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Exhibit 10.119 INTERCREDITOR AGREEMENT This
Intercreditor Agreement (this " Agreement "), dated as of
December 23, 2008 is made by and among Russ Berrie and
Company, Inc., a New Jersey corporation (the " Junior Lender
"), Wells Fargo Bank, National Association (with its participants,
successors and assigns, the " Senior Lender "), acting
through its Wells Fargo Business Credit operating division, and The
Russ Companies, Inc., a Delaware corporation (" Company ").
Company now is or hereafter may be indebted to Senior Lender on
account of loans or other extensions of credit or financial
accommodations from Senior Lender to or for the benefit of Company
and/or certain of its affiliates and has secured its indebtedness
by granting a lien on its personal property in favor of Senior
Lender. Company now is or hereafter may also be indebted to Junior
Lender on account of loans or other extensions of credit or
financial accommodations from Junior Lender to Company and has
secured its indebtedness by granting a lien on its personal
property in favor of Junior Lender. As a condition to extending
credit to Company, Senior Lender has required the execution and
delivery of this Agreement by Junior Lender. ACCORDINGLY, for good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and to induce Senior Lender from time to
time to extend credit to Company, Junior Lender, Senior Lender and
Company hereby agree as follows: 1. Definitions . As
used herein, the following terms shall have the meanings set forth
below: " Bankruptcy Code " is defined in Section 6(c).
" Collateral " means all present and future property and
assets of Company wherever located and however described, together,
in each case, with all proceeds thereof pledged to the Senior
Lender to secure the Senior Indebtedness and/or to the Junior
Lender to secure the Junior Indebtedness. " Control Agent "
has the meaning given thereto in Section 14 hereof. "
Control Collateral " means any (a) Collateral which is
a Certificated Security, an Instrument, Investment Property, a
Deposit Account (each as defined in the UCC), or cash, (b) any
rights to receive payments under any insurance policy that
constitutes Collateral and with respect to which the Senior Lender
(or its agent) is named as loss payee, (c) any other
Collateral as to which a Lien may be perfected by possession or
control by the secured party or its agent, and (d) any other
Collateral with respect to which a secured party must be listed on
a certificate of title in order to perfect the Lien thereon.
" Distribution " means, with respect to any indebtedness,
obligation or security (a) any payment or distribution of
cash, securities or other property, by set-off or otherwise, on
account of such indebtedness, obligation or security, (b) any
redemption, purchase or other acquisition of such indebtedness,
obligation or security, or (c) the granting of any Lien to or
for the benefit of the holders of such indebtedness, obligation or
security in or upon any property or interests in property. "
Enforcement Action " means, with respect to the Senior
Indebtedness, any demand for payment or acceleration thereof, the
exercise of any rights and remedies with respect to any Collateral
or the commencement or prosecution of enforcement of any of the
rights and remedies under, as applicable, the Senior Loan
Documents, or applicable law, including without limitation the
exercise of any rights of set-off or recoupment, and the exercise
of any rights or remedies of the Senior Lender as a secured
creditor under the Uniform Commercial Code of any applicable
jurisdiction or under the Bankruptcy Code. " Junior
Indebtedness " means any and all advances, debts, obligations
and liabilities of Company to Junior Lender pursuant to the Note
including without limitation all principal and interest, fees,
expenses, reimbursement obligations and other amounts payable
thereunder. " Junior Loan Documents " means collectively,
the Note and all security agreements and guaranty agreements
related thereto. " Lien " means any security interest,
mortgage, deed of trust, pledge, lien, charge, encumbrance, title
retention agreement or analogous instrument or device, including
the interest of each lessor under any capitalized lease and the
interest of any bondsman under any payment or performance bond, in,
of or on any assets or properties of a person, firm, corporation,
limited liability company or other entity, whether now owned or
hereafter acquired and whether arising by agreement or operation of
law. " Maximum Senior Lien Financing Amount " means as of
any date of determination, such amount not to exceed $30,000,000.00
in aggregate amount at any one time outstanding under the Senior
Loan Documents minus permanent reductions in revolving loan
commitments from time to time in accordance with the Senior Credit
Agreement as in effect as of the date hereof. " Note " means
that certain Secured Promissory Note made by the Company in favor
of Junior Lender in the original principal amount of $19,000,000. "
Notice of Intent " means a written notice from or on behalf
of Junior Lender to Senior Lender stating that an Event of Default
under Section III B of the Note resulting from Company’s
breach of Section VIII (Restricted Payments) of the Note,
breach of Section IX (Limitation on Transactions with Affiliates)
of the Note or Section X (Limitations on Compensation) of the
Note, has occurred and is continuing and any applicable cure,
notice and grace periods have expired.
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" Payment in Full " or " Paid in Full " means that
(a) the Senior Indebtedness (other than contingent
indemnification obligations not yet due and payable) has been paid
and satisfied in full in cash, and (b) any commitment or
agreement of Senior Lender to extend any financial accommodations
to Company under the Senior Loan Documents has been terminated. "
Reorganization Subordination Securities " shall mean any
debt or equity securities of Company or any other Person that are
distributed to Junior Lender in respect of the Junior Indebtedness
that, in the case of debt securities, are subordinate and junior in
right as to liens and payment to the Senior Indebtedness (or
subordinated and junior in right of liens and payment to any debt
or equity securities issued in substitution of all or any portion
of the Senior Indebtedness) to at least the same extent as the
Junior Indebtedness is subordinated to the Senior Indebtedness
under this Agreement. " Senior Credit Agreement " means that
certain Credit and Security Agreement of even date herewith between
Company and Senior Lender, as the same may be modified, amended,
supplemented or restated from time to time. " Senior Default
" means the occurrence and continuance of any Event of Default
under the Senior Credit Agreement. " Senior Guaranty
Agreement " means that certain Guaranty of even date herewith
by Company in favor of Senior Lender, as the same may be modified,
amended, supplemented or restated from time to time. " Senior
Indebtedness " means any and all advances, debts, obligations
and liabilities of Company to Senior Lender, pursuant to the Senior
Credit Agreement and the other Senior Loan Documents including
without limitation all principal and interest, fees, expenses,
reimbursement obligations and other amounts payable thereunder now
or hereafter made, incurred or created, provided, however, that the
amount of the Senior Indebtedness for purposes of this Agreement
shall be limited to no more than the Maximum Senior Lien Financing
Amount and no advances, debts, obligations and liabilities of
Company to Senior Lender with respect to a borrowing or other
extension of credit made after December 21, 2012 shall
constitute Senior Indebtedness without the prior written consent of
the Junior Creditor unless an Enforcement Action has commenced in
which case, Senior Lender’s reasonable out of pocket costs
and expenses in connection with such Enforcement Action shall be
Senior Indebtedness. " Senior Loan Documents " means the
"Loan Documents", as such term is defined in the Senior Guaranty
Agreement. " Senior Security Agreement " means that certain
Collateral Pledge Agreement of even date herewith by Company in
favor of Senior Lender, as the same may be modified, amended,
supplemented or restated from time to time.
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" Standstill Period " means the period beginning when a
Notice of Intent is given and ending on the first Business Day that
is at least 180 days after receipt by Senior Lender of a
Notice of Intent, provided however, that upon the commencement of
an Enforcement Action, the Standstill Period shall be extended
until the Senior Indebtedness has been Paid in Full. " UCC "
shall mean the Uniform Commercial Code as in effect from time to
time in the State of New York. 2. Subordination .
(a) The payment of all of the Junior Indebtedness is hereby
expressly subordinated and deferred to the extent and in the manner
hereinafter set forth, until Payment in Full of the Senior
Indebtedness; and Junior Lender hereby agrees that (regardless of
any priority otherwise available to Junior Lender by law or by
agreement) any Lien which Junior Lender may now hold or may at any
time hereafter acquire in any or all of the Collateral is, shall be
and shall remain fully subordinate for all purposes to any Lien
that Senior Lender may now or hereafter hold in the Collateral. The
Junior Indebtedness and any Lien securing the Junior Indebtedness
shall continue to be subordinated to the Senior Indebtedness even
if the Senior Indebtedness is deemed unsecured, under-secured,
subordinated, avoided or disallowed under the Bankruptcy Code or
other applicable law. (b) Notwithstanding anything herein to
the contrary, the Company shall be permitted to make and the Junior
Lender shall be permitted to receive and retain annual payments
provided they Company complies with the following conditions;
(i) The payments are made in and applied in accordance with
the terms of the Junior Loan Documents; (ii) In computing the
amount of such payment, it shall be the excess of the Availability,
as such term is defined in the Senior Loan Documents, less the sum
of the following, all as of April 30 of each year:
(a) $10,000,000; (b) all outstanding checks; (c) all
accounts payable outstanding more than 60 days from invoice
date; and (d) expenses and liabilities being paid in the
ordinary course of business and without acceleration of sales and
without deterioration of working capital; (iii) There shall
not have occurred prior to or as a result of making such payment,
an Event of Default under the Senior Loan Documents; and
(iv) At least ten (10) business days prior to the making
of such payment the Senior Lender shall have received the
Company’s audited financial statements for the prior fiscal
year end.
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3. Distributions . (a) Junior Lender shall not,
without Senior Lender’s prior written consent, demand,
receive or accept any payment (whether of principal, interest or
otherwise) or Distribution (other than Reorganization Subordination
Securities) in respect of the Junior Indebtedness or exercise any
right of or permit any setoff in respect of the Junior Indebtedness
until the Action Date (as defined in Section 4(a)).
(b) Senior Lender shall not, without Junior Lender’s
prior written consent, demand, receive or accept any payment
(whether of principal, interest or otherwise) or Distribution in
respect of indebtedness that is not Senior Indebtedness or exercise
any right of or permit any setoff in respect of indebtedness that
is not Senior Indebtedness until the Junior Indebtedness has been
paid and satisfied full in cash. (c) If Junior Lender receives
any Distribution in violation of this Agreement, Junior Lender will
hold the amount so received in trust for Senior Lender and will
forthwith turn over such Distribution to Senior Lender in the form
received (except for the endorsement of Junior Lender where
necessary) for application to the Senior Indebtedness (whether or
not due), in such order of application as Senior Lender may deem
appropriate. If Junior Lender fails to make any endorsement
required under this Agreement, Senior Lender, or any of its
officers or employees or agents on behalf of Senior Lender, is
hereby irrevocably appointed (which appointment is coupled with an
interest) as the attorney-in-fact for Junior Lender (with the right
but not the duty) to make such endorsement in Junior Lender’s
name. (d) If Senior Lender receives any Distribution in
violation of this Agreement, Senior Lender will hold the amount so
received in trust for Junior Lender and will forthwith turn over
such Distribution to Junior Lender in the form received (except for
the endorsement of Senior Lender where necessary) for application
to the Junior Indebtedness (whether or not due), in such order of
application as Junior Lender may deem appropriate. If Senior Lender
fails to make any endorsement required under this Agreement, Junior
Lender, or any of its officers or employees or agents on behalf of
Junior Lender, is hereby irrevocably appointed (which appointment
is coupled with an interest) as the attorney in fact for Senior
Lender (with the right but not the duty) to make such endorsement
in Senior Lender’s name. (e) If all Senior Indebtedness
has been Paid In Full, Junior Lender shall be subrogated to the
rights of the holders of such Senior Indebtedness to receive
payments and Distributions applicable to the Senior Indebtedness
until all Junior Indebtedness has been paid and satisfied in full
in cash. For purposes of such subrogation, no payments or
distribution to Senior Lender as the holder of Senior Indebtedness
of any cash, property or securities or other Distribution to which
Junior Lender would be entitled to except for the provisions of
this Agreement, and no payments pursuant to the provisions of this
Agreement to Senior Lender as the holder of Senior Indebtedness by
Junior Lender, shall, as among Company, its creditors other than
Senior Lender as the holder of Senior Indebtedness and Junior
Lender, be deemed to be a payment or Distribution by Company to or
on account of the Senior Indebtedness. If any payment or
Distribution to which Junior Lender would otherwise have been
entitled but for the provisions of this Agreement shall have been
applied, pursuant to the provisions of this Agreement, to the
payment of all amounts payable under the Senior Indebtedness, then
and in such case Junior Lender shall be entitled to receive from
Senior Lender any payments or Distributions received by Senior
Lender in excess of the amount sufficient for the Senior
Indebtedness to be Paid In Full.
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4. No Action . (a) Unless and until the earliest of
(i) the date upon which the Senior Indebtedness shall have
been Paid in Full, (ii) December 31, 2012 and
(iii) if a Standstill Period shall have commenced, the
termination or expiration of such Standstill Period (such earliest
date, the "Action Date"), Junior Lender will not commence any
action or proceeding against Company to recover all or any part of
the Junior Indebtedness, will not commence any action or proceeding
with respect to the Collateral, will not join with any creditor in
bringing any proceeding against Company under any bankruptcy,
reorganization, readjustment of debt, arrangement of debt
receivership, liquidation or insolvency law or statute of the
federal or any state government, will not take possession of, sell
or dispose of, or otherwise deal with, the Collateral, and will not
exercise or enforce any other right or remedy which may be
available to Junior Lender with respect to the Collateral.
Notwithstanding the foregoing in this Section 4(a), in the
event that Senior Lender shall have accelerated the maturity of
part or all of the Senior Indebtedness, the Junior Lender shall be
permitted to accelerate the maturity of the Junior Debt (provided
that Junior Lender shall simultaneously give notice
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