COLLATERAL TRUST AGREEMENT

Exhibit 4.10

EXECUTION VERSION

 

COLLATERAL TRUST AGREEMENT

dated as of July 2, 2009

among

SOLO CUP COMPANY

and

SOLO CUP OPERATING CORPORATION,

as Issuers

the Guarantors from time to time party hereto,

U.S. BANK NATIONAL ASSOCIATION,

as Trustee under the Indenture,

the other Secured Debt

Representatives from time to time party hereto

and

U.S. BANK NATIONAL ASSOCIATION,

as Collateral Trustee

 

TABLE OF CONTENTS

 

 

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EXHIBIT A – Additional Secured Debt Designation

EXHIBIT B – Form of Collateral Trust Joinder—Additional Secured Debt

EXHIBIT C – Form of Collateral Trust Joinder—Additional Guarantors

EXHIBIT D – Form of Intercreditor Agreement

EXHIBIT E – Form of Security Agreement

 

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This Collateral Trust Agreement (this “ Agreement ” ) is dated as of July 2, 2009 and is by and among Solo Cup Company, a Delaware corporation (“ Solo ”), Solo Cup Operating Corporation, a Delaware corporation (“ SCOC ” and, together with Solo, the “ Issuers ” ), the Guarantors from time to time party hereto, U.S. Bank National Association, as trustee (in such capacity and together with its successors in such capacity, the “ Trustee ” ), the other Secured Debt Representatives from time to time party hereto, and U.S. Bank National Association, as Collateral Trustee (in such capacity and together with its successors in such capacity, the “ Collateral Trustee ” ).

RECITALS

The Issuers intend to issue 10.5% Senior Secured Notes due 2013 (together with any additional notes issued under the Indenture (as defined below), the “ Notes ” ) in an aggregate principal amount of $300,000,000 pursuant to an Indenture dated as of the date hereof (as amended, supplemented, amended and restated or otherwise modified and in effect from time to time, the “ Indenture ” ) among the Issuers, the Guarantors party thereto from time to time, the Collateral Trustee and the Trustee.

The Issuers and the Guarantors intend to secure the Obligations under the Notes, the Guarantees of the Notes and the Indenture and any future Priority Lien Debt, with Liens on all current and future Collateral to the extent that such Liens have been provided for in the applicable Security Documents.

This Agreement sets forth the terms on which each Secured Party has appointed the Collateral Trustee to act as the collateral trustee for the current and future holders of the Secured Obligations to receive, hold, maintain, administer and distribute the Collateral at any time delivered to the Collateral Trustee or the subject of the Security Documents, and to enforce the Security Documents and all interests, rights, powers and remedies of the Collateral Trustee with respect thereto or thereunder and the proceeds thereof.

Capitalized terms used in this Agreement have the meanings assigned to them above or in Article 1 below.

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:

“ ABL Agent ” means the Administrative Agent and any other agent, collateral agent, collateral trustee or other representative of lenders or holders of ABL Debt Obligations that becomes party to the Intercreditor Agreement upon the refinancing or replacement of the ABL Credit Agreement, or any successor representative acting in such capacity.

“ ABL Collateral ” means all present and future right, title and interest of the Issuers and the Guarantors in and to the following, whether now owned or hereafter acquired, existing or arising, and wherever located:

(a) “accounts” and “payment intangibles,” including tax refunds but excluding “payment intangibles” that constitute identifiable proceeds of Notes Collateral;

(b) “inventory” and indebtedness owed to Solo or any of its Subsidiaries that arises from cash advances to enable the obligor thereof to acquire “inventory”;

(c) “deposit accounts,” “commodity accounts,” “securities accounts” and lock-boxes, including all “money” and “certificated securities,” “uncertificated securities,” “securities entitlements” and “investment property” credited thereto or deposited therein (including all cash, marketable securities and other funds held in or on deposit in any such deposit account, commodity account or securities account); “instruments,” including intercompany notes; “chattel paper”; and all cash and cash equivalents, including cash and cash equivalents securing reimbursement obligations in respect of letters of credit or other ABL Debt Obligations;

(d) “general intangibles” pertaining to the other items of property included within clauses (a), (b), (c), (e) and (f) of this definition;

(e) books and “records,” “supporting obligations,” “documents” and related “letters of credit,” and “commercial tort claims” or other claims and causes of action, in each case, to the extent related primarily to any of the foregoing; and

(f) all substitutions, replacements, accessions, products and proceeds (including, without limitation, insurance proceeds, licenses, royalties, income, payments, claims, damages and proceeds of suit) of all or any of the foregoing;

except to the extent that any item of property included in clauses (a) through (f) constitutes an Excluded Asset; provided , that in no case shall ABL Collateral include any identifiable cash proceeds from a Sale of Notes Collateral that have been deposited in the Collateral Proceeds Account until such time as such cash proceeds are released therefrom in accordance with the terms of the Indenture; provided further , that in the case of any Guarantor that is organized under the laws of any part of the United Kingdom, the description of the items of property referred to in clauses (a) through (f) above shall be subject to adjustment to reflect the classification of assets used under the laws of the applicable part of the United Kingdom and to reflect the categories of assets that are subject to the security documents governing such Guarantors.

“ ABL Credit Agreement ” means that certain Loan Agreement, to be dated as of July 2, 2009, by and among the Issuers, the Guarantors party thereto, Bank of America, N.A., as administrative agent (in such capacity and together with its successors in such capacity, the “ Administrative Agent ”), and the other agents and lenders party thereto from time to time, and any related notes, Guarantees, collateral documents, instruments and agreements executed in connection therewith, and in each case, as amended, restated, adjusted, waived, renewed, modified, refunded, replaced, restated, restructured, increased, supplemented or refinanced in whole or in part from time to time, regardless of whether such amendment, restatement, adjustment, waiver, modification, renewal, refunding, replacement, restatement, restructuring, increase, supplement or refinancing is with the same financial institutions (whether as agents or lenders) or otherwise in accordance with the terms of the Intercreditor Agreement.

 

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“ ABL Debt ” means the principal amount of indebtedness for borrowed money and letters of credit incurred under the ABL Debt Documents in an aggregate principal amount (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of Solo and its Restricted Subsidiaries thereunder) not to exceed, as of any date of incurrence, the ABL Debt Cap as of such date of incurrence; provided that Banking Product Obligations and Hedging Obligations will not be treated as ABL Debt.

“ ABL Debt Cap ” means as of any date of incurrence of any ABL Debt, an aggregate principal amount not to exceed the greatest of (i) $275,000,000, (ii) the amount of the Borrowing Base (as defined in the Indenture) as of such date of incurrence, and (iii) the maximum aggregate principal amount of ABL Debt permitted to be incurred under all Secured Documents as of such date; provided that the ABL Debt Cap may be reduced at any time by an amendment to the Intercreditor Agreement executed by the ABL Agent and the Issuers without the consent of the Collateral Trustee.

“ ABL Debt Documents ” means the ABL Credit Agreement, any additional credit agreement or indenture and all other loan documents, security documents, notes, guarantees, instruments and agreements governing or evidencing, or executed or delivered in connection with, the ABL Credit Agreement in accordance with the terms of the Intercreditor Agreement.

“ ABL Debt Obligations ” means ABL Debt incurred or arising under the ABL Debt Documents and all other “Obligations” as defined in the ABL Credit Agreement (excluding any such Obligations that would constitute ABL Debt), including:

(1) Banking Product Obligations of either of the Issuers or any other Guarantor relating to services, provided to either of the Issuers or any other Guarantor, that are secured, or intended to be secured, by the ABL Debt Documents if the provider of such Banking Product Obligations has agreed to be bound by the terms of the Intercreditor Agreement or its interest in the ABL Collateral is subject to the terms of the Intercreditor Agreement; and

(2) Hedging Obligations that are secured, or intended to be secured, under the ABL Debt Documents if the provider of such Hedging Obligations has agreed to be bound by the terms of the Intercreditor Agreement or its interest in the ABL Collateral is subject to the terms of the Intercreditor Agreement.

“ ABL Secured Parties ” means, at any time, the ABL Agent, the Administrative Agent, each lender party to the ABL Credit Agreement from time to time, each Issuing Bank (as defined in the ABL Credit Agreement), each holder, provider or obligee under any secured hedge agreement and secured cash management agreement designated as a secured party under any ABL Credit Agreement, the beneficiaries of each indemnification obligation undertaken by any Guarantor under any ABL Credit Agreement and each other holder of, or obligee in respect of, any ABL Debt Obligations outstanding at such time.

 

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“ Act of Required Debtholders ” means, as to any matter at any time:

(1) prior to the Discharge of Priority Lien Obligations, a direction in writing delivered to the Collateral Trustee by or with the written consent of the holders of at least 50.1% of the sum of:

(a) the aggregate outstanding principal amount of Priority Lien Debt (including outstanding letters of credit whether or not then drawn); and

(b) other than in connection with the exercise of remedies, the aggregate unfunded commitments to extend credit which, when funded, would constitute Priority Lien Debt; and

(2) at any time after the Discharge of Priority Lien Obligations, a direction in writing delivered to the Collateral Trustee by or with the written consent of the holders of Subordinated Lien Debt representing the Required Subordinated Lien Debtholders.

For purposes of this definition, (a) Secured Debt registered in the name of, or beneficially owned by, the Issuers or any Affiliate of the Issuers will be deemed not to be outstanding and (b) votes will be determined in accordance with Section 7.2.

“ Additional Secured Debt ” has the meaning set forth in Section 3.8(b).

“Additional Secured Debt Designation” means a notice in substantially the form of Exhibit A .

“ Administrative Agent ” has the meaning given thereto in the definition of “ABL Credit Agreement.”

“ Affiliate ” of any specified Person means (1) any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person or (2) any executive officer or director of such specified Person. For purposes of this definition, “ control ,” as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms “ controlling ,” “ controlled by ” and “ under common control with ” shall have correlative meanings.

“ Agreement ” has the meaning set forth in the preamble.

“Attributable Debt” in respect of a sale and leaseback transaction means, at the time of determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction, including any period for which such lease has been extended or may, at the option of the lessor, be extended. Such present value shall be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP.

 

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“ Banking Product Obligations ” means, with respect to either of the Issuers or any Guarantor, any obligations of such Issuer or Guarantor owed to any Person in respect of treasury management services (including, without limitation, services in connection with operating, collections, payroll, trust, or other depository or disbursement accounts, including automated clearinghouse, e-payable, electronic funds transfer, wire transfer, controlled disbursement, overdraft, depositary, information reporting, lock-box and stop payment services), commercial credit card and merchant card services, stored valued card services, other cash management services, or lock-box leases and other banking products or services related to any of the foregoing.

“Bankruptcy Code” means Title 11 of the United States Code.

“ Business Day ” means any day other than a Legal Holiday.

“ Capital Lease Obligation ” means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP.

“ Capital Stock ” means:

(1) in the case of a corporation, corporate stock;

(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

(3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and

(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

“ Cash Equivalents ” means:

(1) United States dollars;

(2) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof ( provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than one year from the date of acquisition;

(3) time deposits, demand deposits, money market deposits, certificates of deposit and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one year from the date of acquisition and overnight bank deposits, in each case, with any domestic commercial bank having capital and surplus in excess of $500.0 million and a Thomson Bank Watch Rating of “B” or better;

(4) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above;

 

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(5) commercial paper having the highest rating obtainable from Moody’s or S&P and in each case maturing within one year after the date of acquisition;

(6) securities issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and having the highest rating obtainable from Moody’s or S&P;

(7) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (6) of this definition of Cash Equivalents; and

(8) in the case of any Foreign Subsidiary:

(a) local currency held by such Foreign Subsidiary from time to time in the ordinary course of business;

(b) securities issued or directly and fully guaranteed by the sovereign nation or any agency thereof ( provided that the full faith and credit of such sovereign nation is pledged in support thereof) in which such Foreign Subsidiary is organized and is conducting business having maturities of not more than one year from the date of acquisition; and

(c) investments of the type and maturity described in clauses (3) through (5) above of foreign obligors, which investments or obligors satisfy the requirements and have ratings described in such clauses;

(d) provided that the aggregate amount of any obligations and investments that are at any time outstanding pursuant to subclauses (b) and (c) of this clause (8) may not exceed the U.S. dollar equivalent of $15,000,000.

“ Class ” means (a) in the case of Subordinated Lien Debt, every Series of Subordinated Lien Debt, taken together, and (b) in the case of Priority Lien Debt, every Series of Priority Lien Debt, taken together.

“ Collateral ” means, in the case of each Series of Secured Debt, all properties and assets of each Issuer and each Guarantor now owned or hereafter acquired in which Liens have been granted to the Collateral Trustee to secure the Secured Obligations, and shall exclude any properties and assets in which the Collateral Trustee is required to release its Liens pursuant to Section 3.2; provided , that, if such Liens are required to be released as a result of the sale, transfer or other disposition of any properties or assets of any Issuer or any Guarantor, such assets or properties will cease to be excluded from the Collateral if such Issuer or such Guarantor thereafter acquires or reacquires such assets or properties.

“ Collateral Proceeds Account ” means one or more deposit accounts or securities accounts established or maintained by any Issuer or the Collateral Trustee or its agent for the sole purpose of holding the proceeds of any sale or other disposition of any Notes Collateral that are required to be held in trust in such account or accounts pursuant to the terms of the Indenture as in effect

 

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on the date hereof (or as modified from time to time to the extent such modifications, taken as a whole, are not materially adverse to the ABL Secured Parties) or pursuant to the documentation governing any other Priority Lien Document that contains comparable provisions that are not materially adverse to the ABL Secured Parties.

“ Collateral Trustee ” has the meaning set forth in the preamble.

“ Collateral Trust Joinder ” means (a) with respect to the provisions of this Agreement relating to any Additional Secured Debt, an agreement substantially in the form of Exhibit B and (b) with respect to the provisions of this Agreement relating to the addition of additional Guarantors, an agreement substantially in the form of Exhibit C .

“ Covenant Defeasance ” has the meaning assigned to it in the Indenture.

“ Credit Facilities ” means one or more debt facilities, commercial paper facilities, note purchase agreements or indentures, in each case with banks, other lenders or trustees, 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), letters of credit, notes or other borrowings, in each case, as amended, restated, modified, renewed, refunded, restated, restructured, increased, supplemented, replaced or refinanced in whole or in part from time to time.

“ Discharge of ABL Debt Obligations ” means the occurrence of all of the following:

(1) termination or expiration of all commitments to extend credit that would constitute ABL Debt;

(2) payment in full in cash of the principal of, and interest and premium, if any, on all ABL Debt (other than any undrawn letters of credit), other than from the proceeds of an incurrence of ABL Debt;

(3) discharge or cash collateralization (at the lower of (A) 105% of the aggregate undrawn amount and (B) the percentage of the aggregate undrawn amount required for release of liens under the terms of the applicable ABL Debt Document) of all outstanding letters of credit constituting ABL Debt; and

(4) payment in full in cash of all other ABL Debt Obligations that are outstanding and unpaid at the time the ABL Debt 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).

“ Discharge of Priority Lien Obligations ” means the occurrence of all of the following:

(1) termination or expiration of all commitments to extend credit that would constitute Priority Lien Debt;

 

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(2) payment in full in cash of the principal of, and interest and premium, if any, and Special Interest, if any, on, all Priority Lien Debt (other than any undrawn letters of credit), other than from the proceeds of an incurrence of Priority Lien Debt;

(3) discharge or cash collateralization (at the lower of (A) 105% of the aggregate undrawn amount and (B) the percentage of the aggregate undrawn amount required for release of liens under the terms of the applicable Priority Lien Document) of all outstanding letters of credit constituting Priority Lien Debt; and

(4) payment in full in cash of all other Priority Lien Obligations that are outstanding and unpaid at the time the Priority Lien Debt 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).

“ Discharge of Senior Obligations ” means, collectively, the Discharge of ABL Debt Obligations and the Discharge of Priority Lien Obligations.

“Disqualified Stock” means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is one year after the date on which any outstanding Series of Secured Debt matures; provided , however , that only the portion of the Capital Stock which so matures, is mandatorily redeemable or is redeemable at the option of the holder prior to such date shall be deemed to be Disqualified Stock. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the issuer to repurchase such Capital Stock upon the occurrence of a Change of Control or an Asset Sale (each as defined in the Indenture or Secured Debt Documents) shall not constitute Disqualified Stock if the terms of such Capital Stock provide that the issuer may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with all outstanding Secured Debt Documents. The term “Disqualified Stock” shall also include any options, warrants or other rights that are convertible into Disqualified Stock or that are redeemable at the option of the holder, or required to be redeemed, prior to the date that is one-year after the date on which the Notes mature.

“ Domestic Subsidiary ” means any Restricted Subsidiary of Solo other than a Restricted Subsidiary that is (1) a “controlled foreign corporation” under Section 957 of the Internal Revenue Code or (2) a Subsidiary of any such controlled foreign corporation.

“ Equally and Ratably ” means, in reference to sharing of Liens or proceeds thereof as between holders of Secured Obligations within the same Class, that such Liens or proceeds:

(1) will be allocated and distributed first to the Secured Debt Representative for each outstanding Series of Priority Lien Debt or Subordinated Lien Debt within that Class, for the account of the holders of such Series of Priority Lien Debt or Subordinated Lien Debt, ratably in proportion to the principal of, and interest and premium (if any) and Special Interest (if

 

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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, each outstanding Series of Priority Lien Debt or Subordinated Lien Debt within that Class 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 Secured Obligations within that Class) to the Secured Debt Representative for each outstanding Series of Priority Lien Debt or Subordinated Lien Debt within that Class, for the account of the holders of any remaining Secured Obligations within that Class, ratably in proportion to the aggregate unpaid amount of such remaining Secured Obligations within that Class due and demanded (with written notice to the applicable Secured Debt Representative and the Collateral Trustee) prior to the date such distribution is made.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute.

“ Excluded Assets ” means each of the following:

(1) all interests in real property other than fee interests and other interests appurtenant thereto;

(2) fee interests in real property if the greater of the cost or the book value of such fee interest is less than $1,000,000;

(3) any property or asset to the extent that the grant of a Lien under the Security Documents in such property or asset is prohibited by applicable law or requires any consent of any governmental authority not obtained pursuant to applicable law; provided that such property or asset will be an Excluded Asset only to the extent and for so long as the consequences specified above will result and 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 such consequences will no longer result;

(4) any lease, license, contract, property right or agreement to which either of the Issuers or any Guarantor is a party or any of its rights or interests thereunder only to the extent and only for so long as the grant of a Lien under the Security Documents will constitute or result in a breach, termination or default under or requires any consent not obtained under any such lease, license, contract, agreement or property right (other than to the extent that any such term would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or any other applicable law (including the Bankruptcy Code) or principles of equity); provided that such lease, license, contract, property right or agreement will be an Excluded Asset only to the extent and for so long as the consequences specified above will result and 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 such consequences will no longer result;

 

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(5) any motor vehicles, vessels and aircraft, or other property subject to a certificate of title statute of any jurisdiction;

(6) cash or Cash Equivalents, or deposit or securities accounts that solely contain such cash or Cash Equivalents, (a) securing reimbursement obligations under letters of credit or surety bonds (other than, in the case of ABL Collateral, reimbursement obligations in respect of letters of credit securing or constituting ABL Debt Obligations), (b) solely consisting of earnest money deposits made or received in connection with any disposition of property or assets or in connection with any Investment or (c) securing Hedging Obligations, in each case to the extent permitted under the Secured Documents;

(7) assets or property subject to purchase money liens or capital leases permitted to be incurred under the Secured Documents, to the extent a lien on such assets or property is not permitted under the terms of the documents governing such purchase money liens, purchase money indebtedness or capital leases to be created to secure any Secured Obligations

(8) all “securities” of any of the Issuers’ “affiliates” (as the terms “securities” and “affiliates” are used in Rule 3-16 of Regulation S-X under the Securities Act of 1933);

(9) Capital Stock in any joint venture with a third party that is not an Affiliate, to the extent a pledge of such Capital Stock is prohibited by the documents governing such joint venture;

(10) the real property located at 1951 Highway 304, Belen, New Mexico, the real property located at 177 Florence Street, Leominster, Massachusetts, and the real property located at 1900 S. Clark Road, Havre de Grace, Maryland, in each case, including all fixtures and improvements located thereon; and

(11) the real property located at 3333 East 87th Street, Chicago, Illinois (formerly known as the USX South Works site), including all fixtures and improvements located thereon.

“Fair Market Value” means the price that would be paid in an arm’s-length transaction between an informed and willing seller under no compulsion to sell and an informed and willing buyer under no compulsion to buy. Fair market value will be determined (1) if with respect to a security registered under the Exchange Act, based on the average of the closing prices, regular way, of such security for the 20 consecutive trading days immediately preceding the acquisition or sale of such security, (2) if such Person or assets, other than cash and Cash Equivalents, have a fair market value equal to or in excess $5,000,000, by Solo’s Board of Directors and evidenced by a resolution of Solo’s Board of Directors and set forth in an Officers’ Certificate, dated within 30 days of the relevant transaction, and (3) if such Person or assets (other than cash and Cash Equivalents) have a fair market value equal to or in excess of $15,000,000, by an independent accounting, appraisal, financial advisory or investment banking firm of national standing and set forth in a written opinion of such firm which shall be delivered to each Secured Debt Representative.

 

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“Foreign Subsidiary” means any Restricted Subsidiary of Solo other than a Domestic Subsidiary.

“ GAAP ” means generally accepted accounting principles in the United States as set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, the opinions and pronouncements of the Public Company Accounting Oversight Board and in the statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect from time to time.

“ Guarantee ” means, as to any Person, a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness of another Person.

“ Guarantors ” means (1) each direct or indirect Domestic Subsidiary of Solo on the date of the Indenture (other than SCOC and any Excluded Subsidiary); and (2) any other Restricted Subsidiary of Solo that executes a Note Guarantee in accordance with the provisions of the Indenture; and, in each case, their respective successors and assigns until released from their obligations under their Note Guarantees and the Indenture in accordance with the terms of the Indenture.

“ Hedging Obligations ” means, with respect to any specified Person, the obligations of such Person under:

(1) interest rate swap agreements, interest rate cap agreements, interest rate collar agreements and other agreements or arrangements designed for the purpose of fixing, hedging or swapping interest rate risk;

(2) commodity swap agreements, commodity option agreements, forward contracts and other agreements or arrangements designed for the purpose of fixing, hedging or swapping commodity price risk; and

(3) foreign exchange contracts, currency swap agreements and other agreements or arrangements designed for the purpose of fixing, hedging or swapping foreign currency exchange rate risk.

“ Indebtedness ” means, with respect to any specified Person, any indebtedness of such Person, whether or not contingent:

(1) in respect of borrowed money;

 

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(2) evidenced by bonds, notes, debentures or similar instruments;

(3) evidenced by letters of credit (or reimbursement agreements in respect thereof), but excluding obligations with respect to letters of credit (including trade letters of credit) securing obligations (other than obligations described in clause (1) or (2) above or clause (4), (5), (6), (7) or (8) below) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if drawn upon, to the extent such drawing is reimbursed no later than the third Business Day following receipt by such Person of a demand for reimbursement;

(4) in respect of banker’s acceptances;

(5) in respect of Capital Lease Obligations and Attributable Debt;

(6) in respect of the balance deferred and unpaid of the purchase price of any property, except any such balance that constitutes an accrued expense or trade payable;

(7) representing Hedging Obligations, other than Hedging Obligations that are incurred in the normal course of business and not for speculative purposes, and that do not increase the Indebtedness of the obligor outstanding at any time other than as a result of fluctuations in interest rates, commodity prices or foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder; or

(8) representing Disqualified Stock valued at the greater of its voluntary or involuntary maximum fixed repurchase price.

In addition, the term “Indebtedness” includes (1) all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person); provided , that the amount of such Indebtedness shall be the lesser of (A) the Fair Market Value of such asset at such date of determination and (B) the amount of such Indebtedness, and (2) to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person. For purposes hereof, the “maximum fixed repurchase price” of any Disqualified Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Stock as if such Disqualified Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to the Indenture, and if such price is based upon, or measured by, the Fair Market Value of such Disqualified Stock, such Fair Market Value shall be determined in good faith by the board of directors of the issuer of such Disqualified Stock.

The amount of any Indebtedness outstanding as of any date shall be the outstanding balance at such date of all unconditional obligations as described above in this definition of Indebtedness and, with respect to contingent obligations, the maximum liability upon the occurrence of the contingency giving rise to the obligation, and shall be:

(1) the accreted value thereof, in the case of any Indebtedness issued with original issue discount; and

 

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(2) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness;

provided that Indebtedness shall not include:

(a) any liability for federal, state, local or other taxes,

(b) performance, bid, surety, appeal and similar bonds and completion of performance guarantees provided by Solo or any Restricted Subsidiary thereof in the ordinary course of business,

(c) any liability arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided , however , that such liability is extinguished within five Business Days of its incurrence,

(d) any liability owed to any Person in connection with workers’ compensation, health, disability or other employee benefits or property, casualty or liability insurance provided by such Person pursuant to reimbursement or indemnification obligations to such Person, in each case incurred in the ordinary course of business,

(e) any indebtedness existing on the date of the Indenture that has been satisfied and discharged or defeased by Legal Defeasance,

(f) agreements providing for indemnification, adjustment of purchase price or similar obligations, or Guarantees or letters of credit, surety bonds or performance bonds securing any obligations of Solo or any of its Restricted Subsidiaries pursuant to such agreements, in any case incurred in connection with the disposition of any business, assets or Restricted Subsidiary (other than Guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Restricted Subsidiary for the purpose of financing such acquisition), so long as the principal amount does not exceed the gross proceeds actually received by Solo or any Restricted Subsidiary in connection with such disposition, or

(g) indebtedness under leases that exists solely as a result of the implementation of the proposed revisions to lease accounting standards by the Financial Accounting Standards Board and the International Accounting Standards Board, as described in the discussion paper “Leases: Preliminary Views” dated March 2009.

No Indebtedness of any Person will be deemed to be contractually subordinated in right of payment to any other Indebtedness of such Person solely by virtue of being unsecured or by virtue of being secured on a junior priority basis.

“ Indemnified Liabilities ” means any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, taxes, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, performance, administration or enforcement of this Agreement or any of the other Security Documents, including any of the foregoing relating to the use of proceeds of any Secured Debt or the violation of, noncompliance with or liability under, any law applicable to or

 

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enforceable against the Issuers, any of their Subsidiaries or any Guarantor or any of the Collateral and all reasonable costs and expenses (including reasonable fees and expenses of legal counsel selected by the Indemnitee) incurred by any Indemnitee in connection with any claim, action, investigation or proceeding in any respect relating to any of the foregoing, whether or not suit is brought.

“ Indemnitee ” has the meaning set forth in Section 7.11(a).

“ Indenture ” has the meaning set forth in the recitals.

“ Insolvency or Liquidation Proceeding ” means:

(1) any case commenced by or against Solo, SCOC or any Guarantor under the Bankruptcy 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 Solo, SCOC or any Guarantor, any receivership or assignment for the benefit of creditors relating to Solo, SCOC or any Guarantor or any similar case or proceeding relative to Solo, SCOC or any 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 Solo, SCOC or any Guarantor, in each case whether or not voluntary and whether or not involving bankruptcy or insolvency, unless otherwise permitted by the Indenture and the Security Documents;

(3) any proceeding seeking the appointment of a trustee, receiver, liquidator, custodian or other insolvency official with respect to either of the Issuers or any Guarantor or any of their assets;

(4) any other proceeding of any type or nature in which substantially all claims of creditors of Solo, SCOC or any Guarantor are determined and any payment or distribution is or may be made on account of such claims; or

(5) any analogous procedure or step in any jurisdiction.

“Intercreditor Agreement” means an intercreditor agreement entered into by and among the Collateral Trustee, the ABL Agent, the Issuers and the other parties signatory thereto, in substantially the form attached as Exhibit D , as amended, supplemented, restated, modified, renewed or replaced (whether upon or after termination or otherwise), in whole or in part from time to time, or any other successor agreement and whether among the same or any other parties.

“ Issuers ” has the meaning set forth in the preamble.

“ Legal Defeasance ” has the meaning assigned to it in the Indenture.

“Legal Holiday” means a Saturday, a Sunday or a day on which banking institutions in The City of New York or at a place of payment are authorized by law, regulation or executive order to remain closed.

 

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“ Lien ” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing, authorized by or on behalf of the Issuers, of or agreement to give any financing statement under the UCC (or equivalent statutes) of any jurisdiction.

“ Lien Sharing and Priority Confirmation ” means:

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

(a) that all Priority Lien Obligations will be and are secured Equally and Ratably by all Priority Liens at any time granted by the Issuers or any Guarantor to secure any Obligations in respect of such Series of Priority Lien Debt, whether or not upon property otherwise constituting Collateral, and that all such Priority Liens will be enforceable by the Collateral Trustee for the benefit of all holders of Priority Lien Obligations Equally and Ratably;

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

(c) consenting to the terms of this Agreement and the Intercreditor Agreement and the Collateral Trustee’s performance of, and directing the Collateral Trustee to perform, its obligations under this Agreement and the Intercreditor Agreement;

(2) as to any Series of ABL Debt, the written agreement of the holders of such Series of ABL Debt, as set forth in the credit agreement, indenture or other agreement governing such Series of ABL Debt, for the benefit of all holders of Secured Debt and each future Secured Debt Representative, that the holders of Obligations in respect of such Series of ABL Debt are bound by the provisions of the Intercreditor Agreement; and

(3) as to any Series of Subordinated Lien Debt, the written agreement of the holders of such Series of Subordinated Lien Debt, as set forth in the indenture, credit agreement or other agreement governing such Series of Subordinated Lien Debt, for the benefit of all holders of Secured Debt and each future Secured Debt Representative:

(a) that all Subordinated Lien Obligations will be and are secured Equally and Ratably by all Subordinated Liens at any time granted by the Issuers or any Guarantor to secure any Obligations in respect of such Series of Subordinated Lien Debt, whether or not upon property otherwise constituting collateral for such Series of Subordinated Lien Debt, and that all such Subordinated Liens will be enforceable by the Collateral Trustee for the benefit of all holders of Subordinated Lien Obligations Equally and Ratably;

 

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(b) that the holders of Obligations in respect of such Series of Subordinated Lien Debt are bound by the provisions of this Agreement and the Intercreditor Agreement, including the provisions relating to the ranking of Subordinated Liens and the order of application of proceeds from the enforcement of Subordinated Liens; and

(c) consenting to the terms of this Agreement and the Intercreditor Agreement and the Collateral Trustee’s performance of, and directing the Collateral Trustee to perform, its obligations under this Agreement and the Intercreditor Agreement.

“ Moody’s ” means Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation, and any successor to its rating agency business.

“ Notes ” has the meaning set forth in the recitals.

“ Note Guarantee ” means a Guarantee of the Notes pursuant to the Indenture.

“ Notes Collateral ” means all of the tangible and intangible properties and assets at any time owned or acquired by the Issuers or any Guarantor, except: (1) Excluded Assets; and (2) ABL Collateral.

“ Obligations ” means any principal, interest, penalties, fees, expenses, indemnifications, reimbursements, damages and other liabilities (including all interest, Special Interest (if any), fees and expenses accruing after the commencement of any Insolvency or Liquidation Proceeding, even if such interest, fees and expenses are not enforceable, allowable or allowed as a claim in such proceeding) under any Secured Documents, and, to the extent applicable, Banking Product Obligations and Hedging Obligations.

“ Officer ” means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary, any Senior Vice President, any Vice President or any Assistant Vice President of such Person.

“ Officers’ Certificate ” means a certificate with respect to compliance with a condition or covenant provided for in this Agreement, signed on behalf of the applicable Issuer by at least two Officers of such Issuer, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of such Issuer, including:

(a) a statement that the Person making such certificate has read such covenant or condition;

(b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate are based;

(c) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been satisfied; and

 

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(d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied.

“Permitted Liens ” has the meaning assigned to it in the Indenture.

“ Permitted Prior Liens ” has the meaning assigned to it in the Indenture.

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

“ Priority Lien ” means a Lien granted by a Security Document to the Collateral Trustee, at any time, upon any property of the Issuers or any Guarantor to secure Priority Lien Obligations.

“ Priority Lien Debt ” means:

(1) the Notes issued on the date hereof under the Indenture; and

(2) additional notes issued under any indenture or other Indebtedness (including letters of credit and reimbursement obligations with respect thereto) of either of the Issuers that is secured Equally and Ratably with the Notes by a Priority Lien that was permitted to be incurred and so secured under each applicable Secured Debt Document; provided , in the case of any additional notes or other Indebtedness referred to in this clause (2), that:

(a) on or before the date on which such additional notes were issued or Indebtedness is incurred by such Issuer, such additional notes or other Indebtedness, as applicable, is designated by Solo, in an Additional Secured Debt Designation executed and delivered in accordance with Section 3.8(b), as “Priority Lien Debt” for the purposes of the Secured Debt Documents; provided that no Series of Secured Debt may be designated as both Subordinated Lien Debt and Priority Lien Debt and no Series of Secured Debt may be designated as both ABL Debt and Priority Lien Debt;

(b) the Priority Lien Representative for such Indebtedness executes and delivers a Collateral Trust Joinder in accordance with Section 3.8(a);

(c) such additional notes or such Indebtedness is governed by an indenture or a credit agreement, as applicable, or other agreement that includes a Lien Sharing and Priority Confirmation; and

(d) all other requirements set forth in Section 3.8 hereof have been complied with (and the satisfaction of such requirements will be conclusively established if Solo delivers to the Collateral Trustee an Officers’ Certificate stating that such requirements and other provisions have been satisfied and that such notes or such Indebtedness is “Priority Lien Debt”).

 

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“ Priority Lien Documents ” means the Indenture and any additional indenture, Credit Facility or other agreement pursuant to which any Priority Lien Debt is incurred and the Security Documents related thereto (other than any Security Documents that do not secure Priority Lien Obligations).

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

“ Priority Lien Representative ” means:

(a) the Collateral Trustee, in the case of the Notes; or

(b) in the case of any other Series of Priority Lien Debt, the trustee, agent or representative of the holders of such Series of Priority Lien Debt who maintains the transfer register for such Series of Priority Lien Debt and is appointed as a representative of such Series of Priority Lien Debt (for purposes related to the administration of the Security Documents) pursuant to the indenture, credit agreement or other agreement governing such Series of Priority Lien Debt, and who has executed a Collateral Trust Joinder.

“Registration Rights Agreement” means the registration rights agreement, to be dated the date of the Indenture, among the Issuers, the Guarantors, Goldman, Sachs & Co., Banc of America Securities LLC and Wachovia Capital Markets, LLC.

“ Required Priority Lien Debtholders ” means, at any time, the holders of a majority in aggregate principal amount of all Priority Lien Debt then outstanding, calculated in accordance with the provisions of Section 7.2. For purposes of this definition, Priority Lien Debt registered in the name of, or beneficially owned by, any Issuer, any Guarantor or any Affiliate of any Issuer or any Guarantor will be deemed not to be outstanding.

“ Required Subordinated Lien Debtholders ” means, at any time, the holders of a majority in aggregate principal amount of all Subordinated Lien Debt then outstanding, calculated in accordance with the provisions of Section 7.2. For purposes of this definition, Subordinated Lien Debt registered in the name of, or beneficially owned by, any Issuer, any Guarantor or any Affiliate of any Issuer or any Guarantor will be deemed not to be outstanding.

“ Restricted Subsidiary ” of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary.

“ S&P ” means Standard & Poor’s Ratings Services, a division of The McGraw Hill Companies, Inc., and any successor to its rating agency business.

“ SCOC ” has the meaning set forth in the preamble.

“ Secured Debt ” means Priority Lien Debt and Subordinated Lien Debt.

 

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“ Secured Debt Default ” means any event or condition which, under the terms of any credit agreement, indenture or other agreement governing any Series of Secured Debt causes, or permits holders of Secured Debt outstanding thereunder (with or without the giving of notice or lapse of time, or both, and whether or not notice has been given or time has lapsed) to cause, the Secured Debt outstanding thereunder to become immediately due and payable.

“ Secured Debt Documents ” means the Priority Lien Documents and the Subordinated Lien Documents.

“ Secured Debt Representative ” means each Priority Lien Representative and each Subordinated Lien Representative.

“ Secured Documents ” means the ABL Debt Documents, the Priority Lien Documents and the Subordinated Lien Documents.

“ Secured Obligations ” means the Subordinated Lien Obligations and Priority Lien Obligations.

“ Secured Parties ” means the holders of Secured Obligations and the Secured Debt Representatives.

“ Security Agreement ” means the Security Agreement, dated as of July 2, 2009, among the Issuers, the subsidiaries of the Issuers from time to time party thereto and the Collateral Trustee, as amended, supplemented, restated, renewed, refunded, replaced, restructured, repaid, refinanced or otherwise modified from time to time.

“ Security Documents ” means this Agreement, the Intercreditor Agreement, each Lien Sharing and Priority Confirmation, each Collateral Trust Joinder, the Security Agreement and all security agreements, pledge agreements, collateral assignments, collateral agency agreements, debentures, control agreements, mortgages, deeds of trust or other grants or transfers for security executed and delivered by the Issuers or any Guarantor creating (or purporting to create) a Lien upon Collateral in favor of the Collateral Trustee, for the benefit of the Secured Parties, 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 Section 7.2.

“Senior Trust” has the meaning set forth in Section 2.1.

“ Senior Trust Estate ” has the meaning set forth in Section 2.1.

“ Series of ABL Debt ” means, severally, the ABL Credit Agreement and any Credit Facility and other Indebtedness that constitutes ABL Debt Obligations.

“ Series of Priority Lien Debt ” means, severally, the Notes and any additional notes, any Credit Facility (other than the ABL Credit Agreement) and other Indebtedness that constitutes Priority Lien Debt.

“ Series of Secured Debt ” means each Series of Subordinated Lien Debt and each Series of Senior Debt.

 

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“ Series of Senior Debt ” means each Series of ABL Debt and each Series of Priority Lien Debt.

“ Series of Subordinated Lien Debt ” means, severally, each issue or series of Subordinated Lien Debt for which a single transfer register is maintained.

“ Solo ” has the meaning set forth in the preamble.

“Special Interest” means all special interest then owing pursuant to the Registration Rights Agreement.

“ Subordinated Lien ” means a Lien granted by a Security Document to the Collateral Trustee, at any time, upon any Collateral of either of the Issuers or any Guarantor to secure Subordinated Lien Obligations.

“ Subordinated Lien Debt ” means any Indebtedness (including letters of credit and reimbursement obligations with respect thereto) of either of the Issuers or any Guarantor that is secured on a subordinated basis to the Priority Lien Debt by a Subordinated Lien that was permitted to be incurred and so secured under each applicable Secured Debt Document; provided that:

(1) on or before the date on which such Indebtedness is incurred by such Issuer or Guarantor, such Indebtedness is designated by Solo in an Additional Secured Debt Designation executed and delivered in accordance with Section 3.8(b) as “Subordinated Lien Debt” for the purposes of the Secured Debt Documents; provided , that no Series of Secured Debt may be designated as both Subordinated Lien Debt and Priority Lien Debt;

(2) the Subordinated Lien Representative for such Indebtedness executes and delivers a Collateral Trust Joinder in accordance with Section 3.8(a);

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

(4) all other requirements set forth in Section 3.8 have been complied with (and the satisfaction of such requirements will be conclusively established if Solo delivers to the Collateral Trustee an Officers’ Certificate stating that such requirements and other provisions have been satisfied and that such Indebtedness is “Subordinated Lien Debt”).

“ Subordinated Lien Documents ” means, collectively, any indenture, credit agreement or other agreement governing each Series of Subordinated Lien Debt and the Security Documents (other than any Security Documents that do not secure Subordinated Lien Obligations).

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

 

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“ Subordinated Lien Representative ” means, in the case of any future Series of Subordinated Lien Debt, the trustee, agent or representative of the holders of such Series of Subordinated Lien Debt who maintains the transfer register for such Series of Subordinated Lien Debt and (A) is appointed as a Subordinated 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 Subordinated Lien Debt, together with its successors in such capacity, and (B) that has executed a Collateral Trust Joinder.

“Subordinated Trust” has the meaning set forth in Section 2.2.

“ Subordinated Trust Estate ” has the meaning set forth in Section 2.2.

“ Subsidiary ” means, with respect to any specified Person:

(1) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other subsidiaries of that Person (or a combination thereof); and

(2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a subsidiary of such Person or (b) the only general partners of which are such Person or one or more subsidiaries of such Person (or any combination thereof).

“ Trustee ” has the meaning set forth in the recitals.

“ Trust Estates ” has the meaning set forth in Section 2.2.

“ UCC ” means the Uniform Commercial Code as in effect from time to time in any applicable jurisdiction.

“ Unrestricted Subsidiary ” has the meaning assigned to it in the Indenture.

SECTION 1.2 Rules of Interpretation .

(a) All terms used in this Agreement that are defined in Article 1, 8 or 9, as the case may be, of the UCC and not otherwise defined herein have the meanings assigned to them in Article 1, 8 or 9, as the case may be, of the UCC.

(b) Unless otherwise indicated, any reference to any agreement or instrument will be deemed to include a reference to that agreement or instrument as assigned, amended, supplemented, amended and restated, or otherwise modified and in effect from time to time or replaced in accordance with the terms of this Agreement.

 

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(c) The use in this Agreement or any of the other Security Documents of the word “include” or “including,” when following any general statement, term or matter, will not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not nonlimiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto, but will be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter. The word “will” shall be construed to have the same meaning and effect as the word “shall.”

(d) References to “Sections,” “clauses,” “recitals” and the “preamble” will be to Sections, clauses, recitals and the preamble, respectively, of this Agreement unless otherwise specifically provided. References to “Articles” will be to Articles of this Agreement unless otherwise specifically provided. References to “Exhibits” will be to Exhibits to this Agreement unless otherwise specifically provided.

(e) Notwithstanding anything to the contrary in this Agreement, any references contained herein to any section, clause, paragraph, definition or other provision of the Indenture (including any definition contained therein) shall be deemed to be a reference to such section, clause, paragraph, definition or other provision as in effect on the date of this Agreement; provided , that any reference to any such section, clause, paragraph or other provision shall refer to such section, clause, paragraph or other provision of the Indenture (including any definition contained therein) as amended or modified from time to time if such amendment or modification has been (1) made in accordance with the Indenture and (2) approved by an Act of the Required Debtholders in a writing delivered to the applicable Secured Debt Representative and the Collateral Trustee. Notwithstanding the foregoing, whenever any term used in this Agreement is defined or otherwise incorporated by reference to the Indenture, such reference shall be deemed to have the same effect as if such definition or term had been set forth herein in full and such term shall continue to have the meaning established pursuant to the Indenture notwithstanding the termination or expiration of the Indenture or redemption of all Obligations evidenced thereby.

(f) This Agreement and the other Security Documents will be construed without regard to the identity of the party who drafted it and as though the parties participated equally in drafting it. Consequently, each of the parties acknowledges and agrees that any rule of construction that a document is to be construed against the drafting party will not be applicable either to this Agreement or the other Security Documents.

(g) In the event of any conflict between any terms and provisions set forth in this Agreement and those set forth in any other Security Document (other than the Intercreditor Agreement), the terms and provisions of this Agreement shall supersede and control the terms and provisions of such other Security Document (other than the Intercreditor Agreement). In the event of any conflict between any terms and provisions set forth in this Agreement and those set forth in the Intercreditor Agreement, the terms and provisions of the Intercreditor Agreement shall supersede and control the terms and provisions of this Agreement.

 

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ARTICLE 2. THE TRUST ESTATES

SECTION 2.1 Declaration of Senior Trust .

To secure the payment of the Priority Lien Obligations and in consideration of the mutual agreements set forth in this Agreement, each Issuer and each Guarantor hereby grants to the Collateral Trustee, and the Collateral Trustee hereby accepts and agrees to hold, in trust under this Agreement for the benefit of all current and future holders of Priority Lien Obligations, all of such Issuer’s or Guarantor’s right, title and interest in, to and under all Collateral granted to the Collateral Trustee under any Security Document for the benefit of the holders of Priority Lien Obligations, together with all of the Collateral Trustee’s right, title and interest in, to and under the Security Documents, and all interests, rights, powers and remedies of the Collateral Trustee thereunder or in respect thereof and all cash and non-cash proceeds thereof (collectively, the “ Senior Trust Estate ” ).

The Collateral Trustee and its successors and assigns under this Agreement will hold the Senior Trust Estate in trust for the benefit solely and exclusively of all current and future holders of Priority Lien Obligations as security for the payment of all current and future Priority Lien Obligations (the “Senior Trust” ).

Notwithstanding the foregoing, if at any time:

(1) all Liens securing the Priority Lien Obligations have been released as provided in Section 4.1;

(2) the Collateral Trustee holds no other property in trust as part of the Senior Trust Estate;

(3) no monetary obligation (other than indemnification and other contingent obligations not then due and payable and letters of credit that have been cash collateralized as provided in clause (3) of the definition of “ Discharge of Priority Lien Obligations ”) is outstanding and payable under this Agreement to the Collateral Trustee or any of its co-trustees or agents (whether in an individual or representative capacity); and

(4) Solo delivers to the Collateral Trustee an Officers’ Certificate stating that all Priority Liens of the Collateral Trustee have been released in compliance with all applicable provisions of the Priority Lien Documents and that the Issuers and the Guarantors are not required by any Priority Lien Document to grant any Priority Lien upon any property,

then the Senior Trust arising hereunder will terminate, except that all provisions set forth in Sections 7.10 and 7.11 that are enforceable by the Collateral Trustee or any of its co-trustees or agents (whether in an individual or representative capacity) will remain enforceable in accordance with their terms.

The parties further declare and covenant that the Senior Trust Estate will be held and distributed by the Collateral Trustee subject to the further agreements herein.

 

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SECTION 2.2 Declaration of Subordinated Trust . To secure the payment of the Subordinated Lien Obligations and in consideration of the premises and the mutual agreements set forth herein, the Issuers and each of the Guarantors hereby grants to the Collateral Trustee, and the Collateral Trustee hereby accepts and agrees to hold, in trust under this Agreement for the benefit of all current and future holders of Subordinated Lien Obligations, all of such Issuers’ or Guarantor’s right, title and interest in, to and under all Collateral granted to the Collateral Trustee under any Security Document for the benefit of the holders of Subordinated Lien Obligations, together with all of the Collateral Trustee’s right, title and interest in, to and under the Security Documents, and all interests, rights, powers and remedies of the Collateral Trustee thereunder or in respect thereof and all cash and non-cash proceeds thereof (collectively, the “ Subordinated Trust Estate ” and, together with the Senior Trust Estate, the “ Trust Estates ” ).

The Collateral Trustee and its successors and assigns under this Agreement will hold the Subordinated Trust Estate in trust for the benefit solely and exclusively of all current and future holders of Subordinated Lien Obligations as security for the payment of all current and future Subordinated Lien Obligations (the “Subordinated Trust” ).

Notwithstanding the foregoing, if at any time:

(1) all Liens securing the Subordinated Lien Obligations have been released as provided in Section 4.1;

(2) the Collateral Trustee holds no other property in trust as part of the Subordinated Trust Estate;

(3) no monetary obligation (other than indemnification and other contingent obligations not then due and payable and letters of credit that have been cash collateralized as provided in clause (3) of the definition of “ Discharge of Priority Lien Obligations ”) is outstanding and payable under this Agreement to the Collateral Trustee or any of its co-trustees or agents (whether in an individual or representative capacity); and

(4) Solo delivers to the Collateral Trustee an Officers’ Certificate stating that all Subordinated Liens of the Collateral Trustee have been released in compliance with all applicable provisions of the Subordinated Lien Documents and that the Issuers and the Guarantors are not required by any Subordinated Lien Document to grant any Subordinated Lien upon any property,

then the Subordinated Trust arising hereunder will terminate, except that all provisions set forth in Sections 7.10 and 7.11 that are enforceable by the Collateral Trustee or any of its co-trustees or agents (whether in an individual or representative capacity) will remain enforceable in accordance with their terms.

The parties further declare and covenant that the Subordinated Trust Estate will be held and distributed by the Collateral Trustee subject to the further agreements herein.

SECTION 2.3 Priority of Liens . Notwithstanding (1) anything else contained herein or in any other Security Document; (2) the time of incurrence of any Series of Priority Lien

 

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Debt; (3) the order or method of attachment or perfection of any Liens securing any Series of Priority Lien Debt; (4) the time or order of filing or recording of financing statements or other documents filed or recorded to perfect any Priority Lien upon any Priority Lien Collateral; (5) the time of taking possession or control over any Priority Lien Collateral; (6) that any Priority Lien may not have been perfected or may be or have become subordinated, by equitable subordination or otherwise, to any other Lien; or (7) the rules for determining priority under any law governing relative priorities of Liens, it is the intent of the parties that:

(a) this Agreement and the other Security Documents create two separate and distinct Trust Estates and Liens: the Senior Trust Estate and the Priority Lien securing the payment and performance of the Priority Lien Obligations and the Subordinated Trust Estate and the Subordinated Lien securing the payment and performance of the Subordinated Lien Obligations; and

(b) the Liens securing the Subordinated Lien Obligations are subject and subordinate to the Liens securing the Priority Lien Obligations.

SECTION 2.4 Restrictions on Enforcement of Subordinated Liens .

(a) Until the Discharge of Senior Obligations, the holders of the Notes and the holders of other future Priority Lien Obligations will have, subject to the provision of reasonable security, pre-funding or indemnity satisfactory to the Collateral Trustee by such holders of the Notes against any costs, loss, liability or expense, and subject also to the Intercreditor Agreement and the exceptions set forth below in clauses (1) through (4), and subject to the rights of the holders of Permitted Prior Liens, the exclusive right to authorize and direct the Collateral Trustee with respect to the Collateral (including, without limitation, the exclusive right to authorize or direct the Collateral Trustee to enforce, collect or realize on any Collateral or exercise any other right or remedy with respect to the Collateral) and the provisions of the Security Documents relating thereto, and no Subordinated Lien Representative or holder of Subordinated Lien Obligations may authorize or direct the Collateral Trustee with respect to such matters. Notwithstanding the foregoing, the holders of Subordinated Lien Obligations may, subject to the rights of the holders of other Permitted Prior Liens and subject to the limitations set forth in the Intercredit