Exhibit 10.11
INTERCREDITOR
AGREEMENT
INTERCREDITOR AGREEMENT dated as of
March 26, 2009, between BANK OF AMERICA, N.A. (“ Bank
of America ”), in its capacity as collateral agent for
the First Lien Obligations (as defined below), including its
successors and assigns from time to time, and NATIXIS, NEW YORK
BRANCH (“ Natixis ”) in its capacity as
collateral agent for the Second Lien Obligations (as defined
below), including its successors and assigns from time to time.
Capitalized terms used herein but not otherwise defined herein have
the meanings set forth in Section 1 below.
A. Sbarro, Inc., a Delaware
corporation (the “ Company ”), is party to the
Credit Agreement dated as of January 31, 2007 (as amended on
March 26, 2009 and as further amended, restated, supplemented,
waived, Refinanced or otherwise modified from time to time, the
“ First Lien Credit Agreement ”), among the
Company, Sbarro Holdings, LLC, (“ Holdings ”),
each lender from time to time party thereto, Bank of America, as
Administrative Agent, Collateral Agent, Swing Line Lender and L/C
Issuer, Credit Suisse, as Syndication Agent, Banc of America
Securities LLC and Credit Suisse Securities (USA) LLC, as Joint
Lead Arrangers and Joint Book Managers, and Natixis and Bank of
Ireland, as Co-Documentation Agents.
B. The Company is party to that
certain Second Lien Credit Agreement (as amended, restated,
supplemented, waived, Refinanced or otherwise modified from time to
time, the “ Second Lien Credit Agreement ”)
dated March 26, 2009 among the Company, Holdings, each lender
from time to time party thereto and Natixis, as collateral
agent.
Accordingly, in consideration of the
foregoing, the mutual covenants and obligations herein set forth
and for other good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
SECTION 1. Definitions
.
1.1. Defined Terms . As used
in this Agreement, the following terms have the meanings specified
below:
“ Agreement ”
shall mean this Agreement, as amended, renewed, extended,
supplemented or otherwise modified from time to time in accordance
with the terms hereof.
“ Bank of America
” shall have the meaning set forth in the
preamble.
“ Bankruptcy Code
” means Title 11 of the United States Code, as
amended.
“ Bankruptcy Law
” shall mean the Bankruptcy Code and any similar Federal,
state or foreign law for the relief of debtors.
“ Cap Amount ”
shall mean $225,000,000.
“ Common Collateral
” shall mean all of the assets of any Grantor, whether real,
personal or mixed, constituting both First Lien Collateral and
Second Lien Collateral, including without limitation any assets in
which the First Lien Collateral Agent is automatically deemed to
have a Lien pursuant to the provisions of Section 2.3
.
“ Company ” shall
have the meaning set forth in the recitals.
“ Comparable Second Lien
Security Document ” shall mean, in relation to any Common
Collateral subject to any Lien created under any First Lien
Document, those Second Lien Security Documents that create a Lien
on the same Common Collateral, granted by the same
Grantor.
“ DIP Financing ”
shall have the meaning set forth in Section 6.1
.
“ Discharge of First Lien
Obligations ” shall mean, except to the extent otherwise
provided in Section 5.7 , payment in full in cash
(except for contingent indemnities and cost and reimbursement
obligations to the extent no claim has been made) of all First Lien
Obligations and, with respect to letters of credit or letter of
credit guaranties outstanding under the First Lien Documents,
delivery of cash collateral or backstop letters of credit in
respect thereof in a manner consistent with the First Lien Credit
Agreement, in each case after or concurrently with the termination
of all commitments to extend credit thereunder, and the termination
of all commitments of the First Lien Secured Parties under the
First Lien Documents; provided that the Discharge of First
Lien Obligations shall not be deemed to have occurred if such
payments are made with the proceeds of other First Lien Obligations
that constitute an exchange or replacement for or a Refinancing of
such Obligations or First Lien Obligations. In the event the First
Lien Obligations are modified and are paid over time or otherwise
modified pursuant to Section 1129 of the Bankruptcy Code, the
First Lien Obligations shall be deemed to be discharged when the
final payment is made, in cash, in respect of such indebtedness and
any obligations pursuant to such new indebtedness shall have been
satisfied.
“ First Lien Collateral
” shall mean all of the assets of any Grantor, whether real,
personal or mixed, with respect to which a Lien is granted or
purported to be granted as security for any First Lien Obligations
pursuant to a First Lien Security Document.
“ First Lien Collateral
Agent ” shall mean Bank of America, in its capacity as
administrative agent and collateral agent for the lenders and other
secured parties under the First Lien Credit Agreement and the other
First Lien Documents entered into pursuant to the First Lien Credit
Agreement, together with its successors and permitted assigns under
the First Lien Credit Agreement exercising substantially the same
rights and powers; and in each case provided that if such First
Lien Collateral Agent is not Bank of America, such First Lien
Collateral Agent shall have become a party to this Agreement and
the other applicable First Lien Security Documents.
“ First Lien Credit
Agreement ” shall have the meaning set forth in the
recitals.
“ First Lien Documents
” means the credit, guarantee and security documents
governing the First Lien Obligations, including, without
limitation, the First Lien Credit Agreement,
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each Swap Agreement (as defined in the First
Lien Credit Agreement) with a Swap Creditor (as defined in the
First Lien Credit Agreement), documents governing Cash Management
Obligations (as defined in the First Lien Credit Agreement)
constituting First Lien Obligations and the First Lien Security
Documents.
“ First Lien
Obligations ” shall mean all “Finance
Obligations” as defined in the Security Agreement (as defined
in the First Lien Credit Agreement).
“ First Lien Secured
Parties ” means, at any relevant time, the holders of
First Lien Obligations at such time, including without limitation
the lenders, letter of credit issuers, and agents (including First
Lien Collateral Agent) under the First Lien Credit Agreement and
each Swap Creditor in respect of a Swap Agreement (each as defined
in the First Lien Credit Agreement).
“ First Lien Security
Documents ” means the Collateral Documents (as defined in
the First Lien Credit Agreement) and any other agreement, document
or instrument pursuant to which a Lien is granted or purported to
be granted securing First Lien Obligations or under which rights or
remedies with respect to such Liens are governed, in each case to
the extent relating to Common Collateral.
“ First Priority Liens
” means Liens securing the First Lien Obligations, which
Liens are superior and prior in priority to the Liens securing the
Second Lien Obligations.
“ Grantors ”
shall mean the Company and each other Loan Party (as defined in the
First Lien Credit Agreement) that has executed and delivered a
First Lien Document or a Second Lien Document.
“ Holdings ”
shall have the meaning set forth in the recitals.
“ Indebtedness ”
shall mean and include all obligations that constitute
“Indebtedness” within the meaning of the Second Lien
Credit Agreement or the First Lien Credit Agreement.
“ Insolvency or Liquidation
Proceeding ” means:
(1) any case commenced by or against
the Company or any other Grantor under any Bankruptcy Law, any
other proceeding for the reorganization, recapitalization or
adjustment or marshalling of the assets or liabilities of the
Company or any other Grantor, any receivership or assignment for
the benefit of creditors relating to the Company or any other
Grantor or any similar case or proceeding relative to the Company
or any other Grantor or its creditors, as such, in each case
whether or not voluntary;
(2) any liquidation, dissolution,
marshalling of assets or liabilities or other winding up of or
relating to the Company or any other Grantor, in each case whether
or not voluntary and whether or not involving bankruptcy or
insolvency; or
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(3) any other proceeding of any type
or nature in which substantially all claims of creditors of the
Company or any other Grantor are determined and any payment or
distribution is or may be made on account of such
claims.
“ Lien ” shall
have the meaning assigned to such term in the First Lien Credit
Agreement.
“ New Agent ”
shall have the meaning set forth in Section 5.7 .
“ Non-Conforming Plan of
Reorganization ” any Plan of Reorganization which either
grants the Second Lien Collateral Agent or any Second Lien Secured
Party any right or benefit, directly or indirectly, which right or
benefit is expressly prohibited at such time by the provisions of
this Agreement, or fails to provide for the Discharge of the First
Lien Obligations upon the effective date thereof.
“ Payment Discharge
” shall have the meaning set forth in
Section 5.1(a) .
“ Person ” shall
mean any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, entity or
other party, including any government and any political
subdivision, agency or instrumentality thereof.
“ Plan of
Reorganization ” means any plan of reorganization, plan
of liquidation, agreement for composition, or other type of plan of
arrangement proposed in or in connection with any Insolvency or
Liquidation Proceeding.
“ Pledged Collateral
” shall mean the Common Collateral in the possession or
control of the First Lien Collateral Agent (or its agents or
bailees), to the extent that possession or control thereof perfects
a Lien thereon under the UCC.
“ Recovery ”
shall have the meaning set forth in Section 6.3
.
“ Refinance ”
means, in respect of any indebtedness, to refinance, extend, renew,
defease, amend, increase, modify, supplement, restructure, refund,
replace or repay, or to issue other indebtedness or enter
alternative financing arrangements, in exchange or replacement for
such indebtedness, including by adding or replacing lenders,
creditors, agents, borrowers and/or guarantors, and including in
each case, but not limited to, after the original instrument giving
rise to such indebtedness has been terminated. “
Refinanced ” and “ Refinancing ”
have correlative meanings.
“ Reinstatement ”
shall have the meaning set forth in Section 5.7 .
“ Required Lenders
” shall have the meaning assigned to such term in the First
Lien Credit Agreement.
“ Second Lien
Collateral ” shall mean all of the assets of any Grantor,
whether real, personal or mixed, with respect to which a Lien is
granted or purported to be granted as security for any Second Lien
Obligations pursuant to a Second Lien Security Document.
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“ Second Lien Collateral
Agent ” shall mean Natixis, in its capacity as
administrative agent and collateral agent for the lenders and other
secured parties under the Second Lien Credit Agreement and the
other Second Lien Documents entered into pursuant to the Second
Lien Credit Agreement, together with its successors and permitted
assigns under the Second Lien Credit Agreement exercising
substantially the same rights and powers; and in each case provided
that if such Second Lien Collateral Agent is not Natixis, such
Second Lien Collateral Agent shall have become a party to this
Agreement and the other applicable Second Lien Security
Documents.
“ Second Lien Documents
” means the credit and security documents governing the
Second Lien Obligations, including, without limitation, the Second
Lien Documents and the Second Lien Security Documents.
“ Second Lien
Obligations ” shall mean all [“Finance
Obligations”] as defined in the Security Agreement (as
defined in the Second Lien Credit Agreement).
“ Second Lien Secured
Parties ” means, at any relevant time, the holders of
Second Lien Obligations at such time, including, without
limitation, the lenders and agents (including the Second Lien
Collateral Agent) under the Second Lien Credit Facility.
“ Second Liens ”
means the Liens securing the Second Lien Obligations.
“ Second Lien Security
Documents ” means the Collateral Documents (as defined in
the Second Lien Credit Agreement) and any other agreement, document
or instrument pursuant to which a Lien is granted or purported to
be granted securing Second Lien Obligations or under which rights
or remedies with respect to such Liens are governed.
“ Subsidiary ”
shall mean any “Subsidiary” of the Company as defined
in the First Lien Credit Agreement or the Second Lien Credit
Agreement.
“ UCC ” shall
mean the Uniform Commercial Code as from time to time in effect in
the State of New York.
1.2. Terms Generally . The
definitions of terms herein shall apply equally to the singular and
plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include,”
“includes” and “including” shall be deemed
to be followed by the phrase “without limitation.” The
word “will” shall be construed to have the same meaning
and effect as the word “shall.” Unless the context
requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed
as referring to such agreement, instrument or other document as
from time to time amended, supplemented or otherwise modified in
accordance with this Agreement, (b) any reference herein to
any Person shall be construed to include such Person’s
successors and assigns, (c) the words “herein,”
“hereof” and “hereunder,” and words of
similar import, shall be construed to refer to this Agreement in
its entirety and not to any particular provision hereof,
(d) all references herein to Sections shall be construed to
refer to Sections of this Agreement and (e) the words
“asset” and “property” shall be construed
to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash,
securities, accounts and contract rights.
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SECTION 2. Lien Priorities
.
2.1. Subordination of Liens .
Notwithstanding (i) the date, time, manner or order of filing
or recordation of any document or instrument or grant, attachment
or perfection (including any defect or deficiency or alleged defect
or deficiency in any of the foregoing) of any Liens granted to the
Second Lien Collateral Agent or the Second Lien Secured Parties on
the Common Collateral or of any Liens granted to the First Lien
Collateral Agent or the First Lien Secured Parties on the Common
Collateral, (ii) any provision of the UCC, the Bankruptcy
Code, any applicable law, the Second Lien Documents or the First
Lien Documents, (iii) whether the First Lien Collateral Agent,
either directly or through agents, holds possession of, or has
control over, all or any part of the Common Collateral,
(iv) the fact that any such Liens may be subordinated, voided,
avoided, invalidated or lapsed or (v) any other circumstance
of any kind or nature whatsoever, the Second Lien Collateral Agent,
on behalf of itself and each Second Lien Secured Party, hereby
agrees that: (a) any Lien on the Common Collateral securing
any First Lien Obligations now or hereafter held by or on behalf of
the First Lien Collateral Agent or any First Lien Secured Parties
or any agent or trustee therefor regardless of how acquired,
whether by grant, statute, operation of law, subrogation or
otherwise, shall have priority over and be senior in all respects
and prior to any Lien on the Common Collateral securing any Second
Lien Obligations, and (b) any Lien on the Common Collateral
securing any Second Lien Obligations now or hereafter held by or on
behalf of the Second Lien Collateral Agent or any Second Lien
Secured Party or any agent or trustee therefor regardless of how
acquired, whether by grant, statute, operation of law, subrogation
or otherwise, shall be junior and subordinate in all respects to
all Liens on the Common Collateral securing any First Lien
Obligations. All Liens on the Common Collateral securing any First
Lien Obligations shall be and remain senior in all respects and
prior to all Liens on the Common Collateral securing any Second
Lien Obligations for all purposes, whether or not such Liens
securing any First Lien Obligations are subordinated to any Lien
securing any other obligation of the Company, any other Grantor or
any other Person. The Second Lien Collateral Agent, for itself and
on behalf of the Second Lien Secured Parties, expressly agrees that
any Lien purported to be granted on any Common Collateral as
security for the First Lien Obligations shall be deemed to be, and
shall be deemed to remain, senior in all respects and prior to all
Liens on the Common Collateral securing any Second Lien Obligations
for all purposes regardless of whether the Lien purported to be
granted is found to be improperly granted, improperly perfected,
preferential, a fraudulent conveyance or legally or otherwise
deficient in any manner.
2.2. Prohibition on Contesting
Liens . The Second Lien Collateral Agent, for itself and on
behalf of each applicable Second Lien Secured Party, agrees that
(a) it shall not (and hereby waives any right to) take any
action to challenge, contest or support any other Person in
contesting or challenging, directly or indirectly, in any
proceeding (including any Insolvency or Liquidation Proceeding),
the validity, perfection, priority or enforceability of a Lien
securing any First Lien Obligations held (or purported to be held)
by or on behalf of the First Lien Collateral Agent or any of the
First Lien Secured Parties or any agent or trustee therefor in any
First Lien Collateral or Common Collateral and (b) none of
them will oppose or otherwise contest (or support
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any Person contesting) any other request for
judicial relief made in any court by the First Lien Collateral
Agent or any First Lien Secured Parties relating to the lawful
enforcement of any First Priority Lien on Common Collateral or
First Lien Collateral.
2.3. No New Liens . So long
as the Discharge of First Lien Obligations has not occurred, the
parties hereto agree that, after the date hereof, the Second Lien
Collateral Agent shall not acquire or hold any Lien on any assets
of the Company or any other Grantor (and neither the Company nor
any Grantor shall grant such Lien) securing any Second Lien
Obligations that are not also subject to a First Priority Lien in
respect of the First Lien Obligations under the First Lien
Documents. If the Second Lien Collateral Agent shall (nonetheless
and in breach hereof) acquire or hold any Lien on any assets of the
Company or any other Grantor that is not also subject to the First
Priority Lien in respect of the First Lien Obligations under the
First Lien Documents, then the Second Lien Collateral Agent shall,
without the need for any further consent of any party and
notwithstanding anything to the contrary in any other document, be
deemed to also hold and have held such Lien for the benefit of the
First Lien Collateral Agent as security for the First Lien
Obligations (subject to the lien priority and other terms hereof)
and shall use its best efforts to promptly notify the First Lien
Collateral Agent in writing of such Lien and in any event take such
actions as may be requested by the First Lien Collateral Agent to
assign or release such Lien to the First Lien Collateral Agent
(and/or its designee) as security for the applicable First Lien
Obligations.
2.4. Perfection of Liens .
Except as expressly set forth in Section 5.5 hereof, neither
the First Lien Collateral Agent nor any First Lien Secured Party
shall be responsible for perfecting and maintaining the perfection
of Liens with respect to the Common Collateral for the benefit of
the Second Lien Collateral Agent or any other Second Lien Secured
Parties. The provisions of this Agreement are intended solely to
govern the respective Lien priorities as between the First Lien
Secured Parties and the Second Lien Secured Parties and shall not
impose on the First Lien Collateral Agent, the Second Lien
Collateral Agent, the Second Lien Secured Parties or the First Lien
Secured Parties or any agent or trustee therefor any obligations in
respect of the disposition of proceeds of any Common Collateral
which would conflict with prior perfected claims therein in favor
of any other Person or any order or decree of any court or
governmental authority or any applicable law.
SECTION 3. Enforcement
.
3.1. Exercise of Remedies
.
(a) So long as the Discharge of
First Lien Objections has not occurred, whether or not any
Insolvency or Liquidation Proceeding has been commenced by or
against the Company or any other Grantor, (i) none of the
Second Lien Collateral Agent or any Second Lien Secured Party will
(x) exercise or seek to exercise any rights or remedies
(including setoff and the right to credit bid debt) with respect to
any Common Collateral in respect of any applicable Second Lien
Obligations, or institute any action or proceeding with respect to
such rights or remedies (including any action of foreclosure),
(y) contest, protest or otherwise object to any foreclosure or
enforcement proceeding or action brought with respect to the Common
Collateral or any other collateral by the First Lien Collateral
Agent or any First Lien Secured Party in respect of the First Lien
Obligations, the exercise of any right by the First Lien Collateral
Agent or
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any First Lien Secured Party (or any agent or
sub-agent on their behalf) in respect of the First Lien Obligations
under any control agreement, lockbox agreement, landlord waiver or
bailee’s letter or similar agreement or arrangement to which
the Second Lien Collateral Agent or any Second Lien Secured Party
either is a party or may have rights as a third party beneficiary,
or any other exercise by any such party, of any rights and remedies
as a secured party relating to the Common Collateral or any other
collateral under the First Lien Documents or otherwise in respect
of First Lien Obligations, or (z) object to any waiver or
forbearance by the First Lien Secured Parties from or in respect of
bringing or pursuing any foreclosure proceeding or action or any
other exercise of any rights or remedies relating to the Common
Collateral or any other collateral in respect of First Lien
Obligations and (ii) except as otherwise provided herein, the
First Lien Collateral Agent and the First Lien Secured Parties
shall have the sole and exclusive right to enforce rights, exercise
remedies (including setoff and the right to credit bid their debt),
marshal, process and make determinations regarding the release,
disposition or restrictions, or waiver or forbearance of rights or
remedies with respect to the Common Collateral without any
consultation with or the consent of the Second Lien Collateral
Agent or any Second Lien Secured Party; provided ,
however , that (A) in any Insolvency or Liquidation
Proceeding commenced by or against the Company or any other
Grantor, the Second Lien Collateral Agent may file a proof of claim
or statement of interest with respect to the Second Lien
Obligations and (B) the Second Lien Collateral Agent may take
any action (not adverse to the prior Liens on the Common Collateral
securing the First Lien Obligations, or the rights of the First
Lien Collateral Agent or the First Lien Secured Parties to exercise
remedies in respect thereof) in order to prove, preserve or protect
(but not enforce) its rights in, and perfection and priority of its
Lien on, the Common Collateral. In exercising rights and remedies
with respect to the First Lien Collateral or Common Collateral, the
First Lien Collateral Agent and the First Lien Secured Parties may
enforce the provisions of the First Lien Documents and exercise
remedies thereunder, all in such order and in such manner as they
may determine in the exercise of their sole discretion. Such
exercise and enforcement shall include the rights of an agent
appointed by them to sell or otherwise dispose of Common Collateral
or other 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 Uniform
Commercial Code of any applicable jurisdiction and of a secured
creditor under Bankruptcy Laws of any applicable
jurisdiction.
(b) So long as the Discharge of
First Lien Obligations has not occurred, the Second Lien Collateral
Agent, on behalf of itself and each applicable Second Lien Secured
Party, agrees that it will not, in the context of its role as
secured lender, take or receive any Common Collateral or any
proceeds of Common Collateral in connection with the exercise of
any right or remedy or otherwise in an Insolvency or Liquidation
Proceeding (including set off or the right to credit bid debt
(except as set forth in Section 6.10 below)) with
respect to any Common Collateral in respect of the applicable
Second Lien Obligations. Without limiting the generality of the
foregoing, unless and until the Discharge of First Lien Obligations
has occurred, except as expressly provided in the proviso in
clause (ii) of Section 3.1(a) , the sole
right of the Second Lien Collateral Agent and the Second Lien
Secured Parties with respect to the Common Collateral is to hold a
Lien on the Common Collateral in respect of the applicable Second
Lien Obligations pursuant to the Second Lien Documents, as
applicable, for the period and to the extent granted therein and to
receive a share of the proceeds thereof, if any, after the
Discharge of First Lien Obligations has occurred.
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(c) Subject to the proviso in
clause (ii) of Section 3.1(a) ,
(i) the Second Lien Collateral Agent, for itself and on behalf
of each Second Lien Secured Party, agrees that none of the Second
Lien Collateral Agent or any Second Lien Secured Party will take
any action that would hinder any exercise of remedies undertaken by
the First Lien Collateral Agent or the First Lien Secured Parties
with respect to the Common Collateral, the First Lien Collateral or
any other collateral under the First Lien Documents, including any
sale, lease, exchange, transfer or other disposition of the Common
Collateral, the First Lien Collateral or such other collateral,
whether by foreclosure or otherwise, and (ii) the Second Lien
Collateral Agent, for itself and on behalf of each Second Lien
Secured Party, hereby waives any and all rights it or any Second
Lien Secured Party may have as a junior lien creditor or otherwise
to object to the manner in which the First Lien Collateral Agent or
the First Lien Secured Parties seek to enforce or collect the First
Lien Obligations or the Liens granted in any of the First Lien
Collateral or Common Collateral, regardless of whether any action
or failure to act by or on behalf of the First Lien Collateral
Agent or First Lien Secured Parties is adverse to the interests of
the Second Lien Secured Parties.
(d) The Second Lien Collateral Agent
and each Second Lien Secured Party hereby acknowledge and agree
that no covenant, agreement or restriction contained in any
applicable Second Lien Document shall be deemed to restrict in any
way the rights and remedies of the First Lien Collateral Agent or
the First Lien Secured Parties with respect to the First Lien
Collateral or Common Collateral as set forth in this Agreement and
the First Lien Documents.
(e) So long as the Discharge of
First Lien Obligations has not occurred, the Second Lien Collateral
Agent, on behalf of itself and the applicable Second Lien Secured
Parties, agrees not to assert and hereby waives, to the fullest
extent permitted by law, any right to demand, request, plead or
otherwise assert or otherwise claim the benefit of, any
marshalling, appraisal, valuation or other similar right that may
otherwise be available under applicable law with respect to the
Common Collateral or any other similar rights a junior secured
creditor may have under applicable law.
3.2. Cooperation . Subject to
the proviso in clause (ii) of
Section 3.1(a) , the Second Lien Collateral Agent, on
behalf of itself and each applicable Second Lien Secured Party,
agrees that, unless and until the Discharge of First Lien
Obligations has occurred, it will not commence, or join with any
Person (other than the First Lien Secured Parties and the First
Lien Collateral Agent upon the request thereof) in commencing, any
enforcement, collection, execution, levy or foreclosure action or
proceeding with respect to any Lien held by it in the Common
Collateral or any other collateral under any of the applicable
Second Lien Documents or otherwise in respect of the applicable
Second Lien Obligations.
3.3. Actions Upon Breach . If
any Second Lien Secured Party, in contravention of the terms of
this Agreement, in any way takes, attempts to or threatens to take
any action with respect to the Common Collateral (including,
without limitation, any attempt to realize upon or enforce any
remedy with respect to this Agreement), this Agreement shall create
an irrebuttable presumption and admission by such Second Lien
Secured Party that relief against such Second Lien Secured Party by
injunction, specific performance and/or other appropriate equitable
relief is necessary to prevent irreparable harm to the First Lien
Secured Parties, it being understood and
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agreed by each Second Lien Collateral Agent on
behalf of each applicable Second Lien Secured Party that
(i) the First Lien Secured Parties’ damages from its
actions may at that time be difficult to ascertain and may be
irreparable, and (ii) each Second Lien Secured Party waives
any defense that the Grantors and/or the First Lien Secured Parties
cannot demonstrate damage and/or can be made whole by the awarding
of damages.
SECTION 4. Payments
.
4.1. Application of Proceeds
. So long as the Discharge of First Lien Obligations has not
occurred, the Common Collateral or proceeds thereof received in
connection with the sale or other disposition of, or collection on,
such Common Collateral upon the exercise of remedies as a secured
party, shall be applied by the First Lien Collateral Agent to the
First Lien Obligations in such order as specified in the relevant
First Lien Documents until the Discharge of First Lien Obligations
has occurred. Upon the Discharge of First Lien Obligations, subject
to the proviso of Section 5.1(a)(y) and subject to
Section 5.7 hereof, the First Lien Collateral Agent
shall deliver promptly to the Second Lien Collateral Agent any
Common Collateral or proceeds thereof held by it in the same form
as received, with any necessary endorsements or as a court of
competent jurisdiction may otherwise direct.
4.2. Payments Over . Any
Common Collateral or First Lien Collateral or proceeds thereof
received by the Second Lien Collateral Agent or any Second Lien
Secured Party in connection with the exercise of any right or
remedy (including set off or credit bid) or in any Insolvency or
Liquidation Proceeding relating to the Common Collateral not
expressly permitted by this Agreement or prior to the Discharge of
First Lien Obligations shall be segregated and held in trust for
the benefit of and forthwith paid over to the First Lien Collateral
Agent (and/or its designees) for the benefit of the First Lien
Secured Parties in the same form as received, with any necessary
endorsements or as a court of competent jurisdiction may otherwise
direct. The First Lien Collateral Agent is hereby authorized to
make any such endorsements as agent for the Second Lien Collateral
Agent or any such Second Lien Secured Party. This authorization is
coupled with an interest and is irrevocable.
4.3. AHYDO Payments .
Notwithstanding anything herein to the contrary, the Second Lien
Secured Parties may accept and retain amounts paid by the Grantors
pursuant to Section 2.06(e) of the Second Lien Credit
Agreement as in effect on the date hereof.
SECTION 5. Other
Agreements .
5.1. Releases .
(a) (x) If, at any time any
Grantor or any First Lien Secured Party delivers notice to the
Second Lien Collateral Agent with respect to any specified Common
Collateral (including for such purpose, in the case of the sale or
other disposition of all or substantially all of the equity
interests in any Subsidiary, any Common Collateral held by such
Subsidiary or any direct or indirect Subsidiary thereof)
that:
(A) such specified Common Collateral
has been or is being sold, transferred or otherwise disposed of in
connection with a Disposition by the owner of such Common
Collateral in a transaction permitted under the First Lien Credit
Agreement; or
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(B) the First Priority Liens thereon
have been or are being released in connection with a Subsidiary
that is released from its guarantee under the First Lien Credit
Agreement; or
(C) the First Priority Liens thereon
have been or are being otherwise released as permitted by the First
Lien Credit Agreement or by the First Lien Collateral Agent on
behalf of the First Lien Secured Parties (unless, in the case of
clause (B) or (C) of this
Section 5.1(a)(x) such release occurs in connection
with, and after giving effect to, a Discharge of First Lien
Obligations, which discharge is not in connection with a
foreclosure of, or other exercise of remedies with respect to,
Common Collateral by the First Lien Secured Parties (such discharge
not in connection with any such foreclosure or exercise of remedies
or a sale or other disposition generating sufficient proceeds to
cause the Discharge of First Lien Obligations, a “ Payment
Discharge ”)),
then the Second Liens upon such
Common Collateral will automatically be released and discharged as
and when, but only to the extent, such Liens on such Common
Collateral securing First Lien Obligations are released and
discharged ( provided that in the case of a Payment
Discharge, the Liens on any Common Collateral disposed of in
connection with the satisfaction in whole or in part of First Lien
Obligations shall be automatically released but any proceeds
thereof not used for purposes of the Discharge of First Lien
Obligations or otherwise in accordance with the Second Lien Credit
Agreement shall be subject to Second Liens and shall be applied
pursuant to Section 4.1 ). Upon delivery to the Second
Lien Collateral Agent of a notice from the First Lien Collateral
Agent stating that any such release of Liens securing or supporting
the First Lien Obligations has become effective (or shall become
effective upon the Second Lien Collateral Agent’s release),
the Second Lien Collateral Agent will promptly, at the
Company’s expense, execute and deliver such instruments,
releases, termination statements or other documents confirming such
release on customary terms, which instruments, releases and
termination statements shall be substantially identical to the
comparable instruments, releases and termination statements
executed by the First Lien Collateral Agent in connection with such
release. In the case of the sale of capital stock of a Subsidiary
or any other transaction resulting in the release of such
Subsidiary’s guarantee under the First Lien Credit Agreement
in accordance with the First Lien Credit Agreement, the guarantee
in favor of the Second Lien Secured Parties, if any, made by such
Subsidiary will automatically be released and discharged as and
when, but only to the extent, the guarantee by such Subsidiary of
First Lien Obligations is released and discharged.
(y) In the event of a Payment
Discharge, the Second Liens on Common Collateral owned by the
Company or a Grantor immediately after giving effect to such
Payment Discharge shall become first-priority security interests
(subject to any intercreditor agreements or arrangements among
Second Lien Secured Parties pursuant to Section 8.21
and subject to Liens permitted by the Second Lien Credit
Agreement); provided that if the Company or the Grantors
incur at any time thereafter any new or replacement First Lien
Obligations permitted under the Second Lien Credit Agreement, then
the provisions of Section 5.7 shall apply as if a
Refinancing of First Lien Obligations had occurred.
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(b) The Second Lien Collateral
Agent, for itself and on behalf of each Second Lien Secured Party,
hereby irrevocably constitute and appoint the First Lien Collateral
Agent and any officer or agent of the First Lien Collateral Agent,
with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the
place and stead of the Second Lien Collateral Agent or such holder
or in the First Lien Collateral Agent’s own name, from time
to time in the First Lien Collateral Agent’s discretion, for
the purpose of carrying out the terms of this
Section 5.1 , to take any and all appropriate action
and to execute any and all documents and instruments that may be
necessary or desirable to accomplish the purposes of this
Section 5.1 , including any termination statements,
endorsements or other instruments of transfer or
release.
(c) Unless and until the Discharge
of First Lien Obligations has occurred, the Second Lien Collateral
Agent for itself and on behalf of each Second Lien Secured Party,
hereby consents to the application, whether prior to or after a
default, of proceeds of Common Collateral or other collateral to
the repayment of First Lien Obligations pursuant to the First Lien
Credit Agreement.
5.2. Insurance . Unless and
until the Discharge of First Lien Obligations has occurred, the
First Lien Collateral Agent and the First Lien Secured Parties
shall have the sole and exclusive right, to the extent permitted by
the First Lien Documents and subject to the rights of the Grantors
thereunder, to adjust settlement for any insurance policy covering
the Common Collateral in the event of any loss thereunder and to
approve any award granted in any condemnation or similar proceeding
affecting the Common Collateral. Unless and until the Discharge of
First Lien Obligations has occurred, all proceeds of any such
policy and any such award if in respect of the Common Collateral
shall be paid (a) first, until to the occurrence of the
Discharge of First Lien Obligations, to the First Lien Collateral
Agent for the benefit of First Lien Secured Parties pursuant to the
terms of the First Lien Documents, (b) second, after the
occurrence of the Discharge of First Lien Obligations, to the
Second Lien Collateral Agent for the benefit of the Second Lien
Secured Parties pursuant to the terms of the applicable Second Lien
Documents and (c) third, if no Second Lien Obligations are
outstanding, to the owner of the subject property, such other
person as may be entitled thereto or as a court of competent
jurisdiction may otherwise direct. If the Second Lien Collateral
Agent or any Second Lien Secured Party shall, at any time, receive
any proceeds of any such insurance policy or any such award in
contravention of this Agreement, such proceeds shall be segregated
and held in trust for the benefit of the First Lien Collateral
Agent and it shall forthwith pay such proceeds over to the First
Lien Collateral Agent in accordance with the terms of
Section 4.2 .
5.3. Amendments to Documents
.
(a) So long as the Discharge of
First Lien Obligations has not occurred, without the prior written
consent of the First Lien Collateral Agent, (i) no Second Lien
Security Document may be amended, supplemented or otherwise
modified or entered into to the extent any such amendment,
supplement or modification would be prohibited or inconsistent with
any of the terms of this Agreement and (ii) no other Second
Lien Document may be amended, supplemented
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or otherwise modified or entered into unless
such amendment, supplement or modification shall operate only to
(A) decrease the rate of interest or delay or defer the date
for payment of the interest, principal, premium (if any) or fees
payable on the Second Lien Obligations, (B) amend covenants,
events of default or remedies relating to Second Lien Obligations
in a manner that makes such provisions less restrictive or
(C) amend covenants, events of default or remedies relating to
Second Lien Obligations in order to reflect a corresponding change
in the applicable First Lien Document, provided that any cushion or
setback between the First Lien Documents and the Second Lien
Documents (expressed as the absolute or percentage difference,
whichever is greater) is maintained in connection therewith. The
Second Lien Collateral Agent agrees that each applicable Second
Lien Security Document shall include the following language (or
language to similar effect approved by the First Lien Collateral
Agent):
“Notwithstanding anything
herein to the contrary, the liens and security interests granted to
[the Second Lien Collateral Agent] pursuant to this Agreement and
the exercise of any right or remedy by [the Second Lien Collateral
Agent] hereunder are subject to the limitations and provisions of
the Intercreditor Agreement, dated as of March 26, 2009 (as
amended, restated, supplemented or otherwise modified from time to
time, the “ Intercreditor Agreement ”
