RESTRUCTURING SUPPORT AGREEMENT

Exhibit 10.40

RESTRUCTURING SUPPORT AGREEMENT

This Restructuring Support Agreement, dated as of February 3, 2009 (as may be amended, supplemented or otherwise modified from time to time, this “ Agreement ”), is made and entered into by and among (i) Spectrum Brands, Inc., a Wisconsin corporation (“ Spectrum Brands ”); (ii) the subsidiaries of Spectrum Brands listed on the signature pages hereto (such subsidiaries, together with Spectrum Brands, “ Spectrum ”); (iii) Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Capital Partners Special Situations Fund, L.P. (collectively, with any affiliates that become a party to this Agreement in accordance with the terms hereof, “ Harbinger ”); (iv) D. E. Shaw Laminar Portfolios, L.L.C. (collectively, with any affiliates that become a party to this Agreement in accordance with the terms hereof, “ Laminar ”); and (v) Avenue International Master, L.P., Avenue Investments, L.P., Avenue Special Situations Fund V, L.P., Avenue Special Situations Fund IV, L.P. and Avenue-CDP Global Opportunities Fund, L.P. (collectively, with any affiliates that become a party to this Agreement in accordance with the terms hereof, “ Avenue ”).

RECITALS

WHEREAS, each of Harbinger, Laminar and Avenue are holders of one or more series of Spectrum’s 7.375% Senior Subordinated Notes due 2015, Variable Rate Toggle Senior Subordinated Notes due 2013 and 8 1/2% Senior Subordinated Notes due 2013 (collectively, the “ Notes ”) or their agents, investment advisors or managers or other authorized representatives (each, solely in their capacity as holders of certain of the Notes (or agents, advisors, managers or other authorized representatives of the beneficial owner(s) of the Notes), a “ Consenting Noteholder ”);

WHEREAS, Spectrum intends, subject to the terms and conditions of this Agreement, to prepare and file a disclosure statement (such disclosure statement together with all of the related documents and agreements attached as exhibits thereto, all to the extent that they are in form and substance reasonably satisfactory to each of the Consenting Noteholders, and with such amendments, supplements or modifications from time to time as may be permitted under Section 14 of this Agreement, collectively, the “ Disclosure Statement ”) and plan of reorganization (as it may be amended or modified from time as permitted under this Agreement, and as supplemented by attachments, exhibits, schedules and other ancillary documentation as permitted under Section 14 of this Agreement, the “ Plan ”) consistent in all material respects with and to implement the terms set forth in this Agreement and the term sheet attached hereto as Exhibit “A” (the “ Term Sheet ”), except as the Disclosure Statement and the Plan may be amended, supplemented or modified as permitted under this Agreement, in jointly administered cases (the “ Chapter 11 Cases ”) filed under chapter 11 of title 11 of the United States Code, as amended (the “ Bankruptcy Code ”) in the United States Bankruptcy Court for the Western District of Texas (the “ Bankruptcy Court ”), and Spectrum intends to use its reasonable best efforts to have such Disclosure Statement approved and such Plan confirmed by the Bankruptcy Court, in each case as expeditiously as possible under the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure (the “ Bankruptcy Rules ”);

WHEREAS, in order to expedite the implementation of the Plan, each Consenting Noteholder is prepared to commit, on the terms and subject to the conditions of this Agreement, upon receipt of a Bankruptcy-Court approved Disclosure Statement and when properly solicited to do so, to vote all Notes and claims, as defined in section 101(5) of the Bankruptcy Code, arising out of, or related to the Notes (such claims collectively with the Notes, the “ Note Claims ”), now or hereafter beneficially owned by such Consenting Noteholder or for which the Consenting Noteholder now or hereafter serves as the agent, investment advisor, manager or other authorized representative of any beneficial owners of the Notes, to accept the Plan.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Spectrum and each Consenting Noteholder, on a several but not joint basis, and solely in its capacity as a Consenting Noteholder and solely with respect to the Note Claims, agree as follows:

13. Agreement. Spectrum and each Consenting Noteholder, on a several but not joint basis, and solely in its capacity as a Consenting Noteholder and solely with respect to the Note Claims, to the extent permitted by applicable law, agree to the terms set forth in this Agreement. Each of Spectrum and each Consenting Noteholder is referred to individually as a “Party” and collectively as the “Parties.” Capitalized terms used and not defined herein shall have the meanings ascribed to them in the Term Sheet.

 

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14. Consent. To the extent that any provision of this Agreement or the Term Sheet requires the consent or approval of a Consenting Noteholder, such consent or approval shall be exercisable by each Consenting Noteholder, but only for so long as such Consenting Noteholder shall continue to hold at least 50% of the aggregate principal amount of the outstanding Notes that it holds on the date hereof; provided, however, that, notwithstanding that such Consenting Noteholder shall not continue to hold at least 50% of the aggregate principal amount of the outstanding Notes that it holds on the date hereof, the consent or approval of such Consenting Noteholder will be required to the extent that any amendment, supplement or modification to any provision of this Agreement or the Term Sheet, each as in effect on the date hereof, or the Plan as substantially in the form approved by each of the Consenting Noteholders as of the date hereof would materially and adversely disadvantage such Consenting Noteholder (solely in its capacity as a Consenting Noteholder) relative to the other Consenting Noteholders (solely in their capacity as Consenting Noteholders); provided further, however, that nothing in this Section 2 shall be construed to affect such Consenting Noteholder’s vote pursuant to and in accordance with the provisions of Section 3.

15. Voting .

15.1 So long as this Agreement shall remain in effect, and subject to the terms herein, each Consenting Noteholder agrees on a several but not joint basis, and solely in its capacity as a Consenting Noteholder and solely with respect to the Note Claims, that (i) upon receipt of a Bankruptcy-Court approved Disclosure Statement, and when properly solicited to do so, it shall timely vote all Note Claims now or hereafter beneficially owned by it, or for which it now or hereafter serves as the agent, investment advisor, manager or other authorized representative of the beneficial owners of such Note Claims, to accept the Plan, (ii) it shall not, in its capacity as a holder of Note Claims (and only in such capacity), object to or otherwise commence any proceeding or support any other person’s efforts to oppose or object to confirmation and consummation of the Plan, (iii) it shall not vote any Note Claims now or hereafter beneficially owned by it or for which it now or hereafter serves as the agent, investment advisor, manager or other authorized representative for beneficial owners of such Note Claims in favor of any other plan; provided that in each case, the terms of the Plan and Disclosure Statement are in all material respects consistent with the terms set forth in the Term Sheet and are otherwise satisfactory to each of the Consenting Noteholders in all material respects and (iv) it shall not, with respect to all Note Claims for which such Consenting Noteholder beneficially owns or is an agent, investment advisor, manager or other authorized representative of the beneficial owner of such Note Claims, withdraw or revoke any properly solicited vote to accept the Plan unless the Plan is amended in a manner that is inconsistent in any material respect with this Agreement without the prior written consent of each of the Consenting Noteholders.

15.2 Notwithstanding the foregoing provisions, nothing in this Agreement shall require Spectrum or any Consenting Noteholder to take any action prohibited by the Bankruptcy Code, the Securities Act of 1933, as amended (the “ Securities Act ”), the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), any rule or regulations thereunder or by other applicable law or regulation or by any order or direction of any court or any federal or state governmental authority.

15.3 It is agreed by and between Spectrum and each Consenting Noteholder, on a several but not joint basis, and solely in its capacity as a Consenting Noteholder and solely with respect to the Note Claims, that the right of any or all of them to enforce the rights and obligations under this Agreement between and among Spectrum and each Consenting Noteholder shall not be abridged, modified or in any manner affected by the commencement by Spectrum of the Chapter 11 Cases.

16. Restriction on Transfer/Obligations of Transferee .

16.1 Each Consenting Noteholder hereby agrees, on a several but not joint basis, and solely in its capacity as a Consenting Noteholder and solely with respect to the Note Claims, that, so long as this Agreement shall remain in effect, such Consenting Noteholder shall not sell, transfer or assign (“ Transfer ”) its Note Claims or any option thereon or any right or interest (voting or otherwise) therein over which it has dispositive power, unless the transferee thereof, as a condition precedent to such sale, transfer or assignment, agrees in writing to be bound by all the terms and conditions of this Agreement applicable to a “Consenting Noteholder” as if it were a party hereto by properly completing and executing the transfer form attached hereto as Exhibit “B” and the transferor promptly provides Spectrum Brands with a copy thereof, in which event Spectrum shall be deemed to have acknowledged that its obligations to such Consenting Noteholder hereunder shall be deemed to constitute obligations in favor of such transferee. Spectrum shall confirm that acknowledgement in writing (but the transferor need not wait for such confirmation prior to consummating such transfer). Any sale, transfer or assignment of any Note Claim that does not comply with the procedure set forth in this Section 4 shall be deemed void ab initio .

16.2 In the event that any of Harbinger, Laminar or Avenue Transfers 50% or more of the aggregate principal amount of the outstanding Notes held by it on the date hereof to a transferee pursuant to and in accordance with Section 4.1 (such transferee, a “Transferee”), following the effective time of such Transfer, such Transferee shall, so long as such Transferee remains a Qualifying Transferee, be entitled to exercise the rights of consent or approval of a “Consenting Noteholder” under this Agreement and, except as otherwise provided in Section 2, Harbinger, Laminar or Avenue, as the case may be, shall no longer be entitled to exercise any such rights hereunder. Any transferee of Notes from a Transferee shall be entitled to the rights of a “Consenting Noteholder” under this Agreement only for so long as such subsequent transferee remains a Qualfiying Transferee. For

 

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purposes of this Section 4.2, a “Qualifying Transferee” is a Transferee or a subsequent transferee which holds in excess of 50% of the aggregate principal amount of the Notes held by the Consenting Noteholder party to this Agreement as of the date hereof from whom the Transferee acquired such Notes.

17. Means for Implementing the Plan .

17.1 Spectrum hereby agrees that it shall use its reasonable best efforts to:

(1) commence the Chapter 11 Cases promptly following the effective date of this Agreement and no later than February 17, 2009;

(2) coordinate with counsel to each Consenting Noteholder to prepare the Plan and Disclosure Statement;

(3) submit for and obtain at the earliest practicable date, Bankruptcy Court approval of the Disclosure Statement in form and substance reasonably satisfactory to each Consenting Noteholder no later than the date set forth in Section 8(b), and solicit the requisite acceptances of the Plan in accordance with section 1125 of the Bankruptcy Code after the Bankruptcy Court has approved the Disclosure Statement;

(4) except as the board of directors of Spectrum Brands may determine in its good faith judgment, after receiving the advice of outside counsel, to be required in the exercise of their fiduciary duties under applicable law, not withdraw the Plan without the prior consent of each Consenting Noteholder;

(5) seek to confirm the Plan as expeditiously as practicable under the Bankruptcy Code and the Bankruptcy Rules;

(6) implement all steps necessary and desirable to obtain from the Bankruptcy Court an order confirming the Plan (the “ Confirmation Order ”) no later than the time set forth in Section 8(h);

(7) seek to satisfy as promptly as possible all conditions to confirmation and consummation of the Plan as set forth in the Plan;

(8) consummate the confirmed Plan at the earliest practicable date; and

(9) except as the board of directors of Spectrum Brands may determine in its good faith judgment, after receiving the advice of outside counsel, to be required in the exercise of their fiduciary duties under applicable law, not to pursue, propose or support, or encourage the pursuit, proposal or support of, any plan of reorganization for Spectrum that is inconsistent with the Plan.

18. Support of the Plan . As long as this Agreement remains in effect, and provided that the terms of the Plan and Disclosure Statement are in all material respects consistent with the terms set forth in the Term Sheet and are otherwise satisfactory to each of the Consenting Noteholders in all material respects, each Consenting Noteholder will, on a several but not joint basis, and solely in its capacity as a Consenting Noteholder and solely with respect to the Note Claims, subject to the provisions of this Agreement, support the Plan in the manner described herein and, upon receipt of a Bankruptcy-Court approved Disclosure Statement, and when properly solicited to do so, vote all Note Claims in favor of the Plan. With respect to any Note Claims now or hereafter beneficially owned by any Consenting Noteholder or for which any Consenting Noteholders now or hereafter serves as the agent, investment advisor, manager or other authorized representative for beneficial owners of such Note Claims, as long as this Agreement remains in effect, and provided that the terms of the Plan and Disclosure Statement are in all material respects consistent with the terms set forth in the Term Sheet and are otherwise satisfactory to each of the Consenting Noteholders in all material respects, such Consenting Noteholder, on a several but not joint basis, and solely in its capacity as a Consenting Noteholder and solely with respect to the Note Claims, shall not (a) oppose the chapter 11 filing; (b) object to confirmation of the Plan or otherwise commence any proceeding to oppose or alter the Plan, (c) vote for, consent to, support or participate in the formulation of any other plan of reorganization or liquidation proposed or filed or to be proposed or filed, (d) directly or indirectly seek, solicit, support or encourage any other plan, sale, proposal or offer of dissolution, winding up, liquidation, reorganization, merger or restructuring of Spectrum or any of its subsidiaries, (e) object to the Disclosure Statement or the solicitation of acceptances to the Plan, or (f) take any action, directly or indirectly, with respect to Spectrum, any of its subsidiaries or otherwise that is inconsistent with, or that would delay confirmation of, the Plan.

 

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19. Acknowledgement . This Agreement is not and shall not be deemed to be a solicitation for consents to the Plan. The acceptance of any Consenting Noteholder will not be solicited until such Consenting Noteholder shall have received the Disclosure Statement and related ballot, each as approved by the Bankruptcy Court.

20. Termination of Agreement . Upon the occurrence of one of the following events (each a “Termination Event”), each Consenting Noteholder’s obligations hereunder will automatically terminate on the third business day following written notice of such occurrence to Spectrum Brands by any Consenting Noteholder or on such other date as provided for in this Section 8 with respect to any specified Termination Event, unless prior to such date, such Termination Event is cured or one or more Consenting Noteholders each agree in writing to waive such Termination Event, in which case the obligations hereunder of such Consenting Noteholders agreeing to waive the termination event shall not be terminated; provided, however, that upon any Termination Event specified in Section 8(o) this Agreement shall terminate automatically and immediately upon the occurrence thereof; provided further, however, that, upon the occurrence of any Termination Event specified in Section 8(m) or Section 8(n), Spectrum or any Consenting Noteholder whose actions or omissions did not give rise to such Termination Event may terminate this Agreement which termination shall be effective on the third business day following written notice of such occurrence to each Consenting Noteholder (unless such Termination Event is otherwise cured prior to effectiveness of the termination) unless prior to such date, one or more of the Consenting Noteholders whose actions or omissions did not give rise to such Termination Event agree in writing to waive such Termination Event, in which case the obligations hereunder of such Consenting Noteholders agreeing to waive the termination event shall not be terminated:

(1) Spectrum shall not have commenced the Chapter 11 Cases prior to February 18, 2009 (such date of commencement, the “ Petition Date ”);

(2) Spectrum shall not have filed a Plan consistent in all material respects with the Term Sheet and Disclosure Statement relating thereto with the Bankruptcy Court on or before ten (10) days after the Petition Date, or such later date as Spectrum and each of the Consenting Noteholders shall mutually agree;

(3) Spectrum fails to obtain entry of the interim financing order, within three (3) business days following the Petition Date, or fails within forty-five (45) calendar days following the Petition Date to obtain entry of the final financing order, in each case, in form and substance acceptable to each of the Consenting Noteholders, authorizing (x) the DIP Financing (defined herein), the principal terms of which are set forth in the DIP Term Sheet attached hereto as Exhibit “C,” or (y) such other DIP financing that provides the Company with the liquidity necessary to fund its operations during the Chapter 11 Cases, is otherwise at least as favorable to the Company, when viewed as a whole, when compared to the DIP Financing reflected on Exhibit “C,” and does not impair the Company’s ability to prosecute, confirm, and consummate the Plan, provided that a Consenting Noteholder seeking to terminate the Agreement due to the failure of a DIP financing to comply with this Section 8(c) shall provide written notice of such termination to Spectrum Brands and each other Consenting Noteholder as promptly as practicable following the entry of a final financing order approving such DIP financing, and in no event later than seven days following the entry of such final financing order;

(4) the Disclosure Statement shall not have been approved by the Bankruptcy Court on or before April 15, 2009;

(5) Spectrum shall file with the Bankruptcy Court a plan of reorganization, or an amendment to the plan of reorganization, that does not provide for unimpairment and reinstatement of the Senior Secured Credit Facility Claims under Section 1124(2) of the Bankruptcy Code on the same terms that exist under the existing Senior Secured Credit Facility or an alternative treatment of the Senior Secured Credit Facility Claims that is mutually agreed upon by Spectrum and each of the Consenting Noteholders;

(6) Spectrum shall file with the Bankruptcy Court a plan of reorganization, or an amendment to the plan of reorganization (other than the Plan), that is materially inconsistent with or provides less favorable economic treatment for the holders of the Notes than that provided in the Term Sheet; provided , however , that such Consenting Noteholder shall give Spectrum no less than three (3) business days’ notice in order to provide Spectrum an opportunity to cure any such inconsistency;

(7) Spectrum shall withdraw the Plan or publicly announce its intention not to pursue, propose or support the Plan;

(8) the Plan shall not have been confirmed by the Bankruptcy Court on or before June 30, 2009, provided , however , that with respect to this Section 8(h) of this Agreement, such date shall be extended, on a daily basis, so long as (i) a hearing to consider confirmation of the Plan has commenced and is continuing and (ii) Spectrum is using its reasonable best efforts to obtain an order of the Bankruptcy Court confirming the Plan; provided further , however , that such date shall not be extended beyond July 10, 2009 without the consent of each of the Consenting Noteholders;

 

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(9) the Chapter 11 Cases shall have been dismissed or converted to a case under Chapter 7 of the Bankruptcy Code;

(10) an occurrence of whatever nature that results in Spectrum being unable to perform its obligations under the Plan, the Term Sheet (to the extent consistent with the Plan) or this Agreement;

(11) Spectrum shall have made or engaged in any act, or omitted to take any action, that is materially inconsistent with, prior to the date of the filing of the Plan, the Term Sheet, and after such date, the Plan;

(12) Spectrum shall have breached any of its material obligations under this Agreement, including the obligations under Section 5;

(13) any Consenting Noteholder, solely in its capacity as a Consenting Noteholder, shall have made or engaged in any act, or omitted to take any action, that is materially inconsistent with the Plan;

(14) any Consenting Noteholder, solely in its capacity as a Consenting Noteholder, shall have breached any of its material obligations under this Agreement, including the obligations under Section 3;

(15) a Chapter 11 trustee or an examiner with expanded powers shall have been appointed for Spectrum pursuant to section 1104 of the Bankruptcy Code;

(16) the Bankruptcy Court shall have determined by final order that the terms of this Agreement are unenforceable;

(17) the Bankruptcy Court shall enter an order denying confirmation of the Plan;

(18) the occurrence of the Effective Date of the Plan no later than July 15, 2009.

Upon termination of this Agreement, all obligations hereunder shall terminate and shall be of no further force and effect; provided , however , that any claim for breach of this Agreement shall survive termination and all rights and remedies with respect to such claims shall not be prejudiced in any way; but provided further , however , that the breach of this Agreement by one or more of the Parties shall not create any rights or remedies against any non-breaching Party unless such non-breaching Party has participated in or aided and abetted the breach by the breaching Party. Except as set forth in this paragraph and for the obligations set forth in Sections 16, 18, 19, 21, 22, 25, 27, 33 and 34 upon such termination, any obligations of the non-breaching Parties set forth in this Agreement shall be null and void ab initio and all claims, causes of action, remedies, defenses, setoffs, rights or other benefits of such non-breaching Parties shall be fully preserved without any estoppel, evidentiary or other effect of any kind or nature whatsoever.

21. Good Faith Negotiation of Documents . Each Party hereby further covenants and agrees to negotiate the definitive documents relating to the Plan consistent with the Term Sheet and in good faith, but subject to Section 14 and Section 15.1.

22. Mutual Representations and Warranties . Spectrum and each Consenting Noteholder, on a several but not joint basis, and solely in its capacity as a Consenting Noteholder and solely with respect to the Note Claims, as applicable, represent and warrant to each other that the following statements are true, correct and complete in all material respects as of the date hereof:

(1) Corporate Power and Authority. Each Party represents that it has all requisite corporate, partnership or Limited Liability Company power and authority to enter into this Agreement and to carry out the transactions contemplated by, and perform its respective obligations under, this Agreement.

(2) Authorization. Each Party represents that the execution and delivery of this Agreement and the performance of its obligations hereunder have been duly authorized by all necessary corporate, partnership or Limited Liability Company action on its part.

23. Other Representations and Warranties.

(1) Each of the Consenting Noteholders represents, severally and not jointly that, as of the date of this Agreement, such Consenting Noteholder is the beneficial owner (and/or agent, investment advisor, manager or other authorized

 

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representative of the beneficial owner(s)) of and has full voting power and dispositive power with respect to the Note Claims and has full power to compromise the Note Claims, and owns or controls the aggregate amount of Notes identified on Schedule A attached hereto. Notwithstanding the representations and warranties made within this Section 11(a) of this Agreement, with respect to any Notes owned or controlled by a Consenting Noteholder and held at Lehman Brothers Inc. or any of its affiliates (collectively, “ Lehman ”), such Consenting Noteholder cannot represent that it has voting power and/or dispositive power with respect to the Notes and such Notes will not be identified on Schedule A , and, notwithstanding anything to the contrary contained herein, until such Notes no longer are held at Lehman and are not otherwise under such Consenting Noteholder’s dominion and control, shall not be included as subject to the provisions of this Agreement.

(2) Binding Obligation of Spectrum . Spectrum represents that, subject to the provisions of sections 1125 and 1126 of the Bankruptcy Code, this Agreement is the legally valid and binding obligation of Spectrum, enforceable against it in accordance with its terms, except to the extent that enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws relating to the rights of a creditor against a debtor, or by equitable principles relating to enforceability.

(3) Binding Obligation of Consenting Noteholder. Each Consenting Noteholder represents that this Agreement is the legally valid and binding obligation of such Consenting Noteholder, enforceable against it in accordance with its terms, except to the extent that enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws relating to the rights of a creditor against a debtor, or by equitable principles relating to enforceability.

24. Cooperation. Prior to the commencement of and during the Chapter 11 Cases, Spectrum shall provide to counsel for each Consenting Noteholder (x) drafts of all motions, proposed orders or applications and other documents Spectrum intends to file with the Bankruptcy Court at least three (3) business days prior to the date when Spectrum intends to file any such document unless such advance notice is impossible or impractical under the circumstances in which case Spectrum shall notify telephonically or by electronic mail counsel to each Consenting Noteholder to advise them of the documents to be filed and the facts that make the provision of advance copies at least three (3) business days prior to submission impossible or impractical, and (y) copies of all documents actually filed by Spectrum with the Bankruptcy Court within two (2) business days of such filing. Spectrum shall utilize reasonable best efforts to consult with each of the Consenting Noteholders prior to filing any such documents. The provisions of this Section 12 shall be deemed satisfied by each of the Consenting Noteholders with respect to all first day motions, proposed orders or applications and other documents delivered to the Consenting Noteholders (or their respective counsel) prior to the date of this Agreement.

25. Access. Spectrum will afford each Consenting Noteholder and its attorneys, consultants, and other authorized representatives reasonable access, upon reasonable notice during normal business hours, and at other reasonable times, to all properties, books, contracts, commitments, records, personnel, lenders and advisors of Spectrum.

26. Amendment of Plan Documents. The Plan, Disclosure Statement, and attachments, schedules, supplements and documents related to the Plan or the Disclosure Statement may from time to time be amended, supplemented or modified by Spectrum if such amendment, supplement or modification is otherwise consented to by each of the Consenting Noteholders (which consent shall not be unreasonably withheld).

27. Other Interests or Claims .

27.1 For the avoidance of doubt, other than the Note Claims, no claims or other debt or equity interests in Spectrum, including, with respect to (i) the Credit Agreement, dated as of March 30, 2007, with Goldman Sachs Credit Partners L.P., as the Administrative Agent, the Collateral Agent and the Syndication Agent; Wachovia Bank, National Association, as the Deposit Agent; Bank of America, N.A., as an LC Issuer; and the Lenders party thereto, as amended (the “ Senior Secured Credit Facility ”), (ii) the credit agreement, dated as of September 28, 2007, with Wachovia Bank, National Association, as the Administrative Agent, the Collateral Agent and an LC Issuer; Goldman Sachs Credit Partners L.P., as the Syndication Agent; and the Lenders party thereto, as amended (the “ ABL Facility ”), (iii) any DIP Financing (as defined herein), (iv) any Exit Financing (as defined herein) or (v) any other non-Note Claims (any such claims or debt or equity interests are collectively, the “ Other Spectrum Claims ”) that are now or in the future held by any Consenting Noteholder shall be subject to the terms of this Agreement and no Consenting Noteholder shall be bound by the terms of this Agreement with respect to any such Other Spectrum Claims and nothing in this Agreement shall prohibit or shall be construed to prohibit any Consenting Noteholder that holds Other Spectrum Claims from appearing as a party-in-interest in any matter to be adjudicated in the Chapter 11 Cases with respect to such Other Spectrum Claims or prohibit or shall be construed to prohibit, limit or restrict the ability, of any Consenting Noteholder to hold, make investments in, sell, transfer, assign, pledge or vote any Other Spectrum Claims, it being understood and agreed that any of the foregoing shall in no event cause any breach or violation of or create liability under this Agreement.

 

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27.2 This Agreement shall in no way be construed to preclude any Consenting Noteholder from acquiring additional Note Claims or other claims against or interests in Spectrum. Any additional Note Claims so acquired shall automatically become subject to the terms of this Agreement.

28. Amendments . This Agreement may not be modified, amended or supplemented without the prior written consent of Spectrum and each Consenting Noteholder. Notwithstanding anything to the contrary in Section 2 or Section 4.2, any amendment to the provisions of Sections 8(f), 15.1, 16 or 18 shall require the consent of each Consenting Noteholder party hereto.

29. Impact of Appointment to Unsecured Creditors’ Committee . If any creditors’ committee is appointed by the United States Trustee in the Chapter 11 Cases and the United States Trustee appoints one or more of the Consenting Noteholders to be a member of such creditors’ committee pursuant to section 1102 of the Bankruptcy Code, then the fact of such service on such creditors’ committee shall not otherwise affect the continuing obligations of the Consenting Noteholders under this Agreement or the validity or enforceability of this Agreement; provided, however, that nothing contained herein shall prevent any such Consenting Noteholders, in its capacity as a member of such creditors’ committee, from acting in a manner consistent with its fiduciary duties as a member of such creditors’ committee even if such action is inconsistent with this Agreement and the Term Sheet.

30. Disclosure of Consenting Noteholders . Unless required by applicable law or regulation, Spectrum shall not disclose any Consenting Noteholder’s holdings of Notes, and no Consenting Noteholder shall disclose any other Consenting Noteholder’s holdings of Notes, in each case without the prior written consent of the Consenting Noteholder holding such Notes; and if such announcement or disclosure is so required by law or regulation, Spectrum or the disclosing Consenting Noteholder, as the case may be, shall afford the Consenting Noteholder a reasonable opportunity to review and comment upon, or, if possible, object to the requirement to make, any such announcement or disclosure prior to Spectrum’s or the disclosing Consenting Noteholder’s, as the case may be, making such announcement or disclosure. The foregoing shall not prohibit Spectrum or any Consenting Noteholder from disclosing the approximate aggregate holdings of the Consenting Noteholders collectively together with the holdings of any other holders of Notes that may become party hereto or party to a similar agreement.

31. Governing Law and Jurisdiction . This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to any conflicts of law provision which would require the application of the law of any other jurisdiction. By its execution and delivery of this Agreement, each of the parties hereto hereby irrevocably and unconditionally agrees for itself that any legal action, suit or proceeding against it with respect to any matter under or arising out of or in connection with this Agreement or for recognition or enforcement of any judgment rendered in any such action, suit or proceeding, may be brought in the United States District Court for the District of New York. By execution and delivery of this Agreement, each of the parties hereto hereby irrevocably accepts and submits itself to the nonexclusive jurisdiction of such court, generally and unconditionally, with respect to any such action, suit or proceeding. Notwithstanding the foregoing consent to New York jurisdiction, upon the commencement of the Chapter 11 Cases, each of the parties hereto hereby agrees that the Bankruptcy Court shall have exclusive jurisdiction of all matters arising out of or in connection with this Agreement.

32. Headings . The headings of the sections, paragraphs and subsections of this Agreement are inserted for convenience only and shall not affect the interpretation hereof.

33. Specific Performance. It is understood and agreed by each of the parties hereto that money damages would not be a sufficient remedy for any breach of this Agreement by any Party and each non-breaching Party shall be entitled to any termination rights under Section 8 hereto, as well as specific performance and injunctive or other equitable relief as a remedy of any such breach.

34. Successors and Assigns . This Agreement is intended to bind and inure to the benefit of the parties hereto and their respective successors, assigns, heirs, executors, administrators and representatives. Except as set forth herein, including without limitation Section 4 hereof, no party hereto may assign any of its rights or obligations hereunder without the prior consent of all other parties hereto.

35. Entire Agreement . This Agreement, including the exhibits hereto, constitutes the entire agreement of the Parties with respect to the subject matter of this Agreement, and supersedes all prior negotiations, agreements and understandings, whether written or oral, among the Parties with respect to the subject matter of this Agreement.

36. Counterparts . This Agreement may be executed in one or more counterparts, any one of which need not contain the signature of more than one Party, each of which shall be deemed an original, and all of which shall constitute one and the same Agreement. This Agreement may be executed by facsimile or electronic pdf.

 

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37. No Third-Party Beneficiaries . Unless expressly stated herein, this Agreement shall be solely for the benefit of the Parties hereto and no other person or entity shall be a third-party beneficiary hereof.

38. Consideration . It is hereby acknowledged by the Parties hereto that no consideration shall be due or paid to the Consenting Noteholders for their agreement to vote their Note Claims to accept the Plan in accordance with the terms and conditions of this Agreement other than Spectrum’s agreements hereunder.

39. No Waiver of Participation and Reservation of Rights . Except as expressly provided in this Agreement, nothing contained herein is intended to, or does, in any manner waive, limit, impair or restrict the ability of any Consenting Noteholder to protect or preserve its rights, remedies and interests, including, without limitation, its interests and claims against Spectrum or its full participation in any case filed by or against Spectrum under the Bankruptcy Code. If the transactions contemplated by this Agreement, including, without limitation, the Plan, are not consummated, or if this Agreement is terminated for any reason, then the Consenting Noteholders, as well as the other Parties hereto, fully reserve any and all of their rights, remedies, interests and claims against the other Parties hereto. Pursuant to Federal Rule of Evidence 408 and any other applicable rules of evidence, this Agreement and all negotiations relating hereto shall not be admissible into evidence in any proceeding other than a proceeding to enforce its terms.

40. Disclosure Obligation. Spectrum hereby agrees to file a Form 8-K with the United States Securities and Exchange Commission disclosing the Term Sheet, as well as the existence of this Agreement, but, not this Agreement’s terms, except as otherwise required by applicable law and regulation, no later than the later of (x) the date hereof and (y) the date of filing of the Chapter 11 Cases with the Bankruptcy Court.

41. Further Assurances. Subject to the terms of this Agreement, the parties hereto agree to execute and deliver such other instruments and perform such acts, in addition to the matters herein specified, as may be reasonably appropriate or necessary, from time to time, to effectuate the Plan.

42. Automatic Stay. The parties hereto acknowledge that after the commencement of the Chapter 11 Case, the giving of notice or termination by any party pursuant to this Agreement shall not be a violation of the automatic stay of section 362 of the Bankruptcy Code; provided, however, nothing herein shall prejudice any party’s rights to argue that the giving of notice of termination was not proper under the terms of this Agreement.

43. Several not Joint for Consenting Noteholders. The agreements, representations and obligations of the Consenting Noteholders under this Agreement are, in all respects, several and not joint. Any breach of this Agreement by any Consenting Noteholder shall not result in liability for any other non-breaching Consenting Noteholder.

44. No Obligation to Extend Credit. Notwithstanding anything to the contrary in this Agreement, the Consenting Noteholders may also in their sole discretion determine to provide financing to Spectrum, which may be in the form of one or more of a facility to provide credit (x) while the Chapter 11 Cases are pending (as provided by any of the Consenting Noteholders, the “DIP Financing”, and any documents in respect thereof, as may be amended, supplemented or otherwise modified from time to time, the “DIP Financing Documents”) and (y) to the reorganized entities or their successors following consummation of the Plan (as provided by any of the Consenting Noteholders, the “Exit Financing”). In no event shall any provision of this Agreement (i) constitute a commitment by any Consenting Noteholder to provide, or otherwise obligate any Consenting Noteholder to provide, any financing to Spectrum or (ii), in the event that any of the Consenting Noteholders agree to provide the DIP Financing and/or the Exit Financing, prohibit or prevent any such Consenting Noteholder from taking any action, or require it to take any action, or to perform any obligation or refrain from exercising any right or remedy in respect of the DIP Financing or the Exit Financing and no default of any of its obligations hereunder shall exist by virtue of any such action taken or omitted in such capacity.

In the event that any of the Consenting Noteholders provide the DIP Financing and/or the Exit Financing to Spectrum: (i) any extension of credit that may be provided to Spectrum pursuant to the DIP Financing or the Exit Financing, as applicable, and the effectiveness of the DIP Financing and Exit Financing, as applicable, shall remain subject to the conditions precedent set forth in the applicable documentation in respect of the DIP Financing or the Exit Financing, and (ii) no Consenting Noteholder shall be obligated to make any extensions of credit under the DIP Financing or the Exit Financing, as applicable, until such time as Spectrum satisfies the conditions precedent in respect of the applicable facility, which satisfaction shall be determined in the sole discretion of such Consenting Noteholders.

45. Notice. All notices hereunder shall be deemed given if in writing and delivered, if sent by facsimile, courier, electronic mail or by registered or certified mail (return receipt requested) to the parties and their respective addresses and facsimile numbers (or at such other addresses or facsimile numbers as shall be specified by like notice) set forth on the signature pages hereto (or with respect to any transferee, on the signature page of the applicable transfer agreement in the form attached hereto as Exhibit “B”). Any notice given by delivery, mail (including electronic mail) or courier shall be effective when received. Any notice given by facsimile shall be effective upon oral or machine confirmation of transmission.

 

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46. Interpretation. References to Sections, Exhibits and Schedules are to Sections, Exhibits and Schedules of or to this Agreement unless otherwise specified. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”, whether or not they are in fact followed by those words or words of like import. References to a specific article, section or subsection of the Bankruptcy Code, the Securities Act, the Exchange Act or any other statute, regulation or rule expressly referenced herein shall, unless otherwise specified, include any amendments to or successor provisions of such article, section or subsection.

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be executed and delivered by its duly authorized officer as of the date first above written.

 

 

10

IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be executed and delivered by its duly authorized officer as of the date first above written.

 

 

11

IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be executed and delivered by its duly authorized officer as of the date first above written.

 

 

12

IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be executed and delivered by its duly authorized officer as of the date first above written.

 

 

13

IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be executed and delivered by its duly authorized officer as of the date first above written.

 

 

14

IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be executed and delivered by its duly authorized officer as of the date first above written.

 

 

15

IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be executed and delivered by its duly authorized officer as of the date first above written.

 

 

 

16

IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be executed and delivered by its duly authorized officer as of the date first above written.

 

 

 

17

IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be executed and delivered by its duly authorized officer as of the date first above written.

 

 

 

18

IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be executed and delivered by its duly authorized officer as of the date first above written.

 

 

 

19

IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be executed and delivered by its duly authorized officer as of the date first above written.

 

 

 

20

IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be executed and delivered by its duly authorized officer as of the date first above written.

 

 

 

21

IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be executed and delivered by its duly authorized officer as of the date first above written.

 

 

 

22

IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be executed and delivered by its duly authorized officer as of the date first above written.

 

 

 

23

IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be executed and delivered by its duly authorized officer as of the date first above written.

 

 

 

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IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be executed and delivered by its duly authorized officer as of the date first above written.

 

 

 

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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed and delivered by its duly authorized officer as of the date first above written.

 

 

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