EXHIBIT 10.4 INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT

 

 

 

 

 

                                                                    EXHIBIT 10.4

 

                                                               EXECUTION VERSION

 

                 INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT

 

         This INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT, dated as of April

11, 2004, is entered into among CITICORP NORTH AMERICA, INC. ("Citigroup"), as

administrative agent for the First Lien Lenders (in such capacity, the "Senior

Agent"), CITIGROUP, as administrative agent for the Term C Lenders (in such

capacity, the "Junior Agent"), CITIGROUP, as collateral agent for the Secured

Parties (in such capacity, the "Collateral Agent"), HLI OPERATING COMPANY,

INC. (the "Borrower"), HAYES LEMMERZ INTERNATIONAL, INC. (the "Company") and

each other Loan Party.

 

                             W I T N E S S E T H :

 

         WHEREAS, the Borrower, the Company, the Lenders, the Issuers, the

Senior Agent, the Junior Agent and the Collateral Agent have entered into the

Amended and Restated Credit Agreement, dated as of the date hereof (as such

agreement may be amended, restated, supplemented, renewed or otherwise

modified from time to time, together with any other agreements pursuant to

which any of the Indebtedness, commitments, obligations, costs, expenses,

fees, reimbursements, indemnities or other obligations payable or owing

thereunder may be refinanced, restructured, renewed, extended, increased,

refunded or replaced, the "Credit Agreement"); and

 

         WHEREAS, it is a condition to the effectiveness of the Credit

Agreement that the parties hereto execute and deliver this Agreement;

 

         NOW, THEREFORE, in consideration of the premises and the covenants

and agreements contained herein, the parties hereto hereby agree as follows:

 

         Section 1. Definitions

 

         1.1 Definitions

 

         (a) Unless otherwise defined herein, terms are used herein as defined

in the Credit Agreement. In addition, as used in this Agreement, the following

terms shall have the following meanings (such meanings to be equally

applicable to both the singular and plural forms of the terms defined):

 

         "Agent" shall mean each of the Senior Agent, the Junior Agent and the

Collateral Agent.

 

         "Agreement" shall mean this Intercreditor Agreement, as amended,

restated, supplemented or otherwise modified from time to time in accordance

with the terms hereof.

 

         "Bankruptcy Code" shall mean title 11, United States Code.

 

         "Bankruptcy Law" shall mean the Bankruptcy Code, or any similar

federal, state or foreign Requirement of Law for the relief of debtors or any

arrangement, reorganization, insolvency, moratorium, assignment for the

benefit of creditors, any other marshalling of the assets and liabilities of

the Company, the Borrower or any other Loan Party or any similar law relating

to or affecting the enforcement of creditors' rights generally.

 

         "Collateral Agent" shall include, in addition to the Collateral Agent

referred to in the recitals hereto, any successors and assigns to the

Collateral Agent permitted hereunder.

 

         "Credit Agreement" shall have the meaning set forth in the recitals

to this Agreement.

 

         "Insolvency or Liquidation Proceeding" shall mean, collectively, (a)

any voluntary or involuntary case or proceeding under the Bankruptcy Law with

respect to the Company, the Borrower or any other Loan Party, (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 the Company, the Borrower or any other Loan

Party or with respect to any of their respective assets, (c) any liquidation,

dissolution, reorganization or winding up of the Company, the Borrower or any

Loan Party, whether voluntary or involuntary and whether or not involving

insolvency or bankruptcy, and (d) any assignment for the benefit of creditors

or any other marshaling of assets and liabilities of the Company, the Borrower

or any other Loan Party.

 

         "Junior Agent" shall include, in addition to the Junior Agent

referred to in the recitals hereto, (a) any successors and assigns thereto or

any acting Second Lien Agent, in each case, as permitted under the Credit

Agreement, and (b) if there is no acting Second Lien Agent, the Requisite Term

C Lenders.

 

         "Junior Claims" shall mean all Secured Obligations arising under, or

in respect of, the Term C Facility and all extensions of credit under any

financing, or any arrangement for use of cash collateral, under any Bankruptcy

Law, in each case, extended or provided to any Loan Party by the Term C

Lenders.

 

         "Junior Documents" shall mean, collectively, with respect to any

Junior Claim, any provision pertaining to such Junior Claim in any Loan

Document or any other document, instrument or certificate evidencing or

delivered in connection with such Junior Claim.

 

         "Junior Liens" shall mean all Liens securing the Junior Claims.

 

         "Junior Secured Parties" shall mean the Second Lien Agent, the Term C

Lenders and each other holder of any Junior Claim.

 

         "Notice of Actionable Default" shall mean a written certification

identified as a "Notice of Actionable Default," substantially in the form

attached hereto as Exhibit A or such other form reasonably satisfactory to the

Collateral Agent, from any Administrative Agent addressed to the Collateral

Agent certifying that an Event of Default has occurred and is continuing under

the Credit Agreement and that any required notice thereof has been given and

any grace periods provided for therein have expired.

 

         "pay in full," "paid in full" or "payment in full" shall mean with

respect to any Secured Claims, the payment in full in cash of the principal

of, accrued (but unpaid) interest and premium, if any, on all such Secured

Claims and, with respect to letters of credit outstanding thereunder, delivery

of cash collateral or backstop letters of credit in respect thereof in

compliance with the relevant Collateral Documents, in each case, after or

concurrently with termination of all Commitments thereunder and payment in

full in cash of any other such Secured Claims that are due and payable at or

prior to the time such principal and interest are paid.

 

         "Secured Claims" shall mean, collectively, the Senior Claims and the

Junior Claims.

 

         "Senior Agent" shall include, in addition to the Senior Agent

referred to in the recitals hereto, (a) any successors and assigns thereto or

any acting First Lien Agent, in each case, as permitted under the Credit

Agreement, and (b) if there is no acting First Lien Agent, the Requisite First

Lien Lenders.

 

         "Senior Claims" shall mean all Secured Obligations arising under, or

in respect of, the Revolving Credit Facility or the Term B Facility and all

extensions of credit under any financing, or any arrangement for use of cash

collateral, under any Bankruptcy Law, in each case, extended or provided to

any Loan Party by the First Lien Lenders. "Senior Claims" shall include all

interest accrued or accruing (or which would, absent the commencement of an

Insolvency or Liquidation Proceeding, accrue) after the commencement of an

Insolvency or Liquidation Proceeding in accordance with and at the rate

specified in the Loan Documents whether or not the claim for such interest is

allowed as a claim in such Insolvency or Liquidation Proceeding. To the extent

any payment with respect to the Senior Claims (whether by or on behalf of any

Loan Party, as proceeds of security, enforcement of any right of setoff or

otherwise) is declared to be fraudulent or preferential in any respect, set

aside or required to be paid to a debtor in possession, trustee, receiver or

similar Person, then the obligation or part thereof originally intended to be

satisfied shall be deemed to be reinstated and outstanding as if such payment

had not occurred.

 

         "Senior Documents" shall mean, collectively, with respect to any

Senior Claim, any provision pertaining to such Senior Claim in any Loan

Document or any other document, instrument or certificate evidencing or

delivered in connection with such Senior Claim.

 

         "Senior Liens" shall mean all Liens securing the Senior Claims.

 

         "Senior Secured Parties" shall mean the First Lien Agent, the First

Lien Lenders and each other holder of any Senior Claim.

 

         "Uniform Commercial Code" or "UCC" shall mean the Uniform Commercial

Code of the applicable jurisdiction, as amended.

 

         1.2 Certain Other Terms

 

         (a) The terms "herein," "hereof," "hereto" and "hereunder" and

similar terms refer to this Agreement as a whole and not to any particular

Article, Section, subsection or clause in this Agreement.

 

         (b) References herein to an Annex, Schedule, Article, Section,

subsection or clause, unless specifically stated otherwise, refer to the

appropriate Annex or Schedule to, or Article, Section, subsection or clause in

this Agreement.

 

         (c) Where the context requires, provisions relating to any

Collateral, when used in relation to any Loan Party, shall refer to such Loan

Party's Collateral or any relevant part thereof.

 

         (d) Any reference in this Agreement to a Loan Document shall include

all appendices, exhibits and schedules thereto, and, unless specifically

stated otherwise, all amendments, restatements, supplements or other

modifications thereto, and as the same may be in effect at any time such

reference becomes operative.

 

         (e) The term "including" means "including, without limitation" except

when used in the computation of time periods.

 

         (f) References in this Agreement to any statute shall be to such

statute as amended or modified and in effect from time to time.

 

         Section 2. Collateral Agent

 

         2.1 Appointment.

 

         (a) Each Senior Secured Party hereby appoints Citigroup as the

Collateral Agent hereunder and authorizes the Collateral Agent to take such

action as agent on its behalf and to exercise such powers under this Agreement

and the other Collateral Documents as are delegated to the Collateral Agent

under such documents and to exercise such powers as are reasonably incidental

thereto. Without limiting the foregoing, each Senior Secured Party hereby

authorizes the Collateral Agent to execute and deliver, and to perform its

obligations under, each of the Collateral Documents to which the Collateral

Agent is a party, to exercise all rights, powers and remedies that the

Collateral Agent may have under such documents and to act as agent for the

Senior Secured Parties under such Collateral Documents.

 

         (b) Each Junior Secured Party hereby appoints Citigroup as the

Collateral Agent hereunder and authorizes the Collateral Agent to take such

action as agent on its behalf and to exercise such powers under this Agreement

and the other Collateral Documents as are delegated to the Collateral Agent

under such documents and to exercise such powers as are reasonably incidental

thereto. Without limiting the foregoing, each Junior Secured Party hereby

authorizes the Collateral Agent to execute and deliver, and to perform its

obligations under, each of the Collateral Documents to which the Collateral

Agent is a party, to exercise all rights, powers and remedies that the

Collateral Agent may have under such documents and to act as agent for the

Junior Secured Parties under such Collateral Documents.

 

         (c) Each Secured Party hereby appoints Citigroup as the Collateral

Agent hereunder and authorizes the Collateral Agent to take such action as

agent on its behalf and to exercise such powers under this Agreement and the

other Collateral Documents as are delegated to the Collateral Agent under such

documents and to exercise such powers as are reasonably incidental thereto.

Without limiting the foregoing, each Secured Party hereby authorizes the

Collateral Agent to execute and deliver, and to perform its obligations under,

each of the Collateral Documents to which the Collateral Agent is a party, to

exercise all rights, powers and remedies that the Collateral Agent may have

under such documents and to act as agent for the Secured Parties under such

Collateral Documents.

 

         2.2 Actions; Direction of Administrative Agents.

 

         (a) Except as set forth in Section 2.2(b), the Collateral Agent shall

take, or refrain from taking, any action as directed in writing (i) by the

applicable Administrative Agent as expressly designated in the Credit

Agreement or any other Loan Document with respect to such action, (ii)

collectively by the Administrative Agents or (iii) in the absence of such

events, (A) until the payment in full of the Senior Claims, by the Senior

Agent and (B) thereafter, the Junior Agent.

 

         (b) From and after the receipt of any Notice of Actionable Default

and prior to the withdrawal of all pending Notices of Actionable Default, the

Collateral Agent shall take, or refrain from taking any action, as directed in

writing (i) until the payment in full of the Senior Claims, by the Senior

Agent and (ii) thereafter, the Junior Agent. Each Administrative Agent, in the

event all of the Events of Default giving rise to any Notice of Actionable

Default issued by such Administrative Agent has been cured or waived or

otherwise has ceased to exist pursuant to the Credit Agreement, shall withdraw

such Notice of Actionable Default by written notice to the Collateral Agent.

Notwithstanding the foregoing, until the payment in full of the Senior Claims

and except for any Notice of Actionable Default issued by the Junior Agent

under Section 5.2 (Second Lien Financial Covenants), the Junior Agent shall

not issue any Notice of Actionable Default without the consent of the Senior

Agent, and the Senior Agent may, and upon instruction from the Requisite

Lenders shall, withdraw any Notice of Actionable Default previously issued by

either Administrative Agent.

 

         (c) Each Administrative Agent shall promptly send to the other

Administrative Agent a copy of any written directions given by such

Administrative Agent pursuant to this Section 2.2; provided, however, that the

failure to comply with this Section 2.2(c) shall not impair any of the rights,

powers and remedies of such Administrative Agent or the Collateral Agent under

any Collateral Document.

 

         (d) Notwithstanding anything to the contrary provided herein or in

the Collateral Documents, the Collateral Agent shall not be obligated to take,

or refrain from taking, any action (i) to the extent the Collateral Agent has

received a written advice from its counsel that such action is in conflict

with any applicable law, Collateral Document or order of any Governmental

Authority or (ii) with respect to which the Collateral Agent, in its

reasonable judgment, has not received adequate security or indemnity hereunder

or under the Collateral Documents.

 

         (e) Nothing in this Section 2.2 shall impair the right of the

Collateral Agent in its discretion to take or omit to take any action which is

deemed proper by the Collateral Agent under the Collateral Documents and which

it believes in good faith is not inconsistent with any direction of the

applicable Administrative Agent delivered pursuant to this Section 2.2;

provided, however, the Collateral Agent shall not be under any obligation to

take any discretionary action under the provisions of this Agreement or any

other Collateral Document unless so directed by the applicable Administrative

Agent.

 

         2.3 Limitation on Duties.

 

         (a) The Collateral Agent shall be obliged to perform only such duties

as are specifically set forth in this Agreement or any other Collateral

Document, and no implied covenants or obligations shall be read into any

Collateral Document against the Collateral Agent. The Collateral Agent shall,

upon receipt of any written direction pursuant to Section 2.2, exercise the

rights and powers vested in it by any Collateral Document with respect to such

direction, and the Collateral Agent shall not be liable with respect to any

action taken or omitted in accordance with such direction. If the Collateral

Agent shall seek directions from any Administrative Agent or the Lenders with

respect to any action under any Collateral Document, the Collateral Agent

shall not be required to take, or refrain from taking, such action until it

shall have received such direction.

 

         (b) The Collateral Agent's sole duty with respect to the custody,

safekeeping and physical preservation of the Collateral in its possession

shall be to deal with it in the same manner as with similar property for its

own account. The powers conferred on the Collateral Agent hereunder and under

the Collateral Documents are solely to protect the Collateral Agent's interest

in the Collateral (for itself and for the benefit of the Secured Parties) and,

except as expressly set forth herein, shall not impose any duty upon the

Collateral Agent to exercise any such powers. The Collateral Agent shall be

accountable only for amounts that it actually receives as a result of the

exercise of such powers at the direction of the applicable Administrative

Agent, and neither the Collateral Agent nor any of its officers, directors,

employees or agents shall be responsible to any Secured Party or any Loan

Party for any act or failure to act hereunder, except for its own gross

negligence or willful misconduct.

 

         2.4 Resignation and Removal.

 

         (a) The Collateral Agent may resign at any time by giving written

notice thereof to the Lenders and the Borrower. The Collateral Agent may be

removed at any time by the Administrative Agents, acting jointly, or the

Requisite Lenders by giving written notice thereof to the Collateral Agent and

the Borrower. Upon any such resignation or removal, the Administrative Agents,

acting jointly, or the Requisite Lenders shall have the right to appoint a

successor Collateral Agent. If no successor Collateral Agent shall have been

so appointed, and shall have accepted such appointment, within 30 days

following the notice of resignation or removal, then the retiring Collateral

Agent may, on behalf of the Secured Parties, appoint a successor Collateral

Agent. In either case, such appointment shall be subject to the prior written

approval of the Borrower (which approval may not be unreasonably withheld or

delayed and shall not be required upon the occurrence and during the

continuance of an Event of Default).

 

         (b) Upon the acceptance of any appointment as the Collateral Agent by

a successor Collateral Agent, such successor Collateral Agent shall succeed

to, and become vested with, all the rights, powers, privileges and duties of

the retiring Collateral Agent, and the retiring Collateral Agent shall be

discharged from its duties and obligations under this Agreement, the Credit

Agreement and the Collateral Documents. Promptly after any retiring Collateral

Agent's resignation or removal hereunder as Collateral Agent, the retiring

Collateral Agent shall take such action as may be reasonably necessary to

assign to the successor Collateral Agent its rights as Collateral Agent under

the Collateral Documents and to protect and maintain the Liens held by the

Collateral Agent for the benefit of the Secured Parties (including delivery of

any Collateral in its possession to the successor Collateral Agent). After

such resignation, the retiring Collateral Agent shall continue to have the

benefit of Section 8 as to any actions taken or omitted to be taken by it

while it was Collateral Agent under this Agreement, the Credit Agreement and

the Collateral Documents.

 

         (c) If no Person has accepted appointment as a successor Collateral

Agent within 30 days following the notice of resignation or removal, the

retiring Collateral Agent's resignation or removal shall nevertheless

thereupon become effective, and the Administrative Agents, jointly, shall

assume and perform all of the duties of the retiring Collateral Agent

hereunder until such time, if any, as the Administrative Agents or the

Requisite Lenders shall appoint a successor Collateral Agent as provided for

above.

 

         Section 3. Priority of Liens

 

         3.1 Lien Subordination. Notwithstanding the date, manner or order of

grant, attachment or perfection of any Junior Lien in respect of any

Collateral or of any Senior Lien in respect of any Collateral and

notwithstanding any provision of the UCC, any applicable law, any Collateral

Document, any alleged or actual defect or deficiency in any of the foregoing

or any other circumstance whatsoever, the Junior Agent, on behalf of each

Junior Secured Party, in respect of such Collateral hereby agrees that:

 

         (a) any Senior Lien in respect of such Collateral, regardless of how

acquired, whether by grant, statute, operation of law, subrogation or

otherwise, shall be and shall remain senior and prior to any Junior Lien in

respect of such Collateral (whether or not such Senior Lien is subordinated to

any Lien securing any other obligation); and

 

         (b) any Junior Lien in respect of such Collateral, regardless of how

acquired, whether by grant, statute, operation of law, subrogation or

otherwise, shall be junior and subordinate in all respects to any Senior Lien

in respect of such Collateral.

 

         3.2 Prohibition on Contesting Liens. In respect of any Collateral,

the Junior Agent, on behalf of each Junior Secured Party, in respect of such

Collateral agrees that it shall not, and hereby waives any right to:

 

         (a) contest, or support any other Person in contesting, in any

proceeding (including any Insolvency or Liquidation Proceeding), the priority,

validity or enforceability of any Senior Lien on such Collateral; or

 

         (b) demand, request, plead or otherwise assert or claim the benefit

of any marshalling, appraisal, valuation or similar right which it may have in

respect of such Collateral or the Senior Liens on such Collateral, except to

the extent that such rights are expressly granted in this Agreement.

 

         3.3 New Liens.

 

         (a) The parties hereto agree that, prior to the payment in full of

the Secured Claims, any Lien on any asset of any Loan Party securing any

Secured Claim (and which asset is not also subject to a Lien securing all of

the Secured Claims in accordance with the priorities set forth herein) shall

immediately be released upon demand by any Agent or assigned to the Collateral

Agent on behalf of the Secured Parties, subject to the priorities set forth in

Section 3.1, and, at all times prior to such release or assignment, the

Secured Party to whom such Lien was granted shall be acting as a sub-agent of

the Collateral Agent for the sole purpose of perfecting the Lien on such

asset.

 

         (b) Each Loan Party hereby agrees not to grant, or to permit any of

its Subsidiaries to grant, except as expressly permitted by the Credit

Agreement, any Lien on any of its respective assets securing the Senior Claims

or the Junior Claims, as the case may be, to any Person other than the

Collateral Agent on behalf of the Secured Parties, subject to the priorities

set forth in Section 3.1.

 

         3.4 Separate Liens. Each of the parties hereto acknowledges and

agrees that (i) the grants of Liens pursuant to the Collateral Documents

constitute separate and distinct grants of Liens and (ii) because of, among

other things, their differing rights in the Collateral, the Junior Claims in

respect of any Collateral are fundamentally different from the Senior Claims

in respect of such Collateral, and the Junior Claims and Senior Claims in

respect of any Collateral must be separately classified in any Insolvency or

Liquidation Proceeding. To further effectuate the intent of the parties as

provided in the immediately preceding sentence, if it is held that, in respect

of any Collateral, the Junior Claims and the Senior Claims in respect of such

Collateral constitute only one secured claim (rather than separate classes of

senior and junior secured claims), then the Junior Secured Parties hereby

acknowledge and agree that all distributions shall be made as if there were

separate classes of senior and junior secured claims against the Loan Parties

in respect of any Collateral (with the effect that, to the extent that the

aggregate value of the Collateral is sufficient (for this purpose ignoring all

claims held by the Junior Secured Parties), the Senior Secured Parties shall

be entitled to receive, in addition to amounts distributed to them in respect

of principal, pre-petition interest and other claims, all amounts owing in

respect of post-petition interest before any distribution is made in respect

of the claims held by the Junior Secured Parties with respect to the

Collateral, with the Junior Secured Parties hereby acknowledging and agreeing

to turn over to the Senior Secured Parties amounts otherwise received or

receivable by them to the extent necessary to effectuate the intent of this

sentence, even if such turnover has the effect of reducing the claim or

recovery of the Junior Secured Parties).

 

         Section 4. Exercise of Remedies

 

         4.1 Remedies.

 

         (a) Prior to the payment in full of the Senior Claims, in respect of

any Collateral, whether or not any Insolvency or Liquidation Proceeding has

been commenced by or against any Loan Party:

 

              (i) no Junior Secured Party shall (or direct the Collateral

         Agent to) (A) exercise or seek to exercise any rights or remedies

         with respect to such Collateral, (B) institute any action or

         proceeding with respect to such rights or remedies, including any

         action of foreclosure, contest or protest, (C) object to any

         foreclosure proceeding or action brought by Collateral Agent or any

         Senior Secured Party or any other exercise of any rights and remedies

         relating to such Collateral under the Collateral Documents or

         otherwise, or (D) object to the forbearance by the Senior Secured

         Parties from bringing or pursuing any foreclosure proceeding or

         action or any other exercise of any rights or remedies relating to

         such Collateral; and

 

              (ii) the Senior Agent, on behalf of the Senior Secured Parties,

         shall have the exclusive right to (and the exclusive right to direct

         the Collateral Agent to) enforce rights, exercise remedies and make

         determinations regarding release, disposition (including under

         ss.363(f) of the Bankruptcy Code) or restrictions with respect to

         such Collateral without any consultation with, or the consent of, any

          Junior Secured Party.

 

         (b) In exercising rights and remedies with respect to any Collateral,

the Senior Agent, on behalf of the Senior Secured Parties, may enforce (and

direct the Collateral Agent to enforce) the provisions of the Senior 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, without limitation, the rights of an agent

appointed by them to sell or otherwise dispose of such Collateral upon

foreclosure, to incur expenses in connection with such sale or disposition,

and to exercise all the rights and remedies of a secured lender under the UCC

of any applicable jurisdiction and of a secured creditor under any Bankruptcy

Law.

 

         (c) The Junior Agent, on behalf of each Junior Secured Party, agrees

that, prior to the payment in full of the Senior Claims, it will not take or

receive any Collateral or any proceeds of such Collateral in connection with

the exercise of any right or remedy (including setoff) with respect to such

Collateral. Without limiting the generality of the foregoing, prior to the

payment in full of the Senior Claims, the sole right of the Junior Agent and

the Junior Secured Parties with respect to any Collateral shall be the right

to receive a share of the proceeds thereof pursuant to Section 5.1.

 

         (d) The Junior Agent, on behalf of each Junior Secured Party, (i)

agrees that neither it nor any Junior Secured Party will oppose or object to

or take any other action that would hinder any exercise of remedies undertaken

by any Senior Secured Party in respect of any Collateral under the Collateral

Documents, including any sale, lease, exchange, transfer or other disposition

of such Collateral, whether by foreclosure, under ss.363 of the Bankruptcy

Code or otherwise, and (ii) hereby waives any and all rights it or any Junior

Secured Party may have as a junior creditor or otherwise to object to the

manner in which any Senior Secured Party may seek to enforce or collect the

Senior Claims or the Liens granted in such Collateral.

 

         4.2 Exercise of Remedies as Unsecured Creditors. Notwithstanding

anything to the contrary in this Agreement, each Junior Secured Party may

exercise its rights and remedies as an unsecured creditor against the Loan

Parties in accordance with the terms of the Junior Documents and applicable

law. In the event any Junior Secured Party becomes a judgment lien creditor in

respect of any Collateral as a result of its enforcement of its rights as an

unsecured creditor, such judgment lien shall be subordinated to any Senior

Lien on such Collateral on the same basis and to the same extent as the other

Liens on such Collateral securing the Junior Claims are subordinated to those

securing the Senior Claims under this Agreement. Nothing in this Agreement

modifies any rights or remedies which any Senior Secured Party in respect of

any Collateral may have with respect to such Collateral.

 

         Section 5. Application of Payments; Subrogation

 

         5.1 Proceeds of Collateral. From and after the receipt by the

Collateral Agent of any Notice of Actionable Default and prior to the

withdrawal of all pending Notices of Actionable Default, proceeds of any

Collateral received by any party hereto shall be applied to the Secured Claims

as follows:

 

         (a) first, to pay interest on and then principal of any portion of

the Senior Claims that the Senior Agent may have advanced on behalf of any

Senior Secured Party for which the Senior Agent has not then been reimbursed

by such Senior Secured Party or the Loan Parties;

 

         (b) second, to pay Secured Claims in respect of any expense

reimbursements or indemnities then due to the Senior Agent and the Collateral

Agent;

 

         (c) third, to pay Secured Claims in respect of any expense

reimbursements or indemnities then due to the other Senior Secured Parties;

 

         (d) fourth, to pay Secured Claims in respect of any fees then due to

the Senior Agent and the Collateral Agent;

 

         (e) fifth, to pay Secured Claims in respect of any fees then due to

the other Senior Secured Parties;

 

         (f) sixth, to pay interest then due and payable in respect of all

Senior Claims;

 

         (g) seventh, to pay or prepay principal payments for all Senior

Claims (and, when applicable, to provide cash collateral for letters of credit

or Interest Rate Contracts constituting Senior Claims);

 

         (h) eighth, to pay all other Senior Claims;

 

         (i) ninth, to pay interest on and then principal of any portion of

the Junior Claims that the Junior Agent may have advanced on behalf of any

Junior Secured Party for which the Junior Agent has not then been reimbursed

by such Junior Secured Party or the Loan Parties;

 

         (j) tenth, to pay Secured Claims in respect of any expense

reimbursements or indemnities then due to the Junior Agent;

 

         (k) eleventh, to pay Secur