INTERCREDITOR AGREEMENT

Exhibit 10.8

 

INTERCREDITOR AGREEMENT

 

dated as of October 28, 2005

 

among

 

DEL LABORATORIES, INC.,

 

the other Grantors from time to time party hereto,

 

JPMORGAN CHASE BANK, N.A. ,

as Administrative Agent under the Initial Credit Agreement

and as Credit Facility Collateral Agent,

 

and

 

WELLS FARGO BANK, NATIONAL ASSOCIATION ,

as Trustee and as Note Collateral Agent

 

 

TABLE OF CONTENTS

 

 

EXHIBIT A – Form of Intercreditor Agreement Joinder

 

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This Intercreditor Agreement (this “ Agreement ”) dated as of October 28, 2005 is entered into by and among Del Laboratories, Inc., a Delaware corporation (the “ Company ”), the other Grantors from time to time party hereto, JPMorgan Chase Bank, National Association, as Administrative Agent under the Initial Credit Agreement described below and as Credit Facility Collateral Agent, and Wells Fargo Bank, National Association, as trustee under the Indenture described below and as Note Collateral Agent.

 

Recitals

 

Pursuant to a Credit Agreement dated as of October 28, 2005 (the “ Initial Credit Agreement ”) among DLI Holding II Corp., a Delaware corporation (“ Holdings ”), the Company, the Grantors party hereto on the date hereof, the lenders party thereto and the Credit Agreement Agent, the Company intends to obtain, and Holdings and such Grantors will guarantee, loans and other extensions of credit secured, together with other Credit Facility Lien Obligations, by Credit Facility Liens granted to the Credit Facility Collateral Agent pursuant to the Credit Facility Lien Security Documents.

 

Pursuant to an Indenture dated as of October 28, 2005 (the “ Indenture ”) among the Company, the Grantors party hereto on the date hereof and the Trustee, the Company intends to issue, and such Grantors will guarantee, the Company’s Senior Secured Floating Rate Notes due 2011 (together with any related exchange notes and all additional notes at any time issued under the Indenture, the “ Notes ”) secured, together with other Note Lien Obligations, by Note Liens granted to the Note Collateral Agent pursuant to the Note Lien Security Documents.

 

This Agreement sets forth certain agreements relating to the Credit Facility Liens and Note Liens.

 

Agreement

 

In consideration of the premises and the mutual agreements herein set forth, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:

 

ARTICLE 1.

DEFINITIONS; PRINCIPLES OF CONSTRUCTION

 

SECTION 1.1 Defined Terms . The following terms will have the following meanings:

 

“Accounts” means all “accounts” as defined in Article 9 of the UCC.

 

“Affiliate” of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

 

“Board of Directors” of the Company or any other Person means (i) with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board; (ii) with respect to a partnership, the Board of Directors of the general partner of the partnership; (iii) with respect to a limited liability company, the managing member or members or any controlling committee of managing members thereof; and (iv) with respect to any other Person, the board or committee of such Person serving a similar function.

“Cash Management Obligations” means all monetary obligations, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise of the Company or any of its Subsidiaries arising out of any cash management, clearing house, wire transfer, depository or investment services provided by any lender under any Credit Facility or an Affiliate of such lender.

 

“Cash Proceeds” means all Proceeds of any Collateral received by any Grantor consisting of cash and checks.

 

“Chattel Paper” means all “chattel paper” as defined in Article 9 of the UCC, including, without limitation, “electronic chattel paper” or “tangible chattel paper,” as each term is defined in Article 9 of the UCC.

 

“Collateral” means all of the assets and property of any Grantor, whether real, personal or mixed, constituting either Fixed Collateral or Liquid Collateral.

 

“Collateral Agency Agreement” means the Collateral Agency Agreement dated as of October 28, 2005 among Wells Fargo Bank, N.A., as trustee under the Indenture, Wells Fargo Bank, N.A., as collateral agent, and the Grantors party thereto

 

“Collateral Agent” means,

 

(1) with respect to holders of Note Lien Obligations, the Note Collateral Agent, and

 

(2) with respect to holders of Credit Facility Lien Obligations, the Credit Facility Collateral Agent.

 

“Collateral Class,” as used with respect to Collateral, means the Fixed Collateral or the Liquid Collateral, as applicable.

 

“Collateral Records” means all books, records, ledger cards, files, correspondence, customer lists, blueprints, technical specifications, manuals, computer software, computer printouts, tapes, disks and related data processing software and similar items that at any time evidence or contain information relating to any of the Collateral or are otherwise necessary or helpful in the collection thereof or realization thereupon.

 

“Collateral Support” means all property (real or personal) assigned, hypothecated or otherwise securing any Collateral and shall include any security agreement or other agreement granting a lien or security interest in such real or personal property.

 

“Commercial Tort Claims” means all “commercial tort claims” as defined in Article 9 of the UCC.

 

“Copyright Licenses” means, with respect to any Grantor, all agreements (whether or not in writing) naming such Grantor as licensor or licensee, granting any right under any Copyright, including the grant of rights to print, publish, copy, distribute, exploit and sell materials derived from any Copyright, subject in each case, to the terms of such agreements, and the right to prepare for sale, sell and advertise for sale, all Inventory now or hereafter covered by such agreements.

 

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“Copyrights” means:

 

(1) all United States and foreign copyrights, whether or not the underlying works of authorship have been published, and all copyright registrations and copyright applications, and any renewals or extensions thereof;

 

(2) the right to sue or otherwise recover for any and all past, present and future infringements thereof;

 

(3) all income, royalties, damages and other payments now and hereafter due and/or payable with respect thereto (including, without limitation, payments under all licenses entered into in connection therewith, and damages and payments for past, present or future infringements thereof); and

 

(4) all other rights of any kind whatsoever accruing thereunder or pertaining thereto.

 

“Credit Agreement” means the Initial Credit Agreement and, to the extent it Refinances the Initial Credit Agreement, the Permanent ABL Facility.

 

“Credit Agreement Agent” means, at any time, the Person serving at such time as the “Agent” or “Administrative Agent” under the Credit Agreement or any other representative then most recently designated in accordance with the applicable provisions of the Credit Agreement, together with its successors in such capacity.

 

“Credit Facilities” means (x) the Credit Agreement and (y) to the extent specified by the Company by notice to the Trustee, one or more other debt facilities or commercial paper facilities, in each case, with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced (whether upon or after termination or otherwise) or refinanced (including by means of sales of debt securities to institutional investors) in whole or in part from time to time.

 

“Credit Facility Collateral Agent” means JPMorgan Chase Bank, N.A., in its capacity as collateral agent under the Credit Facility Lien Security Documents, together with its successors in such capacity.

 

“Credit Facility Lien” means a Lien on Collateral granted by a Credit Facility Lien Security Document to the Credit Facility Collateral Agent, at any time, upon any property of the Company or any Subsidiary Guarantor to secure Credit Facility Lien Obligations.

 

“Credit Facility Lien Debt” means:

 

(1) Indebtedness of the Company or any Subsidiary Guarantor under the Credit Agreement that is secured by a Credit Facility Lien that was permitted to be incurred and so secured under the Indenture (or as to which the lenders under the Credit Agreement obtained an Officer’s Certificate at the time of incurrence to the effect that such Indebtedness was permitted to be Incurred and secured by the Indenture) and guarantees thereof by the Subsidiary Guarantors;

 

(2) Indebtedness of the Company or any Subsidiary Guarantor under any other Credit Facility that is secured by a Credit Facility Lien that was permitted to be incurred and so secured under the Indenture (or as to which the lenders under the Credit Agreement obtained an Officer’s Certificate at the time of incurrence to the effect that such Indebtedness was permitted to be Incurred and secured by the

 

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Indenture) and guarantees thereof by the Subsidiary Guarantors; provided , in the case of any Indebtedness referred to in this clause (2), that:

 

(a) on or before the date on which such Indebtedness is incurred by the Company, such Indebtedness is designated by the Company, in an Officer’s Certificate delivered to each Credit Facility Lien Representative, the Credit Facility Collateral Agent and the Note Collateral Agent, as “Credit Facility Lien Debt” for the purposes of the Secured Debt Documents; provided that no Series of Secured Debt may be designated as both Note Lien Debt and Credit Facility Lien Debt;

 

(b) such Indebtedness is governed by a credit agreement or other agreement that includes a Lien Sharing and Priority Confirmation; and

 

(c) all requirements set forth in this Agreement as to the confirmation, grant or perfection of the Credit Facility Collateral Agent’s Lien to secure such Indebtedness or Obligations in respect thereof are satisfied (and the satisfaction of such requirements and the other provisions of this clause (c) will be conclusively established if the Company delivers to the Credit Facility Collateral Agent and the Note Collateral Agent an Officer’s Certificate stating that such requirements and other provisions have been satisfied and that such Indebtedness is “Credit Facility Lien Debt”); and

 

(3) Hedging Obligations of the Company or any Subsidiary Guarantor incurred to hedge or manage interest rate risk (in a notional amount not to exceed the aggregate amount of the Company’s and its Subsidiaries’ consolidated variable interest rate Indebtedness then outstanding or committed) and Cash Management Obligations of the Company or any Subsidiary Guarantor; provided that:

 

(a) such Hedging Obligations and Cash Management Obligations are secured by a Credit Facility Lien on all of the assets and properties that secure Credit Facility Lien Debt; and

 

(b) such Credit Facility Lien is senior to or on a parity with the Credit Facility Liens securing Credit Facility Lien Debt;

 

in each case to the extent secured by Liens permitted by clause (2) of the definition of Permitted Liens.

 

“Credit Facility Lien Documents” means, collectively, the Credit Agreement, any credit agreement or other agreement governing each other Series of Credit Facility Lien Debt, and the Credit Facility Lien Security Documents.

 

“Credit Facility Lien Obligations” means the Credit Facility Lien Debt and all other Obligations in respect of Credit Facility Lien Debt.

 

“Credit Facility Lien Representative” means (1) the Credit Agreement Agent or (2) in the case of any other Series of Credit Facility Lien Debt, the trustee, agent or representative of the holders of such Series of Credit Facility Lien Debt who maintains the transfer register for such Series of Credit Facility Lien Debt and is appointed as a representative of the Priority Debt (for purposes related to the administration of the security documents) pursuant to the credit agreement or other agreement governing such Series of Credit Facility Lien Debt.

 

“Credit Facility Lien Security Documents” means this Agreement, each Lien Sharing and Priority Confirmation relating to Credit Facility Lien Obligations, and all security agreements, pledge agreements, collateral assignments, mortgages, deeds of trust, collateral agency agreements, control agreements or other grants or transfers for security executed and delivered by the Company or any Subsidiary Guarantor creating (or purporting to create) a Credit Facility Lien upon collateral in favor of the Credit Facility

 

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Collateral Agent to secure Credit Facility Lien Obligations, in each case, as amended, modified, renewed, restated or replaced, in whole or in part, from time to time, in accordance with its terms.

 

“Credit Facility Priority Lien Cap” means, as of any date, an aggregate principal amount equal to the sum of (a) the aggregate principal amount of Indebtedness permitted to be Incurred under clause (b) (1) of Section 4.09 of the Indenture (regardless of the amount actually Incurred) as of such date, plus (b) the principal amount of Indebtedness permitted to be Incurred under clause (b)(13) of Section 4.09 of the Indenture (regardless of the amount actually Incurred) as of such date.

 

“Credit Facility Secured Party” means the Credit Agreement Agent and the lenders under the Credit Agreement (together with any other holders of Credit Facility Lien Obligations).

 

“Deposit Accounts” means all “deposit accounts” as defined in Article 9 of the UCC of any applicable jurisdiction and, in any event including any demand, time, savings, passbook or like account maintained with a depositary institution.

 

“Discharge of Priority Lien Obligations” means, with respect to either Collateral Class, the occurrence of all of the following:

 

(1) termination or expiration of all commitments to extend credit that would constitute Priority Lien Debt with respect to the applicable Collateral Class;

 

(2) payment in full in cash of the principal of and interest and premium (if any) on all Priority Lien Debt (other than any undrawn letters of credit) with respect to the applicable Collateral Class;

 

(3) discharge or cash collateralization (at the lower of (1) 105% of the aggregate undrawn amount and (2) the percentage of the aggregate undrawn amount required for release of liens under the terms of the applicable Priority Lien Document with respect to the applicable Collateral Class) of all outstanding letters of credit constituting Priority Lien Debt with respect to the applicable Collateral Class; and

 

(4) payment in full in cash of all other Priority Lien Obligations with respect to the applicable Collateral Class that are outstanding and unpaid at the time the Priority Lien Debt with respect to the applicable Collateral Class is paid in full in cash (other than any obligations for taxes, costs, indemnifications, reimbursements, damages and other liabilities in respect of which no claim or demand for payment has been made at such time);

 

provided , that no Discharge of Priority Lien Obligations will be deemed to have occurred in a Refinancing of Secured Debt with secured Indebtedness that is Incurred contemporaneously with or promptly after the discharge of such pre-existing Secured Debt if such new secured Indebtedness constitutes Note Lien Debt or Credit Facility Lien Debt, as applicable, entitled to the benefit of this Agreement in accordance with the terms of this Agreement and, as so designated by the Company, such new Series of Secured Debt constitutes Priority Lien Debt with respect to the applicable Collateral Class.

 

“Documents” means all “documents” as defined in Article 9 of the UCC.

 

“equally and ratably” means, in reference to sharing of Liens or proceeds thereof as between holders of Note Lien Obligations, that such Liens or proceeds:

 

(1) will be allocated and distributed first to the Note Lien Representative for each outstanding Series of Note Lien Debt, for the account of the holders of such Note Lien Debt, ratably in proportion to the

 

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principal of, and interest and premium (if any) and reimbursement obligations (contingent or otherwise) with respect to letters of credit, if any, outstanding (whether or not drawings have been made under such letters of credit) on each outstanding Series of Note Lien Debt when the allocation or distribution is made; and thereafter,

 

(2) will be allocated and distributed (if any remain after payment in full of all of the principal of, and interest and premium (if any) and reimbursement obligations (contingent or otherwise) with respect to letters of credit, if any, outstanding (whether or not drawings have been made on such letters of credit) on all outstanding Note Lien Obligations) to the Note Lien Representative for each outstanding Series of Note Lien Debt, for the account of the holders of any remaining Note Lien Obligations, ratably in proportion to the aggregate unpaid amount of such remaining Note Lien Obligations due and demanded (with written notice to the applicable Note Lien Representative and the Note Collateral Agent) prior to the date such distribution is made.

 

“Equipment” means all “equipment” as defined in Article 9 of the UCC and including, in any event, all sales displays.

 

“Equity Interests” means:

 

(1) all shares of Capital Stock owned by the Company or any of its Subsidiaries, and the certificates, if any, representing such shares and any interest of the Company or any of its Subsidiaries in the entries on the books of the issuer of such shares or on the books of any securities intermediary pertaining to such shares, and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares;

 

(2) all interests of the Company or any of its Subsidiaries in any limited liability company and the certificates, if any, representing such limited liability company interests and any interest of the Company or any of its Subsidiaries on the books and records of such limited liability company or on the books and records of any securities intermediary pertaining to such interest and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such limited liability company interests;

 

(3) all interests of the Company or any of its Subsidiaries in any general partnership, limited partnership, limited liability partnership or other partnership and the certificates, if any, representing such partnership interests and any interest of the Company or any of its Subsidiaries on the books and records of such partnership or on the books and records of any securities intermediary pertaining to such interest and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such partnership interests;

 

(4) all interests of the Company or any of its Subsidiaries in a Delaware business trust or other trust and the certificates, if any, representing such trust interests and any interest of the Company or any of its Subsidiaries on the books and records of such trust or on the books and records of any securities intermediary pertaining to such interest and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such trust interests; and

 

(5) any “securities” of any of the Company’s “affiliates” (as such terms are used in Rule 3-16 of Regulation S-X under the Securities Act).

 

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“Excluded Assets” means all Equity Interests and any of the following property to the extent that and for as long as such grant of a security interest therein:

 

(1) is prohibited by any Requirement of Law; provided that (a) such property shall cease to be an Excluded Asset immediately and automatically (without need for any further grant or act) at such time as the condition described in this clause (1) ceases to exist and (b) to the extent severable, such all rights that are not subject to the applicable condition described in clause (1) in respect of such property shall not constitute an Excluded Asset;

 

(2) requires a filing with or consent from any Governmental Authority pursuant to any Requirement of Law that has not been made or obtained;

 

(3) constitutes a breach or default under or results in the termination of, or requires any consent not obtained under, any lease, license or agreement, except to the extent that such Requirement of Law or provisions of any such lease, license or agreement is ineffective under applicable law or would be ineffective under Sections 9-406, 9-407, 9-408 or 9-409 of the New York UCC to prevent the attachment of the security interest granted hereunder; provided that such lease, license, contract, property right or agreement will cease to be an Excluded Asset and will become subject to the Lien granted under the security documents, immediately and automatically, at such time as the grant of a Lien under the security documents no longer constitutes or results in a breach, termination or default under any lease, license, contract, property right or agreement;

 

(4) is in (A) any of the following real property: (i) Riverside Industrial Park, Little Falls, New York, (ii) Little Falls Industrial Park, Little Falls, New York, (iii) 99 Creek Street, Canajoharie, New York, (iv) 660, 682 and 684 So. 17 ^th Street, Newark, New Jersey, (iv) The Carlyle Hotel, Apt. #1002, 35 East 76 ^th Street, New York City, New York, (v) 316 Bayview Drive, Barrie, Ontario, Canada, and (vi) all real property a fee interest in which is acquired by the Company or any Subsidiary Guarantor after the Closing Date that has a fair market value not exceeding $3.0 million per contiguous parcel, or (B) any leasehold interest in any real property leased by the Company or any Subsidiary Guarantor;

 

(5) is in any other property or assets (other than Intellectual Property) in which a Lien cannot be perfected either automatically or by the filing of a financing statement under the UCC of the relevant jurisdiction, so long as the aggregate fair market value of all such property and assets does not at any one time exceed $5.0 million.

 

“Fixed Collateral” means, except as provided below, all of the following property of the Company and each Subsidiary Guarantor now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest:

 

(1) the Net Available Cash Account;

 

(2) all Equipment;

 

(3) all Fixtures;

 

(4) all fee interest of the Grantors in real property on which the Grantors are required to provide a Priority Lien to the Note Secured Parties pursuant to the Note Lien Security Documents; and

 

(5) all Intellectual Property, to the extent of each Grantor’s right, title or interest therein (except for “intent-to-use” applications for trademark or service mark registrations filed pursuant to Section 1(b)

 

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of the Lanham Act, 15 U.S.C. § 1051, unless and until an Amendment to Allege Use or a Statement of Use under Sections 1(c) and 1(d) of said Act has been filed, to the extent that any assignment of an “intent-to-use” application prior to such filing would violate the Lanham Act);

 

(6) all General Intangibles, including without limitation commercial contracts but excluding General Intangibles constituting Payment Intangibles or Commercial Tort Claims (except as set forth in the next succeeding clause);

 

(7) identified Commercial Tort Claims to the extent that they relate to the infringement, impairment, damage or destruction of any of the items referred to in the preceding clauses (1) through (6) (“Fixed Collateral Commercial Tort Claims”);

 

(8) to the extent relating to any of the items referred to in the preceding clauses (1) through (7) and subject to the proviso below, all Documents;

 

(9) to the extent relating to any of the items referred to in the preceding clauses (1) through (8), all Supporting Obligations;

 

(10) subject to the proviso below, all books, Records and Collateral Records relating to the foregoing (including without limitation all books, databases, customer lists, engineer drawings, Records and Collateral Records, whether tangible or electronic, which contain any information relating to any of the foregoing);

 

(11) all identifiable non-Cash Proceeds and, solely to the extent not constituting Liquid Collateral, Cash Proceeds, products, accessions, rents and profits of or in respect of any of the foregoing and all collateral security, guarantees and other Collateral Support given by any Person with respect to any of the foregoing;

 

provided that to the extent any of the items specified in the foregoing clauses (8), (9) or (10) also relates to Liquid Collateral, only that portion related to the items referred to in the preceding clauses (1) through (7) as being included in the Fixed Collateral shall be included in the Fixed Collateral. Notwithstanding the foregoing, “Fixed Collateral” will exclude:

 

(A) Liquid Collateral;

 

(B) Excluded Assets; and

 

(C) any properties and assets in which each Collateral Agent is required to release or releases its Liens pursuant to Section 10.08 of the Indenture or as contemplated in Section 2.7 of this Agreement; provided that, in the case of this clause (C), if such Liens are required to be released as a result of the sale, transfer or other disposition of any properties or assets of the Company or any Subsidiary Guarantor, such assets or properties will cease to be excluded from the Collateral if the Company or any Subsidiary Guarantor thereafter acquires or reacquires such assets or properties.

 

“Fixtures” means all “fixtures” as defined in Article 9 of the UCC.

 

“General Intangibles” means all “general intangibles” as defined in Article 9 of the UCC.

 

“Goods” means all “goods” as defined in Article 9 of the UCC.

 

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“Grantors” means the Company and each of the Subsidiary Guarantors that have executed and delivered, or may from time to time execute and deliver, a Note Lien Security Document or a Credit Facility Lien Security Document.

 

“Hedging Obligations” of any Person means the obligations of such Person pursuant to any Interest Rate Agreement or Currency Agreement.

 

“Incur” has the meaning given in the Indenture, as in effect on the date hereof.

 

“Indebtedness” has the meaning given in the Indenture, as in effect on the date hereof.

 

“Insolvency or Liquidation Proceeding” means:

 

(1) any case commenced by or against the Company or any Subsidiary Guarantor under Title 11, U.S. Code or any similar federal or state law for the relief of debtors, any other proceeding for the reorganization, recapitalization or adjustment or marshalling of the assets or liabilities of the Company or any Subsidiary Guarantor, any receivership or assignment for the benefit of creditors relating to the Company or any Subsidiary Guarantor or any similar case or proceeding relative to the Company or any Subsidiary Guarantor 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 Subsidiary Guarantor, in each case whether or not voluntary and whether or not involving Credit Facility bankruptcy or insolvency; or

 

(3) any other proceeding of any type or nature in which substantially all claims of creditors of the Company or any Subsidiary Guarantor are determined and any payment or distribution is or may be made on account of such claims.

 

“Instruments” means all “instruments” as defined in Article 9 of the UCC.

 

“Intellectual Property” means the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including all Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks, Trademark Licenses, Trade Secrets, and Trade Secret Licenses and all rights to sue at law or in equity for any past, present and future infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.

 

“Intercreditor Agreement Joinder” means an agreement substantially in the form of Exhibit A .

 

“Interest Rate Agreement” means with respect to any Person any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement or arrangement to which such Person is party or of which it is a beneficiary.

 

“Inventory” means all “inventory” as defined in Article 9 of the UCC.

 

“Investment Property” means the collective reference to all “investment property” as such term is defined in Section 9-102(a)(49) of the New York UCC (other than Equity Interests).

 

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“Junior Lien” means:

 

(1) with respect to Fixed Collateral, the Credit Facility Liens; and

 

(2) with respect to Liquid Collateral, the Note Liens.

 

“Junior Lien Collateral Agent” means:

 

(1) with respect to Fixed Collateral, the Credit Facility Collateral Agent; and

 

(2) with respect to Liquid Collateral, the Note Collateral Agent.

 

“Junior Lien Debt” means:

 

(1) with respect to Fixed Collateral, Credit Facility Lien Debt; and

 

(2) with respect to Liquid Collateral, Note Lien Debt.

 

“Junior Lien Documents” means:

 

(1) with respect to Fixed Collateral, the Credit Facility Lien Documents; and

 

(2) with respect to Liquid Collateral, the Note Lien Documents.

 

“Junior Lien Obligations” means:

 

(1) with respect to Fixed Collateral, the Credit Facility Lien Obligations; and

 

(2) with respect to Liquid Collateral, the Note Lien Obligations.

 

“Junior Lien Representative” means:

 

(1) with respect to Fixed Collateral, each Credit Facility Lien Representative; and

 

(2) with respect to Liquid Collateral, each Note Lien Representative.

 

“Letter of Credit Right” means “letter-of-credit right” as defined in Article 9 of the UCC.

 

“Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof).

 

“Lien Sharing and Priority Confirmation” means:

 

(1) as to any Series of Credit Facility Lien Debt, the written agreement of the holders of such Series of Credit Facility Lien Debt, as set forth in the indenture, credit agreement or other agreement governing such Series of Credit Facility Lien Debt, for the enforceable benefit of all holders of each existing and future Series of Note Lien Debt and each existing and future Note Lien Representative:

 

(a) that the holders of Obligations in respect of such Series of Credit Facility Lien Debt are bound by the provisions of this Agreement, including the provisions relating to the ranking of Credit Facility Liens; and

 

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(b) consenting to and directing the Credit Facility Collateral Agent to perform its obligations under this Agreement and the other security documents; and

 

(2) as to any Series of Note Lien Debt, the written agreement of the holders of such Series of Note Lien Debt, as set forth in the indenture, credit agreement or other agreement governing such Series of Note Lien Debt, for the enforceable benefit of all holders of each existing and future Series of Credit Facility Lien Debt and each existing and future Credit Facility Lien Representative:

 

(a) that all Note Lien Obligations will be and are secured equally and ratably by all Note Liens at any time granted by the Company or any Subsidiary Guarantor to secure any Obligations in respect of such Series of Note Lien Debt, whether or not upon property otherwise constituting collateral for such Series of Note Lien Debt, and that all such Note Liens will be enforceable by the Note Collateral Agent for the benefit of all holders of Note Lien Obligations equally and ratably;

 

(b) that the holders of Obligations in respect of such Series of Note Lien Debt are bound by the provisions of this Agreement, including the provisions relating to the ranking of Note Liens; and

 

(c) consenting to and directing the Note Collateral Agent to perform its obligations under this Agreement and the other Note Lien Security Documents.

 

“Liquid Collateral” means, except as provided below, all of the following property of the Company and each Subsidiary Guarantor now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest:

 

(1) all Accounts;

 

(2) all Chattel Paper;

 

(3) all Instruments;

 

(4) all identified Commercial Tort Claims other than Fixed Collateral Commercial Tort Claims;

 

(5) all Letter of Credit Rights;

 

(6) all Payment Intangibles;

 

(7) all Receivables;

 

(8) (a) all Deposit Accounts (other than the Net Available Cash Account, to the extent that it constitutes a Deposit Account) and all cash, checks, Temporary Cash Investments, and other property held therein or credited thereto, (b) all Money and (c) all Securities (other than Equity Interests), Security Entitlements, and Securities Accounts (other than the Net Available Cash Account, to the extent that it constitutes a Securities Account) and other Investment Property, and all cash, checks, Temporary Cash Investments, securities, financial assets or other property held therein or credited thereto;

 

(9) all Inventory;

 

(10) to the extent relating to any of the items referred to in the preceding clauses (1) through (9) and subject to the proviso below, all Documents;

 

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(11) to the extent relating to any of the items referred to in the preceding clauses (1) through (10) and subject to the proviso below, all Supporting Obligations;

 

(12) all books, Records, Receivables Records and Collateral Records relating to the foregoing (including without limitation all books, databases, customer lists, engineer drawings, Records, Receivables Records and Collateral Records, whether tangible or electronic, which contain any information relating to any of the foregoing); and

 

(13) all identifiable Cash Proceeds and, solely to the extent not constituting Fixed Collateral, non-Cash Proceeds, products, accessions, rents and profits of or in respect of any of the foregoing (including without limitation, all insurance proceeds) and all collateral security, guarantees and other Collateral Support given by any Person with respect to any of the foregoing;

 

provided that to the extent any of items specified in the preceding clauses (10), (11) and (12) also relates to Fixed Collateral, only that portion related to the items referred to in the preceding clauses (1) through (9) as being included in the Liquid Collateral shall be included in the Liquid Collateral. Notwithstanding the foregoing, “Liquid Collateral” will exclude:

 

(A) Fixed Collateral;

 

(B) Excluded Assets; and

 

(C) any properties and assets in which each Collateral Agent releases its Liens pursuant to Section 10.08 of the Indenture or as contemplated in Section 2.7 of this Agreement; provided that, in the case of this clause (C), if such Liens are required to be released as a result of the sale, transfer or other disposition of any properties or assets of the Company or any Subsidiary Guarantor, such assets or properties will cease to be excluded from the Collateral if the Company or any Subsidiary Guarantor thereafter acquires or reacquires such assets or properties.

 

“Money” means “money” as defined in the UCC.

 

“Net Available Cash Account” means any Deposit Account or Securities Account established by the Company or its Restricted Subsidiaries in accordance with the requirements of the covenant set forth in Section 4.10 of the Indenture into which the proceeds from any Sale of Fixed Collateral shall be deposited pending final application in accordance with such covenant.

 

“Note Collateral Agent” means Wells Fargo Bank, National Association, in its capacity as collateral agent under the Note Lien Security Documents, together with its successors in such capacity.

 

“Note Documents” means the Notes, the notations of Subsidiary Guarantee, if any, the Indenture and the Registration Rights Agreement.

 

“Note Lien” means a Lien granted by a security document to the Note Collateral Agent, at any time, upon any property of the Company or any Subsidiary Guarantor to secure Note Lien Obligations.

 

“Note Lien Debt” means:

 

(1) the notes issued on the date of the Indenture and notes issued under the Indenture in exchange therefor in accordance with the Registration Rights Agreement; and

 

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(2) any other Indebtedness of the Company (including Additional Notes) that is secured equally and ratably with the notes by a Note Lien that was permitted to be incurred and so secured under each applicable Secured Debt Document; provided that:

 

(a) the net proceeds are used to refund, refinance, replace, defease, discharge or otherwise acquire or retire Credit Facility Lien Debt or other Note Lien Debt; or

 

(b) on the date of incurrence of such Indebtedness, after giving pro forma effect to the incurrence thereof and the application of the proceeds therefrom, the aggregate principal amount of Note Lien Debt outstanding does not exceed $210.0 million;

 

provided further , in the case of any Indebtedness referred to in clause (2) of this definition:

 

(i) on or before the date on which such Indebtedness is incurred by the Company, such Indebtedness is designated by the Company, in an Officer’s Certificate delivered to each Note Lien Representative, the Note Collateral Agent and the Credit Facility Collateral Agent, as “Note Lien Debt” for the purposes of the Indenture and this Agreement; provided that no Series of Secured Debt may be designated as both Note Lien Debt and Credit Facility Lien Debt;

 

(ii) such Indebtedness is governed by an Indenture, credit agreement or other agreement that includes a Lien Sharing and Priority Confirmation; and

 

(iii) all requirements set forth in this Agreement as to the confirmation, grant or perfection of the Note Collateral Agent’s Liens to secure such Indebtedness or Obligations in respect thereof are satisfied (and the satisfaction of such requirements and the other provisions of this clause (iii) will be conclusively established if the Company delivers to the Note Collateral Agent and the Credit Facility Collateral Agent an Officer’s Certificate stating that such requirements and other provisions have been satisfied and that such Indebtedness is “Note Lien Debt”).

 

“Note Lien Documents” means, collectively, the Note Documents, the indenture, credit agreement or other agreement governing each other Series of Note Lien Debt, and the Note Lien Security Documents.

 

“Note Lien Obligations” means Note Lien Debt and all other Obligations in respect thereof.

 

“Note Lien Representative” means:

 

(1) in the case of the notes, the Trustee;

 

(2) in the case of any other Series of Note Debt, the trustee, agent or representative of the holders of such Series of Note Lien Debt who maintains the transfer register for such Series of Note Lien Debt and (a) is appointed as a Note Lien Representative (for purposes related to the administration of the security documents) pursuant to the indenture, credit agreement or other agreement governing such Series of Note Lien Debt, together with its successors in such capacity, and (b) has become a party to this Agreement by executing a joinder in the form required under this Agreement.

 

“Note Lien Security Documents” means this Agreement, each Lien Sharing and Priority Confirmation with respect to Note Lien Obligations, and all security agreements, pledge agreements,

 

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collateral assignments, mortgages, deeds of trust, collateral agency agreements, control agreements or other grants or transfers for security executed and delivered by the Company or any Subsidiary Guarantor creating (or purporting to create) a Note Lien upon Collateral in favor of the Note Collateral Agent to secure Note Lien Obligations, in each case, as amended, modified, renewed, restated or replaced, in whole or in part, from time to time, in accordance with its terms and the provisions described in Section 2.8 of the Indenture.

 

“Note Secured Party” means the Trustee and the holders of notes (together with any other holders of Note Lien Obligations).

 

“Obligations” means any principal (including reimbursement obligations with respect to letters of credit whether or not drawn), interest (including, to the extent legally permitted, all interest accrued thereon after the commencement of any Insolvency or Liquidation Proceeding at the rate, including any applicable post-default rate, specified in the Credit Facility Lien Documents, even if such interest is not enforceable, allowable or allowed as a claim in such proceeding), premium (if any), penalties, fees, indemnifications, reimbursements, damages, expenses and other liabilities payable under the documentation governing any Indebtedness.

 

“Officer” means the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the President, any Vice President, the Treasurer or the Secretary of the Company. “Officer” of a Subsidiary Guarantor has a correlative meaning.

 

“Officer’s Certificate” means a certificate signed by an Officer.

 

“Patent License” means, with respect to any Grantor, all agreements (whether or not in writing) providing for the grant by or to such Grantor of any right to manufacture, use, import, export, distribute, offer for sale or sell any invention covered in whole or in part by a Patent, subject in each case, to the terms of such agreements, and the right to prepare for sale, sell and advertise for sale, all Inventory now or hereafter covered by such agreements.

 

“Patents” means:

 

(1) all United States and foreign patents, patent applications and patentable inventions;

 

(2) all inventions and improvements described and claimed therein;

 

(3) the right to sue or otherwise recover for any and all past, present and future infringements thereof;

 

(4) all income, royalties, damages and other payments now and hereafter due and/or payable with respect thereto (including payments under all licenses entered into in connection therewith, and damages and payments for past, present or future infringements thereof); and

 

(5) all reissues, divisions, continuations, continuations-in-part, substitutes, renewals, and extensions thereof, all improvements thereon and all other rights of any kind whatsoever accruing thereunder or pertaining thereto.

 

“Payment Intangibles” means all “payment intangibles” as defined in Article 9 of the UCC.

 

“Permanent ABL Facility” means the committed asset based loan credit facility described in the offering memorandum for the Notes under the caption “Description of Other Indebtedness” that is

 

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expected to Refinance in full and replace the Initial Credit Agreement, as amended, restated, supplemented, waived, replaced (whether or not upon termination, and whether with the original lenders or otherwise), refinanced, restructured or otherwise modified from time to time.

 

“Permitted Liens” means the following types of Liens:

 

(1) Liens on Collateral held by the Note Collateral Agent equally and ratably securing (a) the notes to be issued on the date of the Indenture and all related Note Lien Obligations and (b) all future Note Lien Debt, subject to the limits thereon set forth in the definition thereof, and all related Note Lien Obligations;

 

(2) Liens on Collateral, Liens on the Capital Stock of the Company’s Subsidiaries and Liens on other Excluded Assets to the extent such Excluded Assets would not constitute Fixed Collateral if not classified as Excluded Assets, in each case held by the Credit Facility Collateral Agent securing Credit Facility Lien Obligations; provided that:

 

(a) without otherwise limiting the amount secured by such Liens insofar as they attach to any property other than Liquid Collateral or secure Credit Facility Lien Obligations that are not Indebtedness, the aggregate principal amount of all Indebtedness (including all fixed and contingent reimbursement obligations in respect of letters of credit but excluding Hedging Obligations and Cash Management Obligations) secured by such Liens insofar as they attach to Liquid Collateral shall not at any time exceed the Credit Facility Priority Lien Cap; and

 

(b) all such Liens on Collateral are subject to this Agreement;

 

(3) Liens securing indebtedness incurred in reliance in Section 4.09(b)(4) of the Indenture; provided that such Liens do not extend to or cover any property or assets of the Company or of any Restricted Subsidiary other than the property or assets that secured such Indebtedness prior to the time the applicable Restricted Subsidiary became a Restricted Subsidiary;

 

(4) Liens securing indebtedness incurred in reliance in Section 4.09(b)(6) of the Indenture;

 

(5) Liens existing on the Closing Date (other than Credit Facility Liens and Note Liens), together with any Liens securing Refinancing Indebtedness Incurred to refinance Indebtedness secured by Liens existing on the Closing Date (other than Credit Facility Liens and Note Liens); provided that the Liens securing the Refinancing Indebtedness shall not extend to property other than that pledged under the Liens securing the Indebtedness being refinanced;

 

(6) Liens in favor of the Company or any Subsidiary Guarantor on the property or assets, or any proceeds, income or profit therefrom, of any Restricted Subsidiary;

 

(7) Liens for taxes, assessments or governmental charges or claims either:

 

(a) not delinquent; or

 

(b) contested in good faith by appropriate proceedings and as to which the Company or the applicable Restricted Subsidiary has set aside on its books such reserves as may be required pursuant to GAAP;

 

(8) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers, materialmen and repairmen and other Liens imposed by law incurred in the ordinary course of business

 

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for sums not overdue for a period of more than 60 days or being contested in good faith, if such reserve or other appropriate provision, if any, as shall be required by GAAP has been made in respect thereof;

 

(9) Liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security;

 

(10) judgment Liens not giving rise to an Event of Default;

 

(11) easements, rights-of-way, zoning restrictions and other similar charges or encumbrances or title defects or irregularities in respect of real property not interfering in any material respect with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries;

 

(12) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;

 

(13) Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other property relating to such letters of credit and products and proceeds thereof;

 

(14) Liens encumbering deposits made or letters of credit issued to secure obligations arising from statutory, regulatory, contractual or warranty requirements of the Company or any of its Restricted Subsidiaries, including rights of offset and set-off;

 

(15) Liens securing (A) Interest Rate Agreements entered into in the ordinary course of business and not for purposes of speculation which Interest Rate Agreements relate to Indebtedness that is otherwise permitted under the Indenture and (B) all related Obligations;

 

(16) Liens securing (A) Indebtedness under Currency Agreements entered into in the ordinary course of business and not for purposes of speculation and (B) all related Obligations;

 

(17) Liens on assets transferred to a Receivables Entity or on assets of a Receivables Entity, in either case incurred in connection with a Qualified Receivables Transaction;

 

(18) leases or subleases granted to others that do not materially interfere with the ordinary course of business of the Company and its Restricted Subsidiaries;

 

(19) Liens arising from filing precautionary Uniform Commercial Code financing statements regarding leases;

 

(20) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;

 

(21) title defects, survey exceptions and other irregularities or deficiencies in title to real property constituting Collateral which are set forth in the title insurance reports delivered to the Note Collateral Agent in respect of the real property Collateral on the Closing Date;

 

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(22) Liens incurred in the ordinary course of business with respect to obligations that do not exceed $2.5 million at any one time outstanding and that:

 

(a) are not incurred in connection with the borrowing of money or obtaining of advances or credit (other than trade credit in the ordinary course of business); and

 

(b) do not in the aggregate materially detract from the value of the property or materially impair the use thereof in the operation of the business of the Company and the Restricted Subsidiaries; and

 

(23) other Liens; provided that the maximum aggregate amount of outstanding obligations secured thereby shall not at any time exceed $5.0 million.

 

“Permitted Prior Liens” means:

 

(1) Liens described in clauses (3), (4), (5) or (6) of the definition of “Permitted Liens”; and

 

(2) Permitted Liens that arise by operation of law and are not voluntarily granted, to the extent entitled by law to priority over the Liens created by the Credit Facility Lien Security Documents or the Note Lien Security Documents.

 

“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.

 

“Priority Liens” means:

 

(1) with respect to Fixed Collateral, the Note Liens; and

 

(2) with respect to Liquid Collateral, the Credit Facility Liens.

 

“Priority Lien Collateral Agent” means:

 

(1) with respect to Fixed Collateral, the Note Collateral Agent; and

 

(2) with respect to Liquid Collateral, the Credit Facility Collateral Agent.

 

“Priority Lien Debt” means:

 

(1) with respect to Priority Liens on Fixed Collateral, the Note Lien Debt; and

 

(2) with respect to Priority Liens on Liquid Collateral, the Credit Facility Lien Debt.

 

“Priority Lien Documents” means:

 

(1) with respect to Fixed Collateral, the Note Lien Documents; and

 

(2) with respect to Liquid Collateral, the Credit Facility Lien Documents.

 

“Priority Lien Obligations” means:

 

(1) with respect to Fixed Collateral, the Note Lien Obligations; and

 

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(2) with respect to Liquid Collateral, the Credit Facility Lien Obligations.

 

“Priority Lien Representative” means:

 

(1) with respect to Fixed Collateral, each Note Lien Representative; and

 

(2) with respect to Liquid Collateral, each Credit Facility Lien Representative.

 

“Proceeds” shall mean all “proceeds” as defined in Article 9 of the UCC including, in any event all dividends, returns of capital and other distributions from Investment Property and all collection thereon and payments with respect thereto.

 

“Promissory Note” shall mean a “promissory note” as defined in Article 9 of the UCC.

 

“Receivable” means any right to payment or goods sold or leased or for services rendered, whether or not such right is evidenced by an Instrument or Chattel Paper and whether or not it has been earned by performance (including all Accounts).

 

“Receivables Records” shall mean (i) all original copies of all documents, instruments or other writings or electronic records or other Records evidencing the Receivables, (ii) all books, correspondence, credit or other files, Records, ledge