Exhibit 10.5



 






Exhibit 10.5




EXECUTION COPY




INTERCREDITOR AGREEMENT




     This INTERCREDITOR AGREEMENT (“Agreement”), is dated as of December 5, 2005, and entered into
by and among Day International, Inc. (the “Company”), Goldman Sachs Credit Partners L.P. (“GSCP”),
in its capacity as collateral agent for the First Lien Obligations (as defined below), including
its successors and assigns from time to time (the “First Lien Collateral Agent”), and The Bank of
New York (“BNY”), in its capacity as collateral agent for the Second Lien Obligations (as defined
below), including its successors and assigns from time to time (the “Second Lien Collateral
Agent”). Capitalized terms used in this Agreement have the meanings assigned to them in Section 1
below.



RECITALS




     The Company, Day International Group, Inc. and certain Subsidiaries of the Company, as
guarantors party thereto (collectively, the “Guarantors”), the lenders and agents party thereto,
and GSCP, as Sole Lead Arranger, Sole Bookrunner and Syndication Agent (in each such capacity, the
“Arranger”), and as Administrative Agent and Collateral Agent, have entered into that Credit and
Guaranty Agreement dated as of the date hereof providing for a first lien secured revolving credit
facility and term loan (as amended, restated, supplemented, modified, replaced or refinanced from
time to time, the “First Lien Credit Agreement”);



     The Company, the Guarantors, the lenders and agents party thereto, and GSCP, as Sole Lead
Arranger, Sole Bookrunner and Syndication Agent, and BNY as Administrative Agent and Collateral
Agent, entered into that Credit and Guaranty Agreement dated as of the date hereof providing for a
second lien secured term loan (as amended, restated, supplemented, modified, replaced or refinanced
from time to time, the “Second Lien Credit Agreement”);



     Pursuant to (i) the First Lien Credit Agreement, the Guarantors have agreed to guaranty the
First Lien Obligations and have agreed to cause certain future Subsidiaries of the Company to
guaranty the First Lien Obligations (the “First Lien Guaranty”) and (ii) the Second Lien Credit
Agreement, the Guarantors have agreed to guaranty the Second Lien Obligations and have agreed to
cause certain future Subsidiaries of the Company to guaranty the Second Lien Obligations (the
“Second Lien Guaranty”);



     The obligations of the Company under the First Lien Credit Agreement and any Hedge Agreements
with a Lender Counterparty and the obligations of the Guarantors under the First Lien Guaranty will
be secured on a first priority basis by liens on substantially all the assets of the Company and
the Guarantors, respectively, pursuant to the terms of the First Lien Collateral Documents;



     The obligations of the Company under the Second Lien Credit Agreement and the obligations of
the Guarantors under the Second Lien Guaranty will be secured on a



 









 




second priority basis by liens on substantially all the assets of the Company and the
Guarantors, respectively, pursuant to the terms of the Second Lien Collateral Documents;




     The First Lien Loan Documents and the Second Lien Loan Documents provide, among other things,
that the parties thereto shall set forth in this Agreement their respective rights and remedies
with respect to the Collateral; and



     In order to induce the First Lien Collateral Agent and the First Lien Claimholders to consent
to the Grantors incurring the Second Lien Obligations and to induce the First Lien Claimholders to
extend credit and other financial accommodations and lend monies to or for the benefit of the
Company or any other Grantor, the Second Lien Collateral Agent on behalf of the Second Lien
Claimholders has agreed to the intercreditor and other provisions set forth in this Agreement.



AGREEMENT




     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 the Agreement, the following terms shall have the following
meanings:



     “Affiliate” means, with respect to a specified Person, another Person that directly, or
indirectly through one or more intermediaries, controls or is controlled by or is under common
control with the Person specified. For purposes of this definition, a Person shall be deemed to
“control” or be “controlled by” a Person if such Person possesses, directly or indirectly, power to
direct or cause the direction of the management or policies of such Person whether through
ownership of equity interests, by contract or otherwise.



     “Agreement” means this Intercreditor Agreement, as amended, restated, renewed, extended,
supplemented or otherwise modified from time to time.



     “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.



     “Business Day” means a day other than a Saturday, Sunday or other day on which commercial
banks in New York City are authorized or required by law to close.



     “Cap Amount” has the meaning assigned to that term within the definition of “First Lien
Obligation”.



2









 





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



     “Company” has the meaning assigned to that term in the Preamble to this Agreement.



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



     “Currency Agreement” means any foreign exchange contract, currency swap agreement, futures
contract, option contract, synthetic cap or other similar agreement or arrangement, each of which
is for the purpose of hedging the foreign currency risk associated with the Company’s and the
Guarantors’ operations and not for speculative purposes.



     “DIP Financing” has the meaning assigned to that term in Section 6.1.



     “Discharge of First Lien Obligations” means, except to the extent otherwise expressly provided
in Section 5.5:



     (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, whether or not such interest
would be allowed in such Insolvency or Liquidation Proceeding), on all Indebtedness outstanding
under the First Lien Loan Documents and constituting First Lien Obligations;



     (b) payment in full in cash of all other First Lien Obligations that are due and payable or
otherwise accrued and owing at or prior to the time such principal and interest are paid;



     (c) termination or expiration of all commitments, if any, to extend credit that would
constitute First Lien Obligations; and



     (d) termination or cash collateralization (in an amount and manner reasonably satisfactory to
the First Lien Collateral Agent, but in no event greater than 105% of the aggregate undrawn face
amount) of all letters of credit issued under the First Lien Loan Documents and constituting First
Lien Obligations.



     “Disposition” has the meaning assigned to that term in Section 5.1(b).



     “First Lien Claimholders” means, at any relevant time, the holders of First Lien Obligations
at that time, including the First Lien Lenders and the agents under the First Lien Loan Documents.



     “First Lien Collateral Agent” has the meaning assigned to that term in the Recitals to this
Agreement.



3









 





     “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 as security for any First Lien
Obligations.



     “First Lien Collateral Documents” means the Collateral Documents (as defined in the First Lien
Credit Agreement) and any other agreement, document or instrument pursuant to which a Lien is
granted securing any First Lien Obligations or under which rights or remedies with respect to such
Liens are governed.



     “First Lien Credit Agreement” has the meaning assigned to that term in the Recitals to this
Agreement.



     “First Lien Guaranty” has the meaning assigned to that term in the Recitals to this Agreement.



     “First Lien Lenders” means the “Lenders” under and as defined in the First Lien Loan
Documents.



     “First Lien Loan Documents” means the First Lien Credit Agreement and the Credit Documents (as
defined in the First Lien Credit Agreement), including Hedge Agreements entered into with a Lender
Counterparty, 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 Obligations, including any intercreditor or
joinder agreement among holders of First Lien Obligations, to the extent such are effective at the
relevant time, as each may be amended, restated, supplemented, modified, renewed or extended from
time to time in accordance with the provisions of this Agreement.



     “First Lien Mortgages” means a collective reference to each mortgage, deed of trust and other
document or instrument under which any Lien on real property owned or leased by any Grantor is
granted to secure any First Lien Obligations or under which rights or remedies with respect to any
such Liens are governed.



     “First Lien Obligations” means, subject to the next sentence, all Obligations outstanding
under the First Lien Credit Agreement and the other First Lien Loan Documents, including Hedge
Agreements entered into with any Lender Counterparty. “First Lien Obligations” shall include all
interest accrued or accruing (or which would, absent commencement of an Insolvency or Liquidation
Proceeding, accrue) after commencement of an Insolvency or Liquidation Proceeding in accordance
with the rate specified in the relevant First Lien Loan Document whether or not the claim for such
interest is allowed as a claim in such Insolvency or Liquidation Proceeding.



     Notwithstanding the foregoing, if the sum of: (1) Indebtedness for borrowed money constituting
principal outstanding under the First Lien Credit Agreement and the other First Lien Documents;
plus (2) the aggregate face amount of any letters of credit
issued but not reimbursed under the First Lien Credit Agreement, is in excess of $368.5
million in the aggregate (the “Cap Amount”), then only that portion of such Indebtedness and such
aggregate face amount of letters of credit equal to the Cap Amount shall be



4









 




included in First Lien
Obligations and interest and reimbursement obligations with respect to such Indebtedness and
letters of credit shall only constitute First Lien Obligations to the extent related to
Indebtedness and face amounts of letters of credit included in the First Lien Obligations.




     “Governmental Authority” means any federal, state, municipal, national or other government,
governmental department, commission, board, bureau, court, agency or instrumentality or political
subdivision thereof or any entity or officer exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to any government or any court, in each
case whether associated with a state of the United States, the United States, or a foreign entity
or government.



     “Grantors” means the Company, the Guarantors and each other Person that has or may from time
to time hereafter execute and deliver a First Lien Collateral Document or a Second Lien Collateral
Document as a “Grantor” (or the equivalent thereof).



     “Guarantors” has the meaning set forth in the Recitals to this Agreement.



     “Hedge Agreements” means an Interest Rate Agreement or a Currency Agreement entered
into with a Lender Counterparty in order to satisfy the requirements of the First Lien Credit
Agreement or otherwise in the ordinary course of the Company’s or any of the Guarantors’
businesses.



     “Hedging Obligation” of any Person means any obligation of such Person pursuant to any Hedge
Agreements.



     “Indebtedness” means and includes all Obligations that constitute “Indebtedness” within the
meaning of the First Lien Credit Agreement or the Second Lien Credit Agreement, as applicable.



     “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 their 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.



5









 





     “Interest Rate Agreement” means any interest rate swap agreement, interest rate cap agreement,
interest rate collar agreement, interest rate hedging agreement or other similar agreement or
arrangement each of which is for the purpose of hedging the interest rate exposure associated with
the Company’s or the Guarantors’ operations and not for speculative purposes.



     “Lender Counterparty” means the Arranger and each First Lien Lender or any Affiliate of a
First Lien Lender counterparty to a Hedge Agreement (including any Person who is a First Lien
Lender (and any Affiliate thereof) as of the Closing Date (as defined in the First Lien Credit
Agreement) but subsequently, whether before or after entering into a Hedge Agreement, ceases to be
a First Lien Lender) including, without limitation, each such Affiliate that enters into a joinder
agreement with the First Lien Collateral Agent.



     “Lien” means any lien, mortgage, pledge, assignment, security interest, charge or encumbrance
of any kind (including any agreement to give any of the foregoing, any conditional sale or other
title retention agreement, and any lease in the nature thereof) and any option, trust, UCC
financing statement or other preferential arrangement having the practical effect of any of the
foregoing.



     “New Agent” has the meaning assigned to that term in Section 5.5.



     “Obligations” means all obligations of every nature of each Grantor from time to time owed to
any agent or trustee, the First Lien Claimholders, the Second Lien Claimholders or any of them or
their respective Affiliates, in each case under the First Lien Loan Documents, the Second Lien Loan
Documents or Hedge Agreements, whether for principal, interest or payments for early termination of
Interest Rate Agreements, fees, expenses, indemnification or otherwise and all guarantees of any of
the foregoing.



     “Person” means any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership, governmental authority or other entity.



     “Pledged Collateral” has the meaning set forth in Section 5.4(a).



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



     “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 in whole or in part. “Refinanced” and
“Refinancing” shall have correlative meanings.



     “Second Lien Claimholders” means, at any relevant time, the holders of Second Lien Obligations
at that time, including the Second Lien Lenders and the agents under the Second Lien Loan
Documents.



6









 





     “Second 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 as security for any Second Lien
Obligations.



     “Second Lien Collateral Agent” has the meaning assigned to that term in the Preamble of this
Agreement.



     “Second Lien Collateral Documents” means the Collateral Documents (as defined in the Second
Lien Credit Agreement) and any other agreement, document or instrument pursuant to which a Lien is
granted securing any Second Lien Obligations or under which rights or remedies with respect to such
Liens are governed.



     “Second Lien Credit Agreement” has the meaning assigned to that term in the Recitals to this
Agreement.



     “Second Lien Guaranty” has the meaning assigned to that term in the Recitals to this
Agreement.



     “Second Lien Lenders” means the “Lenders” under and as defined in the Second Lien Credit
Agreement.



     “Second Lien Loan Documents” means the Second Lien Credit Agreement and the Credit Documents
(as defined in the Second Lien Credit Agreement) 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 Obligations,
including any intercreditor or joinder agreement among holders of Second Lien Obligations to the
extent such are effective at the relevant time, as each may be amended, restated, supplemented,
modified, renewed or extended from time to time in accordance with the provisions of this
Agreement.



     “Second Lien Mortgages” means a collective reference to each mortgage, deed of trust and any
other document or instrument under which any Lien on real property owned or leased by any Grantor
is granted to secure any Second Lien Obligations or under which rights or remedies with respect to
any such Liens are governed.



     “Second Lien Obligations” means all Obligations outstanding under the Second Lien Credit
Agreement and the other Second Lien Loan Documents. “Second Lien Obligations” shall include all
interest accrued or accruing (or which would, absent commencement of an Insolvency or Liquidation
Proceeding, accrue) after commencement of an Insolvency or Liquidation Proceeding in accordance
with the rate specified in the relevant Second Lien Loan Document whether or not the claim for such
interest is allowed as a claim in such Insolvency or Liquidation Proceeding.



     “Standstill Period” has the meaning set forth in Section 3.1(a)(1).



     “Subsidiary” means, with respect to any Person, any corporation, partnership, limited
liability company, association, joint venture or other business entity of



7









 




which more than 50% of the total voting power of shares of stock or other ownership interests
entitled (without regard to the occurrence of any contingency) to vote in the election of the
Person or Persons (whether directors, managers, trustees or other Persons performing similar
functions) having the power to direct or cause the direction of the management and policies thereof
is at the time owned or controlled, directly or indirectly, by that Person or one or more of the
other Subsidiaries of that Person or a combination thereof.




     “UCC” means the Uniform Commercial Code (or any similar or equivalent legislation) as in
effect in any applicable jurisdiction.



     1.2 Terms Generally. The definitions of terms in this Agreement 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 “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, restated, supplemented, modified, renewed or extended;



     (b) any reference herein to any Person shall be construed to include such Person’s permitted
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) all references herein to Sections shall be construed to refer to Sections of this
Agreement; and



     (e) 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.



     SECTION 2. Lien Priorities.



     2.1 Relative Priorities. Notwithstanding the date, time, method, 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, or any other applicable law or the Second Lien Loan
Documents or any defect or deficiencies in, or failure to perfect, the Liens securing
the First Lien Obligations or any other circumstance whatsoever, the Second Lien Collateral
Agent, on behalf of itself and the Second Lien Claimholders, hereby agrees that:



8









 





     (a) any Lien on the Collateral securing any First Lien Obligations now or hereafter held by or
on behalf of the First Lien Collateral Agent or any First Lien Claimholders 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 Second Lien Obligations; and



     (b) any Lien on the Collateral securing any Second Lien Obligations now or hereafter held by
or on behalf of the Second Lien Collateral Agent, any Second Lien Claimholders 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. 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 Company, any other Grantor or any other Person.



     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 Collateral Agent, for itself and
on behalf of each First Lien Claimholder, agrees that it will not (and hereby waives any right to)
contest or support any other Person in contesting, in any proceeding (including any Insolvency or
Liquidation Proceeding), the perfection, priority, validity or enforceability of a Lien held by or
on behalf of any of the First Lien Claimholders in the First Lien Collateral or by or on behalf of
any of the Second Lien Claimholders in the Second Lien Collateral, as the case may be, or the
provisions of this Agreement; provided that nothing in this Agreement shall be construed to
prevent or impair the rights of the First Lien Collateral Agent or any First Lien Claimholder to
enforce this Agreement, including the provisions of this Agreement relating to the priority of the
Liens securing the First Lien Obligations as provided in Sections 2.1 and 3.1.



     2.3 No New Liens. 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 Company or any
other Grantor, the parties hereto agree that the Company shall not, and shall not permit any other
Grantor to:



     (a) grant or permit any additional Liens on any asset or property to secure any Second Lien
Obligation unless it has granted or concurrently grants a Lien on such asset or property to secure
the First Lien Obligations; or



     (b) grant or permit any additional Liens on any asset or property to secure any First Lien
Obligations unless it has granted or concurrently grants a Lien on such asset or property to secure
the Second Lien Obligations.



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 Collateral Agent and/or the First Lien
Claimholders, the Second Lien Collateral Agent, on behalf of Second Lien Claimholders, agrees that
any amounts received by or distributed to any of them pursuant



9









 




to or as a result of Liens granted
in contravention of this Section 2.3 shall be subject to Section 4.2.




     2.4 Similar Liens and Agreements. The parties hereto agree that it is their intention
that the First Lien Collateral and the Second Lien Collateral be identical. In furtherance of the
foregoing and of Section 8.9, the parties hereto agree, subject to the other provisions of this
Agreement:



     (a) upon request by the First Lien Collateral Agent or the Second Lien Collateral 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 First Lien Collateral and the Second Lien
Collateral and the steps taken to perfect their respective Liens thereon and the identity of the
respective parties obligated under the First Lien Loan Documents and the Second Lien Loan
Documents; and



     (b) that the documents and agreements creating or evidencing the First Lien Collateral and the
Second Lien Collateral and guarantees for the First Lien Obligations and the Second Lien
Obligations, subject to Section 5.3(d), shall be in all material respects the same forms of
documents other than with respect to the first lien and the second lien nature of the Obligations
thereunder.



     SECTION 3. Enforcement.



     3.1 Exercise of Remedies.



     (a) Until the Discharge of First Lien Obligations has occurred, whether or not any Insolvency
or Liquidation Proceeding has been commenced by or against the Company or any other Grantor, the
Second Lien Collateral Agent and the Second Lien Claimholders:




     (1) will not exercise or seek to exercise any rights or remedies with respect to any
Collateral (including the exercise of any right of setoff or any right under any lockbox
agreement, account control 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 any action or proceeding with respect to such rights
or remedies (including any action of foreclosure); provided, however, that
the Second Lien Collateral Agent may
exercise any or all such rights or remedies after the passage of a period of at least
180 days has elapsed since the later of: (i) the date on which the Second Lien Collateral
Agent declares the existence of any Event of Default under any Second Lien Loan Documents
and demands the repayment of all the principal amount of any Second Lien Obligations; and
(ii) the date on which the First Lien Collateral Agent receives notice from the Second Lien
Collateral Agent of such declarations of an Event of Default, (the “Standstill Period”);
provided, further, however, that notwithstanding anything herein to
the contrary, in no event shall the Second Lien Collateral Agent or any Second Lien
Claimholder exercise any rights or remedies with respect to the Collateral if,
notwithstanding the expiration of the Standstill



10









 






Period, the First Lien Collateral Agent or
First Lien Claimholders shall have commenced and be diligently pursuing the exercise of
their rights or remedies with respect to all or any material portion of the Collateral
(prompt notice of such exercise to be given to the Second Lien Collateral Agent);




     (2) will not contest, protest or object to any foreclosure proceeding or action
brought by the First Lien Collateral Agent or any First Lien Claimholder or any other
exercise by the First Lien Collateral Agent or any First Lien Claimholder of any rights and
remedies relating to the Collateral under the First Lien Loan Documents or otherwise; and




     (3) subject to their rights under clause (a)(1) above and except as may be permitted
in Section 3.1(c), will not object to the forbearance by the First Lien Collateral Agent or
the First Lien Claimholders from bringing or pursuing any foreclosure proceeding or action
or any other exercise of any rights or remedies relating to the Collateral;




provided, that, in the case of (1), (2) and (3) above, the Liens granted to
secure the Second Lien Obligations of the Second Lien Claimholders shall attach to any
proceeds resulting from actions taken by the First Lien Collateral Agent or any First Lien
Claimholder in accordance with this Agreement after application of such proceeds to the
extent necessary to meet the requirements of a Discharge of First Obligations.



     (b) Until the Discharge of First Lien Obligations has occurred, whether or not any Insolvency
or Liquidation Proceeding has been commenced by or against the Company or any other Grantor,
subject to Section 3.1(a)(1), the First Lien Collateral Agent and the First Lien Claimholders shall
have the right to enforce rights, exercise remedies (including set-off 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 Second Lien Claimholder; provided, that the Lien securing the
Second Lien Obligations shall remain on the proceeds of such Collateral released or disposed of
subject to the relative priorities described in Section 2. In exercising rights and remedies with
respect to the Collateral, the First Lien Collateral Agent and the First Lien Claimholders may
enforce the provisions of the First Lien Loan 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 rights and remedies of a secured creditor under the UCC and of
a secured creditor under Bankruptcy Laws of any applicable jurisdiction.



     (c) Notwithstanding the foregoing, the Second Lien Collateral Agent and any Second Lien
Claimholder may:



11









 






     (1) file a claim or statement of interest with respect to the Second Lien Obligations;
provided that an Insolvency or Liquidation Proceeding has been commenced by or
against the Company or any other Grantor;




     (2) take any action (not adverse to the priority status of the Liens on the Collateral
securing the First Lien Obligations, or the rights of any First Lien Collateral Agent or
the First Lien Claimholders to exercise remedies in respect thereof) in order to create,
perfect, preserve or protect its Lien on the Collateral;




     (3) file any necessary responsive or defensive pleadings in opposition to any motion,
claim, adversary proceeding or other pleading made by any person objecting to or otherwise
seeking the disallowance of the claims of the Second Lien Claimholders, including any
claims secured by the Collateral, if any, in each case in accordance with the terms of this
Agreement;




     (4) file any pleadings, objections, motions or agreements which assert rights or
interests available to unsecured creditors of the Grantors arising under either any
Insolvency or Liquidation Proceeding or applicable non-bankruptcy law, in each case not
inconsistent with the terms of this Agreement;




     (5) vote on any plan of reorganization, file any proof of claim, make other filings
and make any arguments and motions that are, in each case, in accordance with the terms of
this Agreement, with respect to the Second Lien Obligations and the Collateral; and




     (6) exercise any of its rights or remedies with respect to the Collateral after the
termination of the Standstill Period to the extent permitted by Section 3.1(a)(1).



     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 set-off) with respect to any Collateral in its
capacity as a creditor in violation of this Agreement. Without limiting the generality of the
foregoing, unless and until the Discharge of First Lien Obligations has occurred, except as
expressly provided in Sections 3.1(a), 6.3(b) and this Section 3.1(c), the sole right of the Second
Lien Collateral Agent and the Second Lien Claimholders with respect to the Collateral is to hold a
Lien on the Collateral pursuant to the Second Lien Collateral Documents for the period and to the
extent granted therein and to receive a share of the proceeds thereof, if any, after the Discharge
of First Lien Obligations has occurred.



     (d) Subject to Sections 3.1(a) and (c) and Section 6.3(b):




     (1) the Second Lien Collateral Agent, for itself and on behalf of the Second Lien
Claimholders, agrees that the Second Lien Collateral Agent and the Second Lien Claimholders
will not take any action that would hinder any exercise of remedies under the First Lien
Loan Documents or is otherwise prohibited



12









 






hereunder, including any sale, lease, exchange,
transfer or other disposition of the Collateral, whether by foreclosure or otherwise;




     (2) the Second Lien Collateral Agent, for itself and on behalf of the Second Lien
Claimholders, hereby waives any and all rights it or the Second Lien Claimholders may have
as a junior lien creditor or otherwise to object to the manner in which the First Lien
Collateral Agent or the First Lien Claimholders seek to enforce or collect the First Lien
Obligations or the Liens securing the First Lien Obligations granted in any of the First
Lien Collateral undertaken in accordance with this Agreement, regardless of whether any
action or failure to act by or on behalf of the First Lien Collateral Agent or First Lien
Claimholders is adverse to the interest of the Second Lien Claimholders; and




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



     (e) Except as otherwise specifically set forth in Sections 3.1(a) and (d), the Second Lien
Collateral Agent and the Second Lien Claimholders may exercise rights and remedies as unsecured
creditors against the Company or any other Grantor that has guaranteed or granted Liens to secure
the Second Lien Obligations in accordance with the terms of the Second Lien Loan Documents and
applicable law; provided that in the event that any Second Lien Claimholder becomes a
judgment Lien creditor in respect of Collateral as a result of its enforcement of its rights as an
unsecured creditor with respect to the Second Lien Obligations, such judgment Lien shall be subject
to the terms of this Agreement for all purposes (including in relation to the First Lien
Obligations) as the other Liens securing the Second Lien Obligations are subject to this Agreement.



     (f) Nothing in this Agreement shall prohibit the receipt by the Second Lien Collateral Agent
or any Second Lien Claimholders of the required payments of interest, principal and other amounts
owed in respect of the Second Lien Obligations so long as such receipt is not the direct or
indirect result of the exercise by the Second Lien Collateral Agent or any Second Lien Claimholders
of rights or remedies as a secured creditor (including set-off) or enforcement in contravention of
this Agreement of any Lien held by any of them. Nothing in this Agreement impairs or otherwise
adversely affects any rights or remedies the First Lien Collateral Agent or the First Lien
Claimholders may have with respect to the First Lien Collateral.



     SECTION 4. Payments.



     4.1 Application of Proceeds. 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 Company or any other Grantor, Collateral or proceeds thereof received in connection with the
sale or other disposition of, or collection on, such



13









 




Collateral upon the exercise of remedies by
the First Lien Collateral Agent or First Lien Claimholders, shall be applied by the First Lien
Collateral Agent to the First Lien Obligations in such order as specified in the relevant First
Lien Loan Documents. Upon the Discharge of First Lien Obligations, the First Lien Collateral Agent
shall deliver to the Second Lien Collateral Agent any Collateral and proceeds of 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 Collateral Documents.




     4.2 Payments Over in Violation of Agreement. 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 Company or any other Grantor, any Collateral or proceeds thereof
(including assets or proceeds subject to Liens referred to in the final sentence of Section 2.3)
received by the Second Lien Collateral Agent or any Second Lien Claimholders in connection with the
exercise of any right or remedy (including set-off) relating to the Collateral in contravention of
this Agreement shall be segregated and held in trust and forthwith paid over to the First Lien
Collateral Agent for the benefit of the First Lien Claimholders in the same form as received, with
any necessary endorsements or as a court of competent jurisdiction may otherwise direct. The First
Lien Collateral Agent is hereby authorized to make any such endorsements as agent for the Second
Lien Collateral Agent or any such Second Lien Claimholders. This authorization is coupled with an
interest and is irrevocable until the Discharge of First Lien Obligations.



     SECTION 5. Other Agreements.



     5.1 Releases.



     (a) If in connection with the exercise of the First Lien Collateral Agent’s remedies in
respect of the Collateral provided for in Section 3.1, the First Lien Collateral Agent, for itself
or on behalf of any of the First Lien Claimholders, releases any of its Liens on any part of the
Collateral or releases any Grantor from its obligations under its guaranty of the First Lien
Obligations in connection with the sale of the stock, or substantially all the assets, of such
Grantor, then the Liens, if any, of the Second Lien Collateral Agent, for itself or for the benefit
of the 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. 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 Collateral Agent or such Grantor such termination statements,
releases and other documents as the First Lien Collateral Agent or such Grantor may request to
effectively confirm such release.



     (b) If in connection with any sale, lease, exchange, transfer or other disposition of any
Collateral (collectively, a “Disposition”) permitted under the terms of both the First Lien Loan
Documents and the Second Lien Loan Documents (other than in connection with the exercise of the
First Lien Collateral Agent’s remedies in respect of the Collateral provided for in Section 3.1),
the First Lien Collateral Agent, for itself or on



14









 




behalf of any of the First Lien Claimholders,
releases any of its Liens on any part of the Collateral, or releases any Grantor from its
obligations under its guaranty of the First Lien Obligations in connection with the sale of the
stock, or substantially all the assets, of such Grantor, in each case other than (A) in connection
with the Discharge of First Lien Obligations and (B) after the occurrence and during the
continuance of any Event of Default under the Second Lien Credit Agreement, then the Liens, if any,
of the Second Lien Collateral Agent, for itself or for the benefit of the 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. 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 Collateral Agent or such Grantor such termination statements,
releases and other documents as the First Lien Collateral Agent or such Grantor may request to
effectively confirm such release.




     (c) 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 Collateral Agent and any officer or agent of the First Lien Collateral
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
holder or in the First Lien Collateral Agent’s own name, from time to time in the First Lien
Collateral 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 to accomplish the purposes of this Section 5.1, including any endorsements or other
instruments of transfer or release.



     (d) Until the Discharge of First Lien Obligations occurs, to the extent that the First Lien
Collateral Agent or the First Lien Claimholders (i) have released any Lien on Collateral or any
Grantor from its obligation under its guaranty and any such Liens or guaranty are later reinstated
or (ii) obtain any new liens or additional guarantees from any Grantor, then the Second Lien
Collateral Agent, for itself and for the Second Lien Claimholders, shall be granted a Lien on any
such Collateral, subject to the lien subordination provisions of this Agreement, and an additional
guaranty, as the case may be.



     (e) In the event that the principal amount of funded First Lien Obligations plus the
aggregate face amount of letters of credit, if any, issued under the First Lien Credit Agreement
and not reimbursed plus the aggregate principal amount of
unfunded commitments under the First Lien Credit Agreement (collectively, the “First Lien
Obligations Amount”), at any date of determination no longer constitute at least 15% of the sum of
(i) the First Lien Obligations Amount and (ii) the principal amount of Second Lien Obligations
(collectively, the “Second Lien Obligations Amount”), then any agreement provided for in Section
5.1(a) and (b) above (except for releases given in connection with a Disposition permitted under
the First Lien Loan Documents and the Second Lien Loan Documents) shall require the consent of
First Lien Claimholders and Second Lien Claimholders representing in the aggregate more than 50% of
the sum of (i) the First Lien Obligations Amount and (ii) the Second Lien Obligations Amount.



15









 





     5.2 Insurance. Unless and until the Discharge of First Lien Obligations has occurred,
subject to the terms of, and the rights of the Grantors under, the First Lien Loan Documents, the
First Lien Collateral Agent and the First Lien Claimholders shall have the sole and exclusive right
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 Loan
Documents, all proceeds of any such policy and any such award (or any payments with respect to a
deed in lieu of condemnation) if in respect to the Collateral and to the extent required by the
First Lien Loan Documents shall be paid to the First Lien Collateral Agent for the benefit of the
First Lien Claimholders pursuant to the terms of the First Lien Loan Documents (including, without
limitation, for purposes of cash collateralization of letters of credit) and thereafter, to the
extent no First Lien Obligations are outstanding, and subject to the rights of the Grantors under
the Second Lien Collateral Documents, to the Second Lien Collateral Agent for the benefit of the
Second Lien Claimholders to the extent required under the Second Lien Collateral Documents and
then, to the extent no Second Lien Obligations are outstanding, to the owner of the subject
property, such other Person as may be entitled thereto or as a court of competent jurisdiction may
otherwise direct. Until the Discharge of First Lien Obligations has occurred, if the Second Lien
Collateral Agent or any Second Lien Claimholders shall, at any time, receive any proceeds of any
such insurance policy or any such award or payment in contravention of this Agreement, it shall
segregate and hold in trust and forthwith pay such proceeds over to the First Lien Collateral Agent
in accordance with the terms of Section 4.2.



     5.3 Amendments to First Lien Loan Documents and Second Lien Loan Documents. (a) The
First Lien Loan Documents may be amended, supplemented or otherwise modified in accordance with
their terms and the First Lien Credit Agreement may be Refinanced, in each case, without notice to,
or the consent of the Second Lien Collateral Agent or the Second Lien Claimholders, all without
affecting the lien subordination or other provisions of this Agreement; provided,
however, that the holders of such Refinancing debt bind themselves in a writing addressed
to the Second Lien Collateral Agent and the Second Lien Claimholders to the terms of this Agreement
and any such amendment, supplement, modification or Refinancing shall not, without the consent
of the Second Lien Collateral Agent:




     (1) increase the sum of (without duplication) (A) the then outstanding aggregate
principal amount of the First Lien Credit Agreement and (B) the aggregate amount of
Revolving Commitment under the First Lien Credit Agreement and (C) the aggregate face
amount of any letters of credit issued under the First Lien Credit Agreement and not
reimbursed and (D) the then outstanding aggregate principal amount of First Lien
Obligations and the aggregate face amount of any letters of credit issued and not
reimbursed constituting First Lien Obligations in excess of the Cap Amount;




     (2) increase the “Applicable Margin” or similar component of the interest rate or
yield provisions applicable to the First Lien Obligations by more



16









 






than 2.5% per annum
(excluding increases (A) resulting from application of the pricing grid set forth in the
First Lien Credit Agreement as in effect on the date hereof or (B) resulting from the
accrual of interest at the default rate);




     (3) extend the scheduled maturity of the First Lien Credit Agreement or any
Refinancing thereof beyond the scheduled maturity of the Second Lien Credit Agreement or
any Refinancing thereof; or




     (4) contravene the provisions of this Agreement.



     (b) Without the prior written consent of the First Lien Collateral Agent, no Second Lien Loan
Document may be Refinanced, amended, supplemented or otherwise modified or entered into to the
extent such Refinancing, amendment, supplement or modification, or the terms of any new Second Lien
Loan Document, would:




     (1) increase the principal amount of the Second Lien Credit Agreement in excess of the
amount permitted under the First Lien Credit Agreement;




     (2) increase the “Applicable Margin” or similar component of the interest rate or
yield provisions applicable to the Second Lien Obligations by more than 2.5% per annum
(excluding increases resulting from the accrual of interest at the default rate);




     (3) change any default or Event of Default thereunder in a manner adverse to
the loan parties thereunder (other than to eliminate any such Event of Default or
increase any grace period related thereto or otherwise make such Event of Default
or condition less restrictive or burdensome on the Company);




     (3) change (to earlier dates) any dates upon which payments of principal or
interest are due thereon;




     (4) change the prepayment provisions thereof;




     (5) increase materially the obligations of the obligor thereunder or to
confer any additional material rights on the lenders under the Second Lien Credit
Agreement (or a representative on their behalf) which would be adverse to any
Credit Party or any First Lien Lenders; or




     (6) contravene the provisions of this Agreement.



     The Second Lien Credit Agreement may be Refinanced to the extent the terms and conditions of
such Refinancing debt meet the requirements of this Section 5.3(b), the average life to maturity
thereof is greater than or equal to that of the Second Lien Credit Agreement and the holders of
such Refinancing debt bind themselves in a writing addressed to the First Lien Collateral Agent and
the First Lien Claimholders to the terms of this Agreement.



17









 





     (c) The Company agrees that each Second Lien Collateral Document shall include the following
language (or language to similar effect approved by the First Lien Collateral 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
subject to the provisions of the Intercreditor Agreement, dated as of December 5
2005 (as amended, restated, supplemented or otherwise modified from time to time,
the “Intercreditor Agreement”), among Day International, Inc., Goldman Sachs Credit
Partners L.P., as First Lien Collateral Agent and The Bank of New York, as Second
Lien Collateral Agent and certain other persons party or that may become party
thereto from time to time. 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, the Company agrees that each Second Lien Mortgage covering any Collateral shall
contain such other language as the First Lien Collateral Agent may reasonably request to reflect
the subordination of such Second Lien Mortgage to the First Lien Collateral Document covering such
Collateral.




     (d) In the event any First Lien Collateral Agent or the First Lien Claimholders and the
relevant Grantor enter into any amendment, waiver or consent in respect of any of the First Lien
Collateral Documents for the purpose of adding to, or deleting from, or waiving or consenting to
any departures from any provisions of, any First Lien Collateral Document or changing in any manner
the rights of the First Lien Collateral Agent, such First Lien Claimholders, the Company or any
other Grantor thereunder, then such amendment, waiver or consent shall apply automatically to any
comparable provision of the Comparable Second Lien Collateral Document without the consent of the
Second Lien Collateral Agent or the Second Lien Claimholders and without any action by the Second
Lien Collateral Agent, the Company or any other Grantor, provided, that:




     (1) no such amendment, waiver or consent shall have the effect of:




     (A) removing or releasing assets subject to the Lien of the Second Lien
Collateral Documents, except to the extent that a release of such Lien is permitted
or required by Section 5.1 of this Agreement and provided that there is a
corresponding release of the Liens securing the First Lien Obligations;




     (B) imposing duties on the Second Lien Collateral Agent without its consent;




     (C) permitting other Liens on the Collateral not permitted under the terms of
the Second Lien Loan Documents or Section 6; or



18









 






     (D) being prejudicial to the interests of the Second Lien Claimholders to a
greater extent than the First Lien Claimholders; and




     (2) notice of such amendment, waiver or consent shall have been given to the Second
Lien Collateral Agent within ten (10) Business Days after the effective date of such
amendment, waiver or consent.



     5.4
Bailee for Perfection. (a) The First Lien Collateral Agent agrees to hold that
part of the Collateral that is in its possession or control (or in the possession or control of its
agents or bailees) to the extent that possession or control thereof is taken to perfect a Lien
thereon under the UCC (such Collateral being the “Pledged Collateral”) as collateral agent for the
First Lien Claimholders and as bailee for the Second Lien Collateral Agent (such bailment being
intended, among other things, to satisfy the requirements of Sections 8-301(a)(2) and 9-313(c) of
the UCC) and any assignee solely for the purpose of perfecting the security interest granted under
the First Lien Loan Documents and the Second Lien Loan Documents, respectively, subject to the
terms and conditions of this Section 5.4.



     (b) The First Lien Collateral Agent shall have no obligation whatsoever to the First Lien
Claimholders, the Second Lien Collateral Agent or any Second Lien Claimholder to ensure 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 5.4. The duties or responsibilities of
the First Lien Collateral Agent under this Section 5.4 shall be limited solely to holding the
Pledged Collateral as bailee in accordance with this Section 5.4 and delivering the Pledged
Collateral upon a Discharge of First Lien Obligations as provided in paragraph (d) below.



     (c) The First Lien Collateral Agent acting pursuant to this Section 5.4 shall not have by
reason of the First Lien Collateral Documents, the Second Lien Collateral Documents, this Agreement
or any other document a fiduciary relationship in respect of the First Lien Claimholders, the
Second Lien Collateral Agent or any Second Lien Claimholder.



     (d) Upon the Discharge of First Lien Obligations under the First Lien Loan Documents to which
the First Lien Collateral Agent is a party, the First Lien Collateral Agent shall deliver the
remaining Pledged Collateral (if any) together with any necessary endorsements, first, to
the Second Lien Collateral Agent to the extent Second Lien Obligations remain outstanding, and
second, to the Company to the extent no First Lien Obligations or Second Lien Obligations
remain outstanding (in each case, so as to allow such Person to obtain possession or control of
such Pledged Collateral). The First Lien Collateral Agent further agrees to take all other action
reasonably requested by the Second Lien Collateral Agent in connection with the Second Lien
Collateral Agent obtaining a first-priority interest in the Collateral or as a court of competent
jurisdiction may otherwise direct.



     (e) Subject to the terms of this Agreement, so long as the Discharge of First Lien
Obligations has not occurred, the First Lien Collateral Agent shall be entitled to deal



19









 




with the
Pledged Collateral or Collateral within its “control” in accordance with the terms of this
Agreement and other First Lien Loan Documents as if the Liens of the Second Lien Collateral Agent
and Second Lien Claimholders did not exist.




     5.5 When Discharge of First Lien Obligations Deemed to Not Have Occurred. If concurrently
with the Discharge of First Lien Obligations, the Company thereafter enters into any Refinancing of
any First Lien Loan Document evidencing a First Lien Obligation which Refinancing is permitted by
the Second Lien Loan Documents, then such Discharge of First Lien Obligations shall automatically
be deemed not to have occurred for all purposes of this Agreement (other than with respect to any
actions taken as a result of the occurrence of such first Discharge of First Lien Obligations),
and, from and after the date on which the New First Lien Debt Notice is delivered to the Second
Lien Collateral Agent in accordance with the next sentence, the obligations under such Refinancing
of the First Lien Loan Document 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 First Lien Collateral Agent under such First Lien Loan
Documents shall be the First Lien Collateral Agent for all purposes of this Agreement. Upon
receipt of a notice (the “New First Lien Debt Notice”) stating that the Company has entered into a
new First Lien Loan Document (which notice shall include the identity of the new first lien
collateral agent, such agent, the “New Agent”), the Second Lien Collateral Agent shall promptly (a)
enter into such documents and agreements (including amendments or supplements to this Agreement) as
the Company or such New Agent shall 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 and (b) deliver to the New Agent any Pledged Collateral held by it together with any
necessary endorsements (or otherwise allow the New Agent to obtain control of such Pledged
Collateral). The New Agent shall agree in a writing addressed to the Second Lien Collateral Agent
and the Second Lien Claimholders to be bound by the terms of this Agreement. If the new First Lien
Obligations under the new First Lien Loan Documents are secured by assets of the Grantors
constituting Collateral that do not also secure the Second Lien Obligations, then the Second Lien
Obligations shall be secured at such time
by a second priority Lien on such assets to the same extent provided in the Second Lien
Collateral Documents and this Agreement.



     5.6 Purchase Right. Without prejudice to the enforcement of the First Lien Claimholders
remedies, the First Lien Claimholders agree at any time following an acceleration of the First Lien
Obligations in accordance with the terms of the First Lien Credit Agreement, the First Lien
Claimholders will offer the Second Lien Claimholders the option to purchase the entire aggregate
amount of outstanding First Lien Obligations (including unfunded commitments under the First Lien
Credit Agreement) at par plus accrued interest (without regard to any prepayment penalty or
premium), without warranty or representation or recourse, on a pro rata basis across First Lien
Claimholders. The Second Lien Claimholders shall irrevocably accept or reject such offer within
ten (10) Business Days of the receipt thereof and the parties shall endeavor to close promptly
thereafter. If the Second Lien Claimholders accept such offer, it shall be exercised pursuant to
documentation mutually acceptable to each of the First Lien Collateral Agent and the Second Lien
Collateral Agent. If the Second Lien Claimholders reject such offer



20









 




(or do not so irrevocably
accept such offer within the required timeframe), the First Lien Claimholders shall have no further
obligations pursuant to this Section 5.6 and may take any further actions in their sole discretion
in accordance with the First Lien Loan Documents and this Agreement.




     SECTION 6. Insolvency or Liquidation Proceedings.




     6.1 Finance and Sale Issues. Until the Discharge of First Lien Obligations has occurred,
if the Company or any other Grantor shall be subject to any Insolvency or Liquidation Proceeding
and the First Lien Collateral Agent shall desire to permit the use of “Cash Collateral” (as such
term is defined in Section 363(a) of the Bankruptcy Code), on which the First Lien Collateral Agent
or any other creditor has a Lien or to permit the Company or any other Grantor to obtain financing,
whether from the First Lien Claimholders or any other Person under Section 364 of the Bankruptcy
Code or any similar Bankruptcy Law (“DIP Financing”) then the Second Lien Collateral Agent, on
behalf of itself and the Second Lien Claimholders, agrees that it will raise no objection to such
Cash Collateral use or DIP Financing; provided that the Second Lien Collateral Agent and
the Second Lien Claimholders retain the right to object to (i) any ancillary agreements or
arrangements regarding the Cash Collateral use or the DIP Financing that are materially prejudicial
to their interests, (ii) the DIP Financing to the extent that it compels the Company to seek
confirmation of a specific plan of reorganization for which all or substantially all of the
material terms are set forth in the DIP Financing documentation or a related document or (iii) the
DIP Financing documentation or Cash Collateral order to the extent that it expressly requires the
liquidation of the Collateral prior to a default under the DIP Financing documentation or Cash
Collateral order. To the extent the Liens securing the First Lien Obligations are subordinated to
or pari passu with such DIP Financing and the Second Lien Collateral Agent has not raised any
objections by reasons of any of the clauses
(i) through (iii) above, the Second Lien Collateral Agent will subordinate its Liens in the
Collateral to the Liens securing such DIP Financing (and all Obligations relating thereto) and will
not request adequate protection or any other relief in connection therewith (except, as expressly
agreed by the First Lien Collateral Agent or to the extent permitted by Section 6.3).



     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,
agrees that none of them shall seek (or support any other Person seeking) relief from the automatic
stay or any other stay in any Insolvency or Liquidation Proceeding in respect of the Collateral,
without the prior written consent of the First Lien Collateral 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,
agrees that none of them shall contest (or support any other Person contesting):



21









 






     (1) any request by the First Lien Collateral Agent or the First Lien Claimholders for
adequate protection; or




     (2) any objection by the First Lien Collateral Agent or the First Lien Claimholders to
any motion, relief, action or proceeding based on the First Lien Collateral Agent or the
First Lien Claimholders claiming a lack of adequate protection.



     (b) Notwithstanding the foregoing provisions in this Section 6.3, in any Insolvency or
Liquidation Proceeding:




     (1) if the First Lien Claimholders (or any subset thereof) are granted adequate
protection in the form of additional collateral in connection with any Cash Collateral use
or DIP Financing, then the Second Lien Collateral Agent, on behalf of itself or any of the
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 and such Cash Collateral use or DIP 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; and




     (2) in the event the Second Lien Collateral Agent, on behalf of itself or any of the
Second Lien Claimholders, seeks or requests adequate protection in respect of Second Lien
Obligations and such adequate protection is granted in the
form of additional collateral, then the Second Lien Collateral Agent, on behalf of
itself or any of the Second Lien Claimholders, agrees that the First Lien Collateral Agent
shall also be granted a senior Lien on such additional collateral as security for the First
Lien Obligations and for any Cash Collateral use or DIP Financing provided by the First
Lien Claimholders and that any Lien on such additional collateral securing the Second Lien
Obligations shall be subordinated to the Lien on such collateral securing the First Lien
Obligations and any such DIP Financing provided by the First Lien Claimholders (and all
Obligations relating thereto) and to any other Liens granted to the First Lien Claimholders
as adequate protection on the same basis as the other Liens securing the Second Lien
Obligations are so subordinated to such First Lien Obligations under this Agreement.
Except as otherwise expressly set forth in Section 6.1 or in connection with the exercise
of remedies with respect to the Collateral, nothing herein shall limit the rights of the
Second Lien Collateral Agent or the Second Lien Claimholders from seeking adequate
protection with respect to their rights in the Collateral in any Insolvency or Liquidation
Proceeding (including adequate protection in the form of a cash payment, periodic cash
payments or otherwise).



     6.4 No Waiver. Subject to Sections 3.1(a) and (d), nothing contained herein shall
prohibit or in any way limit the First Lien Collateral Agent or any First Lien Claimholder from
objecting in any Insolvency or Liquidation Proceeding or otherwise to any action taken by the
Second Lien Collateral Agent or any of the Second Lien Claimholders, including the seeking by the
Second Lien Collateral Agent or any Second Lien



22









 




Claimholders of adequate protection or the
asserting by the Second Lien Collateral Agent or any Second Lien Claimholders of any of its rights
and remedies under the Second Lien Loan Documents or otherwise.




     6.5 Avoidance Issues. If any First Lien Claimholder is required in any Insolvency or
Liquidation Proceeding or otherwise to turn over or otherwise pay to the estate of the Company or
any other Grantor any amount paid in respect of First Lien Obligations (a “Recovery”), then such
First Lien Claimholders 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.



     6.6 Reorganization Securities. If, in any Insolvency or Liquidation Proceeding, debt
obligations of the reorganized debtor secured by Liens upon any property of the reorganized debtor
are distributed pursuant to a plan of reorganization or similar dispositive restructuring plan,
both on account of First Lien Obligations and on account of Second Lien Obligations, then, to the
extent the debt obligations distributed on account of the First Lien Obligations and
on account of the Second Lien Obligations are secured by Liens upon the same property, the
provisions of this Agreement will survive the distribution of such debt obligations pursuant to
such plan and will apply with like effect to the Liens securing such debt obligations.



     6.7 Post-Petition Interest. (a) Neither the Second Lien Collateral Agent nor any
Second Lien Claimholder shall oppose or seek to challenge any claim by the First Lien Collateral
Agent or any First Lien Claimholder for allowance in any Insolvency or Liquidation Proceeding of
First Lien Obligations consisting of post-petition interest, fees or expenses to the extent of the
value of any First Lien Claimholder’s Lien, without regard to the existence of the Lien of the
Second Lien Collateral Agent on behalf of the Second Lien Claimholders on the Collateral.



     (b) Neither the First Lien Collateral Agent nor any other First Lien Claimholder shall oppose
or seek to challenge any claim by the Second Lien Collateral Agent or any Second Lien Claimholder
for allowance in any Insolvency or Liquidation Proceeding of Second Lien Obligations consisting of
post-petition interest, fees or expenses to the extent of the value of the Lien of the Second Lien
Collateral Agent on behalf of the Second Lien Claimholders on the Collateral (after taking into
account the First Lien Collateral).



     6.8 Waiver. The Second Lien Collateral Agent, for itself and on behalf of the Second Lien
Claimholders, waives any claim it may hereafter have against any First Lien Claimholder arising out
of the election of any First Lien Claimholder of the application of Section 1111(b)(2) of the
Bankruptcy Code, and/or out of any cash collateral or financing arrangement or out of any grant of
a security interest in connection with the Collateral in any Insolvency or Liquidation Proceeding.



23









 





     6.9 Separate Grants of Security and Separate Classification. The Second Lien Collateral
Agent, for itself and on behalf of the Second Lien Claimholders, and the First Lien Collateral
Agent for itself and on behalf of the First Lien Claimholders, acknowledges and agrees that:



     (a) the grants of Liens pursuant to the First Lien Collateral Documents and the Second Lien
Collateral Documents constitute two separate and distinct grants of Liens; and (b) because of,
among other things, their differing rights in the Collateral, the Second Lien Obligations are
fundamentally different from the First Lien Obligations and must be separately classified in any
plan of reorganization proposed or adopted in an Insolvency or Liquidation Proceeding.


To further effectuate the intent of the parties as provided in the immediately preceding sentence,
if it is held that the claims of the First Lien Claimholders and the Second Lien Claimholders in
respect of the Collateral constitute only one secured claim (rather than
separate classes of senior and junior secured claims), then each of the parties hereto hereby
acknowledges and agrees that, subject to Sections 2.1 and 4.1, all distributions shall be made as
if there were separate classes of senior and junior secured claims against the Grantors in respect
of the Collateral (with the effect being that, to the extent that the aggregate value of the
Collateral is sufficient (for this purpose ignoring all claims held by the Second Lien
Claimholders), the First Lien Claimholders shall be entitled to receive, in addition to amounts
otherwise distributed to them in respect of principal, pre-petition interest and other claims, all
amounts owing in respect of post-petition interest, including any additional interest payable
pursuant to the First Lien Credit Agreement, arising from or related to a default, which is
disallowed as a claim in any Insolvency or Liquidation Proceeding) before any distribution is made
in respect of the claims held by the Second Lien Claimholders with respect to the Collateral, with
the Second Lien Collateral Agent, for itself and on behalf of the Second Lien Claimholders, hereby
acknowledging and agreeing to turn over to the First Lien Collateral Agent, for itself and on
behalf of the First Lien Claimholders, amounts otherwise received or receivable by them to the
extent necessary to effectuate the intent of this sentence (with respect to the payment of
post-petition interest), even if such turnover has the effect of reducing the claim or recovery of
the Second Lien Claimholders).




     SECTION 7. Reliance; Waivers; Etc.



     7.1 Reliance. Other than any reliance on the terms of this Agreement, the First Lien
Collateral Agent, on behalf of itself and the First Lien Claimholders under its First Lien Loan
Documents, acknowledges that it and such First Lien Claimholders have, independently and without
reliance on the Second Lien Collateral Agent or any 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 Loan 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 the First
Lien Credit Agreement or this Agreement. The Second Lien Collateral Agent, on behalf of itself and
the Second Lien Claimholders, acknowledges that it and the Second Lien Claimholders have,
independently and without reliance on the First Lien Collateral Agent or any First Lien
Claimholder, and



24









 




based on documents and information deemed by them appropriate, made their own
credit analysis and decision to enter into each of the Second Lien Loan 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 the Second Lien Loan Documents or this Agreement.




     7.2 No Warranties or Liability. The First Lien Collateral Agent, on behalf of itself and
the First Lien Claimholders under the First Lien Loan Documents, acknowledges and agrees that each
of the Second Lien Collateral Agent and the 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 Loan Documents, the
ownership of any Collateral or the perfection or priority of any Liens
thereon. Except as otherwise provided herein, the Second Lien Claimholders will be entitled
to manage and supervise their respective loans and extensions of credit under the Second Lien Loan
Documents in accordance with law and as they may otherwise, in their sole discretion, deem
appropriate. Except as otherwise provided herein, the Second Lien Collateral Agent, on behalf of
itself and the Second Lien Obligations, acknowledges and agrees that the First Lien Collateral
Agent and the First 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 First Lien Loan Documents, the ownership of any Collateral or the
perfection or priority of any Liens thereon. Except as otherwise provided herein, the First Lien
Claimholders will be entitled to manage and supervise their respective loans and extensions of
credit under their respective First Lien Loan Documents in accordance with law and as they may
otherwise, in their sole discretion, deem appropriate. The Second Lien Collateral Agent and the
Second Lien Claimholders shall have no duty to the First Lien Collateral Agent or any of the First
Lien Claimholders, and the First Lien Collateral Agent and the First Lien Claimholders 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 Company or any other Grantor (including
the First Lien Loan Documents and the Second Lien Loan 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 Claimholders, the
First Lien Collateral Agent or any of them to enforce any provision of this Agreement or any First
Lien Loan Document shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Company or any other Grantor or by any act or failure to act by any First
Lien Claimholder or the First Lien Collateral Agent, or by any noncompliance by any Person with the
terms, provisions and covenants of this Agreement, any of the First Lien Loan Documents or any of
the Second Lien Loan Documents, regardless of any knowledge thereof which the First Lien Collateral
Agent or the First Lien Claimholders, 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 Company and the other Grantors under the First Lien Loan Documents and subject to the
provisions of Section 5.3(a)), the First Lien



25









 




Claimholders, the First Lien Collateral Agent and any
of them may, at any time and from time to time in accordance with the First Lien Loan Documents
and/or applicable law, without the consent of, or notice to, the Second Lien Collateral Agent or
any Second Lien Claimholders, without incurring any liabilities to the Second Lien Collateral Agent
or any Second Lien Claimholders 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:





     (1) 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 Company 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 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 Collateral Agent or any of the First Lien Claimholders,
the First Lien Obligations or any of the First Lien Loan Documents; provided that
any such increase in the First Lien Obligations shall not increase the sum of the
Indebtedness constituting principal under the First Lien Credit Agreement and the face
amount of any letters of credit issued under the First Lien Credit Agreement and not
reimbursed to an amount in excess of the Cap Amount;




     (2) 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 Company or any other Grantor to the First Lien Claimholders or the First Lien
Collateral Agent, or any liability incurred directly or indirectly in respect thereof;




     (3) settle or compromise any First Lien Obligation or any other liability of the
Company 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; and




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



     (c) Except as otherwise provided herein, the Second Lien Collateral Agent, on behalf of itself
and the Second Lien Claimholders, also agrees that the First Lien Claimholders and the First Lien
Collateral Agent shall have no liability to the Second Lien Collateral Agent or any Second Lien
Claimholders, and the Second Lien Collateral Agent,



26









 




on behalf of itself and the Second Lien
Claimholders, hereby waives any claim against any First Lien Claimholder or the First Lien
Collateral Agent, arising out of any and all actions which the First Lien Claimholders or the First
Lien Collateral Agent may take or permit or omit to take with respect to:





     (1) the First Lien Loan Documents (other than this Agreement);




     (2) the collection of the First Lien Obligations; or




     (3) 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 Claimholders and the First Lien Collateral Agent
have no duty to them in respect of the maintenance or preservation of the First Lien
Collateral, the First Lien Obligations or otherwise.



     (d) Until the Discharge of First Lien Obligations, the Second Lien Collateral Agent, on behalf
of itself and the Second Lien Claimholders, 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.



     7.4 Obligations Unconditional. All rights, interests, agreements and obligations of the
First Lien Collateral Agent and the First Lien Claimholders and the Second Lien Collateral Agent
and the Second Lien Claimholders, respectively, hereunder shall remain in full force and effect
irrespective of:



     (a) any lack of validity or enforceability of any First Lien Loan Documents or any Second Lien
Loan Documents;



     (b) except as otherwise expressly set forth in this Agreement, 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
Loan Document or any Second Lien Loan Document;



     (c) except as otherwise expressly set forth in this Agreement, 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 guaranty thereof;



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



27









 





     (e) any other circumstances which otherwise might constitute a defense available to, or a
discharge of, the Company or any other Grantor in respect of the First Lien Collateral Agent, the
First Lien Obligations, any First Lien Claimholder, the Second Lien Collateral Agent, the Second
Lien Obligations 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 Loan Documents or the Second Lien Loan 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 Claimholders may continue, at any time and
without notice to the Second Lien Collateral Agent or any Second Lien Claimholder subject to the
Second Lien Loan Documents, to extend credit and other financial accommodations and lend monies to
or for the benefit of the Company or any Grantor constituting First Lien Obligations in reliance
hereof. The Second Lien Collateral Agent, on behalf of itself and the Second Lien Claimholders,
hereby 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. Any provision of this
Agreement that 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 Company or any other Grantor shall include the Company or such Grantor as debtor and
debtor-in-possession and any receiver or trustee for the Company 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:



     (a) with respect to the First Lien Collateral Agent, the First Lien Claimholders and the First
Lien Obligations, the date of Discharge of First Lien Obligations, subject to the rights of the
First Lien Claimholders under Section 6.5; and



     (b) with respect to the Second Lien Collateral Agent, the Second Lien Claimholders and the
Second Lien Obligations, upon the later of (1) the date upon which the obligations under the Second
Lien Credit Agreement 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.



     8.3 Amendments; Waivers. No amendment, modification or waiver of any of the provisions of
this Agreement by the Second Lien Collateral Agent or the First Lien Collateral Agent shall be
deemed to be made unless the same shall be in writing signed on behalf of each party hereto or its
authorized agent and each waiver, if any, shall be a waiver only with respect to the specific
instance involved and shall in no way impair



28









 




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, the Company shall not have any right to
consent to or approve any amendment, modification or waiver of any provision of this Agreement
except to the extent its rights are directly affected (which includes, but is not limited to any
amendment to the Grantors’ ability to cause additional obligations to constitute First Lien
Obligations or Second Lien Obligations as the Company may designate).




     8.4 Information Concerning Financial Condition of the Company and its Subsidiaries. The
First Lien Collateral Agent and the First Lien Claimholders, on the one hand, and the Second Lien
Claimholders and the Second Lien Collateral Agent, on the other hand, shall each be responsible for
keeping themselves informed of (a) the financial condition of the Company and the Guarantors 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 Collateral Agent and the First Lien Claimholders shall
have no duty to advise the Second Lien Collateral Agent or any 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 Collateral Agent or any of the First Lien Claimholders, 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 Second Lien Claimholder, it or they shall be under no
obligation:



     (a) to make, and the First Lien Collateral Agent and the First Lien Claimholders 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;



     (b) to provide any additional information or to provide any such information on any subsequent
occasion;



     (c) to undertake any investigation; or




     (d) to disclose any information, which pursuant to accepted or reasonable commercial finance
practices, such party wishes to maintain confidential or is otherwise required to maintain
confidential.



     8.5 Subrogation. With respect to the value of any payments or distributions in cash,
property or other assets that any of the Second Lien Claimholders or the Second Lien Collateral
Agent pays over to the First Lien Collateral Agent or the First Lien Claimholders under the terms
of this Agreement, the Second Lien Claimholders and the Second Lien Collateral Agent shall be
subrogated to the rights of the First Lien Collateral Agent and the First Lien Claimholders;
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. The Company acknowledges and agrees that
the value of any payments or distributions in cash, property or other assets



29









 




received by the Second
Lien Collateral Agent or the Second Lien Claimholders that are paid over to the First Lien
Collateral Agent or the First Lien Claimholders pursuant to this Agreement shall not reduce any of
the Second Lien Obligations.




     8.6 Application of Payments. All payments received by the First Lien Collateral Agent or
the First Lien Claimholders may be applied, reversed and reapplied, in whole or in part, to such
part of the First Lien Obligations provided for in the First Lien Loan Documents. 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, subject to Section 5.3(a)(3), of the First Lien Obligations or
any part thereof and to any other indulgence with respect thereto, to any substitution, exchange or
release of any security 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.



     8.7 SUBMISSION TO JURISDICTION; WAIVERS. (a) ALL JUDICIAL PROCEEDINGS BROUGHT
AGAINST ANY PARTY ARISING OUT OF OR RELATING HERETO MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS
AGREEMENT, EACH PARTY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY:




     (1) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF
SUCH COURTS;




     (2) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;




     (3) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE PARTY AT
ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 8.8; AND




     (4) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (3) ABOVE IS SUFFICIENT TO CONFER
PERSONAL JURISDICTION OVER THE APPLICABLE PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT,
AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT.



     (b) EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER. THE SCOPE
OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN
ANY COURT AND THAT RELATE TO THE SUBJECT MATTER HEREOF, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS AND ALL OTHER COMMON



30









 




LAW AND STATUTORY CLAIMS. EACH PARTY HERETO
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP THAT
EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE
TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE; MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A
MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 8.7(b) AND EXECUTED BY EACH OF THE
PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS HERETO. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT
TO A TRIAL BY THE COURT.




     (c) EACH OF THE PARTIES HERETO WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
FIRST LIEN LOAN DOCUMENT OR SECOND LIEN LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
VERBAL OR WRITTEN STATEMENT OR ACTION OF ANY PARTY HERETO.



     8.8 Notices. All notices to the Second Lien Claimholders and the First Lien Claimholders
permitted or required under this Agreement shall also be sent to the Second Lien Collateral Agent
and the First Lien Collateral Agent, respectively. Unless otherwise specifically provided herein,
any notice hereunder shall be in writing and may be personally served, telexed or sent by
telefacsimile or United States mail or courier service and shall be deemed to have been given when
delivered in person or by courier service and signed for against receipt thereof, upon receipt of
telefacsimile or telex, or three Business Days after depositing it in the United States mail with
postage prepaid and properly addressed. For the purposes hereof, the addresses of the parties
hereto shall be as set forth on Annex I 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. The First Lien Collateral Agent, on behalf of itself and the First Lien Claimholders under
the First Lien Loan Documents, and the Second Lien Collateral Agent, on behalf of itself and the
Second Lien Claimholders under the Second Lien Loan Documents, and the Company, agree that each of
them shall take such further action and shall execute and deliver such additional documents and
instruments (in recordable form, if requested) as the First Lien Collateral Agent or the Second
Lien Collateral Agent may reasonably request to effectuate the terms of and the Lien priorities
contemplated by this Agreement.



31









 





     8.10 APPLICABLE LAW. THIS AGREEMENT, AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK.



     8.11 Binding on Successors and Assigns. This Agreement shall be binding upon the First
Lien Collateral Agent, the First Lien Claimholders, the Second Lien Collateral Agent, the Second
Lien Claimholders and their respective successors and assigns.



     8.12 Specific Performance. Each of the First Lien Collateral Agent and the Second Lien
Collateral Agent may demand specific performance of this Agreement. The First Lien Collateral
Agent, on behalf of itself and the First Lien Claimholders under the First Lien Loan Documents, and
the Second Lien Collateral Agent, on behalf of itself and the Second Lien Claimholders, hereby
irrevocably waive 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 Collateral Agent or the First Lien Claimholders or the Second Lien Collateral Agent
or the Second Lien Claimholders, 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. This Agreement may be executed in counterparts (and by different
parties hereto in different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. Delivery of an executed counterpart
of a signature page of this Agreement or any document or instrument delivered in connection
herewith by telecopy shall be effective as delivery of a manually executed counterpart of this
Agreement or such other document or instrument, as applicable.



     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.



     8.16 No Third Party Beneficiaries. This Agreement and the rights and benefits hereof shall
inure to the benefit of each of the parties hereto and its respective successors and assigns and
shall inure to the benefit of each of the First Lien Claimholders and the Second Lien Claimholders.
Nothing in this Agreement shall impair, as between the Company and the other Grantors and the
First Lien Collateral Agent and the First Lien Claimholders, or as between the Company and the
other Grantors and the Second Lien Collateral Agent and the Second Lien Claimholders, the
obligations of the Company and the other Grantors to pay principal, interest, fees and other
amounts as provided in the First Lien Loan Documents and the Second Lien Loan Documents,
respectively.



32









 





     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 Collateral
Agent and the First Lien Claimholders on the one hand and the Second Lien Collateral Agent and the
Second Lien Claimholders on the other hand. None of the Company, any other Grantor or any other
creditor thereof shall have any rights hereunder and neither the Company nor any Grantor may rely
on the terms hereof. Nothing in this Agreement is intended to or shall impair the obligations of
the Company 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 their terms.



[Remainder of this page intentionally left blank]




33









 








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



	 	 	 	 	 
	 	First Lien Collateral Agent



GOLDMAN SACHS CREDIT PARTNERS L.P.

as First Lien Collateral Agent,

 	 
	 	By:  	     /s/ William W. Archer
 	 
	 	 	Name:  William W. Archer 	 
	 	 	Title:  Managing Director 	 
	 



[INTERCREDITOR AGREEMENT]




 









 








	 	 	 	 	 
	 	Second Lien Collateral Agent



THE BANK OF NEW YORK,

as Second Lien Collateral Agent

 	 
	 	By:  	     /s/ Stephen C. Jerard
 	 
	 	 	Name:  Stephen C. Jerard 	 
	 	 	Title:  Vice President 	 
	 



[INTERCREDITOR AGREEMENT]




 









 








	 	 	 	 	 	 	 
	Acknowledged and Agreed to by:	 	 
	 
	 	 	 	 	 	 
	The Company	 	 	 	 
	 
	 	 	 	 	 	 
	DAY INTERNATIONAL, INC.	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	     /s/ Thomas J. Koenig	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name: Thomas J. Koenig	 	 	 
	 

	 	Title: Vice President and CFO	 	 	 






[INTERCREDITOR AGREEMENT]