EX-4.2







	 	 	 	 	 



EXHIBIT
4.2




INTERCREDITOR AGREEMENT




          THIS INTERCREDITOR AGREEMENT dated as of June 5, 2009, is entered into by and among INTERFACE,
INC., a Georgia corporation (the “Borrower”), INTERFACEFLOR, LLC, a Georgia limited
liability company (the “Subsidiary L/C Account Party”), each other Grantor (as hereinafter
defined) from time to time party hereto, WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking
association, in its capacity as domestic agent and collateral agent under the First-Lien Credit
Documents (as defined below) (together with its successors and assigns in such capacity from time
to time, the “First-Lien Agent”), and U.S. BANK, NATIONAL ASSOCIATION, a national banking
association, in its capacities as trustee and collateral agent under the Second-Lien Notes
Documents (as defined below) (together with its successors and assigns in such capacity from time
to time, the “Second-Lien Collateral Agent”). Capitalized terms used herein but not
otherwise defined herein have the meanings set forth in Section 1 below.



RECITALS




          WHEREAS, the Borrower, Subsidiary L/C Account Party, the “Lenders” from time to time party
thereto (as further defined below, the “First-Lien Lenders”), and the First-Lien Agent, are
party to that certain Sixth Amended and Restated Credit Agreement dated as of June 30, 2006, as
amended by that certain First Amendment to Sixth Amended and Restated Credit Agreement dated as of
January 1, 2008, and by that certain Second Amendment to Sixth Amended and Restated Credit
Agreement dated as May 14, 2009 (as the same may be further amended, restated, supplemented, or
otherwise modified or Refinanced from time to time, the “First-Lien Credit Agreement”),
providing for the making of loans to the Borrower, and the issuance of, and participation in,
letters of credit for the account of the Subsidiary L/C Account Party or the Borrower, all as
provided therein;




          WHEREAS, the Borrower has informed First-Lien Agent that it desires to incur up to
$175,000,000 of new secured indebtedness in the form of senior notes, which indebtedness will be
subordinate in terms of lien priority to the First-Lien Obligations of the Borrower to the
First-Lien Creditors and the proceeds of which shall be used for the cash payment or refinancing of
existing indebtedness (such indebtedness, the “Second-Lien Debt”);




          WHEREAS, the Second-Lien Debt will be issued pursuant to an Indenture (as amended, restated,
supplemented, or otherwise modified or Refinanced from time to time, the “Second-Lien Notes
Indenture”) and will be evidenced by a series of promissory notes issued to the holders thereof
from time to time (as amended, restated, supplemented, or otherwise modified or Refinanced from
time to time, the “Second-Lien Notes”);




          WHEREAS, the obligations of the Borrower and the other Grantors under the First-Lien Documents
are secured by all or substantially all the assets of the Borrower and the other Grantors,
respectively, pursuant to the terms of the First-Lien Security Documents;




          WHEREAS, the obligations of the Borrower and the other Grantors under the Second-Lien Notes
Documents will also be secured by all or substantially all the assets of the



 









 






Borrower and the other Grantors, respectively, pursuant to the terms of the Second-Lien
Security Documents;




          WHEREAS, the Borrower and the other Grantors may, from time to time, incur additional secured
debt pursuant to the First-Lien Credit Documents and such additional debt will be secured by the
first-priority security interest in all Collateral of the First-Lien Agent, on behalf of the
First-Lien Lenders, in accordance with the First-Lien Credit Documents in existence at the time of
such incurrence;




          NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and obligations herein
set forth and for other good and valuable consideration, the sufficiency and receipt of which are
hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:





     SECTION 1. Definitions.



          1.1 Defined Terms. As used in this Agreement, the following terms shall have the
following meanings:




          “Agent” means, as the context requires, collectively, the First-Lien Agent and the
Second-Lien Collateral Agent.




          “Agreement” means this Intercreditor Agreement, as amended, restated, supplemented, or
otherwise modified from time to time in accordance with the terms hereof.




          “Bankruptcy Code” means title 11 of the United States Code entitled “Bankruptcy,” as
now and hereafter in effect, or any successor statute.




          “Bankruptcy Law” means the Bankruptcy Code and any similar federal, state or foreign
law for the relief of debtors.




          “Borrower” has the meaning set forth in the preamble of this Agreement.




          “Business Day” means a day other than a Saturday, Sunday, or other day on which
banking institutions are authorized or required by law or other government action to close in the
State of New York.




          “Cash Collateral” has the meaning set forth in Section 363(a) of the Bankruptcy Code.




          “Cash Management Bank” means any First-Lien Lender or an affiliate of a First-Lien
Lender (together with its successors and assigns) providing Cash Management Services to the
Borrower, Subsidiary L/C Account Party, or any Domestic Subsidiary (as defined in the First-Lien
Credit Agreement).




          “Cash Management Obligations” means all obligations owing by the Borrower, Subsidiary
L/C Account Party, or any Domestic Subsidiary (as defined in the First-Lien Credit Agreement) to
any Cash Management Bank in respect of any Cash Management Services




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(including, without limitation, indemnities, fees and interest thereon and all interest and
fees that accrue on or after the commencement of any Insolvency or Liquidation Proceeding at the
rate provided for in the respective documents governing the Cash Management Services, whether or
not a claim for post-petition interest or fees is allowed in any such Insolvency or Liquidation
Proceeding), now existing or hereafter incurred under, arising out of or in connection with such
Cash Management Services, and the due performance and compliance by the Borrower, Subsidiary L/C
Account Party, and each Grantor with the terms, conditions and agreements of such Cash Management
Services.




          “Cash Management Services” means treasury, depository and/or cash management services
or any automated clearing house transfer services.




          “Collateral” means all of the assets and property of any Grantor, whether real,
personal or mixed, constituting First-Lien Collateral or Second-Lien Collateral.




          “Comparable Second-Lien Security Document” means, in relation to any Shared Collateral
subject to any Lien created under any First-Lien Security Document, that Second-Lien Security
Document which creates a Lien on the same Shared Collateral, granted by the same Grantor.




          “Creditors” means, collectively, the First-Lien Creditors and the Second-Lien
Claimholders.




          “Defaulting Creditor” has the meaning set forth in Section 5.7(d) hereof.




          “Discharge of First-Lien Credit Agreement Obligations” means, except to the extent
otherwise provided in Section 5.6 hereof (and subject to Section 6.5 hereof), (a) payment in full
in cash of the principal of and interest (including interest accruing on or after the commencement
of any Insolvency or Liquidation Proceeding at the rate provided for in the respective First-Lien
Credit Document, whether or not such interest would be allowed in any such Insolvency or
Liquidation Proceeding) and premium, if any, on all Indebtedness under the First-Lien Credit
Documents, (b) payment in full in cash of all other First-Lien Obligations (other than Hedging
Obligations and Cash Management Obligations) that are due and payable or otherwise accrued and
owing at or prior to the time such principal, interest, and premium are paid, (c) termination
(without any prior demand for payment thereunder having been made or, if made, with such demand
having been fully reimbursed in cash) or cash collateralization (in an amount and manner, and on
terms, satisfactory to the First-Lien Agent) of all Letters of Credit issued by any First-Lien
Creditor and (d) termination of all other commitments of the First-Lien Creditors under the
First-Lien Credit Documents.




          “Discharge of First-Lien Obligations” means, except to the extent otherwise provided
in Section 5.6 hereof (and subject to Section 6.5 hereof), (a) payment in full in cash of the
principal of and interest (including interest accruing on or after the commencement of any
Insolvency or Liquidation Proceeding at the rate provided for in the respective First-Lien
Document, whether or not such interest would be allowed in any such Insolvency or Liquidation
Proceeding) and premium, if any, on all Indebtedness under the First-Lien Documents, (b) payment in
full in cash of all other First-Lien Obligations that are due and payable or otherwise



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accrued and owing at or prior to the time such principal, interest, and premium are paid, (c)
termination (without any prior demand for payment thereunder having been made or, if made, with
such demand having been fully reimbursed in cash) or cash collateralization (in an amount and
manner, and on terms, satisfactory to the First-Lien Agent) of all Letters of Credit, Secured Hedge
Agreements and Cash Management Services issued or entered into, as the case may be, by any
First-Lien Creditor, and (d) performance of all other obligations owing to any First-Lien Creditor
and termination of all other commitments of the First-Lien Creditors under the First-Lien Credit
Documents.




          “Eligible Purchaser” has the meaning set forth in Section 5.7(a) hereof.




          “Equity Interests” means, with respect to any Person, all of the shares, interests,
rights, participations or other equivalents (however designated) of capital stock of (or other
ownership or profit interests or units in) such Person and all of the warrants, options or other
rights for the purchase, acquisition or exchange from such Person of any of the foregoing
(including through convertible securities).




          “First-Lien Agent” has the meaning set forth in the recitals hereto.




          “First-Lien Collateral” means all of the assets and property of any Grantor, whether
real, personal or mixed, with respect to which a Lien is granted (or purported to be granted) as
security for any First-Lien Obligations.




          “First-Lien Credit Agreement” has the meaning set forth in the recitals hereto.




          “First-Lien Credit Documents” means the First-Lien Credit Agreement, the other Credit
Documents (as defined in the First-Lien Credit Agreement), and each of the other agreements,
documents, and instruments providing for or evidencing any other First-Lien Obligation and any
other document or instrument executed or delivered at any time in connection with any First-Lien
Obligation (including any intercreditor or joinder agreement among holders of First-Lien
Obligations but excluding Secured Hedge Agreements and the documents governing the Cash Management
Obligations), to the extent such are effective at the relevant time, as each may be amended,
modified, restated, supplemented, replaced or Refinanced from time to time.




          “First-Lien Creditors” means, at any relevant time, the holders of First-Lien
Obligations at such time, including, without limitation, the First-Lien Lenders, the Hedge Banks,
the Cash Management Banks, the First-Lien Agent, and the other agents and arrangers under the
First-Lien Credit Agreement, together with their respective successors and assigns.




          “First-Lien Documents” means the First-Lien Credit Documents, the Secured Hedge
Agreements, and any and all documents governing the Cash Management Obligations.




          “First-Lien Guarantors” means the Borrower, Subsidiary L/C Account Party, and any
Subsidiary Guarantor under the First-Lien Credit Agreement from time to time.




          “First-Lien Lenders” means the “Lenders” from time to time party to, and as defined
in, the First-Lien Credit Agreement, together with their respective successors and assigns;




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provided that the term “First-Lien Lender” shall in any event also include each letter
of credit issuer and each settlement loan provider under the First-Lien Credit Agreement,
including, without limitation, the “Domestic L/C Issuer” and the “Domestic Settlement Loan Lender”
under, and as defined in, the First-Lien Credit Agreement.




          “First-Lien Obligations” means (i) all Obligations under the First-Lien Credit
Agreement and the other First-Lien Credit Documents, (ii) all Hedging Obligations and (iii) all
Cash Management Obligations. “First-Lien Obligations” shall in any event include: (a) all
interest accrued or accruing (or which would, absent commencement of an Insolvency or Liquidation
Proceeding (and the effect of provisions such as Section 502(b)(2) of the Bankruptcy Code), accrue)
on or after the commencement of an Insolvency or Liquidation Proceeding in accordance with the rate
specified in the relevant First-Lien Document, whether or not the claim for such interest is
allowed as a claim in such Insolvency or Liquidation Proceeding, (b) any and all fees and expenses
(including attorneys’ and/or financial consultants’ fees and expenses) incurred by the First-Lien
Agent and the First-Lien Creditors on or after the commencement of an Insolvency or Liquidation
Proceeding, whether or not the claim for fees and expenses is allowed under Section 506(b) of the
Bankruptcy Code or any other provision of the Bankruptcy Code or Bankruptcy Law as a claim in such
Insolvency or Liquidation Proceeding, and (c) all obligations and liabilities of each Grantor under
each First-Lien Document to which it is a party which, but for the automatic stay under Section
362(a) of the Bankruptcy Code, would become due.




          “First-Lien Payment Discharge” means any Discharge of First-Lien Obligations obtained,
undertaken, or achieved in any manner other than in connection with any foreclosure of, or other
exercise of remedies with respect to, any Collateral by the First-Lien Agent or any other
First-Lien Creditors.




          “First-Lien Release” has the meaning given such term in Section 5.1.




          “First-Lien Required Lenders” means the “Required Lenders” under, and as defined in,
the First-Lien Credit Agreement.




          “First-Lien Security Agreement” means, collectively, the Borrower Pledge and Security
Agreement (as defined in the First-Lien Credit Agreement) and the Subsidiary Pledge and Security
Agreement (as defined in the First-Lien Credit Agreement), or any of them, as the case may be.




          “First-Lien Security Documents” means the First-Lien Security Agreement, the Security
Documents (as defined in the First-Lien Credit Agreement), and any other agreement, document,
mortgage, or instrument pursuant to which a Lien is granted (or purported to be granted) securing
any First-Lien Obligations or under which rights or remedies with respect to such Liens are
governed, as the same may be amended, supplemented, restated, modified, or Refinanced from time to
time.




          “Governmental Authority” means the government of the United States of America or any
other nation, or of any political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other entity exercising



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executive, legislative, judicial, taxing, regulatory or administrative powers or functions of
or pertaining to government (including any supranational bodies such as the European Union or the
European Central Bank).




          “Grantors” means collectively, the Borrower, the Subsidiary L/C Account Party, and
each of the Subsidiary Guarantors that have executed and delivered, or may from time to time
hereafter execute and deliver, a First-Lien Security Document or a Second-Lien Security Document.




          “Hedge Bank” means any Person that is a First-Lien Lender or an affiliate of a
First-Lien Lender at the time it enters into a Secured Hedge Agreement, in its capacity as a party
thereto, and such Person’s successors and assigns.




          “Hedging Obligations” means (i) obligations (including obligations which, but for the
automatic stay under Section 362(a) of the Bankruptcy Code, would become due) and liabilities,
whether now existing or hereafter arising (including, without limitation, indemnities, fees and
interest thereon and all interest and fees that accrue on or after the commencement of any
Insolvency or Liquidation Proceeding at the rate provided for in the respective Secured Hedge
Agreement, whether or not a claim for post-petition interest or fees is allowed in any such
Insolvency or Liquidation Proceeding), of the Borrower or any First-Lien Guarantor owing to any
Hedge Bank, now existing or hereafter incurred under, or arising out of or in connection with, any
Secured Hedge Agreement (including all such obligations and indebtedness under any guarantee of any
such Secured Hedge Agreement to which Borrower or any First-Lien Guarantor is a party) and (ii) all
performance and compliance obligations by Borrower or any First-Lien Guarantor under any Secured
Hedge Agreement.




          “Indebtedness” means all Obligations that constitute “Indebtedness” within the meaning
of the First-Lien Credit Agreement or the Second-Lien Notes Indenture.




          “Insolvency or Liquidation Proceeding” means (a) any voluntary or involuntary case or
proceeding under the Bankruptcy Code with respect to any Grantor, (b) any other voluntary or
involuntary insolvency, reorganization or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding with respect to any Grantor or with
respect to a material portion of its respective assets, (c) any liquidation, dissolution,
reorganization or winding up of any Grantor, whether voluntary or involuntary and whether or not
involving insolvency or bankruptcy, or (d) any assignment for the benefit of creditors or any other
marshalling of assets and liabilities of any Grantor.




          “Letters of Credit” means any “Letter of Credit” under, and as defined in, the
First-Lien Credit Agreement.




          “Lien” means any mortgage, pledge, security interest, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge preference, priority or other
security interest or agreement, or preferential payment of any kind or nature whatsoever
(including, without limitation, any agreement to give any of the foregoing, any conditional sale or
other title retention agreement, any easement, right of way or other encumbrance on title to real
property, any financing or similar statement or notice filed under the UCC or any other



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similar recording or notice statute, and any Capitalized Lease (as defined in the First-Lien
Credit Agreement) having substantially the same effect as any of the foregoing).




          “Loans” means “Loans” under, and as defined in, the First-Lien Credit Agreement.




          “New Agent” has the meaning set forth in Section 5.6 hereof.




          “Obligations” means any and all obligations (including guaranty obligations), whether
now existing or hereafter arising, with respect to the payment and performance of (a) any principal
of or interest or premium on any indebtedness, including any reimbursement obligation in respect of
any letter of credit, or any other liability, including interest or any premium that accrues on or
after the commencement of any Insolvency or Liquidation Proceeding of any Grantor at the rate
provided for in the respective documentation, whether or not a claim for post-petition interest or
premium is allowed in any such Insolvency or Liquidation Proceeding, (b) any fees, indemnification
obligations, expense reimbursement obligations or other liabilities payable under the documentation
governing any indebtedness (including, without limitation, the retaking, holding, selling or
otherwise disposing of or realizing on the Collateral), (c) any obligation to post cash collateral
in respect of letters of credit or any other obligations, and (d) all performance and compliance
obligations under the documentation governing any indebtedness.




          “Person” means any natural person, individual, partnership, joint venture, firm,
corporation, association, limited liability company, trust or other enterprise, or any Governmental
Authority or other entity.




          “Pledged Collateral” means all Collateral in the possession of the
First-Lien Agent (or its agents or bailees), to the extent that possession thereof is taken to
perfect a Lien thereon under the UCC or other applicable local law.




          “Post-Petition Financing” has the meaning set forth in Section 6.1 hereof.




          “Recovery” has the meaning set forth in Section 6.5 hereof.




          “Refinance” means, in respect of any indebtedness, to refinance, extend, renew,
defease, amend, modify, supplement, restructure, replace, refund or repay, or to issue other
indebtedness, in exchange or replacement for, such indebtedness. “Refinanced” and
“Refinancing” shall have correlative meanings.




          “Required First-Lien Creditors” means (i) at all times prior to the occurrence of the
Discharge of First-Lien Credit Agreement Obligations, the First-Lien Required Lenders (or, to the
extent required by the First-Lien Credit Agreement, each of the First-Lien Lenders), and (ii) at
all times after the occurrence of the Discharge of First-Lien Credit Agreement Obligations, the
holders of at least the majority of the then-outstanding Hedging Obligations and Cash Management
Obligations (determined by the First-Lien Agent in such reasonable manner as is acceptable to it).




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          “Second-Lien Collateral” means all of the assets of any Grantor, whether real,
personal or mixed, with respect to which a Lien is granted (or purported to be granted) as security
for any Second-Lien Obligations.




          “Second-Lien Collateral Agent” has the meaning set forth in the preamble of this
Agreement.




          “Second-Lien Claimholders” means, at any relevant time, the holders of Second-Lien
Obligations at such time, including, without limitation, the Second-Lien Noteholders, the
Second-Lien Collateral Agent and any other agents under the Second-Lien Notes Indenture.




          “Second-Lien Noteholders” means the “Holders” under, and as defined in, the
Second-Lien Notes Indenture.




          “Second-Lien Notes” has the meaning set forth in the recitals hereto.




          “Second-Lien Notes Documents” means the Second-Lien Notes Indenture, the Second-Lien
Notes, the Second-Lien Security Documents, and each of the other agreements, documents and
instruments providing for or evidencing any other Second-Lien Obligation, and any other document or
instrument executed or delivered at any time in connection with any Second-Lien Obligation, to the
extent such are effective at the relevant time, as the same may be amended, restated, supplemented,
modified and/or Refinanced from time to time.




          “Second-Lien Notes Indenture” has the meaning set forth in the recitals hereto.




          “Second-Lien Obligations” means all Obligations under the Second-Lien Notes Indenture
and the other Second-Lien Notes Documents. “Second-Lien Obligations” shall in any event include:
(a) all interest accrued or accruing (or which would, absent commencement of an Insolvency or
Liquidation Proceeding (and the effect of provisions such as Section 502(b)(2) of the Bankruptcy
Code), accrue) on or after commencement of an Insolvency or Liquidation Proceeding in accordance
with the rate specified in the relevant Second-Lien Notes Document whether or not the claim for
such interest is allowed as a claim in such Insolvency or Liquidation Proceeding, (b) any and all
fees and expenses (including attorneys’ and/or financial consultants’ fees and expenses) incurred
by the Second-Lien Collateral Agent and the Second-Lien Claimholders on or after the commencement
of an Insolvency or Liquidation Proceeding, whether or not the claim for fees and expenses is
allowed under Section 506(b) of the Bankruptcy Code or any other provision of the Bankruptcy Code
or Bankruptcy Law as a claim in such Insolvency or Liquidation Proceeding, and (c) all obligations
and liabilities of each Grantor under each Second-Lien Notes Document to which it is a party which,
but for the automatic stay under Section 362(a) of the Bankruptcy Code, would become due.




          “Second-Lien Security Agreement” means the Pledge and Security Agreement, dated as of
June 5, 2009, among the Borrower, the other Grantors from time to time party thereto and the
Second-Lien Collateral Agent, as the same may be amended, restated, supplemented, modified or
Refinanced from time to time.




          “Second-Lien Security Documents” means the Second-Lien Security Agreement and any
other agreement, document, mortgage or instrument pursuant to which a Lien is granted




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(or purported to be granted) securing any Second-Lien Obligations or under which rights or
remedies with respect to such Liens are governed, as the same may be amended, restated,
supplemented, modified or Refinanced from time to time.




          “Secured Hedge Agreements” means each Swap Contract by and between Borrower or any
First-Lien Guarantor, on the one hand, and any Hedge Bank from time to time, but only to the extent
such Swap Contract is permitted under the First-Lien Credit Agreement and constitutes a “Secured
Obligation” (as such term is defined and used in the First-Lien Credit Agreement).




          “Security Documents” means, collectively, the First-Lien Security Documents and the
Second-Lien Security Documents.




          “Shared Collateral” means all Collateral.




          “Subsidiary” of any Person means (i) any corporation more than 50% of whose stock of
any class or classes having by the terms thereof ordinary voting power to elect a majority of the
directors of such corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of the happening of any
contingency) is at the time owned by such Person or one or more Subsidiaries of such Person and
(ii) any partnership, limited liability company, association, joint venture or other entity (other
than a corporation) in which such Person or one or more Subsidiaries of such Person has more than a
50% equity interest at the time.




          “Subsidiary Guarantors” means each Subsidiary of the Borrower which enters into a
guaranty of any First-Lien Obligations or Second-Lien Obligations.




          “Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit
derivative transactions, forward rate transactions, commodity swaps, commodity options, forward
commodity contracts, equity or equity index swaps or options, bond or bond price or bond index
swaps or options or forward bond or forward bond price or forward bond index transactions, interest
rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap transactions, currency options,
spot contracts, or any other similar transactions or any combination of any of the foregoing
(including any options to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions of any kind, and
the related confirmations, which are subject to the terms and conditions of, or governed by, any
form of master agreement published by the International Swaps and Derivatives Association, Inc.,
any International Foreign Exchange Master Agreement, or any other similar master agreement,
including any such obligations or liabilities under any such master agreement.




          “UCC” means the Uniform Commercial Code as from time to time in effect in the relevant
jurisdiction.




          1.2 Terms Generally. The definitions of terms herein shall apply equally to the
singular and plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words




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“include”, “includes” and “including” shall be deemed to be followed by the phrase “without
limitation.” The word “will” shall be construed to have the same meaning and effect as the word
“shall”. Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring to such agreement,
instrument or other document as from time to time amended, supplemented, restated or otherwise
modified, (b) any reference herein to any Person shall be construed to include such Person’s
successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to any particular
provision hereof, (d) the words “asset” and “property” shall be construed to have the same meaning
and effect and to refer to any and all tangible and intangible assets and properties, including
cash, securities, accounts and contract rights, (e) terms defined in the UCC but not otherwise
defined herein shall have the same meanings herein as are assigned thereto in the UCC, (f) a
reference to any law means such law as amended, modified, codified, replaced or re-enacted, in
whole or in part, and in effect on the date hereof, including rules, regulations, enforcement
procedures and any interpretations promulgated thereunder, and (g) references to Sections or
clauses shall refer to those portions of this Agreement, and any references to a clause shall,
unless otherwise identified, refer to the appropriate clause within the same Section in which such
reference occurs.




     SECTION 2. Priority of Liens.



          2.1 Subordination; Etc. Notwithstanding the date, manner or order of grant,
attachment or perfection of any Liens securing the Second-Lien Obligations granted on the
Collateral or of any Liens securing the First-Lien Obligations granted on the Collateral and
notwithstanding any provision of the UCC, any other applicable law, this Agreement, the First-Lien
Documents or the Second-Lien Notes Documents to the contrary, or any other circumstance whatsoever
(including any non-perfection of any Lien purporting to secure the First-Lien Obligations or
Second-Lien Obligations), the Second-Lien Collateral Agent, on behalf of itself and the Second-Lien
Claimholders, and each other Second-Lien Claimholder (by its acceptance of the benefits of the
Second-Lien Notes Documents) hereby agrees that: (a) any Lien on the Collateral securing any
First-Lien Obligations now or hereafter held by or on behalf of the First-Lien Agent or any
First-Lien Creditor or any agent or trustee therefor, regardless of how acquired, whether by grant,
possession, statute, operation of law, subrogation or otherwise, shall be senior in all respects
and prior to any Lien on the Collateral securing any of the Second-Lien Obligations; (b) any Lien
on the Collateral now or hereafter held by or on behalf of the Second-Lien Collateral Agent, any
Second-Lien Claimholder or any agent or trustee therefor regardless of how acquired, whether by
grant, possession, statute, operation of law, subrogation or otherwise, shall be junior and
subordinate in all respects to all Liens on the Collateral securing any First-Lien Obligations, and
(c) it will not take or cause to be taken any action the purpose or effect of which is, or could
be, to make any Lien securing the Second-Lien Obligations pari passu with, or to give the
Second-Lien Collateral Agent or Second-Lien Claimholders any preference or priority relative to,
any Lien securing the First-Lien Obligations with respect to the Collateral or any part thereof.
All Liens on the Collateral securing any First-Lien Obligations shall be and remain senior in all
respects and prior to all Liens on the Collateral securing any Second-Lien Obligations for all
purposes, whether or not such Liens securing any First-Lien Obligations are subordinated to any
Lien securing any other obligation of the Borrower, any other Grantor or any other Person. The
parties hereto acknowledge and agree that it is their



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intent that (i) the First-Lien Obligations (and the security therefor) constitute a separate
and distinct class (and separate and distinct claims) from the Second-Lien Obligations (and the
security therefor) and (ii) the grant of Liens securing payment and performance of the First-Lien
Obligations and the grant of Liens securing payment and performance of the Second-Lien Obligations
create two separate and distinct Liens with each such Lien securing only the First-Lien Obligations
or the Second-Lien Obligations, as the case may be.




          2.2 Prohibition on Contesting Liens. Each of the Second-Lien Collateral Agent, for
itself and on behalf of each Second-Lien Claimholder, and the First-Lien Agent, for itself and on
behalf of each First-Lien Creditor, agrees that it shall not (and hereby waives any right to) take
any action to challenge or contest, or support any other Person in contesting or challenging, in
any proceeding (including any Insolvency or Liquidation Proceeding), (i) the validity or
enforceability of any Security Document or any Obligation thereunder, (ii) the validity,
perfection, priority or enforceability of the Liens, mortgages, assignments and security interests
granted pursuant to the Security Documents with respect to the First-Lien Obligations or the
Second-Lien Obligations or (iii) the relative rights and duties of the holders of the First-Lien
Obligations and the Second-Lien Obligations granted and established in this Agreement or any other
Security Document with respect to such Liens, mortgages, assignments, and security interests;
provided that nothing in this Agreement shall be construed to prevent or impair the rights of the
First-Lien Agent or, to the extent provided in Section 3, any First-Lien Creditor to enforce this
Agreement, including the priority of the Liens securing the First-Lien Obligations as provided in
Section 2.1 hereof.




          2.3 No New Liens. So long as the Discharge of First-Lien Obligations has not
occurred, the parties hereto agree that the Borrower shall not, and shall not permit any other
Grantor or Subsidiary to, grant or permit any additional Liens, or take any action to perfect any
Liens, on any asset or property to secure any Second-Lien Obligation unless it has also granted or
contemporaneously grants to the First-Lien Collateral Agent a Lien on such asset or property to
secure the First-Lien Obligations and has taken all actions to perfect such Liens. To the extent
that the foregoing provisions are not complied with for any reason, without limiting any other
rights and remedies available to the First-Lien Agent and the other First-Lien Creditors, the
Second-Lien Collateral Agent, on behalf of itself and the other Second-Lien Claimholders, and each
other Second-Lien Claimholder (by its acceptance of the benefits of the Second-Lien Notes
Documents), agrees that any amounts received by or distributed to any of them pursuant to or as a
result of Liens granted in contravention of this Section 2.3 shall be subject to Section 4.2
hereof.




          2.4 Similar Liens and Agreements. The parties hereto agree that it is their intention
that the Second-Lien Collateral shall not be more expansive than, and shall be, except to the
extent provided herein, identical to, the First-Lien Collateral. In furtherance of the foregoing
and of Section 8.9 hereof, the Second-Lien Collateral Agent and the other Second-Lien Claimholders
agree, subject to the other provisions of this Agreement:





          (i) upon request by the First-Lien Agent, to cooperate in good faith (and to direct
their counsel to cooperate in good faith) from time to time in order to determine the
specific items included in the Second-Lien Collateral and the steps taken to



11









 







perfect the Liens thereon and the identity of the respective parties obligated under
the Second-Lien Notes Documents; and




          (ii) that any guarantor of the First-Lien Obligations shall also be a guarantor of the
Second-Lien Obligations.



     SECTION 3. Enforcement.



          3.1 Exercise of Remedies. (a) So long as the Discharge of First-Lien Obligations has
not occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or
against the Borrower or any other Grantor: (i) the Second-Lien Collateral Agent and the other
Second-Lien Claimholders will not exercise or seek to exercise any rights or remedies (including
setoff) with respect to any Collateral (including, without limitation, the exercise of any right
under any lockbox agreement, control account agreement, landlord waiver or bailee’s letter or
similar agreement or arrangement to which the Second-Lien Collateral Agent or any Second-Lien
Claimholder is a party) or institute or commence, or join with any Person in commencing, any action
or proceeding with respect to such rights or remedies (including any action of foreclosure,
enforcement, collection or execution and any Insolvency or Liquidation Proceeding), and will not
contest, protest or object to any foreclosure proceeding or action brought by the First-Lien Agent
or any other First-Lien Creditor or any other exercise by the First-Lien Agent or any other
First-Lien Creditor, of any rights and remedies relating to the Collateral under the First-Lien
Credit Documents or otherwise, or object to the forbearance by the First-Lien Agent or the other
First-Lien Creditors from bringing or pursuing any foreclosure proceeding or action or any other
exercise of any rights or remedies relating to the Collateral; and (ii) the First-Lien Agent shall
have the exclusive right, and the Required First-Lien Creditors shall have the exclusive right to
instruct the First-Lien Agent, to enforce rights, exercise remedies (including setoff and the right
to credit bid their debt) and make determinations regarding the release, disposition, or
restrictions with respect to the Collateral without any consultation with or the consent of the
Second-Lien Collateral Agent or any other Second-Lien Claimholder, all as though the Second-Lien
Obligations did not exist; provided, that, (A) in any Insolvency or Liquidation Proceeding
commenced by or against the Borrower or any other Grantor, the Second-Lien Collateral Agent may
file a claim or statement of interest with respect to the Second-Lien Obligations, (B) the
Second-Lien Collateral Agent may take any action (not adverse to the prior Liens on the Collateral
securing the First-Lien Obligations, or the rights of the First-Lien Agent or the other First-Lien
Creditors to exercise remedies in respect thereof) in order to preserve or protect its Lien on the
Shared Collateral in a manner not otherwise inconsistent with the terms of this Agreement, and (C)
the Second-Lien Claimholders shall be entitled to file any necessary responsive or defensive
pleading in opposition to any motion, claim, adversary proceeding or other pleading made by any
Person objecting to or otherwise seeking the disallowance of the claims of the Second-Lien
Claimholders, including any claim secured by the Shared Collateral, if any, in each case in a
manner not otherwise inconsistent with the terms of this Agreement. In exercising rights and
remedies with respect to the Collateral, the First-Lien Agent and the other First-Lien Creditors
may enforce the provisions of the First-Lien Credit Documents and exercise remedies thereunder, all
in such order and in such manner as they may determine in the exercise of their sole discretion.
Such exercise and enforcement shall include the rights of an agent appointed by them to sell or
otherwise dispose of Collateral upon foreclosure, to incur expenses in connection with such sale or
disposition, and to exercise all the



12









 






rights and remedies of a secured creditor under the UCC of any applicable jurisdiction and of
a secured creditor under Bankruptcy Laws of any applicable jurisdiction.




          (b) The Second-Lien Collateral Agent, on behalf of itself and the Second-Lien Claimholders,
agrees that it will not take or receive any Collateral or any proceeds of Collateral in connection
with the exercise of any right or remedy (including setoff) with respect to any Collateral, unless
and until the Discharge of First-Lien Obligations has occurred. Without limiting the generality of
the foregoing, unless and until the Discharge of First-Lien Obligations has occurred, the rights of
the Second-Lien Collateral Agent and the other Second-Lien Claimholders with respect to the
Collateral are limited to the right to hold a Lien on the Shared Collateral pursuant to the
Second-Lien Security Documents for the period and to the extent granted therein, to receive a share
of the proceeds thereof, if any, after the Discharge of First-Lien Obligations has occurred in
accordance with the terms of the Second-Lien Notes Documents and applicable law, and to exercise
only such other rights as are expressly permitted herein.




          (c) The Second-Lien Collateral Agent, for itself and on behalf of the Second-Lien
Claimholders, and each other Second-Lien Claimholder (by its acceptance of the benefits of the
Second-Lien Notes Documents), (i) agrees that the Second-Lien Collateral Agent and the other
Second-Lien Claimholders will not take any action that would hinder, delay, limit or prohibit any
exercise of remedies under the First-Lien Credit Documents, including any collection, sale, lease,
exchange, transfer or other disposition of the Collateral, whether by foreclosure or otherwise, or
that would limit, invalidate, avoid or set aside any Lien or First-Lien Security Document or
subordinate the priority of the First-Lien Obligations to the Second-Lien Obligations or grant the
Liens securing the Second-Lien Obligations equal ranking to the Liens securing the First-Lien
Obligations and (ii) hereby waives any and all rights it or the Second-Lien Claimholders may have
as a junior lien creditor or otherwise (whether arising under the UCC or under any other law) to
object to the manner in which the First-Lien Agent or the other First-Lien Creditors seek to
enforce or collect the First-Lien Obligations or the Liens granted in any of the First-Lien
Collateral, regardless of whether any action or failure to act by or on behalf of the First-Lien
Agent or First-Lien Creditors is adverse to the interest of the Second-Lien Claimholders.




          (d) The Second-Lien Collateral Agent hereby acknowledges and agrees that no covenant,
agreement or restriction contained in the Second-Lien Security Documents or any other Second-Lien
Notes Document shall be deemed to restrict in any way the rights and remedies of the First-Lien
Agent or the other First-Lien Creditors with respect to the Collateral as set forth in this
Agreement and the First-Lien Documents.




          (e) The Second-Lien Collateral Agent, for itself and on behalf of the Second-Lien
Claimholders, and each Second-Lien Claimholder (by its acceptance of the benefits of the
Second-Lien Notes Documents) agrees that the Second-Lien Collateral Agent and the other Second-Lien
Claimholders will not, without the prior written consent of the Required First-Lien Creditors (or
the First-Lien Agent at their direction or with their consent), issue any payment blockage or
similar notice with respect to any obligations that are subordinated in right of payment to any
First-Lien Obligations before the Discharge of First-Lien Credit Agreement Obligations has
occurred.




13









 








          3.2 Actions Upon Breach. (a) If any Second-Lien Claimholder, contrary to this
Agreement, commences or participates in any action or proceeding against any Grantor or the
Collateral, any First-Lien Creditor may intervene and interpose as a defense or dilatory plea the
making of this Agreement, in its name or in the name of such Grantor.




          (b) Should any Second-Lien Claimholder, contrary to this Agreement, in any way take, attempt
to or threaten to take any action with respect to the Collateral (including, without limitation,
any attempt to realize upon or enforce any remedy with respect to this Agreement), or take any
other action in violation of this Agreement or fail to take any action required by this Agreement,
the First-Lien Agent or any other First-Lien Creditor (in its own name or in the name of the
relevant Grantor), with the prior written consent of the First-Lien Agent, (i) may obtain relief
against such Second-Lien Claimholder by injunction, specific performance or other appropriate
equitable relief, it being understood and agreed by the Second-Lien Collateral Agent on behalf of
each Second-Lien Claimholder that (x) the First-Lien Creditors’ damages from its actions may at
that time be difficult to ascertain and may be irreparable, and (y) each Second-Lien Claimholder
waives any defense that the First-Lien Creditors cannot demonstrate damage or be made whole by the
awarding of damages, and (ii) shall be entitled to damages, as well as reimbursement for all
reasonable and documented costs and expenses incurred in connection with any action to enforce the
provisions of this Agreement.




     SECTION 4. Payments.



          4.1 Application of Proceeds. So long as the Discharge of First-Lien Obligations has
not occurred, any proceeds of any Collateral pursuant to the enforcement of any Security Document
or the exercise of any remedial provision thereunder, together with all other proceeds received by
any Creditor (including all funds received in respect of post-petition interest or fees and
expenses) as a result of any such enforcement or the exercise of any such remedial provision or as
a result of any distribution of or in respect of any Collateral (whether or not expressly
characterized as such) upon or in any Insolvency or Liquidation Proceeding with respect to any
Grantor, or the application of any Collateral (or proceeds thereof) to the payment thereof or any
distribution of Collateral (or proceeds thereof) upon the liquidation or dissolution of any
Grantor, shall be applied by the First-Lien Agent to the First-Lien Obligations in such order as
specified in the relevant First-Lien Security Document (it being understood that any payment of the
fees and expenses of the Second-Lien Collateral Agent shall not constitute a distribution of or in
respect of Collateral for purposes of this Agreement, provided, however, that this
understanding does not constitute and may not be construed as an agreement or consent of the
First-Lien Agent or any of the First-Lien Creditors to the payment of the Second-Lien Collateral
Agent’s fees or expenses in any respects). Upon the Discharge of First-Lien Obligations, the
First-Lien Agent shall deliver to the Second-Lien Collateral Agent any proceeds of Shared
Collateral held by it in the same form as received, with any necessary endorsements or as a court
of competent jurisdiction may otherwise direct, to be applied by the Second-Lien Collateral Agent
to the Second-Lien Obligations in such order as specified in the Second-Lien Security Documents.




          4.2 Payments Over. Until such time as the Discharge of First-Lien Obligations has
occurred, any Collateral or proceeds thereof (together with assets or proceeds subject to Liens
referred to in the final sentence of Section 2.3 hereof) (or any distribution in



14









 






respect of the Collateral, whether or not expressly characterized as such) received by the
Second-Lien Collateral Agent or any other Second-Lien Claimholders in connection with the exercise
of any right or remedy (including setoff) relating to the Collateral or that is otherwise
inconsistent with this Agreement shall be segregated and held in trust and forthwith paid over to
the First-Lien Agent for the benefit of the First-Lien Creditors in the same form as received, with
any necessary endorsements or as a court of competent jurisdiction may otherwise direct. The
First-Lien Agent is hereby authorized to make any such endorsements as agent for the Second-Lien
Collateral Agent or any such other Second-Lien Claimholders. This authorization is coupled with an
interest and is irrevocable until such time as this Agreement is terminated in accordance with its
terms.




     SECTION 5. Other Agreements.



          5.1 Releases.




          (a) If, in connection with:




               (i) the exercise of the First-Lien Agent’s remedies in respect of the Collateral provided for
in Section 3.1 hereof, including any sale, lease, exchange, transfer or other disposition of any
such Collateral;




               (ii) any sale, lease, exchange, transfer or other disposition of any Collateral permitted
under the terms of the First-Lien Credit Documents (whether or not an “event of default” thereunder
or under any Second-Lien Notes Document has occurred and is continuing), whether by its terms or
pursuant to any amendment or consent thereto; or




               (iii) any agreement (not contravening the First-Lien Credit Documents) between the First-Lien
Agent and the Borrower or any other Grantor (x) to release the First-Lien Agent’s Lien on any
portion of the Collateral or (y) to release any Grantor from its obligations under its guaranty of
the First-Lien Obligations;



there occurs the release by the First-Lien Agent, acting on its own or at the direction of the
Required First-Lien Creditors, of any of its Liens on any part of the Collateral, or of any Grantor
from its obligations under its guaranty of the First-Lien Obligations (each, a “First-Lien
Release”), then the Liens, if any, of the Second-Lien Collateral Agent, for itself and for the
benefit of the other Second-Lien Claimholders, on such Collateral, and the obligations of such
Grantor under its guaranty of the Second-Lien Obligations, shall be automatically, unconditionally
and simultaneously released, and, upon receipt of notice in writing, the Second-Lien Collateral
Agent, for itself or on behalf of any such Second-Lien Claimholders, promptly shall execute and
deliver to the First-Lien Agent or such Grantor such termination statements, releases and other
documents as the First-Lien Agent or such Grantor may request, and which the Grantor has provided
to the Second-Lien Collateral Agent, to effectively confirm such release; provided, however, that,
(x) in no event, shall the terms of this Section 5.1(a) apply with respect to any First-Lien
Release occurring in connection with, and after giving effect to, any First-Lien Payment Discharge
and (y) any release effected or occasioned by the terms of this Section 5.1 by Second-Lien
Collateral Agent of any Lien in favor of Second-Lien Collateral Agent or any of the Second-Lien
Claimholders shall not extend to or otherwise affect any of the rights of Second-


15









 






Lien Collateral Agent or any Second-Lien Claimholder arising under the Second-Lien Notes Documents
to any proceeds of any disposition of any Collateral occurring in connection with such First-Lien
Release, provided that such rights to such proceeds shall be subject in all respects to the terms
and conditions of this Agreement.




          (b) Until the Discharge of First-Lien Obligations occurs, the Second-Lien Collateral Agent,
for itself and on behalf of the Second-Lien Claimholders, hereby irrevocably constitutes and
appoints the First-Lien Agent and any officer or agent of the First-Lien Agent, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of the Second-Lien Collateral Agent or such other Second-Lien Claimholder or in
the First-Lien Agent’s own name, from time to time in the First-Lien Agent’s discretion, for the
purpose of carrying out the terms of this Section 5.1, to take any and all appropriate action and
to execute any and all documents and instruments which may be necessary or desirable to accomplish
the purposes of this Section 5.1, including any endorsements or other instruments of transfer or
release.




          5.2 Insurance. Unless and until the Discharge of First-Lien Obligations has occurred,
the First-Lien Agent (acting at the direction of the Required First-Lien Creditors to the extent
required by the First-Lien Credit Documents) shall have the sole and exclusive right, subject to
the rights of the Grantors under the First-Lien Credit Documents, to adjust settlement for any
insurance policy covering the Collateral in the event of any loss thereunder and to approve any
award granted in any condemnation or similar proceeding (or any deed in lieu of condemnation)
affecting the Collateral. Unless and until the Discharge of First-Lien Obligations has occurred,
and subject to the rights of the Grantors under the First-Lien Security Documents, all proceeds of
any such policy and any such award (or any payments with respect to a deed in lieu of condemnation)
in respect to the Collateral shall be paid to the First-Lien Agent for the benefit of the
First-Lien Creditors pursuant to the terms of the First-Lien Credit Documents (including, without
limitation, for purposes of cash collateralization of commitments, Letters of Credit, and Secured
Hedge Agreements) and, after the Discharge of First-Lien Obligations has occurred, to the
Second-Lien Collateral Agent for the benefit of the Second-Lien Claimholders (in respect of any
Shared Collateral) to the extent required under the Second-Lien Security Documents and then, to the
extent no Second-Lien Obligations are outstanding, to the owner of the subject property, to such
other Person as may be entitled thereto or as a court of competent jurisdiction may otherwise
direct. If the Second-Lien Collateral Agent or any other Second-Lien Claimholder shall, at any
time, receive from the insurer any proceeds of any such insurance policy or any such award or
payment in contravention of this Agreement, it shall pay such proceeds over to the First-Lien Agent
in accordance with the terms of Section 4.2 of this Agreement. Unless and until the Discharge of
First-Lien Obligations has occurred, each of the First-Lien Agent and the Second-Lien Collateral
Agent will have the right (subject to the rights of the Grantors under the First-Lien Credit
Documents) to be named an additional insured and loss payee (as their interests may appear) under
any such insurance policy, provided, however, that (a) any amounts payable under any such insurance
policy shall constitute proceeds and shall be subject in all respects to the terms and conditions
of this Agreement and (b) if Discharge of First-Lien Obligations has not occurred, then the
Second-Lien Collateral Agent shall, promptly upon the First-Lien Agent’s request, authorize and
direct any applicable insurer to pay over the proceeds which may be payable to the Second-Lien
Collateral Agent under any such insurance policy to the First-Lien Agent to be applied in a manner
consistent with the terms hereof.




16









 








          5.3 Amendments to Second-Lien Notes Documents. (a) Without the prior written consent
of the First-Lien Agent (acting at the direction of the Required First-Lien Creditors), no
Second-Lien Notes Document may be amended, restated, supplemented, modified or Refinanced or
entered into to the extent such amendment, supplement, restatement, modification or Refinancing, or
the terms of any new Second-Lien Notes Document, would contravene the provisions or intent of this
Agreement, the First-Lien Credit Agreement, or any other First-Lien Credit Document (it being
understood that the Second-Lien Collateral Agent may rely upon an opinion of counsel to the
Borrower to make any determination as to whether the requirements of this Section 5.3 have been
complied with). The Borrower, each other Grantor and the Second-Lien Collateral Agent each agree
that each Second-Lien Security Document shall include the following language (or language to
similar effect approved by the First-Lien Agent):





“Notwithstanding anything herein to the contrary, the lien and security interest
granted to the Second-Lien Collateral Agent pursuant to this Agreement and the
exercise of any right or remedy by the Second-Lien Collateral Agent hereunder are
subordinated and subject to the provisions of that certain Intercreditor Agreement,
dated as of June 5, 2009 (as amended, restated, supplemented or otherwise modified
from time to time in accordance with the terms thereof, the “Intercreditor
Agreement”), among Interface, Inc., Interfaceflor, LLC, the other Grantors from
time to time party thereto, Wachovia Bank, National Association, in its capacity as
the initial First-Lien Agent, and U.S. Bank National Association, in its capacity as
the initial Second-Lien Collateral Agent thereunder. In the event of any conflict
between the terms of the Intercreditor Agreement and this Agreement, the terms of
the Intercreditor Agreement shall govern and control.”


In addition, each of the Borrower, each other Grantor and the Second-Lien Collateral Agent each
agree that each Second-Lien Security Document covering any Shared Collateral constituting real
property shall contain such other language as the First-Lien Agent may reasonably request to
reflect the subordination of such Second-Lien Security Document to the First-Lien Security Document
covering such Shared Collateral.




          (b) In the event the First-Lien Agent or the other First-Lien Creditors and the relevant
Grantor(s) enter into any amendment, restatement, waiver or consent in respect of any of the
First-Lien Security Documents for the purpose of adding to, or deleting from, or waiving or
consenting to any departures from any provisions of, any First-Lien Security Document or changing
in any manner the rights of the First-Lien Agent, the other First-Lien Creditors, the Borrower or
any other Grantor thereunder, then such amendment, restatement, waiver or consent shall apply
automatically to any comparable provision of the Comparable Second-Lien Security Document without
the consent of the Second-Lien Collateral Agent or the other Second-Lien Claimholders and without
any action by the Second-Lien Collateral Agent, the Borrower or any other Grantor,
provided, that (A) no such amendment, restatement, waiver or consent shall have the effect
of (i) removing assets subject to the Lien of the Second-Lien Security Documents, except to the
extent that a release of such Lien is permitted or required by Section 5.1 of this Agreement, or
(ii) imposing additional duties on the Second-Lien Collateral Agent without its consent, and (B)
written notice of such amendment, restatement, waiver or consent shall have



17









 






been given to the Second-Lien Collateral Agent (although the failure to give any such notice
shall in no way affect the effectiveness of any such amendment, waiver or consent).




          (c) The Second-Lien Obligations may be Refinanced, in whole or in part and without the consent
of the First-Lien Agent or any of the First-Lien Creditors, to the extent such Refinancing is
permitted pursuant to the terms of the First-Lien Credit Documents, and the terms of this Agreement
shall continue to apply to such Refinance.




          5.4 Rights As Unsecured Creditors. Except as otherwise set forth in this Agreement,
the Second-Lien Collateral Agent and the other Second-Lien Claimholders may exercise rights and
remedies as unsecured creditors against any Grantor in accordance with the terms of the Second-Lien
Notes Documents and applicable law. Except as otherwise set forth in this Agreement (and subject
in any event to any subordination provisions in the Second-Lien Notes Indenture and the other
Second-Lien Notes Documents), nothing in this Agreement shall prohibit the receipt by the
Second-Lien Collateral Agent or any other Second-Lien Claimholder of regularly scheduled payments
of principal of, and regularly scheduled payments of interest on, the Second-Lien Obligations so
long as such receipt is not the direct or indirect result of the exercise by the Second-Lien
Collateral Agent or any other Second-Lien Claimholder of rights or remedies as a secured creditor
(including setoff) or enforcement in contravention of this Agreement of any Lien held by any of
them. In the event the Second-Lien Collateral Agent or any other Second-Lien Claimholder becomes a
judgment lien creditor in respect of Collateral as a result of any enforcement of its rights, such
judgment lien shall be subordinated to the Liens securing First-Lien Obligations on the same basis
as the other Liens securing the Second-Lien Obligations are so subordinated to such Liens securing
First-Lien Obligations under this Agreement. Nothing in this Agreement impairs or otherwise
adversely affects any rights or remedies the First-Lien Agent or the other First-Lien Creditors may
have with respect to the First-Lien Collateral. Each of the parties hereto hereby acknowledges and
agrees that the rights of the Second-Lien Claimholders to (i) receive payments of principal,
interest and other amounts owing in respect of the Second-Lien Obligations and (ii) exercise rights
and remedies as creditors against the Borrower or any other Grantor that has guaranteed the
Second-Lien Obligations may be further subject to any subordination provisions set forth in the
Second-Lien Notes Indenture and the other Second-Lien Notes Documents.




          5.5 Bailee for Perfection. (a) The First-Lien Agent acknowledges it holds the Pledged
Collateral or other Collateral in its possession or control (or in the possession or control of its
agents or bailees) on behalf of itself and the Second-Lien Collateral Agent (it being understood
that with respect to the Second-Lien Collateral Agent, it holds solely the Pledged Collateral or
other Collateral constituting Shared Collateral) and, in each case, any assignee, solely for the
purpose of perfecting the security interest granted under the First-Lien Credit Documents and the
Second-Lien Notes Documents, subject to the terms and conditions of this Section 5.5.




          (b) With respect to any and all filings or recordings by or in favor of First-Lien Agent made
in the United States Patent and Trademark Office or the U.S. Copyright Office against any Grantor’s
intellectual property which constitutes Shared Collateral, First-Lien Agent agrees to act under
such filings and recordings, to the extent filings or recordings of such type and character are
necessary to obtain perfection of a Lien in such intellectual property, and to



18









 






hold such Liens as bailee for the Second-Lien Collateral Agent and each Second-Lien
Claimholder, and their respective successors and assigns, solely for the purpose of achieving the
perfection of such Liens granted in such intellectual property to the Second-Lien Collateral Agent
pursuant to the Second-Lien Security Documents, subject, in all respects, to the terms and
conditions of this Section 5.5.




          (c) Except as otherwise expressly provided herein, until the Discharge of First-Lien
Obligations has occurred, the First-Lien Agent shall be entitled to deal with the Pledged
Collateral in accordance with the terms of the First-Lien Credit Documents as if the Liens of the
Second-Lien Collateral Agent under the Second-Lien Security Documents did not exist. The rights of
the Second-Lien Collateral Agent shall at all times be subject to the terms of this Agreement and
to the First-Lien Agent’s rights under the First-Lien Credit Documents.




          (d) The First-Lien Agent shall have no obligation whatsoever to the First-Lien Creditors and
the Second-Lien Collateral Agent or any Second-Lien Claimholder to assure that the Pledged
Collateral is genuine or owned by any of the Grantors or to preserve rights or benefits of any
Person except as expressly set forth in this Section 5.5. The duties or responsibilities of the
First-Lien Agent under this Section 5.5 shall be limited solely to holding the Pledged Collateral
as bailee in accordance with this Section 5.5.




          (e) The First-Lien Agent, acting pursuant to this Section 5.5, shall not have by reason of the
First-Lien Security Documents, the Second-Lien Security Documents, this Agreement or any other
document, a fiduciary relationship in respect of the First-Lien Creditors, the Second-Lien
Collateral Agent or any other Second-Lien Claimholder.




          (f) Upon the Discharge of First-Lien Obligations, the First-Lien Agent shall deliver whatever
Pledged Collateral it has in its possession (if any) (or proceeds thereof) together with any
necessary endorsements, first, to the Second-Lien Collateral Agent or as the Second-Lien
Collateral Agent shall otherwise lawfully direct (solely to the extent such Pledged Collateral
constitutes Shared Collateral), if any Second-Lien Obligations remain outstanding, and
second, to the Borrower or the relevant Grantor if no First-Lien Obligations or Second-Lien
Obligations remain outstanding (in each case, so as to allow such Person to obtain control of such
Pledged Collateral). The First-Lien Agent further agrees to take all other action reasonably
requested by such Person, at such Person’s sole cost and expense, in connection with such Person’s
obtaining a first-priority interest in the Collateral or as a court of competent jurisdiction may
otherwise direct.




          5.6 When Discharge of First-Lien Obligations Deemed to Not Have Occurred. If the
Discharge of First-Lien Obligations occurs contemporaneously with any Refinancing of the First-Lien
Obligations, then such Discharge of First-Lien Obligations shall automatically be deemed not to
have occurred for all purposes of this Agreement, and the obligations under such Refinancing shall
automatically be treated as First-Lien Obligations for all purposes of this Agreement, including
for purposes of the Lien priorities and rights in respect of Collateral set forth herein, and the
agent under the First-Lien Credit Documents evidencing or relating to such Refinancing shall be the
First-Lien Agent for all purposes of this Agreement (and, if there is no agent relating to such
Refinancing, any lender, bank, or financial institution holding any obligations thereunder shall be
deemed First Lien Agent for all purposes hereunder). Upon



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receipt of a notice in writing stating that the Borrower has entered into Refinancing of the
First-Lien Obligations (which notice shall include the identity of the new agent, such agent, the
“New Agent”), the Second-Lien Collateral Agent shall promptly, at Borrower’s sole cost and
expense, enter into such documents and agreements (including amendments or supplements to this
Agreement) as the Borrower or such New Agent may reasonably request in order to provide to the New
Agent the rights contemplated hereby, in each case consistent in all material respects with the
terms of this Agreement.




          5.7 Option to Purchase First-Lien Debt.




          (a) Without prejudice to the enforcement of the First-Lien Agent’s and each First Lien
Creditor’s remedies at any and all times in accordance with the First-Lien Credit Documents and the
terms of all other sections of this Agreement, the First-Lien Agent and each First Lien Creditors
agree that at any time following (a) acceleration of the First-Lien Obligations in accordance with
the terms of the First Lien Credit Agreement, (b) a payment default under the First-Lien Credit
Agreement that has not been cured or waived by the First-Lien Creditors within ninety (90) days of
the occurrence thereof or (c) the commencement of an Insolvency or Liquidation Proceeding (each, a
“Purchase Event”), one or more of the Second-Lien Claimholders may request, and the
First-Lien Creditors hereby offer the Second-Lien Claimholders the option, to purchase all, but not
less than all, of the aggregate amount of First-Lien Obligations outstanding at the time of
purchase at a purchase price determined in accordance with, and on terms set forth in, this Section
5.7 (any such sale, a “Sale”).




          (b) Any Sale shall be consummated and subject to the following terms and conditions:





          (i) Any Sale shall be made without any recourse or representation or warranty by any of
the First-Lien Agent or the First-Lien Creditors, other than those limited representations
and warranties made by an assigning lender under the terms of the First-Lien Credit Document
in connection with any assignment of such lender’s interest, pursuant to documentation in
form and substance reasonably satisfactory to, and prepared by counsel to, the First-Lien
Agent (with the cost of such counsel to be paid by the Grantors or, if the Grantors do not
make such payment, by the respective Eligible Purchaser or Eligible Purchasers, who shall
have the right to obtain reimbursement of same from the Grantors), with it being understood
and agreed that such documentation shall provide that the First-Lien Agent and each other
First-Lien Creditor shall retain all rights to indemnification as provided in the relevant
First-Lien Credit Documents for all periods prior to any assignment by them pursuant to the
provisions of this Section 5.7;




          (ii) No Sale shall be consummated unless, at the time thereof, all commitments pursuant
to any then outstanding First-Lien Credit Agreement shall have terminated, and all Secured
Hedge Agreements constituting First-Lien Documents and Cash Management Services entered into
with any First-Lien Creditor shall also have been terminated in accordance with their terms,
except to the extent any applicable counterparty to any such Secured Hedge Agreements or
provider of any such Cash Management Services has agreed, in writing, to other arrangements
acceptable to such counterparty, such provider, and the Second-Lien Claimholders party to
such Sale;



20









 






          (iii) Any request made by a Second-Lien Claimholder to exercise the purchase option
described in Section 5.7(a) above shall constitute such Second-Lien Claimholder’s acceptance
of the offer made therein, shall be irrevocable, and shall, on the fifth business day
following the date on which such Second-Lien Claimholder delivered such request (the
“Binding Date”), become legally enforceable and fully binding upon such Second-Lien
Claimholder on the terms set forth herein;




          (iv) If no Second-Lien Claimholder makes any request for a Sale within five days
following the first Purchase Event to occur, then the offer of the First-Lien Creditors set
forth in Section 5.7(a) shall be deemed properly revoked and the First-Lien Creditors shall
have no further obligations to offer or sell any First-Lien Obligations to any Second-Lien
Claimholder pursuant to this Section 5.7;




          (v) The purchase price for such Sale shall equal the sum of (as calculated or
determined, except as may be otherwise provided below, as of the date on which such Sale is
consummated) (A) in the case of all loans, advances or other similar extensions of credit
that constitute First-Lien Obligations (including unreimbursed amounts drawn in respect of
Letters of Credit, but excluding the undrawn amount of then outstanding Letters of Credit),
the greater of (1) 100% and (2) the then current market-based price, of the principal amount
thereof and, in each of the foregoing cases, all accrued and unpaid interest thereon through
the date of such Sale (without regard, however, to any acceleration prepayment
penalties or premiums other than customary breakage costs), (B) in the case of any Secured
Hedge Agreement, the aggregate amount then owing to each Hedge Bank thereunder pursuant to
the terms of the respective Secured Hedge Agreement, including without limitation all
amounts owing to such Hedge Bank as a result of the termination (or early termination)
thereof, (C) in the case of any Cash Management Services, the aggregate amount then owing to
each Cash Management Bank providing such Cash Management Services pursuant to the terms of
the respective documents governing such Cash Management Services, including without
limitation all amounts owing to such Cash Management Bank as a result of the termination (or
early termination) thereof, plus (D) any applicable premium, accrued and unpaid interest,
fees, cost and other expenses and indemnities (including legal fees) incurred by the
First-Lien Agent and the First-Lien Creditors through the date the Sale is consummated;




          (vi) The purchase price for any such Sale and any cash collateral delivered to a
First-Lien Creditor in connection therewith shall be in cash or immediately available funds
and in U.S. dollars;




          (vii) Any First-Lien Creditor which is the issuer of any letter of credit, the
reimbursement obligations of which are secured by any Collateral, shall have received cash
collateral in the amount 110% of the aggregate undrawn amount of all such letters of credit
issued by it, together with an amount equal to the aggregate facing and similar fees which
will accrue thereon through the stated maturity of such letters of credit (assuming no
drawings thereon before stated maturity), and such First-Lien Creditor and the Second-Lien
Claimholders making such purchase shall have agreed upon terms and conditions respecting
such cash collateral;



21









 






          (viii) In addition to other amounts required under this Section 5.7(b), the First-Lien
Agent shall have received an amount equal to 110% of all contingent obligations owing by any
Grantor to the First-Lien Agent and all First-Lien Creditors (except to the extent such
contingent obligations have been accounted for pursuant to other terms of this Section
5.7(b)), as determined in good faith by the First-Lien Agent (in consultation with the other
First-Lien Creditors), which amounts shall be returned to the appropriate Second-Lien
Claimholder, without interest, upon satisfaction of, the failure to materialize after a
reasonable period of time, or settlement of any such contingent obligation;




          (ix) The First-Lien Agent, for itself and on behalf of the First-Lien Creditors, shall
have received from the Second-Lien Collateral Agent a waiver by the Second-Lien Collateral
Agent (on behalf of itself and the other Second-Lien Claimholders) of all claims arising out
of this Agreement and the transactions contemplated hereby as a result of exercising the
purchase option contemplated by this Section 5.7; and




          (x) Neither the First-Lien Agent nor any other First-Lien Creditor shall have any
disclosure obligation to any Eligible Purchaser, the Second-Lien Collateral Agent or any
other Second-Lien Claimholder in connection with any exercise of such purchase option.



          (c) The obligations of the First-Lien Creditors to enter into a Sale of their respective
First-Lien Obligations under this Section 5.7 are several and not joint and several. To the extent
any First-Lien Creditor (a “Defaulting First-Lien Creditor”) breaches its obligation to
consummate a Sale, nothing in this Section 5.7 shall be deemed to require the First-Lien Agent or
any other First-Lien Creditor to purchase such Defaulting First-Lien Creditor’s First-Lien
Obligations for resale to the holders of Second-Lien Obligations and in all cases, the First-Lien
Agent and each First-Lien Creditor complying with the terms of this Section 5.7 shall not be deemed
to be in default of this Agreement or otherwise be deemed liable for any action or inaction of any
Defaulting First-Lien Creditor; provided that nothing in this clause (c) shall require any
Eligible Purchaser to purchase less than all of the First-Lien Obligations.




          (d) Each Grantor irrevocably consents to any assignment effected to one or more Second-Lien
Claimholders pursuant to this Section 5.7 (so long as each of those party to any Sale meet all
eligibility standards contained in all relevant First-Lien Credit Documents, other than obtaining
the consent of any Grantor to an assignment to the extent required by such First-Lien Credit
Documents) for purposes of all First-Lien Credit Documents and hereby agrees that no further
consent from such Grantor shall be required.




     SECTION 6. Insolvency or Liquidation Proceedings.



          6.1 Finance and Sale Issues. (a) Until the Discharge of the First-Lien Obligations
has occurred, if the Borrower or any other Grantor shall be subject to any Insolvency or
Liquidation Proceeding and the First-Lien Agent (acting at the direction of the Required First-Lien
Creditors) shall desire to permit the use of Cash Collateral on which the First-Lien Agent or any
other creditor of the Borrower or any other Grantor has a Lien or agrees, along with the



22









 






Required First-Lien Creditors, to permit the Borrower or any other Grantor to obtain
post-petition financing (including on a priming basis), whether from the First-Lien Creditors or
any other third party under Section 362, 363 or 364 of the Bankruptcy Code or any other Bankruptcy
Law (each, a “Post-Petition Financing”), then the Second-Lien Collateral Agent, on behalf
of itself and the Second-Lien Claimholders, and each Second-Lien Claimholder (by its acceptance of
the benefits of the Second-Lien Notes Documents), agrees that it will not oppose or raise any
objection to or contest (or join with or support any third party opposing, objecting to or
contesting), such use of Cash Collateral or Post-Petition Financing and will not request adequate
protection or any other relief in connection therewith that is inconsistent with Section 6.3
(except as expressly agreed in writing by the First-Lien Agent) and, to the extent the Liens
securing the First-Lien Obligations are subordinated to or pari passu with such Post-Petition
Financing incurred in compliance with this Section 6.1, the Liens of the Second-Lien Claimholders
on the Collateral shall be deemed to be subordinated, without any further action on the part of any
person or entity, to the Liens securing such Post-Petition Financing (and all Obligations relating
thereto), and the Liens securing the Second-Lien Obligations shall have the same priority with
respect to the Collateral relative to the Liens securing the First-Lien Obligations as if such
Post-Petition Financing had not occurred; provided that the First-Lien Agent and the
First-Lien Creditors acknowledge and agree that the Second-Lien Collateral Agent and the
Second-Lien Claimholders shall retain the right to raise any objection to the Post-Petition
Financing that could be raised by any unsecured creditor of the Borrower, so long as such
objections are not based on the Second-Lien Claimholders’ status as secured creditors.




          (b) Until the Discharge of the First-Lien Obligations has occurred, the Second-Lien Collateral
Agent, on behalf of itself and the Second-Lien Claimholders, and each Second-Lien Claimholder (by
its acceptance of the benefits of the Second-Lien Notes Documents), agrees that it will raise no
objection to, oppose or contest (or join with or support any third party opposing, objecting to or
contesting), a sale or other disposition of any Collateral free and clear of its Liens or other
claims under Section 363 of the Bankruptcy Code if the First-Lien Creditors have consented to such
sale or disposition of such assets; provided, that notwithstanding the foregoing, the
Second-Lien Collateral Agent, on behalf of itself and the other Second-Lien Claimholders, may raise
objections to any such disposition of Collateral that could be raised by any creditor of the
Borrower whose claims were not secured by any Liens on the Collateral, so long as such objections
are not based on the Second-Lien Claimholders’ status as secured creditors.




          6.2 Relief from the Automatic Stay. Until the Discharge of First-Lien Obligations has
occurred, the Second-Lien Collateral Agent, on behalf of itself and the Second-Lien Claimholders,
and each Second-Lien Claimholder (by its acceptance of the benefits of the Second-Lien Notes
Documents), agrees that none of them shall seek relief, pursuant to Section 362(d) of the
Bankruptcy Code or otherwise, from the automatic stay of Section 362(a) of the Bankruptcy Code or
from any other stay in any Insolvency or Liquidation Proceeding in respect of the Collateral,
without the prior written consent of the First-Lien Agent, unless a motion for adequate protection
permitted under Section 6.3 has been denied by the Bankruptcy Court.




          6.3 Adequate Protection. (a) The Second-Lien Collateral Agent, on behalf of itself
and the Second-Lien Claimholders, and each Second-Lien Claimholder (by its acceptance of the
benefits of the Second-Lien Notes Documents), agrees that none of them shall (i) oppose,



23









 






object to or contest (or join with or support any third party opposing, objecting to or
contesting) (a) any request by the First-Lien Agent or the other First-Lien Creditors for adequate
protection in any Insolvency or Liquidation Proceeding (or any granting of such request) or (b) any
objection by the First-Lien Agent or the other First-Lien Creditors to any motion, relief, action
or proceeding based on the First-Lien Agent or the other First-Lien Creditors claiming a lack of
adequate protection or (ii) seek or accept any form of adequate protection under any of Sections
362, 363 or 364 of the Bankruptcy Code with respect to the Collateral, except as expressly provided
in this Section 6.3.




          (b) In any Insolvency or Liquidation Proceeding:




               (i) if the First-Lien Creditors (or any subset thereof) are granted adequate protection in the
form of additional collateral in connection with any use of Cash Collateral or Post-Petition
Financing, then the Second-Lien Collateral Agent, on behalf of itself or any of the other
Second-Lien Claimholders, may seek or request adequate protection in the form of a Lien on such
additional collateral, which Lien will be subordinated to the Liens securing the First-Lien
Obligations, such use of Cash Collateral or any Post-Petition Financing (and all Obligations
relating thereto) on the same basis as the other Liens securing the Second-Lien Obligations are
so subordinated to the First-Lien Obligations under this Agreement, the First-Lien Security
Documents and the Second-Lien Security Documents; and



               (ii) the Second-Lien Collateral Agent and the other Second-Lien Claimholders shall only be
permitted to seek adequate protection with respect to their rights in the Collateral in any
Insolvency or Liquidation Proceeding in the form of (A) additional collateral, including
replacement Liens on post-petition collateral, provided, that, as adequate protection for
the First-Lien Obligations, the First-Lien Agent, on behalf of the First-Lien Creditors, is also
granted a security interest in and Lien upon such additional collateral, which is senior and prior
to the security interest and Lien granted to the Second-Lien Collateral Agent and/or the
Second-Lien Claimholders; (B) replacement Liens on the Collateral, provided, that, as
adequate protection for the First-Lien Obligations, the First-Lien Agent, on behalf of the
First-Lien Creditors, is also granted a security interest in and replacement Lien upon such
additional collateral, which is senior and prior to the security interest and Lien granted to the
Second-Lien Collateral Agent and/or the Second-Lien Claimholders; and (C) an administrative expense
claim, provided, that, as adequate protection for the First-Lien Obligations, the
First-Lien Agent, on behalf of the First-Lien Creditors, is also granted an administrative expense
claim that is senior and prior to the administrative expense claim granted to the Second-Lien
Collateral Agent and/or the Second-Lien Claimholders; and provided, further, that
unless the Discharge of First-Lien Obligations has occurred prior to, or occurs on, the effective
date of any plan of reorganization, any adequate protection payments that may otherwise be payable
to the Second-Lien Collateral Agent or any Second-Lien Claimholders in respect of any of the
foregoing shall be paid to the First-Lien Agent for the benefit of the First-Lien Creditors for
application to the First-Lien Obligations.



          6.4 No Waiver; Voting Rights; Reorganization Securities. (a) Nothing contained herein
shall prohibit or in any way limit the First-Lien Agent or any First-Lien Creditor from objecting
on any basis in any Insolvency or Liquidation Proceeding or otherwise to any action taken by the
Second-Lien Collateral Agent or any other Second-Lien Claimholder,



24









 






including the seeking by the Second-Lien Collateral Agent or any other Second-Lien Claimholder
of adequate protection on terms inconsistent with Section 6.3 or the assertion by the Second-Lien
Collateral Agent or any other Second-Lien Claimholder of any of its rights and remedies under the
Second-Lien Notes Documents or otherwise.




          (b) In any Insolvency or Liquidation Proceeding, neither the Second-Lien Collateral Agent nor
any other Second-Lien Claimholder shall (i) oppose or object to the proposed treatment of
First-Lien Obligations or the relative treatment of the First-Lien Obligations to the Second-Lien
Obligations in any plan of reorganization or disclosure statement, or join with or support any
third party in doing so, to the extent the terms of such plan or disclosure statement comply with
the following clause (ii) and are otherwise consistent with the rights of the First-Lien Creditors
under this Agreement or (ii) support any plan of reorganization or disclosure statement of any
Grantor unless (x) such plan provides for the payment in full in cash of all First-Lien Obligations
(including all post-petition interest, fees and expenses as provided in Section 6.6 hereof) on the
effective date of such plan of reorganization, or (y) such plan provides on account of the
First-Lien Obligations for the retention by the First-Lien Agent, for the benefit of the First-Lien
Creditors, of the Liens on the Collateral securing the First-Lien Obligations, and on all proceeds
thereof, and such plan also provides that any Liens retained by, or granted to, the Second-Lien
Collateral Agent are only on assets or property securing the First-Lien Obligations and shall have
the same relative priority with respect to the Collateral or other assets or property,
respectively, as provided in this Agreement with respect to the Collateral, and to the extent such
plan provides for deferred cash payments, or for the distribution of any other property of any kind
or nature, on account of the First-Lien Obligations or the Second-Lien Obligations, such plan
provides that any such deferred cash payments or other distributions in respect of the Second-Lien
Obligations shall be delivered to the First-Lien Agent and distributed in accordance with the
priorities provided in Sections 4.1(a) and 5.4 hereof. Notwithstanding the foregoing, the
Second-Lien Claimholders shall remain entitled to vote their claims in any such Insolvency or
Liquidation Proceeding.




          6.5 Preference Issues. If any First-Lien Creditor is required in any Insolvency or
Liquidation Proceeding or otherwise to turn over or otherwise pay to the estate of the Borrower or
any other Grantor any amount (a “Recovery”), then the First-Lien Obligations shall be
reinstated to the extent of such Recovery and the First-Lien Creditors shall be entitled to a
reinstatement of First-Lien Obligations with respect to all such recovered amounts. If this
Agreement shall have been terminated prior to such Recovery, this Agreement shall be reinstated in
full force and effect, and such prior termination shall not diminish, release, discharge, impair or
otherwise affect the obligations of the parties hereto from such date of reinstatement. Any
amounts received by the Second-Lien Collateral Agent or any Second-Lien Claimholder on account of
the Second-Lien Obligations after the termination of this Agreement shall, in the event of a
reinstatement of this Agreement pursuant to this Section 6.5, be held in trust for and paid over to
the First-Lien Agent for the benefit of the First-Lien Creditors, for application to the reinstated
First-Lien Obligations. This Section 6.5 shall survive termination of this Agreement.




          6.6 Post-Petition Interest. (a) Neither the Second-Lien Collateral Agent nor any
other Second-Lien Claimholder shall oppose or seek to challenge any claim by the First-Lien Agent
or any other First-Lien Creditor for allowance in any Insolvency or Liquidation Proceeding of
First-Lien Obligations consisting of post-petition interest, fees or expenses to the



25









 






extent of the value of the Liens securing the First-Lien Obligations (it being understood and
agreed that such value shall be determined without regard to the existences of any Liens securing
the Second-Lien Obligations). Regardless of whether any such claim for post-petition interest,
fees or expenses is allowed or allowable, and without limiting the generality of the other
provisions of this Agreement, this Agreement is expressly intended to include and does include the
“rule of explicitness” in that this Agreement expressly entitles the First-Lien Creditors, and is
intended to provide the First-Lien Creditors with the right, to receive payment of all
post-petition interest, fees or expenses through distributions made pursuant to the provisions of
this Agreement even though such interest, fees and expenses are not allowed or allowable against
the bankruptcy estate of the Borrower or any other Grantor under Section 502(b)(2) or Section
506(b) of the Bankruptcy Code or under any other provision of the Bankruptcy Code or any other
Bankruptcy Law.




          (b) Without limiting the foregoing, it is the intention of the parties hereto that (and to the
maximum extent permitted by law the parties hereto agree that) the First-Lien Obligations (and the
security therefor) constitute a separate and distinct class (and separate and distinct claims) from
the Second-Lien Obligations (and the security therefor).




          6.7 Waiver. The Second-Lien Collateral Agent, for itself and on behalf of the other
Second-Lien Claimholders, waives any claim it may hereafter have against any First-Lien Creditor
arising out of the election by any First-Lien Creditor of the application to the claims of any
First-Lien Creditor of Section 1111(b)(2) of the Bankruptcy Code, and/or out of any Cash Collateral
or Post-Petition Financing arrangement or out of any grant of a security interest in connection
with the Collateral in any Insolvency or Liquidation Proceeding.




          6.8 Limitations. So long as the Discharge of First-Lien Obligations has not occurred,
without the express written consent of the First-Lien Agent, none of the Second-Lien Claimholders
shall (or shall join with or support any third party making, opposing, objecting or contesting, as
the case may be), in any Insolvency or Liquidation Proceeding involving any Grantor, (i) make an
election for application to its claims of Section 1111(b)(2) of the Bankruptcy Code, (ii) oppose,
object to or contest the determination of the extent of any Liens held by any of the First-Lien
Creditors or the value of any claims of First-Lien Creditors under Section 506(a) of the Bankruptcy
Code or (iii) oppose, object to or contest the payment to the First-Lien Creditors of interest,
fees or expenses under Section 506(b) of the Bankruptcy Code.




     SECTION 7. Reliance; Waivers; Etc.



          7.1 Reliance. Other than any reliance on the terms of this Agreement, the First-Lien
Agent, on behalf of itself and the First-Lien Creditors under the First-Lien Documents,
acknowledges that it and the other First-Lien Creditors have, independently and without reliance on
the Second-Lien Collateral Agent or any other Second-Lien Claimholders, and based on documents and
information deemed by them appropriate, made their own credit analysis and decision to enter into
such First-Lien Documents and be bound by the terms of this Agreement and they will continue to
make their own credit decision in taking or not taking any action under any First-Lien Document or
this Agreement. The Second-Lien Collateral Agent, on behalf of itself and the Second-Lien
Claimholders, acknowledges that it and the other Second-Lien Claimholders have, independently and
without reliance on the First-Lien Agent or any other



26









 






First-Lien Creditor, and based on documents and information deemed by them appropriate, made
their own analysis and decision to enter into each of the Second-Lien Notes Documents and be bound
by the terms of this Agreement and they will continue to make their own decision in taking or not
taking any action under the Second-Lien Notes Documents or this Agreement.




          7.2 No Warranties or Liability. The First-Lien Agent, on behalf of itself and the
First-Lien Creditors under the First-Lien Documents, acknowledges and agrees that each of the
Second-Lien Collateral Agent and the other Second-Lien Claimholders have made no express or implied
representation or warranty, including with respect to the execution, validity, legality,
completeness, collectibility or enforceability of any of the Second-Lien Notes Documents, the
ownership of any Shared Collateral or the perfection or priority of any Liens thereon. The
Second-Lien Collateral Agent, on behalf of itself and the Second-Lien Claimholders, acknowledges
and agrees that each of the First-Lien Agent and the First-Lien Creditors have made no express or
implied representation or warranty, including with respect to the execution, validity, legality,
completeness, collectibility or enforceability of any of the First-Lien Documents, the ownership of
any Collateral or the perfection or priority of any Liens thereon. The First-Lien Creditors will
be entitled to manage and supervise their respective loans and extensions of credit under their
respective First-Lien Documents in accordance with law and as they may otherwise, in their sole
discretion, deem appropriate. The First-Lien Agent and the First-Lien Creditors shall have no duty
to the Second-Lien Collateral Agent or any of the Second-Lien Claimholders, to act or refrain from
acting in a manner which allows, or results in, the occurrence or continuance of an event of
default or default under any agreements with the Borrower or any other Grantor (including under the
First-Lien Documents), regardless of any knowledge thereof which they may have or be charged with.




          7.3 No Waiver of Lien Priorities. (a) No right of the First-Lien Creditors, the
First-Lien Agent or any of them to enforce any provision of this Agreement or any First-Lien
Document shall at any time in any way be prejudiced or impaired by any act or failure to act on the
part of the Borrower or any other Grantor or by any act or failure to act by any First-Lien
Creditor or the First-Lien Agent, or by any noncompliance by any Person with the terms, provisions
and covenants of this Agreement, any of the First-Lien Documents or any of the Second-Lien Notes
Documents, regardless of any knowledge thereof which the First-Lien Agent or the First-Lien
Creditors, or any of them, may have or be otherwise charged with.




          (b) Without in any way limiting the generality of the foregoing paragraph (but subject to the
rights of the Borrower and the other Grantors under the First-Lien Documents and the rights of the
Second-Lien Collateral Agent and the Second-Lien Claimholders expressly set forth in this
Agreement), the First-Lien Creditors, the First-Lien Agent and any of them may, at any time and
from time to time in accordance with the First-Lien Documents and/or applicable law, without the
consent of, or notice to, the Second-Lien Collateral Agent or any other Second-Lien Claimholder,
without incurring any liabilities to the Second-Lien Collateral Agent or any other Second-Lien
Claimholder and without impairing or releasing the Lien priorities and other benefits provided in
this Agreement (even if any right of subrogation or other right or remedy of the Second-Lien
Collateral Agent or any Second-Lien Claimholders is affected, impaired or extinguished thereby) do
any one or more of the following:




27









 









          (i) make loans and advances to any Grantor or issue, guaranty or obtain letters of
credit for account of any Grantor or otherwise extend credit to any Grantor, in any amount
and on any terms, whether pursuant to a commitment or as a discretionary advance and whether
or not any default or event of default or failure of condition is then continuing;




          (ii) change the manner, place or terms of payment or change or extend the time of
payment of, or amend, renew, exchange, increase or alter, the terms of any of the First-Lien
Obligations or any Lien on any First-Lien Collateral or guaranty thereof or any liability of
the Borrower or any other Grantor, or any liability incurred directly or indirectly in
respect thereof (including any increase in or extension of the First-Lien Obligations,
without any restriction as to the amount, tenor or terms of any such increase or extension)
or otherwise amend, renew, exchange, extend, modify or supplement in any manner any Liens
held by the First-Lien Agent or any of the First-Lien Creditors, the First-Lien Obligations
or any of the First-Lien Documents;




          (iii) sell, exchange, release, surrender, realize upon, enforce or otherwise deal with
in any manner and in any order any part of the First-Lien Collateral or any liability of the
Borrower or any other Grantor to the First-Lien Creditors or the First-Lien Agent, or any
liability incurred directly or indirectly in respect thereof;




          (iv) settle or compromise any First-Lien Obligation or any other liability of the
Borrower or any other Grantor or any security therefor or any liability incurred directly or
indirectly in respect thereof and apply any sums by whomsoever paid and however realized to
any liability (including the First-Lien Obligations) in any manner or order;




          (v) exercise or delay in or refrain from exercising any right or remedy against the
Borrower or any other Grantor or any other Person or with respect to any security, elect any
remedy and otherwise deal freely with the Borrower, any other Grantor or any First-Lien
Collateral and any security and any guarantor or any liability of the Borrower or any other
Grantor to the First-Lien Creditors or any liability incurred directly or indirectly in
respect thereof; and




          (vi) release or discharge any First-Lien Obligation or any guaranty thereof or any
agreement or obligation of any Grantor or any other person or entity with respect thereto.



          (c) The Second-Lien Collateral Agent, on behalf of itself and the Second-Lien Claimholders,
and each other Second-Lien Claimholder (by its acceptance of the benefits of the Second-Lien Notes
Documents), agrees not to assert and hereby waives, to the fullest extent permitted by law, any
right to demand, request, plead or otherwise assert or otherwise claim the benefit of, any
marshalling, appraisal, valuation or other similar right that may otherwise be available under
applicable law with respect to the Collateral or any other similar rights a junior secured creditor
may have under applicable law.




28









 








          7.4 Waiver of Liability; Indemnity. (a) The Second-Lien Collateral Agent, on behalf
of itself and the Second-Lien Claimholders, also agrees that the First-Lien Creditors and the
First-Lien Agent shall have no liability to the Second-Lien Collateral Agent or any other
Second-Lien Claimholders, and the Second-Lien Collateral Agent, on behalf of itself and the
Second-Lien Claimholders, hereby waives any claim against any First-Lien Creditor or the First-Lien
Agent, arising out of any and all actions which the First-Lien Creditors or the First-Lien Agent
may take or permit or omit to take with respect to: (i) the First-Lien Documents (including,
without limitation, any failure to perfect or obtain perfected security interests in the First-Lien
Collateral), (ii) the collection of the First-Lien Obligations or (iii) the foreclosure upon, or
sale, liquidation or other disposition of, any First-Lien Collateral. The Second-Lien Collateral
Agent, on behalf of itself and the Second-Lien Claimholders, agrees that the First-Lien Creditors
and the First-Lien Agent have no duty, express or implied, fiduciary or otherwise, to them in
respect of the maintenance or preservation of the First-Lien Collateral, the First-Lien Obligations
or otherwise. Neither the First-Lien Agent nor any other First-Lien Creditor nor any of their
respective directors, officers, employees or agents will be liable for failure to demand, collect
or realize upon any of the Collateral or for any delay in doing so, or will be under any obligation
to sell or otherwise dispose of any Collateral upon the request of the Borrower or any other
Grantor or upon the request of the Second-Lien Collateral Agent, any other holder of Second-Lien
Obligations or any other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof. Without limiting the foregoing, each Second-Lien Claimholder by
accepting the benefits of the Second-Lien Notes Documents agrees that neither the First-Lien Agent
nor any other First-Lien Creditor (in directing the Agent to take any action with respect to the
Collateral) shall have any duty or obligation to realize first upon any type of Collateral or to
sell, dispose of or otherwise liquidate all or any portion of the Collateral in any manner,
including as a result of the application of the principles of marshaling or otherwise, that would
maximize the return to any class of Creditors holding Obligations of any type (whether First-Lien
Obligations or Second-Lien Obligations), notwithstanding that the order and timing of any such
realization, sale, disposition or liquidation may affect the amount of proceeds actually received
by such class of Creditors from such realization, sale, disposition or liquidation.




               (b) With respect to its share of the First-Lien Obligations, Wachovia Bank, National
Association (together with its successors and assigns and in its capacity as a First-Lien Creditor,
“Wachovia”) shall have and may exercise the same rights and powers hereunder as, and shall
be subject to the same obligations and liabilities as and to the extent set forth herein for, any
other First-Lien Creditor, all as if Wachovia were not the First-Lien Agent. The term “Creditors”
or any similar term shall, unless the context clearly otherwise indicates, include Wachovia in its
individual capacity as a First-Lien Creditor. Wachovia and its affiliates may lend money to, and
generally engage in any kind of business with, the Grantors or any of their Affiliates as if
Wachovia were not acting as the First-Lien Agent and without any duty to account therefor to any
other Creditor.




          7.5 Obligations Unconditional. All rights, interests, agreements and obligations of
the First-Lien Agent and the other First-Lien Creditors and the Second-Lien Collateral Agent and
the other Second-Lien Claimholders, respectively, hereunder (including the Lien priorities
established hereby) shall remain in full force and effect irrespective of:




29









 









     (a) any lack of validity or enforceability of any First-Lien Document or any
Second-Lien Notes Document;




     (b) any change in the time, manner or place of payment of, or in any other terms of,
all or any of the First-Lien Obligations or Second-Lien Obligations, or any amendment or
waiver or other modification, including any increase in the amount thereof, whether by
course of conduct or otherwise, of the terms of any First-Lien Document or any Second-Lien
Notes Document;




     (c) any exchange of any security interest in any Collateral or any other collateral, or
any amendment, waiver or other modification, whether in writing or by course of conduct or
otherwise, of all or any of the First-Lien Obligations or Second-Lien Obligations or any
guarantee thereof;




     (d) the commencement of any Insolvency or Liquidation Proceeding in respect of the
Borrower or any other Grantor; or




     (e) any other circumstances which otherwise might constitute a defense available to, or
a discharge of, the Borrower or any other Grantor in respect of the First-Lien Obligations,
or of the Second-Lien Collateral Agent or any Second-Lien Claimholder in respect of this
Agreement.



     SECTION 8. Miscellaneous.



          8.1 Conflicts. In the event of any conflict between the provisions of this Agreement
and the provisions of the First-Lien Documents or the Second-Lien Notes Documents, the provisions
of this Agreement shall govern and control.




          8.2 Effectiveness; Continuing Nature of this Agreement; Severability. This Agreement
shall become effective when executed and delivered by the parties hereto. This is a continuing
agreement of lien subordination and the First-Lien Creditors may continue, at any time and without
notice to the Second-Lien Collateral Agent or any other Second-Lien Claimholder, to extend credit
and other financial accommodations and lend monies to or for the benefit of the Borrower or any
other Grantor constituting First-Lien Obligations in reliance hereon. The Second-Lien Collateral
Agent, on behalf of itself and the other Second-Lien Claimholders, hereby agrees that it will not
attempt, directly or indirectly, whether by judicial proceedings or otherwise, to challenge the
enforceability of any provision of this Agreement, and waives any right it may have under
applicable law to revoke this Agreement or any of the provisions of this Agreement. The terms of
this Agreement shall survive, and shall continue in full force and effect, in any Insolvency or
Liquidation Proceeding. Without limiting the generality of the foregoing, this Agreement is
intended to constitute and shall be deemed to constitute a “subordination agreement” within the
meaning of Section 510(a) of the Bankruptcy Code and is intended to be and shall be interpreted to
be enforceable to the maximum extent permitted pursuant to applicable non-bankruptcy law. Any
provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall not
invalidate the remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
All references to the Borrower or



30









 






any other Grantor shall include the Borrower or such Grantor as debtor and
debtor-in-possession and any receiver or trustee for the Borrower or any other Grantor (as the case
may be) in any Insolvency or Liquidation Proceeding. This Agreement shall terminate and be of no
further force and effect, (i) with respect to the Second-Lien Collateral Agent, the other
Second-Lien Claimholders and the Second-Lien Obligations, upon the later of (1) the date upon which
the obligations under the Second-Lien Notes Documents terminate if there are no other Second-Lien
Obligations outstanding on such date and (2) if there are other Second-Lien Obligations outstanding
on such date, the date upon which such Second-Lien Obligations terminate and (ii) with respect to
the First-Lien Agent, the other First-Lien Creditors and the First-Lien Obligations, the date of
the Discharge of First-Lien Obligations, subject to the rights of the First-Lien Creditors under
Section 6.5 of this Agreement. Notwithstanding any to the contrary within in this Agreement, the
terms and provisions of this Agreement shall terminate upon the Discharge of the First-Lien
Obligations, except to the extent any such term or provision, by its terms, survives any Discharge
of the First-Lien Obligations or is reinstated in accordance with its terms.




          8.3 Amendments; Waivers. (a) No amendment, modification or waiver of any of the
provisions of this Agreement by the Second-Lien Collateral Agent or the First-Lien Agent shall be
made unless the same shall be in writing signed on behalf of each party hereto; provided
that additional Grantors may be added as parties hereto in accordance with the provisions of
Section 8.18 of this Agreement.




          (b) Each waiver of the terms of this Agreement, if any, shall be a waiver only with respect to
the specific instance involved and shall not impair the rights of the parties making such waiver or
the obligations of the other parties to such party in any other respect or at any other time.
Notwithstanding the foregoing, neither Borrower nor any Grantor shall have any right to consent to
or approve any amendment, modification or waiver of any provision of this Agreement except to the
extent the liabilities, duties or obligations of Borrower or such Grantor are increased, expanded,
or made more burdensome to Borrower or such Grantor, as the case may be, as a result of such
amendment, modification or waiver.




          8.4 Information Concerning Financial Condition of the Borrower and its Subsidiaries.
The First-Lien Agent and the First-Lien Creditors, on the one hand, and the other Second-Lien
Claimholders, on the other hand, shall each be responsible for keeping themselves informed of (a)
the financial condition of the Borrower and its Subsidiaries and all endorsers and/or guarantors of
the First-Lien Obligations or the Second-Lien Obligations and (b) all other circumstances bearing
upon the risk of nonpayment of the First-Lien Obligations or the Second-Lien Obligations. The
First-Lien Agent and the other First-Lien Creditors shall have no duty to advise the Second-Lien
Collateral Agent or any other Second-Lien Claimholder of information known to it or them regarding
such condition or any such circumstances or otherwise. In the event the First-Lien Agent or any of
the other First-Lien Creditors, in its or their sole discretion, undertakes at any time or from
time to time to provide any such information to the Second-Lien Collateral Agent or any other
Second-Lien Claimholder, it or they shall be under no obligation (w) to make, and the First-Lien
Agent and the other First-Lien Creditors shall not make, any express or implied representation or
warranty, including with respect to the accuracy, completeness, truthfulness or validity of any
such information so provided, (x) to provide any additional information or to provide any such
information on any subsequent occasion, (y) to undertake any investigation or (z) to disclose any
information which, pursuant to accepted or



31









 






reasonable commercial finance practices, such party wishes to maintain confidential or is
otherwise required to maintain confidential.




          8.5 Subrogation. Subject to the Discharge of First-Lien Obligations, with respect to
the value of any payments or distributions in cash, property or other assets that the Second-Lien
Claimholders or Second-Lien Collateral Agent pay over to the First-Lien Agent or any of the other
First-Lien Creditors under the terms of this Agreement, the Second-Lien Collateral Agent and the
other Second-Lien Claimholders shall be subrogated to the rights of the First-Lien Agent and such
other First-Lien Creditors; provided that, the Second-Lien Collateral Agent, on behalf of
itself and the Second-Lien Claimholders, hereby agrees not to assert or enforce all such rights of
subrogation it may acquire as a result of any payment hereunder until the Discharge of First-Lien
Obligations has occurred. Each of the Borrower and each other Grantor acknowledges and agrees
that, the value of any payments or distributions in cash, property or other assets received by the
Second-Lien Collateral Agent or the other Second-Lien Claimholders and paid over to the First-Lien
Agent or the other First-Lien Creditors pursuant to, and applied in accordance with, this
Agreement, shall not relieve or reduce any of the Obligations owed by the Borrower or any other
Grantor under the Second-Lien Notes Documents.




          8.6 Application of Payments; Consent to Certain Changes. All payments received by the
First-Lien Agent or the other First-Lien Creditors may be applied, reversed and reapplied, in whole
or in part, to such part of the First-Lien Obligations as the First-Lien Creditors, in their sole
discretion, deem appropriate. The Second-Lien Collateral Agent, on behalf of itself and the
Second-Lien Claimholders, assents to any extension or postponement of the time of payment of the
First-Lien Obligations or any part thereof and to any other indulgence with respect thereto, to any
substitution, exchange or, subject to the terms of Section 5.1(a) hereof, release of any security
constituting Shared Collateral which may at any time secure any part of the First-Lien Obligations
and to the addition or release of any other Person primarily or secondarily liable therefor;
provided, that the parties hereto agree that (x) the Borrower shall not, and shall not
permit any other Grantor to, substitute or exchange any security constituting Shared Collateral
under this Section 8.6, unless it has also granted or contemporaneously grants a Lien on such
substituted or exchanged asset or property to secure the Second-Lien Obligations and has taken all
actions reasonably requested by the Second-Lien Collateral Agent to perfect such new Liens, and (y)
in furtherance of Section 2.4(ii) hereof, with respect to any Person added or released as a
guarantor pursuant to this Section 8.6, the parties will enter into such documentation as is
necessary to ensure that the guarantors for the First-Lien Obligations and the Second-Lien
Obligations shall be identical.




          8.7 SUBMISSION TO JURISDICTION; WAIVERS. (a) THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
SITTING IN NEW YORK COUNTY, NEW YORK, AND OF THE UNITED STATES DISTRICT COURT FOR 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 IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT



32









 






OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE 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.




          (b) THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY OBJECTION WHICH EACH MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT REFERRED TO IN
SECTION 8.7(a) HEREOF. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION
OR PROCEEDING IN ANY SUCH COURT.




          (c) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT, THE FIRST-LIEN DOCUMENTS AND THE SECOND-LIEN NOTES DOCUMENTS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.




          8.8 Notices. All notices to the Second-Lien Claimholders and the First-Lien Creditors
permitted or required under this Agreement may be sent to the Second-Lien Collateral Agent and the
First-Lien Agent, respectively. 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, electronically mailed or sent by courier service or U.S. mail and shall be deemed to have
been given when delivered in person or by courier service, upon receipt of electronic mail or four
Business Days after deposit in the U.S. mail (registered or certified, with postage prepaid and
properly addressed). For the purposes hereof, the addresses of the parties hereto shall be as set
forth below each party’s name on the signature pages hereto, 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.




          8.9 Further Assurances. Each of the First-Lien Agent, on behalf of itself and the
First-Lien Creditors under the First-Lien Documents, the Second-Lien Collateral Agent, on behalf of
itself and the Second-Lien Claimholders, the Borrower and each other Grantor, agrees that each of
them shall take such further action and shall execute and deliver such additional



33









 






documents and instruments (in recordable form, if requested) as the First-Lien Agent or the
Second-Lien Collateral Agent may reasonably request to effectuate the terms of and the lien
priorities contemplated by this Agreement. Each Second-Lien Claimholder, by its acceptance of the
benefits of the Second-Lien Notes Documents, agrees to be bound by the agreements herein made by it
and the Second-Lien Collateral Agent, on its behalf.




          8.10 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK INCLUDING SECTION 5-1401 AND SECTION
5-1402 OF THE GENERAL OBLIGATIONS LAW.




          8.11 Binding on Successors and Assigns. This Agreement shall be binding upon the
First-Lien Agent, the other First-Lien Creditors, the Second-Lien Collateral Agent, the other
Second-Lien Claimholders, the Grantors and their respective successors and assigns;
provided that no Grantor may assign any of its rights or obligations under this Agreement
without the prior written consent of the First-Lien Agent and the Second-Lien Collateral Agent.




          8.12 Specific Performance. Each of the First-Lien Agent and the Second-Lien
Collateral Agent may demand specific performance of this Agreement. Each of the First-Lien Agent,
on behalf of itself and the First-Lien Creditors under the First-Lien Documents, and the
Second-Lien Collateral Agent, on behalf of itself and the Second-Lien Claimholders, hereby
irrevocably waives any defense based on the adequacy of a remedy at law and any other defense which
might be asserted to bar the remedy of specific performance in any action which may be brought by
the First-Lien Agent or the Second-Lien Collateral Agent, as the case may be.




          8.13 Headings. Section headings in this Agreement are included herein for convenience
of reference only and shall not constitute a part of this Agreement for any other purpose or be
given any substantive effect.




          8.14 Counterparts; Fax or Other Transmission. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts, each of which when
so executed and delivered shall be deemed to be an original and all of which counterparts, taken
together, shall constitute but one and the same instrument. This Agreement may be executed by
each party on separate copies, which copies, when combined so as to include the signatures of all
parties, shall constitute a single counterpart of the Agreement. Delivery by one or more parties
hereto of an executed counterpart of this Agreement via facsimile, telecopy, or other electronic
method of transmission pursuant to which the signature of such party can be seen (including,
without limitation, Adobe Corporation’s Portable Document Format) shall have the same force and
effect as the delivery of an original executed counterpart of this Agreement. Any party delivering
an executed counterpart of this Agreement by facsimile or other electronic method of transmission
shall also deliver an original executed counterpart, but the failure to do so shall not affect the
validity, enforceability, or binding effect of this Agreement.




          8.15 Authorization. By its signature, each Person executing this Agreement on behalf
of a party hereto represents and warrants to the other parties hereto that it is duly authorized to
execute this Agreement. Each Second-Lien Claimholder, by its acceptance of the



34









 






benefits of the Second-Lien Notes Documents, agrees to be bound by the agreements made herein.




          8.16 No Third Party Beneficiaries; Effect of Agreement. This Agreement and the rights
and benefits hereof shall inure to the benefit of each of the First-Lien Agent, the Second-Lien
Collateral Agent and their respective successors and assigns and shall inure to the benefit of each
of the First-Lien Creditors and the Second-Lien Claimholders. No other Person (including the
Borrower and the Grantors, except as otherwise expressly provided in Section 8.3(b)) shall have or
be entitled to assert rights or benefits hereunder. Nothing in this Agreement shall impair, as
between each of the Grantors and the First-Lien Agent and the First-Lien Creditors, on the one
hand, and each of the Grantors and the Second-Lien Collateral and the Second-Lien Claimholders, on
the other hand, the obligations of each Grantor to pay principal, interest, fees and other amounts
as provided in the First-Lien Documents and the Second-Lien Notes Documents, respectively.




          8.17 Provisions Solely to Define Relative Rights. The provisions of this Agreement
are and are intended solely for the purpose of defining the relative rights of the First-Lien
Creditors, on the one hand, and the Second-Lien Claimholders, on the other hand. None of the
Borrower, any other Grantor or any other creditor thereof shall have any rights hereunder. Nothing
in this Agreement is intended to or shall impair the obligations of the Borrower or any other
Grantor, which are absolute and unconditional, to pay the First-Lien Obligations and the
Second-Lien Obligations as and when the same shall become due and payable in accordance with the
terms of the First-Lien Documents and the Second-Lien Notes Documents, respectively.




          8.18 Grantors; Additional Grantors. It is understood and agreed that the Borrower and
each other Grantor on the date of this Agreement shall constitute the original Grantors party
hereto. The original Grantors hereby covenant and agree to cause each Subsidiary of the Borrower
which becomes a Subsidiary Guarantor after the date hereof to contemporaneously become a party
hereto (as a Grantor) by executing and delivering a counterpart hereof to the First-Lien Agent or
by executing and delivering a joinder or assumption agreement in form and substance reasonably
satisfactory to the First-Lien Agent. The parties hereto further agree that, notwithstanding any
failure to take the actions required by the immediately preceding sentence, each Person which
becomes a Subsidiary Guarantor at any time (and any security granted by any such Person) shall be
subject to the provisions hereof as fully as if same constituted a Grantor party hereto and had
complied with the requirements of the immediately preceding sentence.




          8.19 [Intentionally Omitted].




          8.20 The Second-Lien Collateral Agent.




          (a) Each party hereto hereby acknowledges and agrees that the Second-Lien Collateral Agent is
entering into this Agreement solely in its capacity as Trustee and Collateral Agent under the
Second-Lien Notes Documents and not in its individual capacity.




          (b) The Second-Lien Collateral Agent shall not be deemed to owe any fiduciary duty to the
First-Lien Agent or the other First-Lien Creditors. With respect to the First-Lien



35









 






Agent and the other First-Lien Creditors, each of the Second-Lien Collateral Agent
undertakes to perform or to observe only such of its covenants and obligations as are specifically
set forth in this Agreement and no implied covenants or obligations with respect to the First-Lien
Agent or the other First-Lien Creditors shall be read into this Agreement against the Second-Lien
Collateral Agent.




          (c) The provisions of this Section 8.20 shall survive the termination of this Agreement.




          8.21 No Agency. This Agreement shall not create any agency relationship between the
First-Lien Agent, on the one hand, and Second-Lien Collateral Agent, on the other hand.




          8.22 Recitals Incorporated Herein. The preamble and recitals to this Agreement are
incorporated herein by this reference.



[Signatures on following pages.]





36









 








          IN WITNESS WHEREOF, the parties hereto have executed this Intercreditor Agreement as of the
date first written above.






 




Notice Address:




Charlotte Plaza, CP-23

201 South College Street

Charlotte, North Carolina 28288-0680

Attention: Syndication Agency Services

Telephone: 704-374-2698

Telecopier: 704-383-0288




With a copy to:




171 17th Street

MC 4524

Atlanta, Georgia 30363

Attention: Daniel Denton

Telephone: 404-214-1696

Telecopier: 404-214-7299




Notice Address:



1349 W. Peachtree Street, N.W.

Suite 1050

Two Midtown Plaza

Atlanta, Georgia 30309

Attention: Paul Henderson

Telephone: 404-965-7281

Telecopier: 404-365-7946







	 	 	 	 	 
	 	FIRST-LIEN AGENT:



WACHOVIA BANK, NATIONAL

ASSOCIATION, in its capacity as

First-Lien Agent

 	 
	 	By:  	/s/ Daniel Denton
 	 
	 	 	Daniel Denton 	 
	 	 	Director 	 
	 
	 
	 
	 
	 
	 
	 
	 
	 	SECOND-LIEN COLLATERAL AGENT:


U.S. Bank National Association, in its

capacity as Second-Lien Collateral Agent

 	 
	 	By:  	/s/ Paul L. Henderson
 	 
	 	 	Paul L. Henderson 	 
	 	 	Assistant Vice President 	 
	 









 









 







c/o Interface, Inc.


2859 Paces Ferry Road, Ste. 2000

Atlanta, Georgia 30339

Attention: Patrick C. Lynch

                 Chief Financial Officer

Telephone: 770-437-6848

Telecopier: 770-437-6887





c/o Interface, Inc.

2859 Paces Ferry Road, Ste. 2000

Atlanta, Georgia 30339

Attention: Patrick C. Lynch

                 Chief Financial Officer

Telephone: 770-437-6848

Telecopier: 770-437-6887







	 	 	 	 	 
	 	

GRANTORS:





INTERFACE, INC., as Borrower

 	 
	 	By:  	/s/ Patrick C. Lynch
 	 
	 	 	Patrick C. Lynch 	 
	 	 	Senior Vice President and 

Chief
Financial Officer 	 
	 
	 
	 
	 	INTERFACEFLOR, LLC

BENTLEY PRINCE STREET, INC.

BENTLEY MILLS, INC.

COMMERCIAL FLOORING SYSTEMS, INC.

FLOORING CONSULTANTS, INC.

INTERFACE ARCHITECTURAL

RESOURCES, INC.

INTERFACE OVERSEAS HOLDINGS, INC.

FLOR, INC.

QUAKER CITY INTERNATIONAL, INC.

RE:SOURCE AMERICAS ENTERPRISES, INC.

RE:SOURCE MINNESOTA, INC.

RE:SOURCE NORTH CAROLINA, INC.

RE:SOURCE NEW YORK, INC.

RE:SOURCE OREGON, INC.

RE:SOURCE SOUTHERN CALIFORNIA, INC.

RE:SOURCE WASHINGTON, D.C., INC.

SOUTHERN CONTRACT SYSTEMS, INC.

SUPERIOR/REISER FLOORING

RESOURCES, INC.

 	 
	 	By:  	/s/ Patrick C. Lynch
 	 
	 	 	Patrick C. Lynch 	 
	 	 	Senior Vice President 	 
	 









 









 







c/o Interface, Inc.

2859 Paces Ferry Road, Ste. 2000

Atlanta, Georgia 30339

Attention: Patrick C. Lynch

                 Chief Financial Officer

Telephone: 770-437-6848

Telecopier: 770-437-6887




c/o Interface, Inc.

2859 Paces Ferry Road, Ste. 2000

Atlanta, Georgia 30339

Attention: Patrick C. Lynch

                 Chief Financial Officer

Telephone: 770-437-6848

Telecopier: 770-437-6887




c/o Interface, Inc.

2859 Paces Ferry Road, Ste. 2000

Atlanta, Georgia 30339

Attention: Patrick C. Lynch

                 Chief Financial Officer

Telephone: 770-437-6848

Telecopier: 770-437-6887




c/o Interface, Inc.

2859 Paces Ferry Road, Ste. 2000

Atlanta, Georgia 30339

Attention: Patrick C. Lynch

                 Chief Financial Officer

Telephone: 770-437-6848

Telecopier: 770-437-6887




c/o Interface, Inc.

2859 Paces Ferry Road, Ste. 2000

Atlanta, Georgia 30339

Attention: Patrick C. Lynch

                 Chief Financial Officer

Telephone: 770-437-6848

Telecopier: 770-437-6887










	 	 	 	 	 
	 	INTERFACE GLOBAL COMPANY APS

 	 
	 	By:  	/s/ Daniel T. Hendrix
 	 
	 	 	Daniel T. Hendrix 	 
	 	 	Senior Vice President 	 
	 
	 	 
	 	INTERFACESERVICES, INC.

 	 
	 	By:  	/s/ Keith E. Wright
 	 
	 	 	Keith E. Wright 	 
	 	 	Treasurer 	 
	 
	 	 
	 	INTERFACE REAL ESTATE HOLDINGS, LLC,

 	 
	 	By:  	BENTLEY PRINCE STREE, INC., its sole member
 	 
	 
	 	 	 
	 	By:  	/s/ Patrick C. Lynch
 	 
	 	 	Patrick C. Lynch 	 
	 	 	Senior Vice President 	 
	 
	 	INTERFACE AMERICAS HOLDINGS, LLC,

 	 
	 	By:  	INTERFACE, INC., its manager
 	 
	 	 	 	 
	 	 	 	 
	 	By:  	/s/ Patrick C. Lynch
 	 
	 	 	Patrick C. Lynch 	 
	 	 	Senior Vice President 	 
	 
	 	INTERFACE AMERICAS RE:SOURCE TECHNOLOGIES, LLC,

 	 
	 	By:  	INTERFACEFLOR, LLC, its sole member
 	 
	 	 	 
	 	By:  	/s/ Patrick C. Lynch
 	 
	 	 	Patrick C. Lynch 	 
	 	 	Senior Vice President