform
Commercial Code, with respect to the Collateral, and (b) whatever is recoverable
or recovered when any Collateral is sold, exchanged, collected, or disposed of,
whether voluntarily or involuntarily.

 

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

 

“Secured Parties” shall mean the ABL Secured Parties and the Term Secured
Parties.

 

“Subsidiary” shall mean with respect to any Person (the “parent”) at any date,
any corporation, partnership, joint venture, limited liability company,
unlimited liability company, trust, or other entity (a) of which equity
interests representing more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held, or (b) that is, as of such date,
otherwise controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.

 

“Term Agent” shall have the meaning assigned to that term in the introduction to
this Agreement and shall include any successor thereto.

 

“Term Borrower” shall mean Zale Corporation.

 

“Term Collateral Documents” shall mean the Term Security Agreement and each
other instrument, document and agreement executed and delivered in connection
with the Term Credit Agreement and securing the Term Obligations, in each case
as the same may be amended, supplemented, restated or otherwise modified from
time to time.

 

“Term Credit Agreement” shall have the meaning assigned to that 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 Term Obligations, whether by the same or any other
agent, lender or group of lenders.

 

“Term Documents” shall mean the Term Credit Agreement, any Term Notes, the Term
Collateral Documents, and all other agreements, instruments, and documents now
or hereafter executed by or on behalf of any Term Obligor or any of their
respective Affiliates, and delivered to the Term Agent, in connection with any
of the foregoing or any Term 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 and thereof.

 

“Term Guarantors” shall have the meaning assigned to that term in the recitals
to this Agreement.

 

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

 

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

 

“Term Note” shall mean any promissory note executed and delivered by the Term
Borrower to evidence any loan made pursuant to the Term Credit Agreement, as the
same may be amended, modified, extended, renewed, refunded, consolidated,
replaced, restructured or refinanced from time to time in accordance with the
terms hereof and thereof.

 

“Term Obligations” shall mean all “Obligations” as such term is defined in the
Term Credit Agreement, including, without limitation, any interest, fees,
expenses, and indemnification obligations which, but for the filing of an
Insolvency Proceeding with respect any Term Obligor, would have accrued or been
payable with respect to any Term Obligation, whether or not such claim is
allowed or allowable against any Term Obligor in any Insolvency Proceeding.

 

“Term Obligors” means collectively, the Term Borrower and the Term Guarantors.

 

“Term Priority Collateral” shall mean (a) all Collateral other than ABL Priority
Collateral and (b) all guarantees with respect to any of the foregoing and all
cash, cash equivalents, money, insurance proceeds and other proceeds of any of
the foregoing (such proceeds, “Term Priority Proceeds”).

 

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

 

“Term Reserve” shall have the meaning set forth in Section 5.2(a).

 

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

 

“Term Security Agreement” shall have the meaning assigned to that term in the
recitals to this Agreement.

 

“Trade Secret License” shall mean any and all agreements, whether written or
oral, providing for the grant by or to any Obligor of any right in or to Trade
Secrets, to the extent that a grant of a security interest in such Trade Secret
License is not prohibited by applicable law or the applicable Trade Secret
License.

 

“Trade Secrets” shall mean with respect to any Obligor, all of such Obligor’s
right, title and interest in and to all United States and foreign trade secrets,
including know how, processes, formulae, compositions, designs, and confidential
business and technical information, and all rights of any kind whatsoever
accruing thereunder or pertaining thereto, including (a) all income, royalties,
damages and payments now and hereafter due and/or payable with respect thereto,
including payments under all licenses, non disclosure agreements and memoranda
of understanding entered into in connection therewith, and damages and payments
for past or future misappropriations thereof, and (b) the right to sue or
otherwise recover for past, present or future misappropriations thereof.

 

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“Trademark License” shall mean any written agreement, now or hereafter in
effect, granting to any third party any right to use any Trademark now or
hereafter owned by any Obligor or that any Obligor otherwise has the right to
license, or granting to any Obligor any right to use any Trademark now or
hereafter owned by any third party, and all rights of any Obligor under any such
agreement.

 

“Trademarks” shall have the meaning assigned to such term in the Term Security
Agreement as in effect on the date hereof.

 

“Trigger Event” shall have the meaning assigned to that term in
Section 7.1(a) hereof.

 

“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 or foreign personal property security laws 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, the Personal
Property Security Act, or such foreign personal property security laws as
enacted and in effect in such other jurisdiction solely for purposes of the
provisions thereof relating to such attachment, perfection, priority or remedies
and for purposes of definitions related to such provisions.

 

“Use Period” means the period commencing on the date that the ABL Agent (or an
ABL Obligor acting with the consent of the ABL Agent) commences the full
liquidation and sale of the ABL Priority Collateral and ending on the earliest
of (i) 180 days thereafter, or (ii) the date on which the Discharge of ABL
Obligations occurs. If any stay or other order that prohibits any of the ABL
Agent, the other ABL Secured Parties or any ABL Obligor (with the consent of the
ABL Agent) from commencing and continuing to Exercise Any Secured Creditor
Remedies or to liquidate and sell the ABL Priority Collateral has been entered
by a court of competent jurisdiction, such 180-day period shall be tolled during
the pendency of any such stay or other order and the Use Period shall be so
extended.

 

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,

 

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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).  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.  Any reference herein to a time of day means Eastern time.

 

ARTICLE 2

LIEN PRIORITY

 

Section 2.1                                   Priority of Liens.

 

(A)                                  NOTWITHSTANDING (I) THE DATE, TIME, METHOD,
MANNER, OR ORDER OF GRANT, ATTACHMENT, OR PERFECTION OF ANY LIENS GRANTED TO THE
ABL SECURED PARTIES IN RESPECT OF ALL OR ANY PORTION OF THE COLLATERAL OR OF ANY
LIENS GRANTED TO THE TERM 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 ABL AGENT FOR THE BENEFIT OF THE ABL SECURED PARTIES OR
THE TERM AGENT FOR THE BENEFIT OF THE TERM SECURED PARTIES IN ANY COLLATERAL,
(III) ANY PROVISION OF THE UNIFORM COMMERCIAL CODE, DEBTOR RELIEF LAWS OR ANY
OTHER APPLICABLE LAW, OR OF THE ABL DOCUMENTS OR THE TERM DOCUMENTS,
(IV) WHETHER THE ABL AGENT OR THE TERM AGENT, IN EACH CASE, EITHER DIRECTLY OR
THROUGH AGENTS, HOLDS POSSESSION OF, OR HAS CONTROL OVER, ALL OR ANY PART OF THE
COLLATERAL, (V) THE DATE ON WHICH THE ABL OBLIGATIONS OR THE TERM OBLIGATIONS
ARE ADVANCED OR MADE AVAILABLE TO THE BORROWERS, OR (VI) ANY FAILURE OF THE ABL
AGENT OR THE TERM AGENT TO PERFECT ITS LIEN ON THE COLLATERAL, THE SUBORDINATION
OF ANY LIEN ON THE COLLATERAL SECURING ANY ABL OBLIGATIONS OR TERM OBLIGATIONS,
AS APPLICABLE, TO ANY LIEN SECURING ANY OTHER OBLIGATION OF ANY OBLIGOR, OR THE
AVOIDANCE, INVALIDATION OR LAPSE OF ANY LIEN ON THE COLLATERAL SECURING ANY ABL
OBLIGATIONS OR TERM OBLIGATIONS, THE ABL AGENT, ON BEHALF OF ITSELF AND THE ABL
SECURED PARTIES, AND THE TERM AGENT, ON BEHALF OF ITSELF AND THE TERM SECURED
PARTIES, HEREBY AGREE THAT THE FOLLOWING PRIORITIES APPLY TO THE ABL PRIORITY
COLLATERAL AND THE TERM PRIORITY COLLATERAL:

 

(1) any Lien in respect of all or any portion of the ABL Priority Collateral now
or hereafter held by or on behalf of the ABL Agent or any ABL Secured Parties
that secures all or any portion of the ABL Obligations shall in all respects be
senior and prior to all Liens granted to the Term Agent or any Term Secured
Parties on the ABL Priority Collateral;

 

(2) any Lien in respect of all or any portion of the ABL Priority Collateral now
or hereafter held by or on behalf of the Term Agent or any Term Secured Parties
that secures all or any portion of the Term Obligations shall in all respects
be, until the Discharge of ABL Obligations, junior and subordinate to all Liens
granted to the ABL Agent or the ABL Secured Parties on the ABL Priority
Collateral;

 

(3) any Lien in respect of all or any portion of the Term Priority Collateral
now or hereafter held by or on behalf of the Term Agent or any Term Secured
Parties that secures all or any portion of the Term Obligations shall in all
respects be senior and prior to all Liens granted to the ABL Agent or any ABL
Secured Parties on the Term Priority Collateral; and

 

(4) any Lien in respect of all or any portion of the Term Priority Collateral
now or hereafter held by or on behalf of the ABL Agent or any ABL Secured
Parties that secures all or any

 

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portion of the ABL Obligations shall in all respects be, until the Discharge of
Term Priority Obligations, junior and subordinate to all Liens granted to the
Term Agent or the Term Secured Parties on the Term Priority Collateral.

 

(B)                                 THE TERM AGENT, FOR AND ON BEHALF OF ITSELF
AND THE TERM SECURED PARTIES, ACKNOWLEDGES AND AGREES THAT, CONCURRENTLY
HEREWITH, THE ABL AGENT, FOR THE BENEFIT OF ITSELF AND THE ABL SECURED PARTIES,
HAS BEEN, OR MAY BE, GRANTED LIENS UPON ALL OF THE TERM PRIORITY COLLATERAL AND
THE TERM AGENT HEREBY CONSENTS THERETO.  THE ABL AGENT, FOR AND ON BEHALF OF
ITSELF AND THE ABL SECURED PARTIES, ACKNOWLEDGES AND AGREES THAT, CONCURRENTLY
HEREWITH, THE TERM AGENT, FOR THE BENEFIT OF ITSELF AND THE TERM SECURED
PARTIES, HAS BEEN, OR MAY BE, GRANTED LIENS UPON ALL OF THE ABL PRIORITY
COLLATERAL AND THE ABL AGENT HEREBY CONSENTS THERETO.  THE SUBORDINATION OF
LIENS BY THE TERM AGENT AND THE ABL AGENT IN FAVOR OF ONE ANOTHER AS SET FORTH
HEREIN SHALL NOT BE DEEMED TO SUBORDINATE THE TERM AGENT’S LIENS OR THE ABL
AGENT’ LIENS TO THE LIENS OF ANY OTHER PERSON THAT IS NOT A HOLDER OF ABL
OBLIGATIONS OR TERM OBLIGATIONS.

 

Section 2.2                                   Waiver of Right to Contest Liens.

 

(A)                                  THE TERM AGENT, FOR AND ON BEHALF OF ITSELF
AND THE TERM 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 ABL AGENT
AND THE ABL SECURED PARTIES IN RESPECT OF THE COLLATERAL OR THE PROVISIONS OF
THIS AGREEMENT.  THE TERM AGENT, FOR ITSELF AND ON BEHALF OF THE TERM SECURED
PARTIES, AGREES THAT NONE OF THE TERM AGENT OR THE TERM SECURED PARTIES WILL
TAKE ANY ACTION THAT WOULD INTERFERE WITH ANY EXERCISE OF SECURED CREDITOR
REMEDIES UNDERTAKEN BY THE ABL AGENT OR ANY ABL SECURED PARTY UNDER THE ABL
DOCUMENTS WITH RESPECT TO THE ABL PRIORITY COLLATERAL.  THE TERM AGENT, FOR
ITSELF AND ON BEHALF OF THE TERM SECURED PARTIES, HEREBY WAIVES ANY AND ALL
RIGHTS IT OR THE TERM SECURED PARTIES MAY HAVE AS A JUNIOR LIEN CREDITOR OR
OTHERWISE TO CONTEST, PROTEST, OBJECT TO, OR INTERFERE WITH THE MANNER IN WHICH
THE ABL AGENT OR ANY ABL LENDER SEEKS TO ENFORCE ITS LIENS IN ANY ABL PRIORITY
COLLATERAL.  THE FOREGOING SHALL NOT BE CONSTRUED TO PROHIBIT THE TERM AGENT
FROM ENFORCING THE PROVISIONS OF THIS AGREEMENT OR OTHERWISE ACTING IN
ACCORDANCE WITH THIS AGREEMENT.

 

(B)                                 THE ABL AGENT, FOR AND ON BEHALF OF ITSELF
AND THE ABL SECURED PARTIES, AGREES THAT IT 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 TERM AGENT OR THE
TERM SECURED PARTIES IN RESPECT OF THE COLLATERAL OR THE PROVISIONS OF THIS
AGREEMENT.  EXCEPT TO THE EXTENT SET FORTH IN SECTION 3.5, THE ABL AGENT, FOR
ITSELF AND ON BEHALF OF THE ABL SECURED PARTIES, AGREES THAT NONE OF THE ABL
AGENT OR THE ABL SECURED PARTIES WILL TAKE ANY ACTION THAT WOULD INTERFERE WITH
ANY EXERCISE OF SECURED CREDITOR REMEDIES UNDERTAKEN BY THE TERM AGENT UNDER THE
TERM DOCUMENTS WITH RESPECT TO THE TERM PRIORITY COLLATERAL.  THE ABL AGENT, FOR
ITSELF AND ON BEHALF OF THE ABL SECURED PARTIES, HEREBY WAIVE ANY AND ALL RIGHTS
IT OR THE ABL SECURED PARTIES MAY HAVE AS A JUNIOR LIEN CREDITOR OR OTHERWISE TO
CONTEST, PROTEST, OBJECT TO, OR INTERFERE WITH THE MANNER IN WHICH THE TERM
AGENT SEEKS TO ENFORCE ITS LIENS IN ANY TERM PRIORITY COLLATERAL.  THE

 

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FOREGOING SHALL NOT BE CONSTRUED TO PROHIBIT THE ABL AGENT FROM ENFORCING THE
PROVISIONS OF THIS AGREEMENT OR OTHERWISE ACTING IN ACCORDANCE WITH THIS
AGREEMENT.

 

Section 2.3                                   Remedies Standstill.

 

(A)                                  THE TERM AGENT, ON BEHALF OF ITSELF AND THE
TERM SECURED PARTIES, AGREES THAT, FROM THE DATE HEREOF UNTIL THE DATE UPON
WHICH THE DISCHARGE OF ABL OBLIGATIONS SHALL HAVE OCCURRED, NEITHER THE TERM
AGENT NOR ANY TERM SECURED PARTY WILL EXERCISE ANY SECURED CREDITOR REMEDIES
WITH RESPECT TO ANY OF THE ABL PRIORITY COLLATERAL, AND WILL NOT TAKE, RECEIVE
OR ACCEPT ANY PROCEEDS OF ABL PRIORITY COLLATERAL.  FROM AND AFTER THE DATE UPON
WHICH THE DISCHARGE OF ABL OBLIGATIONS SHALL HAVE OCCURRED, THE TERM AGENT OR
ANY TERM SECURED PARTY MAY EXERCISE ANY SECURED CREDITOR REMEDIES UNDER THE TERM
DOCUMENTS OR APPLICABLE LAW AS TO ANY ABL PRIORITY COLLATERAL; PROVIDED,
HOWEVER, THAT ANY EXERCISE OF SECURED CREDITOR REMEDIES WITH RESPECT TO ANY
COLLATERAL BY THE TERM AGENT OR THE TERM SECURED PARTIES IS AT ALL TIMES SUBJECT
TO THE PROVISIONS OF THIS AGREEMENT UNTIL THE TERMINATION HEREOF.

 

(B)                                 THE ABL AGENT, ON BEHALF OF ITSELF AND THE
ABL SECURED PARTIES, AGREES THAT, FROM THE DATE HEREOF UNTIL THE DATE UPON WHICH
THE DISCHARGE OF TERM OBLIGATIONS SHALL HAVE OCCURRED, NEITHER THE ABL AGENT NOR
ANY ABL SECURED PARTY WILL EXERCISE ANY SECURED CREDITOR REMEDIES WITH RESPECT
TO THE TERM PRIORITY COLLATERAL, AND WILL NOT TAKE, RECEIVE OR ACCEPT ANY
PROCEEDS OF THE TERM PRIORITY COLLATERAL, IT BEING UNDERSTOOD AND AGREED THAT
ANY TERM OBLIGOR’S DEPOSIT OF PROCEEDS OF TERM PRIORITY COLLATERAL IN A DEPOSIT
ACCOUNT CONTROLLED BY THE ABL AGENT SHALL NOT CONSTITUTE A BREACH OF THIS
AGREEMENT.  FROM AND AFTER THE DATE UPON WHICH THE DISCHARGE OF TERM OBLIGATIONS
SHALL HAVE OCCURRED, THE ABL AGENT OR ANY ABL SECURED PARTY MAY EXERCISE ANY
SECURED CREDITOR REMEDIES UNDER THE ABL DOCUMENTS OR APPLICABLE LAW AS TO ANY
TERM PRIORITY COLLATERAL; PROVIDED, HOWEVER, THAT ANY EXERCISE OF SECURED
CREDITOR REMEDIES WITH RESPECT TO ANY COLLATERAL BY THE ABL AGENT OR THE ABL
SECURED PARTIES IS AT ALL TIMES SUBJECT TO THE PROVISIONS OF THIS AGREEMENT
UNTIL THE TERMINATION HEREOF.

 

(C)                                  NOTWITHSTANDING THE PROVISIONS OF SECTIONS
2.3(A), 2.3(B) OR ANY OTHER PROVISION OF THIS AGREEMENT, NOTHING CONTAINED
HEREIN SHALL BE CONSTRUED TO PREVENT ANY AGENT OR ANY SECURED PARTY FROM
(I) FILING A CLAIM OR STATEMENT OF INTEREST WITH RESPECT TO THE ABL OBLIGATIONS
OR TERM OBLIGATIONS OWED TO IT IN ANY INSOLVENCY PROCEEDING COMMENCED BY OR
AGAINST ANY OBLIGOR, (II) TAKING ANY ACTION (NOT ADVERSE TO THE LIEN PRIORITY OF
THE LIENS OF THE OTHER AGENT OR OTHER SECURED PARTIES ON THE COLLATERAL IN WHICH
SUCH OTHER AGENT OR OTHER SECURED PARTY HAS A PRIORITY LIEN OR THE RIGHTS OF THE
OTHER AGENT OR ANY OF THE OTHER SECURED PARTIES TO EXERCISE ANY SECURED CREDITOR
REMEDIES IN RESPECT THEREOF) IN ORDER TO CREATE, PERFECT, PRESERVE OR PROTECT
ITS LIEN (BUT NOT ENFORCE ITS LIEN) ON ANY COLLATERAL, PROVIDED THAT EACH AGENT
MAY JOIN IN ANY JUDICIAL PROCEEDINGS COMMENCED BY THE OTHER AGENT TO ENFORCE
LIENS ON THE COLLATERAL, PROVIDED FURTHER THAT IN CONNECTION THEREWITH, SUBJECT
TO THE ABL AGENT’S RIGHTS UNDER  SECTION 3.5 HEREOF, THE ABL AGENT SHALL NOT
INTERFERE WITH THE ENFORCEMENT ACTIONS OF THE TERM AGENT WITH RESPECT TO TERM
PRIORITY COLLATERAL AND THE TERM AGENT SHALL NOT INTERFERE WITH THE ENFORCEMENT
ACTIONS OF THE ABL AGENT WITH RESPECT TO ABL PRIORITY COLLATERAL, (III) FILING
ANY NECESSARY OR RESPONSIVE PLEADINGS IN OPPOSITION TO ANY MOTION, ADVERSARY
PROCEEDING OR OTHER PLEADING FILED BY ANY PERSON OBJECTING TO OR OTHERWISE
SEEKING DISALLOWANCE OF THE CLAIM OR LIEN OF SUCH AGENT OR SECURED PARTY,
(IV) FILING ANY PLEADINGS, OBJECTIONS, MOTIONS, OR AGREEMENTS WHICH ASSERT
RIGHTS AVAILABLE TO UNSECURED CREDITORS OF THE ABL OBLIGORS OR TERM OBLIGORS

 

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ARISING UNDER ANY INSOLVENCY PROCEEDING OR APPLICABLE NON-BANKRUPTCY LAW,
(V) EXERCISING RIGHTS AND REMEDIES AS UNSECURED CREDITORS AGAINST ANY OBLIGOR IN
ACCORDANCE WITH THE TERMS OF THE TERM DOCUMENTS OR ABL DOCUMENTS, INCLUDING THE
ACCELERATION OF ANY INDEBTEDNESS OR OTHER OBLIGATIONS OWING UNDER THE TERM
DOCUMENTS OR ABL DOCUMENTS OR THE DEMAND FOR PAYMENT UNDER THE TERM GUARANTY OR
ABL GUARANTY, IN EACH CASE IN ACCORDANCE WITH THE TERMS OF THE APPLICABLE TERM
DOCUMENTS OR ABL DOCUMENTS AND APPLICABLE LAW, (VI) VOTING ON ANY PLAN OF
REORGANIZATION, PROPOSAL, OR PLAN OF ARRANGEMENT OR FILING ANY PROOF OF CLAIM IN
ANY INSOLVENCY PROCEEDING OF ANY OBLIGOR, (VII) MAKING A CASH BID ON ALL OR ANY
PORTION OF THE COLLATERAL IN WHICH SUCH OTHER AGENT HAS A PRIORITY LIEN IN ANY
PRIVATE OR JUDICIAL FORECLOSURE PROCEEDING OR ACTION OR SALE, OR
(VIII) OBJECTING TO THE PROPOSED RETENTION OF, OR TAKING TITLE TO, COLLATERAL BY
THE OTHER AGENT OR ANY OTHER SECURED PARTY IN FULL OR PARTIAL SATISFACTION OF
ANY ABL OBLIGATIONS OR TERM OBLIGATIONS DUE TO SUCH OTHER AGENT OR SECURED PARTY
(THE FOREGOING NOT BEING DEEMED TO LIMIT THE RIGHT OF THE AGENT HAVING A PRIOR
LIEN IN SUCH COLLATERAL FROM CREDIT BIDDING THEREFOR), IN EACH CASE (I) THROUGH
(VIII) ABOVE TO THE EXTENT NOT INCONSISTENT WITH THE TERMS OF THIS AGREEMENT.

 

Section 2.4                                   Exercise of Rights.

 

(A)                                  NO OTHER RESTRICTIONS.  EXCEPT AS EXPRESSLY
SET FORTH IN THIS AGREEMENT, EACH TERM SECURED PARTY AND EACH ABL SECURED PARTY
SHALL HAVE ANY AND ALL RIGHTS AND REMEDIES IT MAY HAVE AS A CREDITOR UNDER
APPLICABLE LAW, INCLUDING THE RIGHT TO THE EXERCISE OF SECURED CREDITOR
REMEDIES; PROVIDED, HOWEVER, THAT THE EXERCISE OF SECURED CREDITOR REMEDIES WITH
RESPECT TO THE COLLATERAL SHALL BE SUBJECT TO THE PROVISIONS OF THIS AGREEMENT. 
THE ABL AGENT MAY ENFORCE THE PROVISIONS OF THE ABL DOCUMENTS, THE TERM AGENT
MAY ENFORCE THE PROVISIONS OF THE TERM DOCUMENTS AND EACH MAY EXERCISE ANY
SECURED CREDITOR REMEDIES, ALL IN SUCH ORDER AND IN SUCH MANNER AS EACH MAY
DETERMINE IN THE EXERCISE OF ITS SOLE DISCRETION, CONSISTENT WITH THE TERMS OF
THIS AGREEMENT AND MANDATORY PROVISIONS OF APPLICABLE LAW; PROVIDED, HOWEVER,
THAT EACH OF THE ABL AGENT AND THE TERM AGENT AGREES TO PROVIDE TO THE OTHER
(X) AN ENFORCEMENT NOTICE PRIOR TO THE COMMENCEMENT OF AN EXERCISE ANY SECURED
CREDITOR REMEDIES, (Y) USE REASONABLE EFFORTS TO ADVISE THE OTHER AT REASONABLE
INTERVALS OF THE STATUS OF ANY EXERCISE OF SECURED CREDITOR REMEDIES BY IT, AND
(Z) COPIES OF ANY NOTICES THAT IT IS REQUIRED UNDER APPLICABLE LAW TO DELIVER TO
ANY ABL OBLIGOR; PROVIDED FURTHER, HOWEVER, THAT THE ABL AGENT’S FAILURE TO
PROVIDE ANY SUCH COPIES OR UPDATES TO THE TERM AGENT (BUT NOT THE ENFORCEMENT
NOTICE) SHALL NOT IMPAIR ANY OF THE ABL AGENT’S RIGHTS HEREUNDER OR UNDER ANY OF
THE ABL DOCUMENTS AND THE TERM AGENT’S FAILURE TO PROVIDE ANY SUCH COPIES OR
UPDATES TO THE ABL AGENT (BUT NOT THE ENFORCEMENT NOTICE) SHALL NOT IMPAIR ANY
OF THE TERM AGENT’S RIGHTS HEREUNDER OR UNDER ANY OF THE TERM DOCUMENTS.  EACH
OF THE TERM AGENT (ON BEHALF OF ITSELF AND THE TERM SECURED PARTIES) AND THE ABL
AGENT (ON BEHALF OF ITSELF AND THE ABL SECURED PARTIES) AGREES (I) THAT IT WILL
NOT INSTITUTE ANY SUIT OR OTHER PROCEEDING OR ASSERT IN ANY SUIT, INSOLVENCY
PROCEEDING OR OTHER PROCEEDING ANY CLAIM, IN THE CASE OF THE TERM AGENT AND EACH
TERM SECURED PARTY, AGAINST EITHER THE ABL AGENT OR ANY OTHER ABL SECURED PARTY,
AND IN THE CASE OF THE ABL AGENT AND EACH OTHER ABL SECURED PARTY, AGAINST
EITHER THE TERM AGENT OR ANY OTHER TERM SECURED PARTY, SEEKING DAMAGES FROM OR
OTHER RELIEF BY WAY OF SPECIFIC PERFORMANCE, INSTRUCTIONS OR OTHERWISE, WITH
RESPECT TO, ANY ACTION TAKEN OR OMITTED TO BE TAKEN BY SUCH PERSON WITH RESPECT
TO THE COLLATERAL WHICH IS CONSISTENT WITH THE TERMS OF THIS AGREEMENT, AND NONE
OF SUCH PARTIES SHALL BE LIABLE FOR ANY SUCH ACTION TAKEN OR OMITTED TO BE
TAKEN, OR (II) IT WILL NOT BE A PETITIONING CREDITOR OR OTHERWISE ASSIST IN THE
FILING OF AN INVOLUNTARY INSOLVENCY PROCEEDING.

 

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(B)                                 RELEASE OF LIENS.

 

(I)                                     IN THE EVENT OF (A) ANY PRIVATE OR
PUBLIC SALE OF ALL OR ANY PORTION OF THE ABL PRIORITY COLLATERAL IN CONNECTION
WITH ANY EXERCISE OF SECURED CREDITOR REMEDIES BY THE ABL AGENT OR BY THE ABL
OBLIGORS WITH THE CONSENT OF THE ABL AGENT, OR (B) ANY SALE, TRANSFER OR OTHER
DISPOSITION OF ALL OR ANY PORTION OF THE ABL PRIORITY COLLATERAL SO LONG AS SUCH
SALE, TRANSFER OR OTHER DISPOSITION IS THEN PERMITTED BY THE ABL DOCUMENTS AND
THE TERM DOCUMENTS (WITHOUT GIVING EFFECT TO ANY AMENDMENTS TO THE TERM
DOCUMENTS WHICH ADD FURTHER RESTRICTIONS TO DISPOSITIONS BEYOND THOSE WHICH ARE
IN EFFECT ON THE DATE HEREOF) OR CONSENTED TO BY THE REQUISITE ABL LENDERS AND
THE REQUISITE TERM LENDERS, THE TERM AGENT AGREES, ON BEHALF OF ITSELF AND THE
TERM SECURED PARTIES THAT SUCH SALE, TRANSFER OR OTHER DISPOSITION WILL BE FREE
AND CLEAR OF THE LIENS ON SUCH ABL PRIORITY COLLATERAL SECURING THE TERM
OBLIGATIONS, AND THE TERM AGENT’S AND THE TERM SECURED PARTIES’ LIENS WITH
RESPECT TO THE ABL PRIORITY COLLATERAL SO SOLD, TRANSFERRED, OR DISPOSED SHALL
TERMINATE AND BE DEEMED AUTOMATICALLY RELEASED AND DISCHARGED WITHOUT FURTHER
ACTION CONCURRENTLY WITH, AND TO THE SAME EXTENT AS, THE RELEASE AND DISCHARGE
OF THE ABL SECURED PARTIES’ LIENS ON SUCH ABL PRIORITY COLLATERAL; PROVIDED,
THAT THE LIENS OF THE PARTIES SHALL ATTACH TO THE PROCEEDS OF ANY SUCH
DISPOSITION OF THE ABL PRIORITY COLLATERAL WITH THE SAME RELATIVE PRIORITY AS
THE LIENS WHICH ATTACHED TO THE ABL PRIORITY COLLATERAL SO RELEASED AND
DISCHARGED.  IN FURTHERANCE OF, AND SUBJECT TO, THE FOREGOING, THE TERM AGENT
AGREES THAT IT WILL PROMPTLY EXECUTE ANY AND ALL LIEN RELEASES, DISCHARGES,
TERMINATION STATEMENTS OR OTHER DOCUMENTS REASONABLY REQUESTED BY THE ABL AGENT
IN CONNECTION THEREWITH.  THE TERM AGENT HEREBY APPOINTS THE ABL AGENT AND ANY
OFFICER OR DULY AUTHORIZED PERSON OF THE ABL AGENT, WITH FULL POWER OF
SUBSTITUTION, AS ITS TRUE AND LAWFUL ATTORNEY-IN-FACT WITH FULL IRREVOCABLE
POWER OF ATTORNEY IN THE PLACE AND STEAD OF THE TERM AGENT AND IN THE NAME OF
THE TERM AGENT OR IN THE ABL AGENT’S OWN NAMES, FROM TIME TO TIME, IN THE ABL
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, TERMINATION
STATEMENTS, DISCHARGES, ENDORSEMENTS, ASSIGNMENTS, RELEASES OR OTHER DOCUMENTS
OR INSTRUMENTS OF TRANSFER (WHICH APPOINTMENT, BEING COUPLED WITH AN INTEREST,
IS IRREVOCABLE).

 

(II)                                  IN THE EVENT OF (A) ANY PRIVATE OR PUBLIC
SALE OF ALL OR ANY PORTION OF THE TERM PRIORITY COLLATERAL IN CONNECTION WITH
ANY EXERCISE OF SECURED CREDITOR REMEDIES BY OR WITH THE CONSENT OF THE TERM
AGENT, OR (B) ANY SALE, TRANSFER OR OTHER DISPOSITION OF ALL OR ANY PORTION OF
THE TERM PRIORITY COLLATERAL SO LONG AS SUCH SALE, TRANSFER OR OTHER DISPOSITION
IS THEN PERMITTED BY THE TERM DOCUMENTS AND THE ABL DOCUMENTS (WITHOUT GIVING
EFFECT TO ANY AMENDMENTS TO THE ABL DOCUMENTS WHICH ADD FURTHER RESTRICTIONS TO
DISPOSITIONS BEYOND THOSE WHICH ARE IN EFFECT ON THE DATE HEREOF) OR CONSENTED
TO BY THE REQUISITE TERM LENDERS OR THE REQUISITE ABL LENDERS, AS APPLICABLE,
THE ABL AGENT AGREES, ON BEHALF OF ITSELF AND THE ABL LENDERS, THAT SUCH SALE,
TRANSFER OR DISPOSITION WILL BE FREE AND CLEAR OF THE LIENS ON SUCH TERM
PRIORITY COLLATERAL SECURING THE ABL OBLIGATIONS AND THE ABL AGENT’ AND THE ABL
SECURED PARTIES’ LIENS WITH RESPECT TO THE TERM PRIORITY COLLATERAL SO SOLD,
TRANSFERRED, OR DISPOSED SHALL TERMINATE AND BE DEEMED AUTOMATICALLY RELEASED
AND DISCHARGED WITHOUT FURTHER ACTION CONCURRENTLY WITH, AND TO THE SAME EXTENT
AS, THE RELEASE AND DISCHARGE OF THE TERM SECURED PARTIES’ LIENS ON SUCH TERM
PRIORITY COLLATERAL; PROVIDED, THAT THE LIENS OF THE PARTIES SHALL ATTACH TO THE
PROCEEDS OF ANY SUCH DISPOSITION OF THE TERM PRIORITY COLLATERAL WITH THE SAME
RELATIVE PRIORITY AS THE LIENS WHICH ATTACHED TO THE TERM PRIORITY COLLATERAL SO
RELEASED AND

 

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DISCHARGED.  IN FURTHERANCE OF, AND SUBJECT TO, THE FOREGOING, THE ABL AGENT
AGREES THAT IT WILL PROMPTLY EXECUTE ANY AND ALL LIEN RELEASES, DISCHARGES,
TERMINATION STATEMENTS OR OTHER DOCUMENTS REASONABLY REQUESTED BY THE TERM AGENT
IN CONNECTION THEREWITH.  THE ABL AGENT HEREBY APPOINTS THE TERM AGENT AND ANY
OFFICER OR DULY AUTHORIZED PERSON OF THE TERM AGENT, WITH FULL POWER OF
SUBSTITUTION, AS THEIR TRUE AND LAWFUL ATTORNEY-IN-FACT WITH FULL IRREVOCABLE
POWER OF ATTORNEY IN THE PLACE AND STEAD OF THE ABL AGENT AND IN THE NAME OF THE
ABL AGENT OR IN THE TERM AGENT’S OWN NAME, FROM TIME TO TIME, IN THE TERM
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, TERMINATION
STATEMENTS, DISCHARGES, ENDORSEMENTS, ASSIGNMENTS, RELEASES OR OTHER DOCUMENTS
OR INSTRUMENTS OF TRANSFER (WHICH APPOINTMENT, BEING COUPLED WITH AN INTEREST,
IS IRREVOCABLE).

 

SECTION 2.5                                   NO NEW LIENS.

 

(A)                                  UNTIL THE DISCHARGE OF ABL OBLIGATIONS, AND
FOR SO LONG AS THE TERM OBLIGATIONS ARE SECURED BY ANY ABL PRIORITY COLLATERAL,
THE PARTIES HERETO AGREE THAT NO TERM SECURED PARTY SHALL ACQUIRE OR HOLD ANY
LIEN ON ANY ASSETS OF ANY TERM OBLIGOR SECURING ANY TERM OBLIGATION WHICH ASSETS
ARE NOT ALSO SUBJECT TO THE LIEN OF THE ABL AGENT UNDER THE ABL DOCUMENTS.  IF
ANY TERM SECURED PARTY SHALL NONETHELESS ACQUIRE OR HOLD ANY LIEN ON ANY ASSETS
OF ANY TERM OBLIGOR SECURING ANY TERM OBLIGATION WHICH ASSETS ARE NOT ALSO
SUBJECT TO THE LIEN OF THE ABL AGENT UNDER THE ABL DOCUMENTS, THEN THE TERM
AGENT (OR THE RELEVANT TERM SECURED PARTY) SHALL, WITHOUT THE NEED FOR ANY
FURTHER CONSENT OF ANY OTHER TERM SECURED PARTY, OR ANY TERM OBLIGOR AND
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN ANY OTHER TERM DOCUMENT, BE DEEMED
TO ALSO HOLD AND HAVE HELD SUCH LIEN AS AGENT OR BAILEE FOR THE BENEFIT OF THE
ABL AGENT AS SECURITY FOR THE ABL OBLIGATIONS (SUBJECT TO THE LIEN PRIORITY AND
OTHER TERMS HEREOF) AND SHALL PROMPTLY NOTIFY THE ABL AGENT IN WRITING OF THE
EXISTENCE OF SUCH LIEN.

 

(B)                                 UNTIL THE DISCHARGE OF TERM OBLIGATIONS, AND
FOR SO LONG AS THE ABL OBLIGATIONS ARE SECURED BY ANY TERM PRIORITY COLLATERAL,
THE PARTIES HERETO AGREE THAT NO ABL SECURED PARTY SHALL ACQUIRE OR HOLD ANY
LIEN ON ANY ASSETS OF ANY ABL OBLIGOR SECURING ANY ABL OBLIGATION WHICH ASSETS
ARE NOT ALSO SUBJECT TO THE LIEN OF THE TERM AGENT UNDER THE TERM DOCUMENTS.  IF
ANY ABL SECURED PARTY SHALL NONETHELESS ACQUIRE OR HOLD ANY LIEN ON ANY ASSETS
OF ANY ABL OBLIGOR SECURING ANY ABL OBLIGATION WHICH ASSETS ARE NOT ALSO SUBJECT
TO THE LIEN OF THE TERM AGENT UNDER THE TERM DOCUMENTS, THEN THE ABL AGENT (OR
THE RELEVANT ABL SECURED PARTY) SHALL, WITHOUT THE NEED FOR ANY FURTHER CONSENT
OF ANY OTHER ABL SECURED PARTY, OR ANY ABL OBLIGOR AND NOTWITHSTANDING ANYTHING
TO THE CONTRARY IN ANY OTHER ABL DOCUMENT, BE DEEMED TO ALSO HOLD AND HAVE HELD
SUCH LIEN AS AGENT OR BAILEE FOR THE BENEFIT OF THE TERM AGENT AS SECURITY FOR
THE TERM OBLIGATIONS (SUBJECT TO THE LIEN PRIORITY AND OTHER TERMS HEREOF) AND
SHALL PROMPTLY NOTIFY THE TERM AGENT IN WRITING OF THE EXISTENCE OF SUCH LIEN.

 

Section 2.6                                   Waiver of Marshalling.

 

(A)                                  UNTIL THE DISCHARGE OF ABL OBLIGATIONS, THE
TERM AGENT, ON BEHALF OF ITSELF AND THE TERM 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 ABL PRIORITY COLLATERAL OR
ANY OTHER SIMILAR

 

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RIGHTS A JUNIOR SECURED CREDITOR MAY HAVE UNDER APPLICABLE LAW WITH RESPECT TO
THE ABL PRIORITY COLLATERAL.

 

(B)                                 UNTIL THE DISCHARGE OF TERM OBLIGATIONS, THE
ABL AGENT, ON BEHALF OF ITSELF AND THE ABL 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 TERM PRIORITY COLLATERAL OR
ANY OTHER SIMILAR RIGHTS A JUNIOR SECURED CREDITOR MAY HAVE UNDER APPLICABLE LAW
WITH RESPECT TO THE TERM PRIORITY COLLATERAL.

 

ARTICLE 3

ACTIONS OF THE PARTIES

 

Section 3.1                                   Certain Actions Permitted. The
Term Agent and the ABL Agent may make such demands or file such claims in
respect of the Term Obligations or the ABL 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 Term Agent or
any other Term Secured Party of the required payments of principal, interest,
fees, indemnities, and expense reimbursements so long as such receipt is not the
direct or indirect result of (a) the exercise by the Term Agent or any other
Term Secured Party of rights or remedies as a secured creditor in respect of ABL
Priority Collateral or (b) the enforcement in contravention of this Agreement of
any Lien in respect of Term Obligations held by any of them.  Nothing in this
Agreement shall prohibit the receipt by the ABL Agent or any other ABL Secured
Party of the required payments of principal, interest, fees, indemnities, and
expense reimbursements so long as such receipt is not the direct or indirect
result of (a) the exercise by the ABL Agent or any other ABL Secured Party of
rights or remedies as a secured creditor in respect of Term Priority Collateral
or (b) the enforcement in contravention of this Agreement of any Lien in respect
of ABL Obligations held by any of them.

 

Section 3.2                                   Agent for Perfection.  The ABL
Agent, for and on behalf of itself and each ABL Secured Party, and the Term
Agent, for and on behalf of itself and each Term Secured Party, as applicable,
each agree to hold all Collateral in their respective possession, custody, or
control (or in the possession, custody, or control of agents or bailees for
either) as agent for the other solely for the purpose of perfecting the security
interest granted to each in such Collateral, subject to the terms and conditions
of this Section 3.2.  Without limiting the foregoing, the ABL Agent agrees to
act as agent for the benefit of the Term Agent and the Term Secured Parties
under each account control agreement with respect to any Deposit Accounts or
Securities Accounts of a Borrower or an ABL Guarantor.  None of the ABL Agent,
the ABL Secured Parties, the Term Agent, or the Term Secured Parties, as
applicable, shall have any obligation whatsoever to the others to assure that
the Collateral is genuine or owned by any ABL Obligor, Term Obligor or any other
Person or to preserve rights or benefits of any Person.  The duties or
responsibilities of the ABL Agent and the Term Agent under this Section 3.2 are
and shall be limited solely to holding or maintaining control of the Collateral
described in this Section 3.2 as agent for the other Party for purposes of
perfecting the Lien held by the Term Agent or the ABL Agent, as applicable.  The
ABL Agent is not and shall not be deemed to be a fiduciary of any

 

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kind for the Term Secured Parties or any other Person.  Without limiting the
generality of the foregoing, but subject to the provisions of Sections 3.6, 3.7,
and 4.1(a), the ABL Secured Parties shall not be obligated to see to the
application of any Proceeds of the Term Priority Collateral deposited into any
Deposit Account or be answerable in any way for the misapplication thereof.  The
Term Agent is not and shall not be deemed to be a fiduciary of any kind for the
ABL Secured Parties, or any other Person.

 

Section 3.3                                   Insurance.  Proceeds of Collateral
include insurance proceeds and, therefore, the Lien Priority shall govern the
ultimate disposition of casualty insurance proceeds.  The ABL Agent and the Term
Agent shall each be named as additional insured or loss payee, as applicable,
with respect to all insurance policies relating to the Collateral.  Until
Discharge of the ABL Obligations, the ABL Agent shall have the sole and
exclusive right, as against the Term Agent, to adjust settlement of insurance
claims in the event of any covered loss, theft or destruction of ABL Priority
Collateral and take other such actions with respect to insurance covering the
ABL Priority Collateral as set forth in the ABL Credit Agreement.  Until
Discharge of the Term Obligations, the Term Agent shall have the sole and
exclusive right, as against the ABL Agent, to adjust settlement of insurance
claims in the event of any covered loss, theft or destruction of Term Priority
Collateral and take other such actions with respect to insurance covering the
Term Priority Collateral as set forth in the Term Credit Agreement.  All
proceeds of such insurance shall be remitted to the ABL Agent or the Term Agent,
as the case may be, and each of the Term Agent and ABL Agent shall cooperate (if
necessary) in a reasonable manner in effecting the payment of insurance proceeds
in accordance with Section 4.1 hereof.

 

Section 3.4                                   No Additional Rights For the
Obligors Hereunder.  If any ABL Secured Party or Term Secured Party shall
enforce its rights or remedies in violation of the terms of this Agreement, the
Obligors shall not be entitled to use such violation as a defense to any action
by any ABL Secured Party or Term Secured Party, nor to assert such violation as
a counterclaim or basis for set off or recoupment against any ABL Secured Party
or Term Secured Party.

 

Section 3.5                                   Inspection and Access Rights.

 

(A)                                  WITHOUT LIMITING ANY RIGHTS THE ABL AGENT
OR ANY OTHER ABL SECURED PARTY MAY OTHERWISE HAVE UNDER APPLICABLE LAW OR BY
AGREEMENT, IN CONNECTION WITH THE EXERCISE OF ANY OF SUCH RIGHTS, INCLUDING,
WITHOUT LIMITATION, IN THE EVENT OF ANY LIQUIDATION OF THE ABL PRIORITY
COLLATERAL (OR ANY OTHER EXERCISE OF ANY SECURED CREDITOR REMEDIES BY THE ABL
AGENT) AND WHETHER OR NOT THE TERM AGENT OR ANY OTHER TERM SECURED PARTY HAS
COMMENCED AND IS CONTINUING TO EXERCISE ANY SECURED CREDITOR REMEDIES OF THE
TERM AGENT, THE ABL AGENT OR ANY OTHER PERSON (INCLUDING ANY ABL OBLIGOR) ACTING
WITH THE CONSENT, OR ON BEHALF, OF THE ABL AGENT, SHALL HAVE THE RIGHT
(A) DURING NORMAL BUSINESS HOURS ON ANY BUSINESS DAY, TO ACCESS ABL PRIORITY
COLLATERAL THAT (I) IS STORED OR LOCATED IN OR ON, OR (II) HAS BECOME AN
ACCESSION WITH RESPECT TO (WITHIN THE MEANING OF SECTION 9-335 OF THE UNIFORM
COMMERCIAL CODE), OR (III) HAS BEEN COMMINGLED WITH (WITHIN THE MEANING OF
SECTION 9-336 OF THE UNIFORM COMMERCIAL CODE), TERM PRIORITY COLLATERAL, AND
(B) DURING THE USE PERIOD, SHALL HAVE THE RIGHT TO USE THE TERM PRIORITY
COLLATERAL, EACH OF THE FOREGOING IN ORDER TO ASSEMBLE, INSPECT, COPY OR
DOWNLOAD INFORMATION STORED ON, TAKE ACTION TO PERFECT ITS LIENS ON, COMPLETE A
PRODUCTION RUN OF INVENTORY, TAKE POSSESSION OF, MOVE, PREPARE AND ADVERTISE FOR
SALE, SELL (BY PUBLIC AUCTION, PRIVATE SALE OR A

 

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“STORE CLOSING”, “GOING OUT OF BUSINESS” OR SIMILAR SALE, WHETHER IN BULK, IN
LOTS OR TO CUSTOMERS IN THE ORDINARY COURSE OF BUSINESS OR OTHERWISE AND WHICH
SALE MAY INCLUDE AUGMENTED INVENTORY OF THE SAME TYPE SOLD IN THE ANY ABL
OBLIGOR’S BUSINESS), STORE OR OTHERWISE DEAL WITH THE ABL PRIORITY COLLATERAL,
IN EACH CASE WITHOUT NOTICE TO, THE INVOLVEMENT OF OR INTERFERENCE BY ANY TERM
SECURED PARTY OR LIABILITY TO ANY TERM SECURED PARTY, PROVIDED THAT THE ABL
AGENT SHALL, FURNISH PROMPT WRITTEN NOTICE TO THE TERM AGENT OF THE EXERCISE OF
ANY RIGHTS OF THE ABL AGENT AND ABL SECURED PARTIES HEREUNDER.  IN THE EVENT
THAT ANY ABL SECURED PARTY HAS COMMENCED AND IS CONTINUING THE EXERCISE OF ANY
SECURED CREDITOR REMEDIES WITH RESPECT TO ANY ABL PRIORITY COLLATERAL OR ANY
OTHER SALE OR LIQUIDATION OF THE ABL PRIORITY COLLATERAL HAS BEEN COMMENCED BY
AN ABL OBLIGOR (WITH THE CONSENT OF THE ABL AGENT), THE TERM AGENT MAY NOT SELL,
ASSIGN OR OTHERWISE TRANSFER THE RELATED TERM PRIORITY COLLATERAL PRIOR TO THE
EXPIRATION OF THE USE PERIOD, UNLESS THE PURCHASER, ASSIGNEE OR TRANSFEREE
THEREOF AGREES TO BE BOUND BY THE PROVISIONS OF THIS SECTION 3.5.

 

(B)                                 IN FURTHERANCE OF THE ABL AGENT’S RIGHTS
UNDER SECTION 3.5(A), AT ALL TIMES DURING THE USE PERIOD, THE TERM AGENT
(I) SHALL, TO THE EXTENT PERMITTED BY LAW, PERMIT THE ABL AGENT AND ITS AGENTS
OR REPRESENTATIVES AT THE ABL AGENT’S OPTION TO USE, ON A NONEXCLUSIVE, ROYALTY
FREE BASIS, ANY OF THE INTELLECTUAL PROPERTY AS IS OR MAY BE NECESSARY FOR THE
ABL AGENT TO SELL OR OTHERWISE LIQUIDATE THE ABL PRIORITY COLLATERAL AND
(II) HEREBY GRANTS TO THE ABL AGENT A NONEXCLUSIVE, IRREVOCABLE, ROYALTY-FREE,
WORLDWIDE LICENSE TO USE ANY AND ALL INTELLECTUAL PROPERTY AS IS OR MAY BE
NECESSARY TO SELL OR OTHERWISE LIQUIDATE THE ABL PRIORITY COLLATERAL.  THE TERM
AGENT (A) ACKNOWLEDGES AND CONSENTS TO THE GRANT TO THE ABL AGENT BY THE ABL
OBLIGORS ON THE DATE HEREOF OF A CONTINUING, LIMITED, NON-EXCLUSIVE ROYALTY-FREE
LICENSE FOR THE USES DESCRIBED IN CLAUSES (B)(I) AND (B)(II) ABOVE AT ANY TIME
(THE “EFFECTIVE DATE LICENSE”) AND (B) AGREES THAT ITS LIENS ON THE TERM
PRIORITY COLLATERAL SHALL BE SUBJECT TO THE EFFECTIVE DATE LICENSE AS SET FORTH
HEREIN.  FURTHERMORE, THE TERM AGENT AGREES THAT, IN CONNECTION WITH ANY
FORECLOSURE SALE CONDUCTED BY THE TERM AGENT IN RESPECT OF THE INTELLECTUAL
PROPERTY, (1) ANY NOTICE REQUIRED TO BE GIVEN BY THE TERM AGENT IN CONNECTION
WITH SUCH FORECLOSURE SHALL CONTAIN AN ACKNOWLEDGEMENT THAT THE TERM AGENT’S
LIEN IS SUBJECT TO THE EFFECTIVE DATE LICENSE, AND (2) THE TERM AGENT SHALL
DELIVER A COPY OF THE EFFECTIVE DATE LICENSE TO ANY PURCHASER AT SUCH
FORECLOSURE AND PROVIDE WRITTEN NOTICE TO SUCH PURCHASER THAT THE TERM AGENT’S
LIEN AND THE PURCHASER’S RIGHTS IN THE SUCH TRANSFERRED COLLATERAL ARE SUBJECT
TO THE EFFECTIVE DATE LICENSE.

 

(C)                                  DURING THE PERIOD OF ACTUAL OCCUPATION, USE
AND/OR CONTROL BY THE ABL SECURED PARTIES AND/OR THE ABL AGENT (OR THEIR
RESPECTIVE EMPLOYEES, AGENTS, ADVISERS AND REPRESENTATIVES) OF ANY TERM PRIORITY
COLLATERAL, THE ABL SECURED PARTIES AND THE ABL AGENT SHALL BE OBLIGATED TO
REPAIR AT THEIR EXPENSE ANY PHYSICAL DAMAGE (BUT NOT ANY OTHER DIMINUTION IN
VALUE) TO SUCH TERM PRIORITY COLLATERAL RESULTING FROM SUCH OCCUPANCY, USE OR
CONTROL, AND TO LEAVE SUCH TERM PRIORITY COLLATERAL IN SUBSTANTIALLY THE SAME
CONDITION AS IT WAS AT THE COMMENCEMENT OF SUCH OCCUPANCY, USE OR CONTROL,
ORDINARY WEAR AND TEAR EXCEPTED.  NOTWITHSTANDING THE FOREGOING, IN NO EVENT
SHALL THE ABL SECURED PARTIES OR THE ABL AGENT HAVE ANY LIABILITY TO THE TERM
SECURED PARTIES AND/OR TO THE TERM AGENT PURSUANT TO THIS SECTION 3.5 AS A
RESULT OF ANY CONDITION (INCLUDING ANY ENVIRONMENTAL CONDITION, CLAIM OR
LIABILITY) ON OR WITH RESPECT TO THE TERM PRIORITY COLLATERAL EXISTING PRIOR TO
THE DATE OF THE EXERCISE BY THE ABL SECURED PARTIES (OR THE ABL AGENT, AS THE
CASE MAY BE) OF THEIR RIGHTS UNDER SECTION 3.5 AND THE ABL SECURED PARTIES SHALL
HAVE NO DUTY OR LIABILITY TO MAINTAIN THE TERM PRIORITY COLLATERAL IN A
CONDITION OR MANNER BETTER THAN THAT IN WHICH IT WAS MAINTAINED PRIOR TO THE USE
THEREOF BY THE

 

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ABL SECURED PARTIES, OR FOR ANY DIMINUTION IN THE VALUE OF THE TERM PRIORITY
COLLATERAL THAT RESULTS FROM ORDINARY WEAR AND TEAR RESULTING FROM THE USE OF
THE TERM PRIORITY COLLATERAL BY THE ABL SECURED PARTIES IN THE MANNER AND FOR
THE TIME PERIODS SPECIFIED UNDER THIS SECTION 3.5.  THE ABL AGENT SHALL
COOPERATE AND USE REASONABLE EFFORTS TO ENSURE THAT ITS ACTIVITIES DURING THE
USE PERIOD AS DESCRIBED ABOVE DO NOT INTERFERE MATERIALLY WITH THE ACTIVITIES OF
THE TERM AGENT AS DESCRIBED ABOVE, INCLUDING THE RIGHT OF THE TERM AGENT TO
COMMENCE FORECLOSURE OF THE TERM PRIORITY COLLATERAL, TO SHOW THE TERM PRIORITY
COLLATERAL TO PROSPECTIVE PURCHASERS AND TO READY THE TERM PRIORITY COLLATERAL
FOR SALE.

 

(D)                                 THE ABL AGENT AND THE ABL SECURED PARTIES
SHALL NOT BE OBLIGATED TO PAY ANY RENT, FEE OR OTHER AMOUNTS TO THE TERM AGENT
OR THE TERM SECURED PARTIES (OR ANY PERSON CLAIMING BY, THROUGH OR UNDER THE
TERM SECURED PARTIES, INCLUDING ANY PURCHASER OF THE TERM PRIORITY COLLATERAL)
OR TO THE ABL OBLIGORS, FOR OR IN RESPECT OF THE USE BY THE ABL AGENT AND THE
ABL SECURED PARTIES OF THE TERM PRIORITY COLLATERAL.

 

(E)                                  THE ABL SECURED PARTIES SHALL (I) USE THE
TERM PRIORITY COLLATERAL IN ACCORDANCE WITH APPLICABLE LAW; (II) INSURE FOR
DAMAGE TO PROPERTY AND LIABILITY TO PERSONS, INCLUDING PROPERTY AND LIABILITY
INSURANCE FOR THE BENEFIT OF THE TERM SECURED PARTIES; AND (III) INDEMNIFY AND
HOLD HARMLESS THE TERM SECURED PARTIES FROM ANY CLAIM, LOSS, DAMAGE, COST OR
LIABILITY ARISING FROM THE ABL SECURED PARTIES’ USE OF THE TERM PRIORITY
COLLATERAL (EXCEPT FOR THOSE ARISING FROM THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF ANY TERM SECURED PARTY).

 

(F)                                    THE TERM AGENT AND THE OTHER TERM SECURED
PARTIES SHALL USE COMMERCIALLY REASONABLE EFFORTS TO NOT HINDER OR OBSTRUCT THE
ABL AGENT AND THE OTHER ABL SECURED PARTIES FROM EXERCISING THE RIGHTS DESCRIBED
IN SECTION 3.5(A) HEREOF.

 

Section 3.6                                   Tracing of and Priorities in
Proceeds.  The ABL Agent, for itself and on behalf of the ABL Secured Parties,
and the Term Agent, for itself and on behalf of the Term Secured Parties,
further agree that prior to an issuance of any notice of Exercise of Any Secured
Creditor Remedies by such Secured Party (unless a bankruptcy or insolvency Event
of Default then exists), any proceeds of Collateral, whether or not deposited
under control agreements, which are used by any Obligor to acquire other
property which is Collateral shall not (solely as between the Agents and the
Lenders) be treated as Proceeds of Collateral for purposes of determining the
relative priorities in the Collateral which was so acquired. Each of the ABL
Agent and the Term Agent agrees that after an issuance of an Enforcement Notice,
each such Person shall cooperate in good faith to identify the proceeds of the
ABL Priority Collateral and the Term Priority Collateral, as the case may be;
provided, however, that neither ABL Agent nor Term Agent shall be liable or in
any way responsible for any claims or damages from conversion of the ABL
Priority Collateral or Term Priority Collateral, as the case may be (it being
understood and agreed that the only obligation of any holder of a junior Lien on
any Collateral is to pay over to the holder of the senior Lien on such
Collateral, in the same form as received, with any necessary endorsements, all
proceeds that such holder of a junior Lien received that have been identified as
proceeds of Collateral on which such holder does not have priority).

 

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Section 3.7                                   Payments Over.

 

(A)                                  SO LONG AS THE DISCHARGE OF ABL OBLIGATIONS
HAS NOT OCCURRED, ANY ABL PRIORITY COLLATERAL OR PROCEEDS THEREOF NOT
CONSTITUTING TERM PRIORITY COLLATERAL RECEIVED BY THE TERM AGENT OR ANY TERM
SECURED PARTIES IN CONNECTION WITH THE EXERCISE OF ANY RIGHT OR REMEDY
(INCLUDING SET OFF) RELATING TO THE ABL PRIORITY COLLATERAL IN CONTRAVENTION OF
THIS AGREEMENT OR ACTUALLY KNOWN TO THE TERM AGENT TO BE PROCEEDS OF ABL
PRIORITY COLLATERAL (WITHOUT ANY OBLIGATION TO UNDERTAKE ANY INDEPENDENT
INVESTIGATION AS TO THE SOURCE OF SUCH PROCEEDS) SHALL BE SEGREGATED AND HELD IN
TRUST AND FORTHWITH PAID OVER TO THE ABL AGENT FOR THE BENEFIT OF THE ABL
SECURED PARTIES IN THE SAME FORM AS RECEIVED, WITH ANY NECESSARY ENDORSEMENTS OR
AS A COURT OF COMPETENT JURISDICTION MAY OTHERWISE DIRECT.  THE ABL AGENT IS
HEREBY AUTHORIZED TO MAKE ANY SUCH ENDORSEMENTS AS AGENT FOR THE TERM AGENT OR
ANY SUCH TERM 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.

 

(B)                                 SO LONG AS THE DISCHARGE OF TERM OBLIGATIONS
HAS NOT OCCURRED, ANY TERM PRIORITY COLLATERAL OR PROCEEDS THEREOF NOT
CONSTITUTING ABL PRIORITY COLLATERAL RECEIVED BY THE ABL AGENT OR ANY OTHER ABL
SECURED PARTY IN CONNECTION WITH THE EXERCISE OF ANY RIGHT OR REMEDY (INCLUDING
SET OFF) RELATING TO THE TERM PRIORITY COLLATERAL IN CONTRAVENTION OF THIS
AGREEMENT OR ACTUALLY KNOWN TO THE ABL AGENT TO BE PROCEEDS OF TERM PRIORITY
COLLATERAL (WITHOUT ANY OBLIGATION TO UNDERTAKE ANY INDEPENDENT INVESTIGATION AS
TO THE SOURCE OF SUCH PROCEEDS) SHALL BE SEGREGATED AND HELD IN TRUST AND
FORTHWITH PAID OVER TO THE TERM AGENT FOR THE BENEFIT OF THE TERM SECURED
PARTIES IN THE SAME FORM AS RECEIVED, WITH ANY NECESSARY ENDORSEMENTS OR AS A
COURT OF COMPETENT JURISDICTION MAY OTHERWISE DIRECT.  THE TERM AGENT IS HEREBY
AUTHORIZED TO MAKE ANY SUCH ENDORSEMENTS AS AGENT FOR THE ABL AGENT OR ANY SUCH
OTHER ABL 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.

 

ARTICLE 4

APPLICATION OF PROCEEDS

 

Section 4.1                                   Application of Proceeds.

 

(A)                                  REVOLVING NATURE OF ABL OBLIGATIONS.  THE
TERM AGENT, FOR AND ON BEHALF OF ITSELF AND THE TERM SECURED PARTIES, EXPRESSLY
ACKNOWLEDGES AND AGREES THAT (I) THE ABL CREDIT AGREEMENT INCLUDES A REVOLVING
COMMITMENT, THAT IN THE ORDINARY COURSE OF BUSINESS THE ABL AGENT AND THE ABL
LENDERS WILL APPLY PAYMENTS AND MAKE ADVANCES THEREUNDER, AND THAT NO
APPLICATION OF ANY COLLATERAL OR THE RELEASE OF ANY LIEN BY THE ABL AGENT UPON
ANY PORTION OF THE COLLATERAL IN CONNECTION WITH A PERMITTED DISPOSITION BY THE
ABL OBLIGORS UNDER ANY ABL CREDIT AGREEMENT SHALL CONSTITUTE THE EXERCISE OF
SECURED CREDITOR REMEDIES UNDER THIS AGREEMENT; (II) SUBJECT TO THE TERMS
HEREOF, THE AMOUNT OF THE ABL OBLIGATIONS THAT MAY BE OUTSTANDING AT ANY TIME OR
FROM TIME TO TIME MAY BE INCREASED OR REDUCED AND SUBSEQUENTLY REBORROWED, AND
THAT THE TERMS OF THE ABL OBLIGATIONS MAY BE MODIFIED, EXTENDED OR AMENDED FROM
TIME TO TIME, AND THAT THE AGGREGATE AMOUNT OF THE ABL OBLIGATIONS MAY BE
INCREASED, REPLACED OR REFINANCED, IN EACH EVENT, WITHOUT NOTICE TO OR CONSENT
BY THE TERM SECURED PARTIES AND WITHOUT AFFECTING THE PROVISIONS HEREOF; AND
(III) ALL COLLATERAL RECEIVED BY THE ABL AGENT (OTHER THAN THROUGH THE EXERCISE
OF ANY SECURED CREDITOR REMEDIES OR ACTUALLY KNOWN TO THE ABL AGENT TO BE
PROCEEDS OF TERM PRIORITY COLLATERAL (WITHOUT ANY OBLIGATION TO UNDERTAKE ANY
INDEPENDENT INVESTIGATION AS TO THE SOURCE OF SUCH PROCEEDS)) MAY BE APPLIED,
REVERSED, REAPPLIED

 

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OR CREDITED, IN WHOLE OR IN PART, TO THE ABL OBLIGATIONS AT ANY TIME; PROVIDED,
HOWEVER, THAT FROM AND AFTER THE DATE ON WHICH THE ABL AGENT (OR ANY ABL SECURED
PARTY) OR THE TERM AGENT (OR ANY TERM SECURED PARTY) COMMENCES THE EXERCISE OF
ANY SECURED CREDITOR REMEDIES, ALL AMOUNTS RECEIVED BY THE ABL AGENT OR ANY ABL
LENDER SHALL BE APPLIED AS SPECIFIED IN SECTIONS 4.1(B) AND (C).  THE LIEN
PRIORITY SHALL NOT BE ALTERED OR OTHERWISE AFFECTED BY ANY SUCH AMENDMENT,
MODIFICATION, SUPPLEMENT, EXTENSION, REPAYMENT, REBORROWING, INCREASE,
REPLACEMENT, RENEWAL, RESTATEMENT OR REFINANCING OF EITHER THE ABL OBLIGATIONS
OR THE TERM OBLIGATIONS, OR ANY PORTION THEREOF.

 

(B)                                 APPLICATION OF PROCEEDS OF ABL PRIORITY
COLLATERAL.  THE ABL AGENT AND THE TERM AGENT HEREBY AGREE THAT ALL ABL PRIORITY
COLLATERAL, ABL PRIORITY PROCEEDS AND ALL OTHER PROCEEDS THEREOF, RECEIVED BY
EITHER OF THEM IN CONNECTION WITH ANY EXERCISE OF SECURED CREDITOR REMEDIES WITH
RESPECT TO THE ABL PRIORITY COLLATERAL SHALL BE APPLIED,

 

first, to the payment of costs and expenses of the ABL Agent in connection with
such Exercise of Secured Creditor Remedies to the extent provided in the ABL
Documents,

 

second, to the payment of the ABL Obligations (other than Excess ABL
Obligations) in accordance with the ABL Documents,

 

third, to the payment of the Term Obligations in accordance with the Term
Documents until the Discharge of Term Obligations shall have occurred,

 

fourth, to the payment of the Excess ABL Obligations in accordance with the ABL
Documents until the Discharge of ABL Obligations shall have occurred, and

 

fifth, the balance, if any, to the ABL Obligors or as a court of competent
jurisdiction may direct.

 

(C)                                  APPLICATION OF PROCEEDS OF TERM PRIORITY
COLLATERAL.  THE ABL AGENT AND THE TERM AGENT HEREBY AGREE THAT ALL TERM
PRIORITY COLLATERAL, TERM PRIORITY PROCEEDS AND ALL OTHER PROCEEDS THEREOF,
RECEIVED BY EITHER OF THEM IN CONNECTION WITH ANY EXERCISE OF SECURED CREDITOR
REMEDIES WITH RESPECT TO THE TERM PRIORITY COLLATERAL SHALL BE APPLIED,

 

first, to the payment of costs and expenses of the Term Agent in connection with
such Exercise of Secured Creditor Remedies to the extent provided in the Term
Documents,

 

second, to the payment of the Term Obligations in accordance with the Term
Documents until the Discharge of Term Obligations shall have occurred,

 

third, to the payment of the ABL Obligations in accordance with the ABL
Documents until the Discharge of ABL Obligations shall have occurred, and

 

fourth, the balance, if any, to the Term Obligors or as a court of competent
jurisdiction may direct.

 

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(D)                                 LIMITED OBLIGATION OR LIABILITY.  IN
EXERCISING REMEDIES, WHETHER AS A SECURED CREDITOR OR OTHERWISE, THE ABL AGENT
SHALL HAVE NO OBLIGATION OR LIABILITY TO THE TERM AGENT OR TO ANY TERM SECURED
PARTY, AND THE TERM AGENT SHALL HAVE NO OBLIGATION OR LIABILITY TO THE ABL AGENT
OR ANY ABL 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 EACH PARTY 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.

 

(E)                                  TURNOVER OF COLLATERAL.  UPON THE DISCHARGE
OF THE ABL OBLIGATIONS, THE ABL AGENT SHALL DELIVER TO THE TERM AGENT OR SHALL
EXECUTE SUCH DOCUMENTS AS THE TERM AGENT MAY REASONABLY REQUEST (AT THE EXPENSE
OF THE TERM BORROWER) TO ENABLE THE TERM AGENT TO HAVE CONTROL OVER ANY CONTROL
COLLATERAL STILL IN THE ABL 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, SUBJECT TO THE REINSTATEMENT PROVISIONS OF
SECTION 5.3 BELOW.  UPON THE DISCHARGE OF TERM OBLIGATIONS, THE TERM AGENT SHALL
DELIVER TO THE ABL AGENT OR SHALL EXECUTE SUCH DOCUMENTS AS THE ABL AGENT MAY
REASONABLY REQUEST (AT THE EXPENSE OF THE ABL BORROWERS) TO ENABLE THE ABL AGENT
TO HAVE CONTROL OVER ANY CONTROL COLLATERAL STILL IN THE TERM 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,
SUBJECT TO THE REINSTATEMENT PROVISIONS OF SECTION 5.3 HEREOF.

 

Section 4.2                                   Specific Performance.  Each of the
ABL Agent and the Term Agent is hereby authorized to demand specific performance
of this Agreement, whether or not any Obligor shall have complied with any of
the provisions of any of the Credit 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 ABL Agent, for and on behalf of itself and the
ABL Secured Parties, and the Term Agent, for and on behalf of itself and the
Term Secured Parties, hereby irrevocably waives any defense based on the
adequacy of a remedy at law that might be asserted as a bar to such remedy of
specific performance.

 

ARTICLE 5

INTERCREDITOR ACKNOWLEDGEMENTS AND WAIVERS

 

Section 5.1                                   Notice of Acceptance and Other
Waivers.

 

(A)                                  ALL ABL OBLIGATIONS AT ANY TIME MADE OR
INCURRED BY ANY BORROWER SHALL BE DEEMED TO HAVE BEEN MADE OR INCURRED IN
RELIANCE UPON THIS AGREEMENT, AND THE TERM AGENT, ON BEHALF OF ITSELF AND THE
TERM SECURED PARTIES, HEREBY WAIVES NOTICE OF ACCEPTANCE, OR PROOF OF RELIANCE
BY THE ABL AGENT OR ANY ABL 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 ABL OBLIGATIONS.  ALL TERM OBLIGATIONS AT ANY TIME MADE
OR INCURRED BY THE TERM BORROWER SHALL BE DEEMED TO HAVE BEEN MADE OR INCURRED
IN RELIANCE UPON THIS AGREEMENT, AND THE ABL AGENT, ON BEHALF OF ITSELF AND THE
ABL SECURED PARTIES, HEREBY WAIVES NOTICE OF ACCEPTANCE, OR PROOF OF RELIANCE,
BY THE TERM AGENT OR ANY TERM SECURED PARTY OF THIS AGREEMENT AND NOTICE OF

 

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THE EXISTENCE, INCREASE, RENEWAL, EXTENSION, ACCRUAL, CREATION, OR NON-PAYMENT
OF ALL OR ANY PART OF THE TERM OBLIGATIONS.

 

(B)                                 NONE OF THE ABL AGENT, ANY ABL 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 ABL AGENT OR ANY ABL SECURED PARTY HONORS (OR FAILS TO HONOR)
A REQUEST BY ANY BORROWER FOR AN EXTENSION OF CREDIT PURSUANT TO ANY ABL CREDIT
AGREEMENT OR ANY OF THE OTHER ABL DOCUMENTS, WHETHER THE ABL AGENT OR ANY ABL
SECURED PARTY HAVE KNOWLEDGE THAT THE HONORING OF (OR FAILURE TO HONOR) ANY SUCH
REQUEST WOULD CONSTITUTE A DEFAULT UNDER THE TERMS OF ANY TERM CREDIT AGREEMENT
OR ANY OTHER TERM DOCUMENT OR AN ACT, CONDITION, OR EVENT THAT, WITH THE GIVING
OF NOTICE OR THE PASSAGE OF TIME, OR BOTH, WOULD CONSTITUTE SUCH A DEFAULT, OR
IF THE ABL AGENT OR ANY ABL SECURED PARTY OTHERWISE SHOULD EXERCISE ANY OF ITS
CONTRACTUAL RIGHTS OR REMEDIES UNDER ANY ABL DOCUMENTS (SUBJECT TO THE EXPRESS
TERMS AND CONDITIONS HEREOF), NEITHER THE ABL AGENT NOR ANY ABL SECURED PARTY
SHALL HAVE ANY LIABILITY WHATSOEVER TO THE TERM AGENT OR ANY TERM SECURED PARTY
AS A RESULT OF SUCH ACTION, OMISSION, OR EXERCISE (SO LONG AS ANY SUCH EXERCISE
DOES NOT BREACH THE EXPRESS TERMS AND PROVISIONS OF THIS AGREEMENT OR MANDATORY
PROVISIONS OF APPLICABLE LAW).  THE ABL AGENT AND THE ABL SECURED PARTIES SHALL
BE ENTITLED TO MANAGE AND SUPERVISE THEIR LOANS AND EXTENSIONS OF CREDIT UNDER
ANY ABL CREDIT AGREEMENT AND ANY OF THE OTHER ABL DOCUMENTS AS THEY MAY, IN
THEIR SOLE DISCRETION, DEEM APPROPRIATE, AND MAY MANAGE THEIR LOANS AND
EXTENSIONS OF CREDIT WITHOUT REGARD TO ANY RIGHTS OR INTERESTS THAT THE TERM
AGENT OR ANY OF THE TERM SECURED PARTIES HAVE IN THE COLLATERAL, EXCEPT AS
OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT.  THE TERM AGENT, ON BEHALF OF
ITSELF AND THE TERM SECURED PARTIES, AGREES THAT NEITHER THE ABL AGENT NOR ANY
ABL 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 ABL DOCUMENTS, SO LONG AS SUCH
DISPOSITION IS CONDUCTED IN ACCORDANCE WITH MANDATORY PROVISIONS OF APPLICABLE
LAW AND DOES NOT BREACH THE PROVISIONS OF THIS AGREEMENT.

 

(C)                                  NONE OF THE TERM AGENT, ANY TERM 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 AN ACT, CONDITION, OR EVENT THAT, WITH THE GIVING OF NOTICE OR
THE PASSAGE OF TIME, OR BOTH, WOULD CONSTITUTE AN EVENT OF DEFAULT UNDER ANY ABL
DOCUMENT, OR IF THE TERM AGENT OR ANY TERM SECURED PARTY OTHERWISE SHOULD
EXERCISE ANY OF ITS CONTRACTUAL RIGHTS OR REMEDIES UNDER THE TERM DOCUMENTS
(SUBJECT TO THE EXPRESS TERMS AND CONDITIONS HEREOF), NEITHER THE TERM AGENT NOR
ANY TERM SECURED PARTY SHALL HAVE ANY LIABILITY WHATSOEVER TO THE ABL AGENT OR
ANY ABL SECURED PARTY AS A RESULT OF SUCH ACTION, OMISSION, OR EXERCISE (SO LONG
AS ANY SUCH EXERCISE DOES NOT BREACH THE EXPRESS TERMS AND PROVISIONS OF THIS
AGREEMENT OR MANDATORY PROVISIONS OF APPLICABLE LAW).  THE TERM AGENT AND THE
TERM SECURED PARTIES SHALL BE ENTITLED TO MANAGE AND SUPERVISE THEIR LOANS AND
EXTENSIONS OF CREDIT UNDER THE TERM DOCUMENTS AS THEY MAY, IN THEIR SOLE
DISCRETION, DEEM

 

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APPROPRIATE, AND MAY MANAGE THEIR LOANS AND EXTENSIONS OF CREDIT WITHOUT REGARD
TO ANY RIGHTS OR INTERESTS THAT THE ABL AGENT OR ANY ABL SECURED PARTY HAS IN
THE COLLATERAL, EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT.  THE
ABL AGENT, ON BEHALF OF ITSELF AND THE ABL SECURED PARTIES, AGREES THAT NONE OF
THE TERM AGENT OR THE TERM SECURED PARTIES SHALL INCUR ANY LIABILITY AS A RESULT
OF A SALE, LEASE, LICENSE, APPLICATION, OR OTHER DISPOSITION OF THE COLLATERAL
OR ANY PART OR PROCEEDS THEREOF, PURSUANT TO THE TERM DOCUMENTS, SO LONG AS SUCH
DISPOSITION IS CONDUCTED IN ACCORDANCE WITH MANDATORY PROVISIONS OF APPLICABLE
LAW AND DOES NOT BREACH THE PROVISIONS OF THIS AGREEMENT.

 

Section 5.2                                   Modifications to ABL Documents and
Term Documents.

 

(A)                                  THE TERM AGENT, ON BEHALF OF ITSELF AND THE
TERM SECURED PARTIES, HEREBY AGREES THAT, WITHOUT AFFECTING THE OBLIGATIONS OF
THE TERM AGENT AND THE TERM SECURED PARTIES HEREUNDER, THE ABL AGENT AND THE ABL
SECURED PARTIES MAY, AT ANY TIME AND FROM TIME TO TIME, IN THEIR SOLE DISCRETION
WITHOUT THE CONSENT OF OR NOTICE TO THE TERM AGENT OR ANY TERM SECURED PARTY,
AND WITHOUT INCURRING ANY LIABILITY TO THE TERM AGENT OR ANY TERM SECURED PARTY
OR IMPAIRING OR RELEASING THE LIEN PRIORITY PROVIDED FOR HEREIN, AMEND, RESTATE,
SUPPLEMENT, REPLACE, REFINANCE, EXTEND, CONSOLIDATE, RESTRUCTURE, OR OTHERWISE
MODIFY ANY OF THE ABL DOCUMENTS IN ANY MANNER WHATSOEVER, OTHER THAN IN A MANNER
WHICH WOULD HAVE THE EFFECT OF CONTRAVENING THE TERMS OF THIS AGREEMENT,
PROVIDED, HOWEVER, WITHOUT THE CONSENT OF THE TERM AGENT, THE ABL AGENT AND THE
ABL LENDERS SHALL NOT AGREE TO ANY AMENDMENT OR MODIFICATION OF THE ABL CREDIT
AGREEMENT WHICH WOULD (I) INCREASE THE TOTAL COMMITMENTS (AS DEFINED IN THE ABL
CREDIT AGREEMENT AS IN EFFECT ON THE DATE HEREOF) TO AN AMOUNT IN EXCESS OF THE
AMOUNTS SET FORTH IN CLAUSE (A) OF THE DEFINITION OF MAXIMUM ABL OBLIGATIONS,
(II) DIRECTLY INCREASE THE INTEREST RATES ON THE ABL OBLIGATIONS TO A RATE
GREATER THAN 2.0% PER ANNUM ABOVE RATES AS ARE IN EFFECT ON THE DATE HEREOF
(EXCLUDING, WITHOUT LIMITATION, FLUCTUATIONS IN UNDERLYING RATE INDICES, PRICING
GRID LEVEL CHANGES DUE TO CHANGES IN AVERAGE DAILY EXCESS AVAILABILITY, AND
IMPOSITION OF A DEFAULT RATE OF INTEREST NOT GREATER THAN 2.0% PER ANNUM),
(III) DIRECTLY OR INDIRECTLY PROHIBIT OR RESTRICT THE PAYMENT OF PRINCIPAL OF,
INTEREST ON, THE TERM OBLIGATIONS, IN A MANNER MORE RESTRICTIVE THAN THE
PROHIBITIONS AND RESTRICTIONS CONTAINED IN THE ABL CREDIT AGREEMENT AS IN EFFECT
ON THE DATE HEREOF, (IV) EXCEPT AS A RESULT OF THE PERMITTED INSOLVENCY INCREASE
AMOUNT, CHANGE THE DEFINITION OF “BORROWING BASE”, “OVERADVANCE”, “INADVERTENT
OVERADVANCE”, OR “PERMITTED OVERADVANCE” CONTAINED IN THE ABL CREDIT AGREEMENT
OR ANY COMPONENT DEFINITION THEREOF BY INCREASING ADVANCE RATES OR CHANGING THE
ELIGIBILITY CRITERIA FOR THE ASSETS INCLUDED THEREIN IF SUCH CHANGE WOULD RESULT
IN AN INCREASE OF THE AMOUNTS AVAILABLE TO BE BORROWED THEREUNDER, OR (V) REDUCE
THE AMOUNT OF EXCESS AVAILABILITY (AS DEFINED IN THE ABL CREDIT AGREEMENT AS IN
EFFECT ON THE DATE HEREOF) THAT IS REQUIRED TO BE MAINTAINED IN
SECTION 6.8(B) OF THE ABL CREDIT AGREEMENT AS IN EFFECT ON THE DATE HEREOF.  THE
ABL AGENT AGREES THAT UPON THE REQUEST OF THE TERM AGENT, IT SHALL MAKE ITSELF
AVAILABLE FOR DISCUSSION WITH THE TERM AGENT REGARDING THE AMOUNT OR COMPUTATION
OF ANY RESERVES (AS DEFINED IN THE ABL CREDIT AGREEMENT AS IN EFFECT ON THE DATE
HEREOF) THAT ARE PERMITTED TO BE ESTABLISHED PURSUANT TO THE ABL CREDIT
AGREEMENT, PROVIDED THAT, EXCEPT AS PROVIDED BELOW, THE FOREGOING AGREEMENT
SHALL NOT LIMIT OR IMPAIR THE ABL AGENT’S RIGHTS TO ESTABLISH, INCREASE, REDUCE
OR ELIMINATE ANY SUCH RESERVES OR REQUIRE ANY PRIOR NOTICE TO, OR CONSENT FROM,
THE TERM AGENT OR THE TERM SECURED PARTIES THERETO; PROVIDED FURTHER THAT THE
ABL AGENT SHALL NOT ELIMINATE ANY CATEGORY OF RESERVES EXISTING AS OF THE DATE
HEREOF OR CHANGE THE METHODOLOGY FOR THE CALCULATION OF SUCH RESERVES WITHOUT
THE CONSENT OF THE TERM AGENT.  FURTHERMORE, THE ABL AGENT AGREES THAT, IF AND
TO THE EXTENT THAT

 

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EXCESS AVAILABILITY (AS DEFINED IN THE ABL CREDIT AGREEMENT AS OF THE DATE
HEREOF) IS LESS THAN $75,000,000 AT ANY TIME, UPON THE REQUEST OF THE TERM
AGENT, THE ABL AGENT SHALL ESTABLISH A RESERVE (THE “TERM RESERVE”) IN AN AMOUNT
EQUAL TO TWO AND ONE-HALF PERCENT (2.5%) OF THE BORROWING BASE AS CALCULATED AS
OF THE TIME OF THE TERM AGENT’S REQUEST (IT BEING UNDERSTOOD THAT THE TERM AGENT
MAY MAKE ADDITIONAL REQUESTS DUE TO INCREASES IN THE BORROWING BASE SO THAT THE
TERM RESERVE IS AT ALL TIMES EQUAL TO TWO AND ONE-HALF PERCENT (2.5%) OF THE
BORROWING BASE IF EXCESS AVAILABILITY IS LESS THAN $75,000,000).  ONCE
ESTABLISHED, EXCEPT AS OTHERWISE PERMITTED IN THE TERM CREDIT AGREEMENT, THE
TERM RESERVE SHALL NOT BE ELIMINATED OR REDUCED BY THE ABL AGENT WITHOUT THE
PRIOR WRITTEN CONSENT OF THE TERM AGENT.

 

(B)                                 THE ABL AGENT, ON BEHALF OF ITSELF AND THE
ABL SECURED PARTIES, HEREBY AGREES THAT, WITHOUT AFFECTING THE OBLIGATIONS OF
THE ABL AGENT AND THE ABL SECURED PARTIES HEREUNDER, THE TERM AGENT AND THE TERM
SECURED PARTIES MAY, AT ANY TIME AND FROM TIME TO TIME, IN THEIR SOLE DISCRETION
WITHOUT THE CONSENT OF OR NOTICE TO THE ABL AGENT OR ANY ABL SECURED PARTY, AND
WITHOUT INCURRING ANY LIABILITY TO THE ABL AGENT OR ANY ABL SECURED PARTY OR
IMPAIRING OR RELEASING THE LIEN PRIORITY PROVIDED FOR HEREIN, AMEND, RESTATE,
SUPPLEMENT, REPLACE, REFINANCE, EXTEND, CONSOLIDATE, RESTRUCTURE, OR OTHERWISE
MODIFY ANY OF THE TERM DOCUMENTS IN ANY MANNER WHATSOEVER OTHER THAN IN A MANNER
WHICH WOULD HAVE THE EFFECT OF CONTRAVENING THE TERMS OF THIS AGREEMENT,
PROVIDED, HOWEVER, WITHOUT THE CONSENT OF THE ABL AGENT, THE TERM AGENT AND THE
TERM LENDERS SHALL NOT AGREE TO ANY AMENDMENT OR MODIFICATION OF THE TERM CREDIT
AGREEMENT WHICH WOULD (I) INCREASE THE AMOUNT OF THE TERM LOAN (OTHER THAN
THROUGH THE CAPITALIZATION OF PIK AMOUNTS (AS DEFINED IN THE TERM CREDIT
AGREEMENT AS AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED IN ACCORDANCE
WITH THE TERMS HEREOF)) IN EXCESS OF THE SUM OF $150,000,000 LESS ANY PRINCIPAL
PAYMENTS MADE ON ACCOUNT THEREOF, (II) DIRECTLY INCREASE THE INTEREST RATES ON
THE TERM OBLIGATIONS TO A RATE GREATER THAN 2.0% PER ANNUM ABOVE RATES AS ARE IN
EFFECT ON THE DATE HEREOF (EXCLUDING IMPOSITION OF A DEFAULT RATE OF INTEREST
NOT GREATER THAN 2.0% PER ANNUM), (III) TERMINATE THE TERM BORROWER’S RIGHT TO
THE PIK ELECTION (AS DEFINED IN THE TERM CREDIT AGREEMENT AS IN EFFECT ON THE
DATE HEREOF); PROVIDED THAT THE FOREGOING SHALL NOT BE DEEMED TO LIMIT ANY
AMENDMENTS WHICH INCREASE THE ACCRUED INTEREST WHICH MAY BECOME A PIK AMOUNT,
(IV) DIRECTLY OR INDIRECTLY PROHIBIT OR RESTRICT THE PAYMENT OF PRINCIPAL OF,
INTEREST ON, THE ABL OBLIGATIONS, IN A MANNER MORE RESTRICTIVE THAN THE
PROHIBITIONS AND RESTRICTIONS CONTAINED IN THE TERM CREDIT AGREEMENT AS IN
EFFECT ON THE DATE HEREOF, (V) SHORTEN THE SCHEDULED MATURITY OF THE TERM
OBLIGATIONS, (VI) REQUIRE ANY SCHEDULED PRINCIPAL PAYMENTS OR OTHER MANDATORY
PRINCIPAL PAYMENTS ON ACCOUNT OF THE TERM OBLIGATIONS (OTHER THAN FOR MANDATORY
PREPAYMENTS UNDER THE TERM CREDIT AGREEMENT (AS IN EFFECT ON THE DATE HEREOF))
OR REQUIRE THAT ANY PAYMENT ON THE TERM OBLIGATIONS BE MADE EARLIER THAN THE
DATE ORIGINALLY SCHEDULED FOR SUCH PAYMENT, OR (VII) CHANGE ANY PROVISIONS OF
SECTIONS 7.05 OR 7.08(D) OF THE TERM CREDIT AGREEMENT THAT WOULD BE MORE
RESTRICTIVE THAN THOSE IN EFFECT UNDER THE TERM DOCUMENTS AS OF THE DATE HEREOF.

 

(C)                                  NO CONSENT FURNISHED BY THE ABL AGENT OR
THE TERM AGENT PURSUANT TO SECTIONS 5.2(A) OR 5.2(B) HEREOF SHALL BE DEEMED TO
CONSTITUTE THE MODIFICATION OR WAIVER OF ANY PROVISIONS OF THE ABL DOCUMENTS OR
THE TERM DOCUMENTS, EACH OF WHICH REMAIN IN FULL FORCE AND EFFECT.  WITHOUT
LIMITING THE FOREGOING, THE ABL AGENT AND THE ABL LENDERS MAY CONTINUE TO MAKE
LOANS AND ADVANCES AND ISSUE LETTERS OF CREDIT FOR THE ACCOUNT OF THE ABL
BORROWERS NOTWITHSTANDING THAT AN EVENT OF DEFAULT EXISTS OR MAY ARISE THEREFROM
UNDER THE TERM DOCUMENTS AND NEITHER THE ABL AGENT NOR THE ABL SECURED PARTIES
SHALL HAVE ANY LIABILITY TO THE TERM AGENT OR THE TERM SECURED PARTIES ON
ACCOUNT THEREOF.

 

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(D)                                 THE ABL OBLIGATIONS AND THE TERM 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 PURSUANT TO
SECTION 5.2(A) OR (B) ABOVE OR TO PERMIT THE REFINANCING TRANSACTION UNDER ANY
ABL DOCUMENT OR ANY TERM DOCUMENT) OF THE ABL AGENT, THE ABL SECURED PARTIES,
THE TERM AGENT OR THE TERM 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 ABL AGENT OR THE TERM AGENT,
AS THE CASE MAY BE, SHALL REASONABLY REQUEST AND IN FORM AND SUBSTANCE
REASONABLY ACCEPTABLE TO THE ABL AGENT OR THE TERM AGENT, AS THE CASE MAY BE,
AND ANY SUCH REFINANCING TRANSACTION SHALL BE IN ACCORDANCE WITH ANY APPLICABLE
PROVISIONS OF BOTH THE ABL DOCUMENTS AND THE TERM DOCUMENTS (TO THE EXTENT SUCH
DOCUMENTS SURVIVE THE REFINANCING).

 

Section 5.3                                   Reinstatement and Continuation of
Agreement.

 

(A)                                  IF THE ABL AGENT OR ANY ABL SECURED PARTY
IS REQUIRED IN ANY INSOLVENCY PROCEEDING OR OTHERWISE TO TURN OVER OR OTHERWISE
PAY TO THE ESTATE OF ANY OBLIGOR OR ANY OTHER PERSON ANY PAYMENT MADE IN
SATISFACTION OF ALL OR ANY PORTION OF THE ABL OBLIGATIONS (AN  “ABL RECOVERY”),
THEN THE ABL OBLIGATIONS SHALL BE REINSTATED TO THE EXTENT OF SUCH ABL
RECOVERY.  IF THIS AGREEMENT SHALL HAVE BEEN TERMINATED PRIOR TO SUCH ABL
RECOVERY, THIS AGREEMENT SHALL BE REINSTATED IN FULL FORCE AND EFFECT IN THE
EVENT OF SUCH ABL RECOVERY, AND SUCH PRIOR TERMINATION SHALL NOT DIMINISH,
RELEASE, DISCHARGE, IMPAIR, OR OTHERWISE AFFECT THE OBLIGATIONS OF THE PARTIES
FROM SUCH DATE OF REINSTATEMENT.  ALL RIGHTS, INTERESTS, AGREEMENTS, AND
OBLIGATIONS OF THE ABL AGENT, THE TERM AGENT, THE ABL SECURED PARTIES, AND THE
TERM 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 ANY OBLIGOR OR ANY OTHER CIRCUMSTANCE WHICH OTHERWISE MIGHT CONSTITUTE A
DEFENSE AVAILABLE TO, OR A DISCHARGE OF ANY OBLIGOR IN RESPECT OF THE ABL
OBLIGATIONS OR THE TERM OBLIGATIONS.  NO PRIORITY OR RIGHT OF THE ABL AGENT OR
ANY ABL SECURED PARTY SHALL AT ANY TIME BE PREJUDICED OR IMPAIRED IN ANY WAY BY
ANY ACT OR FAILURE TO ACT ON THE PART OF ANY OBLIGOR OR BY THE NONCOMPLIANCE BY
ANY PERSON WITH THE TERMS, PROVISIONS, OR COVENANTS OF ANY OF THE ABL DOCUMENTS,
REGARDLESS OF ANY KNOWLEDGE THEREOF WHICH THE ABL AGENT OR ANY ABL SECURED PARTY
MAY HAVE.

 

(B)                                 IF THE TERM AGENT OR ANY TERM SECURED PARTY
IS REQUIRED IN ANY INSOLVENCY PROCEEDING OR OTHERWISE TO TURN OVER OR OTHERWISE
PAY TO THE ESTATE OF ANY OBLIGOR OR ANY OTHER PERSON ANY PAYMENT MADE IN
SATISFACTION OF ALL OR ANY PORTION OF THE TERM OBLIGATIONS (A “TERM RECOVERY”),
THEN THE TERM OBLIGATIONS SHALL BE REINSTATED TO THE EXTENT OF SUCH TERM
RECOVERY.  IF THIS AGREEMENT SHALL HAVE BEEN TERMINATED PRIOR TO SUCH TERM
RECOVERY, THIS AGREEMENT SHALL BE REINSTATED IN FULL FORCE AND EFFECT IN THE
EVENT OF SUCH TERM RECOVERY, AND SUCH PRIOR TERMINATION SHALL NOT DIMINISH,
RELEASE, DISCHARGE, IMPAIR, OR OTHERWISE AFFECT THE OBLIGATIONS OF THE PARTIES
FROM SUCH DATE OF REINSTATEMENT.  ALL RIGHTS, INTERESTS, AGREEMENTS, AND
OBLIGATIONS OF THE ABL AGENT, THE TERM AGENT, THE ABL SECURED PARTIES, AND THE
TERM 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 ANY OBLIGOR OR ANY OTHER CIRCUMSTANCE WHICH OTHERWISE

 

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MIGHT CONSTITUTE A DEFENSE AVAILABLE TO, OR A DISCHARGE OF ANY OBLIGOR IN
RESPECT OF THE ABL OBLIGATIONS OR THE TERM OBLIGATIONS.  NO PRIORITY OR RIGHT OF
THE TERM AGENT OR ANY TERM SECURED PARTY SHALL AT ANY TIME BE PREJUDICED OR
IMPAIRED IN ANY WAY BY ANY ACT OR FAILURE TO ACT ON THE PART OF ANY OBLIGOR OR
BY THE NONCOMPLIANCE BY ANY PERSON WITH THE TERMS, PROVISIONS, OR COVENANTS OF
ANY OF THE TERM DOCUMENTS, REGARDLESS OF ANY KNOWLEDGE THEREOF WHICH THE TERM
AGENT OR ANY TERM SECURED PARTY MAY HAVE.

 

ARTICLE 6

INSOLVENCY PROCEEDINGS

 

Section 6.1                                   DIP Financing.

 

(A)                                  THIS AGREEMENT SHALL BE APPLICABLE WITH
RESPECT TO THE ABL OBLIGATIONS AND TERM OBLIGATIONS BOTH BEFORE AND AFTER THE
FILING OF ANY PETITION BY OR AGAINST ANY OF THE OBLIGORS UNDER ANY INSOLVENCY
PROCEEDING, AND ALL REFERENCES HEREIN TO THE OBLIGORS SHALL BE DEEMED TO APPLY
TO THE OBLIGORS AS DEBTORS-IN-POSSESSION.

 

(B)                                 IF ANY OBLIGOR SHALL BE SUBJECT TO ANY
INSOLVENCY PROCEEDING AT ANY TIME PRIOR TO THE DISCHARGE OF ABL OBLIGATIONS, AND
THE ABL AGENT OR ANY OF THE ABL SECURED PARTIES SHALL SEEK TO PROVIDE ANY
OBLIGOR 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 ABL PRIORITY COLLATERAL UNDER SECTION 363 OF THE
BANKRUPTCY CODE (OR ANY SIMILAR PROVISION OF ANY FOREIGN DEBTOR RELIEF LAWS OR
UNDER A COURT ORDER IN RESPECT OF INTERIM FINANCING OR SIMILAR MEASURES GRANTED
WITH SIMILAR EFFECT UNDER ANY FOREIGN DEBTOR RELIEF LAWS) (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 WOULD BE COLLATERAL), THEN THE TERM AGENT, ON BEHALF OF ITSELF
AND THE TERM 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 BASIS, INCLUDING, WITHOUT LIMITATION, ON THE
GROUNDS OF A FAILURE TO PROVIDE “ADEQUATE PROTECTION” FOR THE LIENS OF THE TERM
AGENT SECURING THE TERM OBLIGATIONS (AND WILL NOT REQUEST ANY ADEQUATE
PROTECTION SOLELY AS A RESULT OF SUCH DIP FINANCING OR USE OF CASH COLLATERAL
THAT IS ABL PRIORITY COLLATERAL, AND WILL NOT OFFER OR SUPPORT ANY
DEBTOR-IN-POSSESSION OR INTERIM FINANCING WHICH WOULD COMPETE WITH SUCH DIP
FINANCING); PROVIDED THAT (I) THE TERM AGENT RETAINS ITS LIEN ON THE ABL
PRIORITY COLLATERAL TO SECURE THE TERM OBLIGATIONS (IN EACH CASE, INCLUDING
PROCEEDS THEREOF ARISING AFTER THE COMMENCEMENT OF THE CASE UNDER THE ANY DEBTOR
RELIEF LAWS) (TO THE EXTENT SUCH LIENS WERE VALID, PERFECTED, ENFORCEABLE AND
NOT AVOIDED) SUBJECT TO THE LIENS IN FAVOR OF THE ABL SECURED PARTIES ON THE ABL
PRIORITY COLLATERAL EXISTING PRIOR TO THE COMMENCEMENT OF SUCH INSOLVENCY
PROCEEDING, TO ANY ADEQUATE PROTECTION LIENS GRANTED IN FAVOR OF THE ABL
OBLIGATIONS, TO THE SENIOR PRIORITY OF THE DIP FINANCING AND, TO THE EXTENT A
RESERVE THEREFOR IS MAINTAINED IN THE BORROWING BASE, TO ANY CARVE-OUT AMOUNT
FOR PROFESSIONALS AND DIRECTORS AND OFFICERS FOLLOWING THE OCCURRENCE OF ANY
EVENT OF DEFAULT UNDER ANY SUCH DIP FINANCING OR THE UNITED STATES TRUSTEE OR
ANY OTHER INSOLVENCY OFFICER AND ITS COUNSEL, OR, WITH RESPECT TO ANY CANADIAN
INSOLVENCY PROCEEDING, TO THE EXTENT A RESERVE THEREFOR IS MAINTAINED IN THE
BORROWING BASE, ANY OTHER PRIOR CHARGES PERMITTED UNDER APPLICABLE LAW RELATING
TO THE INSOLVENCY PROCEEDING THAT HAVE BEEN AGREED UPON BY THE ABL AGENT, AND
(II) UNLESS IT SHALL OTHERWISE CONSENT, THE TERM AGENT SHALL RETAIN ITS LIEN ON
THE TERM PRIORITY COLLATERAL WITH THE SAME PRIORITY AS EXISTED PRIOR TO THE

 

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COMMENCEMENT OF THE CASE UNDER THE SUBJECT DEBTOR RELIEF LAWS AND ANY LIEN OF
THE ABL AGENT (OR OTHER PROVIDER OF DIP FINANCING) (TO THE EXTENT SUCH LIENS
WERE VALID, PERFECTED, ENFORCEABLE AND NOT AVOIDED) ON THE TERM PRIORITY
COLLATERAL SECURING SUCH DIP FINANCING IS JUNIOR AND SUBORDINATE TO THE LIEN OF
THE TERM AGENT ON THE TERM PRIORITY COLLATERAL (TO THE EXTENT OF THE TERM
OBLIGATIONS), (III) ALL LIENS ON ABL PRIORITY COLLATERAL SECURING ANY SUCH DIP
FINANCING SHALL BE SENIOR TO OR ON A PARITY WITH THE LIENS OF THE ABL AGENT AND
THE ABL SECURED PARTIES SECURING THE ABL OBLIGATIONS ON ABL PRIORITY COLLATERAL,
(IV) THE DIP FINANCING SHALL NOT SEEK TO PERMIT THE MAKING, ISSUANCE OR
INCURRENCE OF LOANS OR LETTER OF CREDIT ACCOMMODATIONS PURSUANT TO SUCH DIP
FINANCING THAT WOULD CAUSE THE SUM OF (A) THE AGGREGATE OUTSTANDING PRINCIPAL
AMOUNT OF SUCH LOANS AND LETTER OF CREDIT ACCOMMODATIONS MADE PURSUANT TO SUCH
DIP FINANCING PLUS (B) THE OUTSTANDING PRINCIPAL AMOUNT OF PRE-PETITION ABL
OBLIGATIONS TO EXCEED THE AMOUNTS SET FORTH IN CLAUSE (A) OF THE DEFINITION OF
MAXIMUM ABL OBLIGATIONS, (V) THE DIP FINANCING SHALL BE ON TERMS WHICH WOULD NOT
RESULT IN A VIOLATION OF THE PROVISIONS OF SECTION 5.2(A) HEREOF (IT BEING
UNDERSTOOD THAT THE INCREASE OF THE BORROWING BASE BY THE PERMITTED INSOLVENCY
INCREASE AMOUNT SHALL NOT BE VIOLATIVE THEREOF) AND (VI) THE FOREGOING
PROVISIONS OF THIS SECTION 6.1(A) SHALL NOT PREVENT THE TERM AGENT AND THE TERM
SECURED PARTIES FROM OBJECTING TO ANY PROVISION IN ANY DIP FINANCING RELATING TO
ANY PROVISION OR CONTENT OF A PLAN OF REORGANIZATION, ARRANGEMENT, PROPOSAL, OR
OTHER PLAN OF SIMILAR EFFECT UNDER ANY DEBTOR RELIEF LAWS.

 

(C)                                  ALL LIENS GRANTED TO THE ABL AGENT OR THE
TERM 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.

 

(D)                                 THE TERM AGENT AND THE TERM 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 ANY OBLIGOR IN ANY
INSOLVENCY PROCEEDING OR ENDORSE THE PROVISION OF ANY DIP FINANCING TO ANY
OBLIGOR IN ANY INSOLVENCY PROCEEDING OTHER THAN (I) ANY DIP FINANCING PROVIDED
BY OR CONSENTED TO BY THE ABL AGENT, (II) IF THE ABL AGENT AND THE ABL LENDERS
FAIL TO OFFER TO PROVIDE DIP FINANCING TO ANY OBLIGOR WITHIN FIVE (5) BUSINESS
DAYS AFTER THE COMMENCEMENT OF ANY INSOLVENCY PROCEEDING, ANY DIP FINANCING
PROVIDED BY THE TERM AGENT OR ANY TERM LENDERS, OR (III) ANY DIP FINANCING
CONSISTING SOLELY OF A “ROLLOVER” OF THE PRE-PETITION TERM OBLIGATIONS ON THE
SAME TERMS AS EXISTED PRIOR TO THE COMMENCEMENT OF THE INSOLVENCY PROCEEDING. 
EXCEPT FOR DIP FINANCINGS PERMITTED UNDER CLAUSES (D)(I) AND (III), NOTHING IN
THIS INTERCREDITOR AGREEMENT SHALL LIMIT THE RIGHTS OF THE ABL SECURED PARTIES
TO OBJECT TO THE TERMS OF ANY POST-PETITION FINANCING PROVIDED BY THE TERM AGENT
AND/OR THE TERM SECURED PARTIES FOLLOWING ANY INSOLVENCY PROCEEDING ON ANY
GROUNDS.

 

Section 6.2                                   Relief From Stay. Until the
Discharge of ABL Obligations has occurred, the Term Agent, on behalf of itself
and the Term 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
ABL Priority Collateral without the ABL Agent’s express written consent.  Until
the Discharge of Term Obligations has occurred, the ABL Agent, on behalf of
itself and the ABL 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 Term Priority Collateral without the Term Agent’s express written consent. 
In addition, neither the Term Agent nor the ABL Agent shall seek any

 

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relief from the automatic stay or any other 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 ABL Agent and the Term Agent to be modified or
unless the ABL Agent or Term Agent, as applicable, makes a good faith
determination that either (A) the ABL Priority Collateral or the Term Priority
Collateral, as applicable, will decline speedily in value or (B) the failure to
take any action will have a reasonable likelihood of endangering the ABL Agent’s
or the Term Agent’s ability to realize upon its Collateral.

 

SECTION 6.3                                   NO CONTEST; ADEQUATE PROTECTION.

 

(A)                                  THE TERM AGENT, ON BEHALF OF ITSELF AND THE
TERM SECURED PARTIES, AGREES THAT, PRIOR TO THE DISCHARGE OF ABL OBLIGATIONS,
NONE OF THEM SHALL CONTEST (OR SUPPORT ANY OTHER PERSON CONTESTING) (I) ANY
REQUEST BY THE ABL AGENT OR ANY ABL SECURED PARTY FOR ADEQUATE PROTECTION OF ITS
INTEREST IN THE COLLATERAL, (II) SUBJECT TO SECTION 6.1(B) ABOVE, ANY PROPOSED
PROVISION OF DIP FINANCING BY THE ABL AGENT AND THE ABL SECURED PARTIES (OR ANY
OTHER PERSON PROPOSING TO PROVIDE DIP FINANCING WITH THE CONSENT OF THE ABL
AGENT) OR (III) ANY OBJECTION BY THE ABL AGENT OR ANY ABL SECURED PARTY TO ANY
MOTION, RELIEF, ACTION, OR PROCEEDING BASED ON A CLAIM BY THE ABL AGENT OR ANY
ABL 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 ABL AGENT AS
ADEQUATE PROTECTION OF ITS INTERESTS ARE SUBJECT TO THIS AGREEMENT.

 

(B)                                 THE ABL AGENT, ON BEHALF OF ITSELF AND THE
ABL SECURED PARTIES, AGREES THAT, PRIOR TO THE DISCHARGE OF TERM OBLIGATIONS,
NONE OF THEM SHALL CONTEST (OR SUPPORT ANY OTHER PERSON CONTESTING) (I) ANY
REQUEST BY THE TERM AGENT OR ANY TERM SECURED PARTY FOR ADEQUATE PROTECTION OF
ITS INTEREST IN THE COLLATERAL (UNLESS IN CONTRAVENTION OF SECTION 6.1(B) ABOVE
OR 6.3(C) BELOW), (II) ANY OFFER TO PROVIDE DIP FINANCING PURSUANT TO CLAUSES
(I) THROUGH (III) OF SECTION 6.1(D) ABOVE BY THE TERM AGENT AND THE TERM SECURED
PARTIES (OR ANY OTHER PERSON PROPOSING TO PROVIDE DIP FINANCING WITH THE CONSENT
OF THE TERM AGENT), SUBJECT TO THE RIGHT OF THE ABL SECURED PARTIES TO OBJECT TO
THE TERMS OF ANY SUCH DIP FINANCING IN ACCORDANCE WITH THE LAST SENTENCE OF
SECTION 6.1(D) ABOVE, OR (II) ANY OBJECTION BY THE TERM AGENT OR ANY TERM
SECURED PARTY TO ANY MOTION, RELIEF, ACTION OR PROCEEDING BASED ON A CLAIM BY
THE TERM AGENT OR ANY TERM SECURED PARTY THAT ITS INTERESTS IN THE COLLATERAL
(UNLESS IN CONTRAVENTION OF SECTION 6.1(B) ABOVE) 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 TERM AGENT AS ADEQUATE
PROTECTION OF ITS INTERESTS ARE SUBJECT TO THIS AGREEMENT.

 

(C)                                  NOTWITHSTANDING THE FOREGOING PROVISIONS IN
THIS SECTION 6.3, IN ANY INSOLVENCY PROCEEDING:

 

(I)                                     IF THE ABL SECURED PARTIES (OR ANY
SUBSET THEREOF) ARE GRANTED ADEQUATE PROTECTION WITH RESPECT TO THE ABL PRIORITY
COLLATERAL IN THE FORM OF ADDITIONAL COLLATERAL (EVEN IF SUCH COLLATERAL IS NOT
OF A TYPE WHICH WOULD OTHERWISE HAVE CONSTITUTED ABL PRIORITY COLLATERAL), THEN
THE ABL AGENT, ON BEHALF OF ITSELF AND THE ABL SECURED PARTIES, AGREES THAT THE
TERM AGENT, ON BEHALF OF ITSELF OR ANY OF THE TERM SECURED PARTIES, MAY SEEK OR
REQUEST (AND THE ABL 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;

 

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(II)                                  IN THE EVENT THE TERM AGENT, ON BEHALF OF
ITSELF OR ANY OF THE TERM SECURED PARTIES, IS GRANTED ADEQUATE PROTECTION IN
RESPECT OF TERM PRIORITY COLLATERAL IN THE FORM OF ADDITIONAL COLLATERAL (EVEN
IF SUCH COLLATERAL IS NOT OF A TYPE WHICH WOULD OTHERWISE HAVE CONSTITUTED TERM
PRIORITY COLLATERAL), THEN THE TERM AGENT, ON BEHALF OF ITSELF AND ANY OF THE
TERM SECURED PARTIES, AGREES THAT THE ABL AGENT ON BEHALF OF ITSELF OR ANY OF
THE ABL SECURED PARTIES, MAY SEEK OR REQUEST (AND THE TERM 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; AND

 

(III)                               EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN
SECTION 6.1 OR IN CONNECTION WITH THE EXERCISE OF REMEDIES WITH RESPECT TO
(A) THE ABL PRIORITY COLLATERAL, NOTHING HEREIN SHALL LIMIT THE RIGHTS OF THE
TERM AGENT OR THE TERM SECURED PARTIES FROM SEEKING ADEQUATE PROTECTION WITH
RESPECT TO THEIR RIGHTS IN THE COLLATERAL IN ANY INSOLVENCY PROCEEDING
(INCLUDING ADEQUATE PROTECTION IN THE FORM OF A CASH PAYMENT, PERIODIC CASH
PAYMENTS OR OTHERWISE) OR (B) THE TERM PRIORITY COLLATERAL, NOTHING HEREIN SHALL
LIMIT THE RIGHTS OF THE ABL AGENT OR THE ABL SECURED PARTIES FROM SEEKING
ADEQUATE PROTECTION WITH RESPECT TO THEIR RIGHTS IN THE COLLATERAL IN ANY
INSOLVENCY PROCEEDING (INCLUDING ADEQUATE PROTECTION IN THE FORM OF A CASH
PAYMENT, PERIODIC CASH PAYMENTS OR OTHERWISE).

 

Section 6.4                                   Asset Sales.

 

(a)                                  The Term Agent agrees, on behalf of itself
and the Term Secured Parties, that it will not oppose any sale consented to by
the ABL Agent of any ABL Priority Collateral pursuant to Section 363(f) of the
Bankruptcy Code (or any similar provision under the law applicable to any
Insolvency Proceeding or under a court order in respect of measures granted with
similar effect under any foreign Debtor Relief Laws) so long as the Liens of the
Parties attach to the proceeds of such sale consistent with the Lien Priority on
the assets sold and such proceeds are otherwise applied in accordance with this
Agreement. The ABL Agent agrees, on behalf of itself and the ABL Secured
Parties, that they will not oppose any sale consented to by the Term Agent of
any Term Priority Collateral pursuant to Section 363(f) of the Bankruptcy Code
(or any similar provision under the law applicable to any Insolvency Proceeding
or under a court order in respect of measures granted with similar effect under
any foreign Debtor Relief Laws) so long as the Liens of the Parties attach to
the proceeds of such sale consistent with the Lien Priority on the assets sold,
the purchaser assumes and agrees to the provisions of  Section 3.5 hereof as set
forth therein and such proceeds are otherwise applied in accordance with this
Agreement.  If such sale of Collateral includes both ABL Priority Collateral and
Term Priority Collateral, and if the Parties are unable after negotiating in
good faith to agree on the allocation of the purchase price between the ABL
Priority Collateral and Term Priority Collateral, either Party may apply to the
court in such Insolvency Proceeding to make a determination of such allocation,
and the court’s determination shall be binding upon the Parties.

 

(b)                                 Upon the Discharge of the ABL Obligations
(or if the Discharge of the ABL Obligations will occur immediately upon the
consummation of any such bid) the Term Agent and each Term Secured Party at any
sale under a plan of reorganization or plan of liquidation, or any sale under
Section 363 of the Bankruptcy Code or similar provision under any Debtor Relief
Law shall be entitled to credit bid for or purchase the ABL Priority Collateral.

 

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Section 6.5                                   Separate Grants of Security and
Separate Classification.  Each Term Secured Party and each ABL Secured Party
acknowledges and agrees that (i) the grants of Liens pursuant to the ABL
Security Documents and the Term Security Documents constitute two separate and
distinct grants of Liens and (ii) because of, among other things, their
differing rights in the Collateral, the Term Obligations are fundamentally
different from the ABL 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 ABL Secured Parties and the Term Secured Parties
in respect of the Collateral constitute only one secured claim (rather than
separate classes of senior and junior secured claims), then the ABL Secured
Parties and the Term Secured Parties hereby acknowledge and agree that all
distributions shall be made as if there were separate classes of ABL Obligation
claims and Term Obligation claims against the Obligors, with the effect being
that, to the extent that the aggregate value of the ABL Priority Collateral or
Term Priority Collateral is sufficient (for this purpose ignoring all claims
held by the other Secured Parties), the ABL Secured Parties or the Term Secured
Parties, respectively, 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 that is available
from each pool of Priority Collateral for each of the ABL Secured Parties and
the Term Secured Parties, respectively, before any distribution is made in
respect of the claims held by the other Secured Parties from such Priority
Collateral, with the other Secured Parties hereby acknowledging and agreeing to
turn over to the respective other 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.

 

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 and all other similar provisions of
applicable law.

 

Section 6.7                                   ABL Obligations Unconditional. 
All rights of the ABL Agent hereunder, and all agreements and obligations of the
Term Agent and the Obligors (to the extent applicable) hereunder, shall, except
as otherwise specifically provided herein, remain in full force and effect
irrespective of:

 

(i)                                     any lack of validity or enforceability
of any ABL Document;

 

(ii)                                  any change in the time, place or manner of
payment of, or in any other term of, all or any portion of the ABL Obligations,
or any amendment, waiver or other modification, whether by course of conduct or
otherwise, or any refinancing, replacement, refunding or restatement of any ABL
Document (but solely to the extent permitted pursuant to Section 5.2(a) above);

 

(iii)                               any exchange, release, voiding, avoidance or
non perfection of any security interest in or Lien on any Collateral or any
other collateral, or any release, amendment, waiver or other modification,
whether by course of conduct or otherwise, or any refinancing, replacement,
refunding, restatement or increase of all or any portion of the ABL Obligations
or any guarantee or guaranty thereof; or

 

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(iv)                              any other circumstances that otherwise might
constitute a defense available to, or a discharge of, any ABL Obligor in respect
of the ABL Obligations, or of any of the Term Agent or any Term Obligor, to the
extent applicable, in respect of this Agreement.

 

Section 6.8                                   Term Obligations Unconditional. 
All rights of the Term Agent hereunder, all agreements and obligations of the
ABL Agent and the Obligors (to the extent applicable) hereunder, shall, except
as otherwise specifically provided herein, remain in full force and effect
irrespective of:

 

(i)                                     any lack of validity or enforceability
of any Term Document;

 

(ii)                                  any change in the time, place or manner of
payment of, or in any other term of, all or any portion of the Term Obligations,
or any amendment, waiver or other modification, whether by course of conduct or
otherwise, or any refinancing, replacement, refunding or restatement of any Term
Document (but solely to the extent permitted pursuant to Section 5.2(b) above);

 

(iii)                               any exchange, release, voiding, avoidance or
non perfection of any security interest in or Lien on any Collateral, or any
other collateral, or any release, amendment, waiver or other modification,
whether by course of conduct or otherwise, or any refinancing, replacement,
refunding, restatement or increase of all or any portion of the Term Obligations
or any guarantee or guaranty thereof; or

 

(iv)                              any other circumstances that otherwise might
constitute a defense available to, or a discharge of, any Term Obligor in
respect of the Term Obligations, or of any of the ABL Agent or any ABL Obligor,
to the extent applicable, in respect of this Agreement.

 

ARTICLE 7

PURCHASE OPTION

 

Section 7.1                                   Option to Purchase ABL
Obligations.

 

(A)                                  OPTION TO PURCHASE OF TERM SECURED
PARTIES.  (I) IF ALL OF THE ABL OBLIGATIONS SHALL HAVE BEEN ACCELERATED BY VOTE
OF THE ABL AGENT OR THE ABL LENDERS (AND NOT BY AN AUTOMATIC ACCELERATION UPON
THE COMMENCEMENT OF AN INSOLVENCY PROCEEDING), OR (II) FOLLOWING THE NON-PAYMENT
OF THE ABL OBLIGATIONS AFTER THE EXTENDED TERM MATURITY DATE (AS SUCH TERM IS
DEFINED IN THE ABL CREDIT AGREEMENT) OR (III) IF THE ABL AGENT HAS DELIVERED AN
ENFORCEMENT NOTICE (EACH A “TRIGGER EVENT”), THE TERM SECURED PARTIES SHALL HAVE
THE OPTION TO PURCHASE ALL, AND NOT LESS THAN ALL, OF THE ABL OBLIGATIONS FROM
THE ABL AGENT AND THE ABL SECURED PARTIES. THE ABL AGENT SHALL FURNISH THE TERM
AGENT WITH PROMPT NOTICE OF THE OCCURRENCE OF ANY TRIGGER EVENT UNDER CLAUSES
(A)(I) AND (II) HEREOF.

 

(B)                                 EXERCISE OF OPTION TO PURCHASE OF TERM
SECURED PARTIES — SALE WITHOUT CONSENT.  IN ORDER TO EXERCISE THEIR OPTION TO
PURCHASE DESCRIBED IN SECTION 7.1(A), THE TERM AGENT SHALL FURNISH IRREVOCABLE
WRITTEN NOTICE TO THE ABL AGENT (WITH COPIES TO THE BORROWERS) OF THE ELECTION
OF THE TERM SECURED PARTIES TO PURCHASE THE ABL OBLIGATIONS, WHICH NOTICE SHALL

 

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BE RECEIVED BY THE ABL AGENT WITHIN FIVE (5) BUSINESS DAYS’ AFTER THE FIRST
OCCURRENCE OF A TRIGGER EVENT. ON THE DATE SPECIFIED BY THE TERM AGENT IN SUCH
NOTICE (WHICH SHALL NOT BE MORE THAN TEN (10) BUSINESS DAYS AFTER THE RECEIPT BY
THE ABL AGENT OF THE NOTICE FROM THE TERM AGENT OF THE ELECTION BY THE TERM
SECURED PARTIES TO EXERCISE SUCH OPTION), THE ABL AGENT AND THE ABL SECURED
PARTIES SHALL SELL TO THE TERM SECURED PARTIES EXERCISING SUCH OPTION, AND SUCH
TERM SECURED PARTIES SHALL PURCHASE FROM THE ABL AGENT AND THE ABL SECURED
PARTIES, ALL OF THE ABL OBLIGATIONS WITHOUT THE PRIOR WRITTEN CONSENT OF THE
BORROWERS OR ANY OTHER ABL OBLIGOR. DURING THE PERIOD COMMENCING ON THE DATE
SUCH NOTICE IS RECEIVED BY THE ABL AGENT AND ENDING ON THE DATE SPECIFIED IN
SUCH NOTICE FOR THE CONSUMMATION OF THE PURCHASE, ABSENT EXIGENT CIRCUMSTANCES,
THE ABL AGENT SHALL NOT EXERCISE ANY SECURED CREDITOR REMEDIES WITHOUT THE
CONSENT OF THE TERM AGENT (SUCH CONSENT NOT TO BE UNREASONABLY WITHHELD OR
DELAYED).

 

(C)                                  PAYMENT OF PURCHASE PRICE.  UPON THE DATE
OF SUCH PURCHASE AND SALE, THE TERM SECURED PARTIES THAT HAVE EXERCISED SUCH
OPTION SHALL, PURSUANT TO DOCUMENTATION IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE ABL AGENT, (I) PAY TO THE ABL SECURED PARTIES AS THE
PURCHASE PRICE THEREFOR THE FULL AMOUNT OF ALL THE ABL OBLIGATIONS THEN
OUTSTANDING AND UNPAID (INCLUDING, WITHOUT LIMITATION, PRINCIPAL, REIMBURSEMENT
OBLIGATIONS IN RESPECT OF ANY LETTERS OF CREDIT, INTEREST, FEES, INDEMNITIES AND
EXPENSES, INCLUDING REASONABLE ATTORNEYS’ FEES AND LEGAL EXPENSES) AT PAR,
(II) CASH COLLATERALIZE ANY LETTERS OF CREDIT OUTSTANDING UNDER THE ABL CREDIT
AGREEMENT IN AN AMOUNT EQUAL TO 103% OF THE AGGREGATE UNDRAWN FACE AMOUNT
THEREOF, (III) AGREE TO REIMBURSE THE ABL AGENT AND THE ABL SECURED PARTIES FOR
ANY LOSS, COST, DAMAGE OR EXPENSE (INCLUDING REASONABLE ATTORNEYS’ FEES AND
LEGAL EXPENSES) IN CONNECTION WITH ANY COMMISSIONS, FEES, COSTS OR EXPENSES
RELATED TO ANY ISSUED AND OUTSTANDING LETTERS OF CREDIT AS DESCRIBED ABOVE,
(IV) CASH COLLATERALIZE ANY OBLIGATIONS WITH RESPECT TO BANK PRODUCTS, CASH
MANAGEMENT SERVICES IN AN AMOUNT EQUAL TO 103% OF THE AGGREGATE AMOUNT THEREOF,
AND (V) THE DELIVERY OR PROVISION OF CASH COLLATERAL OR BACKSTOP LETTERS OF
CREDIT FOR ANY ASSERTED KNOWN BANK INDEMNIFICATION CLAIMS, IN AN AMOUNT
REASONABLY ESTIMATED BY THE ABL AGENT BUT IN ANY EVENT NOT TO EXCEED 100% OF THE
ABL OBLIGORS’ OBLIGATIONS TO THE ABL AGENT AND THE ABL SECURED PARTIES IN
RESPECT THEREOF.  SUCH PURCHASE PRICE AND CASH COLLATERAL SHALL BE REMITTED BY
WIRE TRANSFER IN FEDERAL FUNDS TO SUCH BANK ACCOUNT OF THE ABL AGENT FOR THE
RATABLE ACCOUNT OF THE ABL AGENT AND THE ABL SECURED PARTIES, AS THE ABL AGENT
MAY DESIGNATE IN WRITING TO THE TERM 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 TERM SECURED PARTIES THAT HAVE
EXERCISED SUCH OPTION TO THE BANK ACCOUNT DESIGNATED BY THE ABL 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
SUCH TERM SECURED PARTIES TO THE BANK ACCOUNT DESIGNATED BY THE ABL AGENT ARE
RECEIVED IN SUCH BANK ACCOUNT LATER THAN 2:00 P.M., EASTERN TIME ON SUCH
BUSINESS DAY.

 

(D)                                 EXCLUSION OF REPRESENTATIONS AND WARRANTIES;
NO RECOURSE.  SUCH PURCHASE SHALL BE EXPRESSLY MADE WITHOUT RECOURSE,
REPRESENTATION OR WARRANTY OF ANY KIND BY THE ABL AGENT OR ANY ABL SECURED
PARTIES AS TO THE ABL DOCUMENTS OR THE ABL OBLIGATIONS OWED TO SUCH PERSON OR
OTHERWISE (INCLUDING, WITHOUT LIMITATION, AS TO THE VALIDITY OR ENFORCEABILITY
THEREOF, THE COLLECTABILITY OF SUCH ABL OBLIGATIONS, OR THE ATTACHMENT OR
PERFECTION OF ANY LIENS THEREUNDER), EXCEPT THAT EACH SUCH PERSON SHALL
REPRESENT AND WARRANT:  (I) THE AMOUNT OF THE ABL OBLIGATIONS BEING SOLD BY IT,
(II) THAT SUCH PERSON HAS NOT CREATED ANY LIEN ON ANY ABL

 

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OBLIGATION BEING SOLD BY IT AND (III) THAT SUCH PERSON HAS THE RIGHT TO ASSIGN
SUCH ABL OBLIGATIONS BEING ASSIGNED BY IT AND ITS ASSIGNMENT IS DULY AUTHORIZED.

 

ARTICLE 8

MISCELLANEOUS

 

Section 8.1                                   Rights of Subrogation.  The Term
Agent, for and on behalf of itself and the Term Secured Parties, agrees that no
payment to the ABL Agent or any ABL Secured Party pursuant to the provisions of
this Agreement shall entitle the Term Agent or any Term Secured Party to
exercise any rights of subrogation in respect thereof until the Discharge of ABL
Obligations.  Thereafter, the ABL Agent agrees to execute such documents,
agreements, and instruments as the Term Agent or any Term Secured Party may
reasonably request to evidence the transfer by subrogation to any such Person of
an interest in the ABL Obligations resulting from payments to the ABL Agent by
such Person, so long as all costs and expenses (including all reasonable legal
fees and disbursements) incurred in connection therewith by the ABL Agent are
paid by such Person upon request for payment thereof.  The ABL Agent, for and on
behalf of itself and the ABL Secured Parties, agrees that no payment to the Term
Agent or any Term Secured Party pursuant to the provisions of this Agreement
shall entitle the ABL Agent or any ABL Secured Party to exercise any rights of
subrogation in respect thereof until the Discharge of Term Obligations. 
Thereafter, the Term Agent agrees to execute such documents, agreements, and
instruments as the ABL Agent or any ABL Secured Party may reasonably request to
evidence the transfer by subrogation to any such Person of an interest in the
Term Obligations resulting from payments to the Term Agent by such Person, so
long as all costs and expenses (including all reasonable legal fees and
disbursements) incurred in connection therewith by the Term Agent are paid by
such Person upon request for payment thereof. Each ABL Obligor and Term Obligor
acknowledges and agrees that, to the extent permitted by applicable law, the
value of any payments or distributions in cash, property or other assets
received by the ABL Agent and the ABL Secured Parties or Term Agent and the Term
Secured Parties that are paid over to other Secured Parties pursuant to this
Agreement shall not reduce the amounts the ABL Obligors or the Term Obligors, as
applicable, shall be obligated to pay to the Persons making such payment.

 

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 ABL Agent or the Term Agent to exercise and
enforce their 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 7.2, 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 7.2.

 

Section 8.3                                   Representations.  The Term Agent
represents and warrants to the ABL Agent that it has the requisite power and
authority under the Term Documents to enter into, execute, deliver, and carry
out the terms of this Agreement on behalf of itself and the Term

 

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Secured Parties and that this Agreement shall be binding obligations of the Term
Agent and the Term Secured Parties, enforceable against the Term Agent and the
Term Secured Parties in accordance with its terms.  The ABL Agent represents and
warrants to the Term Agent that it has the requisite power and authority under
the ABL Documents to enter into, execute, deliver, and carry out the terms of
this Agreement on behalf of itself and the ABL Secured Parties and that this
Agreement shall be binding obligations of the ABL Agent and the ABL Secured
Parties, enforceable against the ABL Agent and the ABL 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 Term Agent and the
ABL Agent and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.

 

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, or
sent by overnight express courier service or mail and shall be deemed to have
been given when delivered in person or by courier service, upon receipt of a
telecopy or three (3) days after deposit in the 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.

 

ABL Agent:     

Bank of America, N.A.

 

100 Federal Street

 

Boston, Massachusetts 02109

 

Attention: Andrew Cerussi

 

Fax: (617) 434-4131

 

 

 

With a copy to:

 

 

 

Riemer & Braunstein, LLP

 

Three Center Plaza

 

Boston, MA 02108

 

Attention: David S. Berman, Esquire

 

Fax: (617) 880-3456

 

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Term Agent:     

Z investments Holdings, LLC

 

One Embarcadero Center, 39th Floor

 

San Francisco, California 94111

 

Attention:  Stefan Kaluzny

 

Fax:  (415) 983-2701

 

 

 

With a copy to:

 

 

 

Kirkland & Ellis, LLP

 

555 California Street

 

San Francisco, California 94104

 

Attention:  John E. Friedrichs, Esquire

 

Fax:  (415) 439-1500

 

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 earlier of the Discharge of ABL Obligations or the Discharge of
Term Obligations, (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 Obligor shall include any Obligor as debtor-in-possession and
any receiver or trustee for such Obligor in any Insolvency Proceeding.  Without
limiting the generality of the foregoing clause (c), the ABL Agent, any ABL
Secured Party, the Term Agent, or any Term Secured Party may assign or otherwise
transfer all or any portion of the ABL Obligations or the Term Obligations, as
applicable, to any other Person (other than any Obligor or any Affiliate of any
Obligor and any Subsidiary of any Obligor) and such other Person shall thereupon
become vested with all the rights and obligations in respect thereof granted to
the ABL Agent, the Term Agent, any ABL Secured Party, or any Term Secured Party,
as the case may be, herein or otherwise.  The ABL Secured Parties and the Term
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 Borrower on the faith
hereof.

 

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.

 

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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 ABL Agent, ABL Secured Parties, Term Agent and Term Secured
Parties.  No other Person (including any Obligor or any Affiliate of any
Obligor, or any Subsidiary of any Obligor) 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         Attorneys’ Fees.  The Parties agree that if any dispute,
arbitration, litigation, or other proceeding is brought with respect to the
enforcement of this Agreement or any provision hereof, the prevailing party in
such dispute, arbitration, litigation, or other proceeding shall be entitled to
recover its reasonable attorneys’ fees and all other costs and expenses incurred
in the enforcement of this Agreement, irrespective of whether suit is brought.

 

Section 8.14         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 ABL SECURED PARTY OR
ANY TERM SECURED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT, ANY TERM DOCUMENTS, OR ANY ABL DOCUMENTS AGAINST ANY
OBLIGOR 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 7.5.  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 8.15         Intercreditor Agreement.  This Agreement is the
Intercreditor Agreement referred to in the ABL Credit Agreement and the Term
Credit Agreement.  Nothing in this Agreement shall be deemed to subordinate the
obligations due to (i) any ABL Secured Party to the obligations due to any Term
Secured Party or (ii) any Term Secured Party to the obligations due to any ABL
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 8.16         No Warranties or Liability.  The Term Agent and the ABL
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 ABL Document or any Term Document.  Except as
otherwise provided in this Agreement, the Term Agent and the ABL Agent will be
entitled to manage and supervise their respective extensions of credit to any
Borrower in accordance with law and their usual practices, modified from time to
time as they deem appropriate.

 

Section 8.17         Conflicts.  In the event of any conflict between the
provisions of this Agreement and the provisions of any ABL Document or any Term
Document, the provisions of this Agreement shall govern.

 

Section 8.18         Information Concerning Financial Condition of the Obligors.

 

(A)           EACH OF THE TERM AGENT AND THE ABL AGENT HEREBY ASSUMES
RESPONSIBILITY FOR KEEPING ITSELF INFORMED OF THE FINANCIAL CONDITION OF THE
OBLIGORS AND ALL OTHER CIRCUMSTANCES BEARING UPON THE RISK OF NONPAYMENT OF THE
ABL OBLIGATIONS OR THE TERM OBLIGATIONS.  THE TERM AGENT AND THE ABL 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 TERM AGENT OR THE ABL AGENT, IN THEIR 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,
(II) TO UNDERTAKE ANY INVESTIGATION NOT A PART OF ITS REGULAR BUSINESS ROUTINE,
OR (III) TO DISCLOSE ANY

 

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OTHER INFORMATION, (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 AGREES TO
HOLD THE PROVIDING 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.

 

(B)           THE OBLIGORS AGREE THAT ANY INFORMATION PROVIDED TO THE ABL AGENT,
THE TERM AGENT, ANY ABL SECURED PARTY OR ANY TERM SECURED PARTY MAY BE SHARED BY
SUCH PERSON WITH ANY ABL SECURED PARTY, ANY TERM SECURED PARTY, THE ABL AGENT OR
THE TERM AGENT NOTWITHSTANDING A REQUEST OR DEMAND BY SUCH OBLIGORS THAT SUCH
INFORMATION BE KEPT CONFIDENTIAL; PROVIDED THAT SUCH INFORMATION SHALL OTHERWISE
BE SUBJECT TO THE RESPECTIVE CONFIDENTIALITY PROVISIONS IN THE ABL CREDIT
AGREEMENT AND THE TERM CREDIT AGREEMENT, AS APPLICABLE

 

[SIGNATURE PAGES FOLLOW]

 

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IN WITNESS WHEREOF, the ABL Agent, for and on behalf of itself and the ABL
Lenders, and the Term Agent, for and on behalf of itself and the Term 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 ABL Agent

 

 

 

 

 

By:

/s/ ANDREW CERUSSI

 

Name:

Andrew Cerussi

 

Title:

SVP

 

 

 

 

 

 

 

Z INVESTMENT HOLDINGS, LLC, in its capacity as the Term Agent

 

 

 

 

 

By:

/s/ PETER MORROW

 

Name:

Peter Morrow

 

Title:

Manager

 

Signature Page to Intercreditor Agreement

 

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ACKNOWLEDGMENT

 

Each ABL Obligor and Term Obligor hereby acknowledges that it has received a
copy of this Agreement and consents thereto, agrees to recognize all rights
granted thereby to the ABL Agent and the Term Agent, and will not do any act or
perform any obligation which is not in accordance with the agreements set forth
in this Agreement. Each ABL Obligor and Term Obligor further acknowledges and
agrees that it is not an intended beneficiary or third party beneficiary under
this Agreement and (i) as between the ABL Secured Parties and the ABL Obligors,
the ABL Documents remain in full force and effect as written and are in no way
modified hereby, and (ii) as between the Term Secured Parties, the Term
Obligors, the Term Documents remain in full force and effect as written and are
in no way modified hereby.  Without limiting the foregoing, the Obligors
acknowledge and agree that the Discharge of ABL Obligations and/or the Discharge
of Term Obligations shall not limit, impair, reduce or otherwise modify their
liability to the Secured Parties for any amounts which thereafter may become due
under the Credit Documents.

 

 

ZALE DELAWARE, INC.

 

 

 

 

 

By:

/s/ STEVE MASSANELLI

 

Name: Steve Massanelli

 

Title: Senior Vice President and Treasurer

 

 

 

 

 

ZALE CORPORATION

 

 

 

 

 

By:

/s/ STEVE MASSANELLI

 

Name: Steve Massanelli

 

Title: Senior Vice President and Treasurer

 

 

 

 

 

ZGCO, LLC

 

 

 

 

 

By:

/s/ STEVE MASSANELLI

 

Name: Steve Massanelli

 

Title: Senior Vice President and Treasurer

 

Acknowledgement — Intercreditor Agreement

 

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TXDC, L.P.

 

 

 

By:

 ZALE DELAWARE, INC.

 

 

Its General Partner

 

 

 

 

By:

/s/ STEVE MASSANELLI

 

Name: Steve Massanelli

 

Title: Senior Vice President and Treasurer

 

 

 

 

 

ZALE PUERTO RICO, INC.

 

 

 

 

 

By:

/s/ STEVE MASSANELLI

 

Name: Steve Massanelli

 

Title: Senior Vice President and Treasurer

 

 

 

 

 

ZALE CANADA CO.

 

 

 

 

 

By:

/s/ STEVE MASSANELLI

 

Name: Steve Massanelli

 

Title: Senior Vice President and Treasurer

 

 

 

 

 

ZALE CANADA DIAMOND SOURCING INC.

 

 

 

 

 

By:

/s/ STEVE MASSANELLI

 

Name: Steve Massanelli

 

Title: Senior Vice President and Treasurer

 

 

 

 

 

ZAP, INC.

 

 

 

By:

/s/ STEVE MASSANELLI

 

Name: Steve Massanelli

 

Title: Senior Vice President and Treasurer

 

 

 

 

 

ZALE CANADA HOLDING, LP.

 

 

 

By:

/s/ STEVE MASSANELLI

 

Name: Steve Massanelli

 

Title: Senior Vice President and Treasurer

 

Acknowledgement — Intercreditor Agreement

 

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ZCSC, LLC

 

 

 

By:

/s/ STEVE MASSANELLI

 

Name: Steve Massanelli

 

Title: Senior Vice President and Treasurer

 

 

 

 

 

ZALE INTERNATIONAL, INC.

 

 

 

By:

/s/ STEVE MASSANELLI

 

Name: Steve Massanelli

 

Title: Senior Vice President and Treasurer

 

 

 

 

 

ZALE EMPLOYEES’ CHILD CARE ASSOCIATION, INC.

 

 

 

By:

/s/ STEVE MASSANELLI

 

Name: Steve Massanelli

 

Title: Senior Vice President and Treasurer

 

 

 

 

 

ZALE CANADA FINCO 2, INC.

 

 

 

By:

/s/ STEVE MASSANELLI

 

Name: Steve Massanelli

 

Title: Senior Vice President and Treasurer

 

 

 

 

 

FINCO HOLDING LP.

 

 

 

By:

/s/ STEVE MASSANELLI

 

Name: Steve Massanelli

 

Title: Senior Vice President and Treasurer

 

 

 

 

 

FINCO PARTNERSHIP LP.

 

 

 

By:

/s/ STEVE MASSANELLI

 

Name: Steve Massanelli

 

Title: Senior Vice President and Treasurer

 

 

 

 

 

ZALE CANADA FINCO, LLC

 

 

 

By:

/s/ STEVE MASSANELLI

 

Name: Steve Massanelli

 

Title: Senior Vice President and Treasurer

 

Acknowledgement — Intercreditor Agreement

 

--------------------------------------------------------------------------------

 

 

ZALE CANADA FINCO 1, INC.

 

 

 

By:

/s/ STEVE MASSANELLI

 

Name: Steve Massanelli

 

Title: Senior Vice President and Treasurer

 

Acknowledgement — Intercreditor Agreement

 

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