Exhibit 4.11
INTERCREDITOR AGREEMENT
This INTERCREDITOR AGREEMENT, dated as of October 15, 2002 is
entered into among General Electric Capital Corporation, as Senior Agent (as
defined below), U.S. Bank TRUST National Association, as Trustee and under the
Indenture (as such terms are defined below); U.S. BANK TRUST NATIONAL
ASSOCIATION, as Collateral Agent under the Noteholder Security Agreement (as
such terms are defined below), and the parties whose names are set forth below
"Credit Parties" on the signature pages hereto (each such party being referred
to as an "Obligor", and collectively, the "Obligors").
W I T N E S S E T H :
WHEREAS, the Obligors, the lenders to the Senior Credit Agreement
referred to below as lenders and issuing banks, and General Electric Capital
Corporation, as agent for such lenders and issuing banks (in such capacity, the
"Senior Agent") propose to enter into a Credit Agreement, dated as of October
15, 2002, (as such agreement may be amended, amended and restated, supplemented
or otherwise modified, from time to time at the option of the parties thereto
and any other agreements pursuant to which any of the indebtedness, commitments,
obligations, costs, expenses, fees, reimbursements, indemnities or other
obligations payable or owing thereunder may be refinanced, restructured,
renewed, extended, increased, refunded or replaced (including pursuant to a DIP
Financing, as hereinafter defined) as any such other agreements may from time to
time at the option of the parties thereto be amended, amended and restated,
supplemented, renewed or otherwise modified, in each case, except as prohibited
by the terms hereof, being collectively referred to herein the "Senior Credit
Agreement"); and
WHEREAS, Golfsmith International, Inc., a Delaware corporation
("Golfsmith"), the Obligors parties thereto as "Guarantors" thereunder and U.S.
Bank National Association, as trustee have entered into an Indenture, dated as
of October 15, 2002 (as such Indenture may be amended, amended and restated,
supplemented or otherwise modified, from time to time at the option of the
parties thereto, the "Indenture") governing the rights and duties of Golfsmith
under its 8.375% Senior Secured Notes due 2009 in the original aggregate
principal amount of $93,750,000 (or, if applicable its Senior Secured Notes due
2009, Series B, issued in exchange thereof, the "Notes");
WHEREAS, Golfsmith International Holdings, Inc., Golfsmith and
certain Subsidiaries of Golfsmith have entered into the Noteholder Security
Agreement, which Noteholder Security Agreement shall provide for an assignment,
pledge and grant or a security interest in certain collateral in favor of the
Collateral Agent and for the benefit of the Noteholders, the Trustee and the
Collateral Agent; and
WHEREAS, it is a condition precedent to the effectiveness of the
Senior Credit Agreement that the Senior Agent (for itself and for the benefit of
the Senior Lenders), the Trustee (on behalf of itself and on behalf and for the
benefit of the Noteholders), the Collateral Agent and the Obligors enter into
this Agreement.
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and obligations herein set forth and for other good and valuable
consideration, the adequacy and receipt of which are hereby acknowledged, and in
reliance upon the representations, warranties and covenants herein contained,
the parties hereto, intending to be legally bound, hereby agree as follows:
SECTION 1. DEFINITIONS. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and the plural form of the terms indicated) and capitalized
terms defined in the Senior Credit Agreement used (but not
otherwise defined) herein shall have the meanings ascribed to them in the Senior
Credit Agreement (as in effect on the date hereof) :
"Agreement" shall mean this Agreement, as amended, supplemented or
otherwise modified from time to time in accordance with the terms hereof.
"Bankruptcy Code" shall mean title 11 of the United States Code (11
U.S.C. 101 et seq.), as amended from time to time and any successor statute.
"Business Day" shall mean any day other than Saturday, Sunday and a
day that is a legal holiday under the laws of the State of New York or on which
banking institutions in the City of New York are required or authorized by law
or other governmental action to close.
"Collateral Agent" shall mean U.S. Bank Trust National Association
in its capacity as collateral agent under the Indenture and any successor in
such capacity.
"Common Collateral" shall mean all of the assets of the Obligors
constituting both Senior Lender Collateral and Noteholder Collateral.
"Comparable Noteholder Collateral Document" means, in relation to
any Common Collateral subject to any Senior Lender Collateral Document, that
Noteholder Collateral Document which creates a security interest in the same
Common Collateral, granted by the same Obligor, as applicable.
"Discharge of Senior Lender Claims" shall mean, except as otherwise
provided in Section 6.5, payment in full in cash of the principal of, interest
and premium, if any, on all Indebtedness outstanding under the Senior Credit
Agreement and all letters of credit outstanding thereunder, delivery of cash
collateral in respect thereof equal to 105% of the aggregate undrawn amount of
all letters of credit in compliance with the Senior Credit Agreement, as
applicable, in each case after or concurrently with termination of all
commitments to extend credit thereunder, and payment in full in cash of all
other Senior Lender Claims, other than those that constitute Unasserted
Contingent Obligations.
"Guarantor" means Golfsmith International Holdings, Inc., a Delaware
corporation ("Holdings") and each Subsidiary of Golfsmith that is a guarantor of
the Noteholder Claims.
"Indebtedness" means, with respect to any specified Person without
duplication, any indebtedness of such Person, whether or not contingent (a) in
respect of borrowed money; (b) evidenced by bonds, notes, debentures or other
similar instruments or letters of credit (or reimbursement agreements in respect
thereof); (c) in respect of banker's acceptances; (d) representing obligations
in connection with Capital Leases; (e) representing the balance deferred and
unpaid of the purchase price of any property, except any such balance that
constitutes an accrued expense or trade payable, if and to the extent any of the
preceding items (other than letters of credit) would appear as a liability upon
a balance sheet of the specified Person prepared in accordance with GAAP. In
addition, the term "Indebtedness" includes all Indebtedness of any other Person
secured by a Lien on any asset of the specified Person (whether or not such
Indebtedness is assumed by the specified Person) to the extent of the fair
market value of such asset where the Indebtedness so secured is not the
Indebtedness of such Person and, to the extent not otherwise included, the
guaranty by the specified Person of the Indebtedness of any other Person. The
amount of any Indebtedness outstanding as of any date will be (i) the accreted
value of the Indebtedness, in the case of any Indebtedness issued with original
issue discount (as determined in accordance with the agreements and instruments
evidencing such Indebtedness); and (ii) the principal amount of the
Indebtedness, together with any interest on the Indebtedness that is more than
30 days past due, in the case of any other
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Indebtedness. Indebtedness of the Obligors shall not include any Indebtedness of
Golfsmith that has been either satisfied and discharged or defeased through
covenant defeasance or legal defeasance.
"Indenture" shall have the meaning set forth in the recitals hereto.
"Insolvency or Liquidation Proceeding" shall mean (a) any voluntary
or involuntary case or proceeding under the Bankruptcy Code with respect to any
Obligor as a debtor, (b) any other voluntary or involuntary insolvency,
reorganization or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding with respect to
any Obligor as a debtor or with respect to any of their respective assets, (c)
any liquidation, dissolution, reorganization or winding up of any Obligor
whether voluntary or involuntary and whether or not involving insolvency or
bankruptcy or (d) any assignment for the benefit of creditors or any other
marshalling of assets and liabilities of any Obligor.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, security interest, deposit arrangement, encumbrance,
lien or preference priority or other security agreement or other preferential
arrangement whatsoever, including, without limitation, any right of setoff, any
conditional sale or other title retention agreement, the interest of a lessor
under a lease or any financing lease having substantially the same economic
effect as any of the foregoing and the filing of any financing statement naming
the owner of the asset to which such Lien relates as debtor.
"Noteholder" shall mean a holder of Noteholder Claims.
"Noteholder Claims" shall mean all Indebtedness, Obligations and
other liabilities (contingent or otherwise) arising under or with respect to the
Noteholder Documents or any of them.
"Noteholder Collateral" shall mean all of the assets of the Obligors
whether real, personal or mixed, in which the Noteholders, the Trustee or the
Collateral Agent or any of them now or hereafter holds a Lien as security for
any Noteholder Claim.
"Noteholder Collateral Documents" shall mean the Noteholder Security
Agreement, the Noteholder Mortgages, and any document or instrument executed and
delivered pursuant to any Noteholder Document at any time or otherwise pursuant
to which a Lien is granted by any Obligor to secure the Noteholder Claims or
under which rights or remedies with respect to any such Lien are governed, as
the same may be amended, renewed, extended, supplemented or modified from time
to time.
"Noteholder Common Liens" shall mean Liens in Common Collateral in
favor of the Collateral Agent created as collateral security for Noteholder
Claims.
"Noteholder Documents" shall mean the Indenture, the Notes, the
Noteholder Collateral Documents, and any other related document or instrument
executed and delivered pursuant to any Noteholder Document at any time or
otherwise evidencing any Noteholder Claims, as the same may be amended, renewed,
extended, supplemented or modified from time to time.
"Noteholder Mortgages" shall mean a collective reference to each
mortgage, deed of trust and any other document or instrument under which any
Lien on real property owned or leased by any Obligor is granted to secure the
Noteholder Claims or under which rights or remedies with respect to any such
Liens are governed, as the same may be amended, renewed, extended, supplemented
or modified.
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"Noteholder Priority Collateral" shall mean real property, fixtures
and equipment of the Obligors and proceeds thereof (other than Senior Lender
PP&E Proceeds and other than any real property, fixtures or equipment that
secures an obligation owed to an Obligor (excluding any obligation that is
proceeds of property, fixtures or equipment that was Noteholder Priority
Collateral) that constitutes Common Collateral).
"Noteholder Priority Liens" shall mean Liens in Noteholder Priority
Collateral in favor of the Collateral Agent created as collateral security for
Noteholder Claims.
"Noteholder Security Agreement" shall mean the Security Agreement,
dated as of October 15, 2002, by and among certain Obligors and the Collateral
Agent, as the same may be amended, renewed, extended, supplemented or modified.
"Obligations" shall mean any principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness (including any
obligation to post cash collateral in respect of letters of credit and any other
obligations), or any obligation for cash management services or Hedging
Obligations.
"Person" shall mean any person, individual, sole proprietorship,
partnership, joint venture, corporation, unincorporated organization,
association, institution, entity or other party, including, without limitation,
any government and any political subdivision, agency or instrumentality thereof.
"Pledged Collateral" shall have the meaning set forth in the Pledge
Agreements, and shall include any other tangible property in the possession of
the Senior Agent (or its agents or bailees) in which a security interest is
perfected by such possession.
"Recovery" shall have the meaning set forth in Section 6.5 hereof.
"Required Lenders" shall mean, with respect to any amendment or
modification of the Senior Credit Agreement, or any termination or waiver of any
provision of the Senior Credit Agreement, or any consent or departure by any
Obligor therefrom, those Senior Lenders, the approval of which is required to
approve such amendment or modification, termination or waiver or consent or
departure.
"Senior Agent" shall include, in addition to the Senior Agent
referred to in the recitals hereto, the then acting collateral agent for the
Senior Lenders under the Senior Lender Documents and any successor thereto
exercising substantially the same rights and powers, or if there is no acting
Senior Agent under the Senior Credit Agreement, the Required Lenders.
"Senior Lender Claims" shall mean (a) the principal of all
Indebtedness outstanding under one or more of the Senior Lender Documents to the
extent not prohibited by the Indenture (as in effect on the date hereof), and
(b) all other Obligations not constituting principal of Indebtedness of any
Obligor under the Senior Lender Documents, including, without limitation, all
claims under the Senior Lender Documents for interest, fees, expense
reimbursements, indemnification and other similar claims. Senior Lender Claims
shall include all interest accrued or accruing (or which would, absent the
commencement of an Insolvency or Liquidation Proceeding, accrue) after the
commencement of an Insolvency or Liquidation Proceeding in accordance with and
at the rate specified in the Senior Credit Agreement whether or not the claim
for such interest is allowed as a claim in such Insolvency or Liquidation
Proceeding. To the extent any payment with respect to the Senior Lender Claims
(whether by or on behalf of any Obligor, as proceeds of security, enforcement of
any right of setoff or otherwise) is declared to be fraudulent or preferential
in any respect, set aside or required to be paid to a debtor in possession,
trustee, receiver or similar Person, then the obligation or part thereof
originally intended to be
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satisfied shall be deemed to be reinstated and outstanding as if such payment
had not occurred. Notwithstanding anything to the contrary contained in the
first sentence of this definition, any principal Indebtedness (including
reimbursement obligations for drawn or undrawn letters of credit) incurred under
the Senior Credit Agreement shall constitute a "Senior Lender Claim" (whether or
not such Indebtedness is at any time determined not to have been permitted to be
incurred under the Indenture), to the extent, after giving effect to such
incurrence, the aggregate principal amount of Indebtedness outstanding under the
Senior Credit Agreement (x) does not exceed $10,000,000 (less any prior
permanent reductions in the Revolving Loan Commitment) or (y) (1) exceeds
$10,000,000 (less any prior permanent reductions in the Revolving Loan
Commitment) and does not exceed $12,500,000 (less any prior permanent reductions
in the Revolving Loan Commitment) and (2) at or about the time of such
incurrence, the Senior Agent shall have received a certificate (which may be the
Borrowing Certificate in respect of such incurrence) from an authorized officer
of the Borrower Representative certifying that (A) such Indebtedness constitutes
"Permitted Indebtedness", under and as defined in the Indenture and (B) the
Borrower Representative has at or about such time delivered a copy of such
certificate to the Trustee and the Collateral Agent.
"Senior Lender Collateral" shall mean all of the assets of the
Obligors in which the Senior Lenders or the Senior Agent or any of them now or
hereafter holds a Lien as security for any Senior Lender Claim. The Senior
Lender Collateral does not include Noteholder Priority Collateral.
"Senior Lender Collateral Documents" shall mean each Security
Agreement, each Pledge Agreement, the Blocked Account Agreements, each
securities account control agreement, and each other Loan Document or other
document or instrument pursuant to which a Lien is granted securing the Senior
Lender Claims, as the same may be amended, renewed, extended, supplemented or
modified from time to time.
"Senior Lender Common Liens" shall mean Liens in Common Collateral
in favor of the Senior Agent or Senior Lenders created as collateral security
for Senior Lender Claims.
"Senior Lender Documents" shall mean the Senior Credit Agreement,
the Holdings Guaranty, the GII Guaranty, the other Guaranties and each of the
other Loan Documents, the Senior Lender Collateral Documents, all documents and
instruments evidencing any other obligation under the Senior Credit Agreement,
and any other related document or instrument executed or delivered pursuant to
any Senior Lender Document at any time or otherwise evidencing any Senior Lender
Claims, as any such document or instrument may from time to time be amended,
renewed, restated, supplemented or otherwise modified.
"Senior Lender Lien" shall mean Liens in Common Collateral or Senior
Lender Collateral in favor of the Senior Agent or Senior Lenders created as
collateral security for the Senior Lender Claims.
"Senior Lenders" shall mean the Persons holding Senior Lender
Claims, including, without limitation, the Senior Agent.
"Senior PP&E Proceeds" shall mean proceeds of Noteholder Priority
Collateral consisting of real estate, fixtures and equipment of the Obligors to
the extent that (i) such proceeds have been deposited in a deposit account that
constitutes Common Collateral or Senior Lender Collateral, except to the extent
that such proceeds are original proceeds of such real estate, fixtures or
equipment, have not been transferred from such deposit account and are traceable
to such real estate or equipment, (ii) such proceeds constitute proceeds of any
such deposit account, (iii) such proceeds have been used to acquire Common
Collateral or Senior Lender Collateral.
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"Trustee" shall mean, at any time, the Person that is the U.S. Bank
Trust National Association, in its capacity as trustee under the Indenture, and
any successor in such capacity.
"Unasserted Contingent Obligations" shall mean, at any time,
Obligations for taxes, costs, indemnifications, reimbursements, damages and
other liabilities (except for (i) the principal of and interest and premium (if
any) on, and fees relating to, any Indebtedness and (ii) contingent
reimbursement obligations in respect of amounts that may be drawn under letters
of credit) in respect of which no claim or demand for payment has been made (or,
in the case of Obligations for indemnification, no notice for indemnification
has been issued by the indemnitee) at such time.
"Uniform Commercial Code" or "UCC" shall mean the Uniform Commercial
Code of the State of New York, as amended.
SECTION 2. LIEN PRIORITIES.
2.1 Subordination.
(a) Notwithstanding the date, manner or order of grant, attachment
or perfection of any Liens granted to the Collateral Agent, the Trustee or the
Noteholders on the Common Collateral or of any Liens granted to the Senior Agent
or the Senior Lenders on the Common Collateral and notwithstanding any provision
of the UCC, or any applicable law, the avoidance or setting aside of any lien on
or security interest granted to the Senior Agent or Senior Lenders in the Common
Collateral, or the Noteholder Documents or the Senior Lender Documents or any
other circumstance whatsoever, the Trustee, on behalf of itself and the
Noteholders, and the Collateral Agent, hereby agree that: (a) any Senior Lender
Common Lien now or hereafter held by the Senior Agent or the Senior Lenders
shall be senior and prior to any Noteholder Common Lien; and (b) any Noteholder
Common Lien now or hereafter held by the Collateral Agent or the Noteholders
regardless of how acquired, whether by grant, statute, operation of law,
subrogation or otherwise, shall be junior and subordinate in all respects to all
Senior Lender Common Liens. All Senior Lender Common Liens shall be and remain
senior to all Noteholder Common Liens for all purposes, whether or not such
Senior Lender Common Liens are subordinated to any Lien securing any other
obligation of any Obligor.
(b) Neither the Senior Agent nor any Senior Lender shall acquire any
security interest in and shall have no interest in (including following
avoidance of any Noteholder Priority Liens) Noteholder Priority Collateral.
2.2 Prohibition on Contesting Liens.
(a) The Trustee, on behalf of itself and each Noteholder, and the
Collateral Agent, agree that until the Discharge of Senior Lender Claims,
neither the Collateral Agent, the Trustee nor any Noteholder shall (i) request
judicial relief, in an Insolvency or Liquidation Proceeding or in any other
court, that would hinder, delay, limit or prohibit the exercise or enforcement
of any right or remedy otherwise available to the holders of Senior Lender Liens
or that would limit, invalidate, avoid or set aside any Senior Lender Lien or
Senior Lender Collateral Document or subordinate any Senior Lender Lien to any
Noteholder Common Lien or grant any Senior Lender Lien equal ranking to any
Noteholder Common Lien; (ii) oppose or otherwise contest any motion for relief
from the automatic stay or from any injunction against foreclosure or
enforcement of Senior Lender Liens made by any holder of Liens in any Insolvency
Liquidation Proceeding; (iii) oppose or otherwise contest any exercise by any
holder of Senior Lender Liens of the right to credit bid Senior Lender Claims at
any sale in foreclosure of Senior Lender Liens; or (iv) oppose or otherwise
contest any other request for judicial relief made in any court by any holder of
Senior Lender Liens relating to the enforcement of any Senior Lender Lien.
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(b) The Senior Agent, for itself and on behalf of each Senior
Lender, agrees that until the Discharge of Noteholder Claims, neither the Senior
Agent nor any Senior Lender shall (i) request judicial relief, in an Insolvency
or Liquidation Proceeding or in any other court, that would hinder, delay, limit
or prohibit the exercise or enforcement of any right or remedy otherwise
available to the holders of Noteholder Priority Liens or that would limit,
invalidate, avoid or set aside any Noteholder Priority Lien or Noteholder
Collateral Document or subordinate any Noteholder Lien or grant any Noteholder
Priority Lien equal ranking to any Senior Lender Lien; (ii) oppose or otherwise
contest any motion for relief from the automatic stay or from any injunction
against foreclosure or enforcement of Noteholder Priority Liens made by any
holder of Noteholder Priority Liens in any Insolvency or Liquidation Proceeding;
(iii) oppose or otherwise contest any exercise by any holder of Noteholder
Priority Liens of the right to credit bid Noteholder Claims at any sale in
foreclosure of Noteholder Priority Liens; or (iv) oppose or otherwise contest
any other request for judicial relief made in any court by any holder of
Noteholder Priority Liens relating to the enforcement of any Noteholder Priority
Lien.
2.3 No New Liens. So long as the Discharge of Senior Lender Claims
has not occurred, the parties hereto agree that each Obligor shall not grant any
Lien on any of its assets (other than Noteholder Priority Collateral), in favor
of the Collateral Agent, the Trustee or the Noteholders unless such Obligor, has
granted a similar Lien on such assets in favor of the Senior Agent or the Senior
Lenders and any property (other than Noteholder Priority Collateral) subject to
any such Lien shall constitute Common Collateral.
SECTION 3. ENFORCEMENT.
3.1 Exercise of Remedies by Senior Agent.
(a) So long as the Discharge of Senior Lender Claims has not
occurred, whether or not any Insolvency or Liquidation Proceeding has been
commenced by or against any Obligor,
(i) the Collateral Agent, the Trustee and the Noteholders will not,
and no Noteholder shall instruct the Collateral Agent or Trustee to,
exercise or seek to exercise any rights or remedies (including setoff)
with respect to any Common Collateral, take any action to enforce, collect
or realize upon any Common Collateral, institute any action or proceeding
with respect to such rights or remedies, including, without limitation,
any action of foreclosure, or contest protest or object to any foreclosure
proceeding or action brought by the Senior Agent or any Senior Lender, the
exercise of any right under any control agreement in respect of a deposit
account or securities entitlement constituting Common Collateral, landlord
waiver or bailee's letter or similar agreement or arrangement to which the
Collateral Agent, the Trustee or any Noteholder is a party, or any other
exercise by any such party, of any rights and remedies relating to the
Common Collateral under the Senior Lender Documents or otherwise, or
object to the forbearance by the Senior Lenders from bringing or pursuing
any foreclosure proceeding or action or any other exercise of any rights
or remedies relating to the Common Collateral and, without limitation, the
Collateral Agent, the Trustee and the Noteholders shall not
(1) take possession of or control over any Common Collateral;
(2) exercise any collection rights in respect of any Common
Collateral, exercise any voting, other incidental rights of ownership or similar
rights in respect of Common Collateral consisting of equity interests, or retain
any proceeds of accounts and other obligations receivable paid to it directly by
any account debtor;
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(3) exercise any right of set-off against any property subject
to any Senior Lender Lien;
(4) foreclose upon any Common Collateral or take or accept any
transfer of title in lieu of foreclosure upon any Common Collateral;
(5) enforce any claim to the proceeds of insurance upon any
Common Collateral;
(6) deliver any notice, instruction, claim or demand relating
to the Common Collateral to any Person (including any securities intermediary,
depositary bank, landlord or issuer of uncertificated securities) in the
possession or control of any Common Collateral or acting as bailee, custodian or
agent for any holder of any Senior Lender Lien in respect of any Common
Collateral;
(7) otherwise enforce any remedy available upon default for
the enforcement of any Lien upon the Common Collateral;
(8) deliver any notice or commence any proceeding for any of
the foregoing purposes; or
(9) seek relief in any Insolvency or Liquidation Proceeding
permitting it to do any of the foregoing, and
(ii) the Senior Agent and the Senior Lenders shall have the
exclusive right to enforce rights, exercise remedies (including, without
limitation, setoff and the right to credit bid their debt) refrain from
enforcing or exercising remedies, and make determinations regarding
release, disposition, or restrictions with respect to the Common
Collateral without any consultation with or the consent of the Collateral
Agent, the Trustee or any Noteholder, all according to the discretion and
exercise of the business judgment of the Senior Agent and Senior Lenders,
including, without limitation, the exclusive right to take the actions
enumerated in clauses (1) through (9) of Section 3.1(a)(i). In connection
therewith, each of the Noteholders, the Trustee, and the Collateral Agent
waives any and all rights to affect the method or challenge the
appropriateness of any action by the Senior Agent or any Senior Lender and
hereby consents to the Senior Agent or any Senior Lender exercising or not
exercising such rights and remedies as if no Noteholder existed, except
only that the Collateral Agent, the Trustee and the Noteholders reserve
all rights granted by law: to request or receive notice of any sale of
Common Collateral in foreclosure of any Senior Lender Lien. In exercising
rights and remedies with respect to the Common Collateral, the Senior
Agent and the Senior Lenders may enforce the provisions of the Senior
Lender Documents and exercise remedies thereunder, all in such order and
in such manner as they may determine in the exercise of their sole
discretion. Such exercise and enforcement shall include, without
limitation, the rights of an agent appointed by them to sell or otherwise
dispose of Common Collateral upon foreclosure, to incur expenses in
connection with such sale or disposition, and to exercise all the rights
and remedies of a secured lender under the Uniform Commercial Code of any
applicable jurisdiction and of a secured creditor under bankruptcy or
similar laws of any applicable jurisdiction.
(b) The Trustee, on behalf of itself and the Noteholders and the
Collateral Agent, agree that none of them will take or receive any Common
Collateral or any proceeds of Common Collateral in connection with the exercise
of any right or remedy (including setoff) with respect to any Common Collateral,
unless and until the Discharge of Senior Lender Claims has occurred. Without
limiting the generality of the foregoing, unless and until the Discharge of
Senior Lender Claims has
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occurred, the sole right of the Collateral Agent, the Trustee and the
Noteholders with respect to the Common Collateral is to hold a Lien on the
Common Collateral pursuant to the Noteholder Documents for the period and to the
extent granted therein and to receive a share of the proceeds thereof, if any,
after the Discharge of the Senior Lender Claims has occurred.
(c) The Trustee, on behalf of itself and the Noteholders, and the
Collateral Agent, agree that none of the Collateral Agent, the Trustee or the
Noteholders will take any action that would hinder any exercise of remedies
undertaken by the Senior Agent under the Senior Loan Documents, including any
sale, lease, exchange, transfer or other disposition of the Common Collateral,
whether by foreclosure or otherwise, and the Collateral Agent, for itself and
the Noteholders, and the Trustee, hereby waive any and all rights it or the
Noteholders may have as a junior lien creditor or otherwise to object to the
manner in which the Senior Agent or the Senior Lenders seek to enforce or
collect the Senior Lender Claims or the Liens granted in any of the Senior
Lender Collateral.
3.2 No Hindrance by the Senior Agent. The Senior Agent, on behalf of
itself and the Senior Lenders, agrees that neither the Senior Agent nor any
Senior Lender will take any action that would hinder any exercise of remedies
undertaken by the Collateral Agent, the Trustee or any Noteholder under the
Noteholder Security Agreement or any Noteholder Mortgage in respect of
Noteholder Priority Collateral, including any sale, lease, exchange, transfer or
other disposition of any Noteholder Priority Collateral, whether by foreclosure
or otherwise, and the Senior Agent, for itself and the Senior Lenders, hereby
waives any and all rights it or the Senior Lenders may have to object to the
manner in which the Collateral Agent, the Trustee or the Noteholders seek to
enforce or collect the Noteholder Claims or the Noteholder Priority Liens.
3.3 Cooperation. The Collateral Agent, on behalf of itself and the
Noteholders, and the Trustee, agree that, unless and until the Discharge of
Senior Lender Claims has occurred, it will not commence, or join with any Person
(other than the Senior Lenders and the Senior Agent upon the request thereof) in
commencing any enforcement, collection, execution, levy or foreclosure action or
proceeding with respect to any Lien held by it under any of the Noteholder
Documents (other than any Noteholder Property Lien) or otherwise.
3.4 Notice by Senior Agent. The Senior Agent agrees to notify
promptly the Collateral Agent and the Trustee of a Discharge of Senior Lender
Claims.
SECTION 4. PAYMENTS.
4.1 Application of Proceeds. As long as the Discharge of Senior
Lender Claims has not occurred, the cash proceeds of Common Collateral received
in connection with the sale of, or collection on, such Common Collateral upon
the exercise of remedies, shall be applied by the Senior Agent to the Senior
Lender Claims in such order as specified in the Senior Credit Agreement until
Discharge of Senior Lender Claims has occurred. Upon Discharge of the Senior
Lender Claims, the Senior Agent shall deliver to the Collateral Agent any
proceeds of Common Collateral held by it in the same form as received, with any
necessary endorsements or as a court of competent jurisdiction may otherwise
direct or in the case of any such proceeds in any such deposit account or
securities account take such steps as may be required under the Senior Lender
Documents to cause such proceeds to be transferred to the Collateral Agent,
except as a court of competent jurisdiction may otherwise direct.
4.2 Payments Over by Collateral Agent, the Trustee and Noteholders.
So long as any Senior Lender Claims are outstanding, any Common Collateral or
proceeds thereof received by the Collateral Agent, the Trustee or any Noteholder
shall be segregated and held in trust and forthwith paid over to the Senior
Agent for the benefit of the Senior Lenders in the same form as received, with
any
9
necessary endorsements or as a court of competent jurisdiction may otherwise
direct. The Senior Agent is hereby authorized to make any such endorsements as
agent for the Collateral Agent, the Trustee or any such Noteholder. This
authorization is coupled with an interest and is irrevocable. Notwithstanding
the foregoing, except for payments constituting proceeds of Common Collateral
that are (1) made in breach of any provision of any Senior Lender Document to
purchase, redeem, prepay or pay the principal of any Notes or to fund a legal or
covenant defeasance of the Notes under Article 8 of the Indenture, unless in
connection with any such payment the Collateral Agent and the Trustee received
an Opinion of Counsel (as defined in the Indenture), or a certificate of the
Senior Agent, that application of such payment to principal of the Notes was
permitted under the Credit Agreement or (2) received by the Collateral Agent,
the Trustee or any Noteholder (A) as a result of any breach of the provisions of
this Agreement, (B) any time after commencement of any Insolvency or Liquidation
Proceeding or (C) at any time after the Trustee and the Collateral Agent have
received written notice from the Senior Agent stating that (i) the Indebtedness
constituting Senior Lender Claims has become immediately due and payable
(whether at maturity, by acceleration or otherwise, and all Letters of Credit
are required to be cash collateralized) or (ii) the Senior Agent has become
entitled to enforce any or all Senior Lender Liens by reason of default by any
Obligor under the Senior Lender Documents, no payment of money made by any
Obligor to the Collateral Agent, the Trustee or any Noteholder will in any event
be subject to the foregoing provisions of this Section 4.2.
4.3 Payments Over by Senior Agent and Senior Lenders. In the event
that the Senior Agent or any Senior Lender receives possession of any Noteholder
Priority Collateral or any proceeds thereof or has control as a secured party of
any proceeds of Noteholder Priority Collateral in a deposit account or
securities account, and whether or not any such Noteholder Priority Lien in such
Noteholder Priority Collateral was avoided or set aside, the Senior Agent or
such Senior Lender shall deliver same to the Collateral Agent or in the case of
any such proceeds in any such deposit account or securities account take such
steps as may be required under the Senior Lender Documents or Section 5.5(e) to
cause such proceeds to be transferred to the Collateral Agent, in each case,
except as a court of competent jurisdiction may otherwise direct.
SECTION 5. OTHER AGREEMENTS.
5.1 Releases.
(a) If in connection with:
(i) the exercise of the Senior Agent's remedies in respect of the
Common Collateral including any sale, lease, exchange, transfer or other
disposition of such Common Collateral made by the Senior Agent or any
Senior Lender; or
(ii) any sale, lease, exchange, transfer or other disposition of
Common Collateral permitted under the terms of the Senior Credit Agreement
(whether or not an event of default under, and as defined therein, has
occurred and is continuing) and not prohibited under Section 4.16 of the
Indenture (Asset Sales);
the Senior Agent, for itself or on behalf of any of the Senior Lenders, releases
any of its Liens on any part of the Common Collateral and, in the case of
Section 5.1(a)(ii), the commitment under the Senior Credit Agreement is reduced
by the net cash proceeds of such sale, lease, exchange, transfer or other
disposition (or to $0, if the net cash proceeds exceeds the then remaining
commitment) and such net cash proceeds shall have been applied to repay or
collateralize any Senior Lender Claims or letters of credit issued under the
Senior Credit Agreement to the extent of any principal balance (including
undrawn letters of credit) outstanding and in excess of such reduced commitment,
the Liens, if any, of the Collateral Agent on such
10
Common Collateral shall be automatically, unconditionally and simultaneously
released and the Collateral Agent shall promptly shall execute and deliver to
the Senior Agent or the applicable Obligor such termination statements, releases
and other documents as the Senior Agent or the applicable Obligor may request to
effectively confirm such release.
(b) The Collateral Agent hereby irrevocably constitutes and appoints
the Senior Agent and any officer or agent of the Senior Agent, with full power
of substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Collateral Agent or such
holder or in the Senior Agent's own name, from time to time in the Senior
Agent's discretion, for the purpose of carrying out the terms of this Section
5.1, to take any and all appropriate action and to execute any and all documents
and instruments which may be necessary or desirable to accomplish the purposes
of this Section 5.1, including, without limitation, any termination statements,
endorsements or other instruments or transfer or release.
5.2 Insurance. Unless and until the Discharge of Senior Lender
Claims has occurred, the Senior Agent and the Senior Lenders shall have the sole
and exclusive right, subject to the rights of the Obligors under the Senior
Lender Documents, to adjust settlement for any insurance policy covering the
Common Collateral in the event of any loss thereof and to approve any award
granted in any condemnation or similar proceeding affecting the Common
Collateral. Unless and until the Discharge of Senior Lender Claims has occurred,
all proceeds of any such policy and any such award in respect of the Common
Collateral shall be paid to the Senior Agent for the benefit of the Senior
Lenders to the extent required under the Senior Credit Agreement and thereafter
to the Collateral Agent to the extent required under the applicable Noteholder
Documents and then to the owner of the subject property or as a court of
competent jurisdiction may otherwise direct; provided, however, that from and
after the Commitment Termination Date, all such proceeds shall be paid to the
Senior Agent for the benefit of the Senior Lenders until the Discharge of Senior
Lender Claims has occurred and thereafter to the Collateral Agent for the
benefit of the Noteholders to the extent required under the applicable
Noteholder Documents and then to the owner of the subject property or as a court
of competent jurisdiction may otherwise direct. If the Collateral Agent, the
Trustee or any Noteholder shall, at any time, receive any proceeds of any such
insurance policy or any such award in respect of the loss of any Common
Collateral in contravention of this Agreement, it shall pay such proceeds over
to the Senior Agent in accordance with the terms of Section 4.2.
5.3 Amendments to Noteholder Collateral Documents.
(a) Without the prior written consent of the Senior Agent and the
Required Lenders, no Noteholder Collateral Document may be amended, supplemented
or otherwise modified or entered into to the extent such amendment, supplement
or modification, or the terms of any new Noteholder Collateral Document, would
be inconsistent with any of the terms of this Agreement or could reasonably be
expected to have an adverse effect on the Senior Agent or Senior Lenders. The
Trustee and the Collateral Agent agree that each Noteholder Collateral Document
creating a Noteholder Common Lien shall include the following language:
"Notwithstanding anything herein to the contrary, the lien and
security interest granted to the [Collateral Agent/Trustee] pursuant
to this Agreement and the exercise of any right or remedy by the
[Collateral Agent/ Trustee] hereunder, in each case in respect of
any collateral constituting Noteholder Common Collateral (as defined
in the Intercreditor Agreement described below) are subject to the
provisions of the Intercreditor Agreement, dated as of October 15,
2002 (as amended, modified or supplemented from time to time, the
"Intercreditor
11
Agreement") among General Electric Capital Corporation as Senior
Agent, and U.S. Bank National Association, as Collateral Agent, U.S.
Bank National Association, as Trustee, and the Obligors (as defined
therein), including the grantor of security interest in this
Agreement, named therein. In the event of any conflict between the
terms of the Intercreditor Agreement and this Agreement, the terms
of the Intercreditor Agreement shall govern."
(b) In the event the Senior Agent or the Senior Lenders enter into
any amendment, waiver or consent in respect of any of the Senior Lender
Collateral Documents for the purpose of adding to, or deleting from, or waiving
or consenting to any departures from any provisions of, any Senior Lender
Collateral Document or changing in any manner the rights of the Senior Agent,
the Senior Lenders, the Obligors thereunder, then such amendment, waiver or
consent shall apply automatically to any comparable provision of the Comparable
Noteholder Collateral Document without the consent of the Collateral Agent or
the Trustee and without any action by the Collateral Agent or Trustee, or any
Obligor; provided, however, that (A) no such amendment, waiver or consent shall
have the effect of removing assets subject to the Lien of the Noteholder
Collateral Documents, except to the extent that a release of such Lien is
permitted by Section 5.1, (B) notice of such amendment, waiver or consent shall
have been given to the Collateral Agent, and (C) no such amendment, waiver or
consent that could reasonably be expected to be adverse to the Collateral Agent
or Noteholder shall apply to such Comparable Noteholder Collateral Document.
5.4 Rights As Unsecured Creditors.
(a) Notwithstanding anything to the contrary in this Agreement, the
Collateral Agent and the Trustee may exercise rights and remedies as an
unsecured creditor against the Obligors in accordance with the terms of the
Noteholder Documents and applicable law. In the event the Collateral Agent, the
Trustee or any Noteholder becomes a judgment lien creditor in respect of Common
Collateral as a result of its enforcement of its rights as an unsecured
creditor, such judgment lien shall be subordinated to the Senior Lender Liens on
the same basis as the other Noteholder Common Liens are so subordinated to such
Senior Lender Liens under this Agreement. Nothing in this Agreement modifies any
rights or remedies the Senior Agent or the Senior Lenders may have with respect
to the Senior Lender Collateral.
(b) Notwithstanding anything to the contrary in this Agreement, the
Senior Agent and the Senior Lenders may exercise rights and remedies as an
unsecured creditor against the Obligors in accordance with the terms of the
Senior Lender Documents and applicable law. In the event the Senior Agent or any
Senior Lender becomes a judgment lien creditor in respect of Noteholder Priority
Collateral as a result of its enforcement of its rights as an unsecured
creditor, such judgment lien shall be subordinated to the Noteholder Priority
Liens and the Senior Agent on behalf of itself and the Senior Lenders agrees
that the terms of this Agreement shall apply, mutatis mutandis, to such judgment
lien as if it were the Noteholder Common Lien and the Liens of the Noteholders
for Noteholder Claims were the Senior Lender Liens. Nothing in this Agreement
modifies any rights or remedies the Collateral Agent or any Noteholder may have
with respect to the Noteholder Priority Collateral.
5.5 Bailee for Perfection.
(a) The Senior Agent agrees to hold the Pledged Collateral that is
part of the Common Collateral in its possession or control (or in the possession
or control of its agents or bailees) as bailee for the Collateral Agent and any
assignee solely for the purpose of perfecting the security interest
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granted in such Pledged Collateral pursuant to the Noteholder Security
Agreement, subject to the terms and conditions of this Section 5.5.
(b) Until the Discharge of Senior Lender Claims has occurred, the
Senior Agent shall be entitled to deal with the Pledged Collateral in accordance
with the terms of the Senior Lender Documents as if the Lien of the Collateral
Agent under the Noteholder Security Agreement did not exist. The rights of the
Collateral Agent, the Noteholders and Trustee shall at all times be subject to
the terms of this Agreement.
(c) The Senior Agent shall have no obligation whatsoever to the
Collateral Agent, the Trustee or any Noteholder to assure that the Pledged
Collateral is genuine or owned by any Obligor or to preserve rights or benefits
of any Person except as expressly set forth in this Section 5.5. The duties or
responsibilities of the Senior Agent under this Section 5.5 shall be limited
solely to holding the Pledged Collateral as bailee for the Collateral Agent for
purposes of perfecting the Lien held by the Collateral Agent.
(d) The Senior Agent shall not have by reason of the Noteholder
Security Agreement or this Agreement or any other document a fiduciary
relationship in respect of the Collateral Agent, the Trustee or any Noteholder.
(e) Upon the Discharge of Senior Lender Claims, (i) the Senior Agent
shall deliver to the Collateral Agent the Pledged Collateral together with any
necessary endorsements or as a court of competent jurisdiction may otherwise
direct and (ii) in the case of any deposit account or securities account take
such steps as may be required to transfer (without recourse and without
representation or warranty and at the expense of the Collateral Agent) all of
its rights (as in effect immediately prior to the Discharge of Senior Lender
Claims) to such deposit account or securities account to the Collateral Agent
except as a court of competent jurisdiction may otherwise direct.
5.6 Enforcement of Noteholder Priority Liens. The Collateral Agent
shall give the Senior Agent at least twenty (20) Business Days prior written
notice before the Collateral Agent, the Trustee or any Noteholder shall commence
or seek to commence any enforcement of the Noteholder Priority Liens, and shall
not prevent the Senior Agent, or its agents, employees or consultants, from
access to any real property that is subject to the Noteholder Priority Lien, so
long as the Senior Agent indemnifies the Collateral Agent, the Trustee and the
Noteholders against any physical damages to the premises caused by the Senior
Agent or its agents or employees at such premises and releases the Collateral
Agent, the Trustee and the Noteholders from any liability arising from injury
any agent or employee of the Senior Agent suffers at such premises. During any
such twenty (20) Business Days period, the Senior Agent shall be entitled to,
but shall have no obligations to cure any event of default under the Indenture
that is then continuing, it being understood that such cure shall not rescind
any acceleration of the Notes based on such event of default, unless the
Noteholders take the requisite action in respect thereof under the Indenture.
SECTION 6. INSOLVENCY OR LIQUIDATION PROCEEDINGS.
6.1 Financing Issues. If any Obligor shall be subject to any
Insolvency or Liquidation Proceeding and the Senior Agent shall desire to permit
the use of cash collateral or to permit such Obligor to obtain financing under
section 363 or section 364 of the Bankruptcy Code ("DIP Financing"), then the
Trustee, on behalf of itself and the Noteholders, agrees that it will raise no
objection to such use or DIP Financing, any conditions thereto, or any other
relief afforded to the Senior Agent or Senior Lender in connection therewith or
to any priming of any Lien securing the DIP Financing to the Noteholder Common
Lien so long as (i) the principal amount of such DIP Financing, together with
the
13
outstanding amount of principal under the Senior Credit Agreement immediately
prior to the initial funding under the DIP Financing (and after giving effect to
the application of proceeds of such initial funding) does not exceed $12,500,000
and (ii) in the event that any Noteholder Common Lien is primed by the DIP
Financing (and all Obligations relating thereto), the Senior Lender Lien is also
primed. In the event that the Senior Agent or Senior Lenders subordinate the
Senior Lender Lien in connection with any such DIP Financing (and all
Obligations relating thereto), the Trustee on behalf of itself and the
Noteholders will subordinate the Noteholder Priority Lien and Noteholder Common
Lien to such DIP Financing (and all Obligations relating thereto).
6.2 Relief from the Automatic Stay. While any amounts are
outstanding under the Senior Lender Documents or any commitment under any DIP
Financing provided by any Senior Lender is in effect, the Collateral Agent on
behalf of itself and the Noteholders, and the Trustee, agree that none of them
shall seek relief from the automatic stay or any other stay in any Insolvency or
Liquidation Proceeding in respect of the Common Collateral, without the prior
written consent of the Senior Agent and the Requisite Lenders.
6.3 Adequate Protection. In any Insolvency or Liquidation Proceeding
the Trustee, on behalf of itself and each Noteholder, and the Collateral Agent,
agree that none of them shall contest (or support any other Person contesting)
(a) any request by the Senior Agent or the Senior Lenders for any replacement
lien, payment or other adequate protection or (b) any objection by the Senior
Agent or the Senior Lenders to any motion, relief, action or proceeding based on
the Senior Agent or the Senior Lenders claiming a lack of adequate protection.
In any Insolvency or Liquidation Proceeding, at no time shall the Trustee, the
Collateral Agent or any Noteholder file, make or prosecute any motion for
adequate protection (or any comparable request for relief) or otherwise seek
adequate protection in respect of any Noteholder Common Lien.
6.4 Voting Rights. In any Insolvency or Liquidation Proceeding,
neither the Trustee, the Collateral Agent nor any Noteholder shall vote any
Noteholder Claim for any plan of reorganization of any Obligor if such plan does
not provide for the payment in full in cash of all Senior Lender Claims on the
effective date of such plan of reorganization or otherwise provides treatment of
the Senior Lender Claims in a manner approved by the Senior Agent and Required
Lenders.
6.5 Preference Issues. If any Senior Lender is required in any
Insolvency or Liquidation Proceeding or otherwise to turn over or otherwise pay
to the estate of any Obligor any amount (a "Recovery"), then the Senior Lender
Claims shall be reinstated to the extent of such Recovery and the Senior Lenders
shall be entitled to a Discharge of Senior Lender Claims with respect to all
such recovered amounts. If this Agreement shall have been terminated prior to
such Recovery, this Agreement shall be reinstated in full force and effect, and
such prior termination shall not diminish, release, discharge, impair or
otherwise affect the obligations of the parties hereto from such date of
reinstatement.
6.6 Reorganization Securities. If, in any Liquidation or Insolvency
Proceeding, debt obligations of the reorganized debtor secured by Liens upon any
property of the reorganized debtor are distributed, pursuant to a plan of
reorganization or similar dispositive restructuring plan, both on account of
Senior Lender Claims and on account of Noteholder Claims, then, to the extent
the debt obligations distributed on account of the Senior Lender Claims and on
account of the Noteholder Claims are secured by Liens upon the same property,
the provisions of this Agreement will survive the distribution of such debt
obligations pursuant to such plan and will apply with like effect to the Liens
securing such debt obligations.
6.7 Expense Claims. Neither the Trustee, the Collateral Agent nor
any Noteholder will assert or enforce, at any time prior to the Discharge of
Senior Lender Claims, any claim under
14
Section 506(c) of the Bankruptcy Code senior to or on a parity with the Senior
Lender Liens for costs or expenses of preserving or disposing of any Common
Collateral.
6.8 Post-Petition Claims. (a) Neither the Trustee, the Collateral
Agent nor any Noteholder shall oppose or seek to challenge any claim by the
Senior Agent or any Senior Lender for allowance in any Insolvency or Liquidation
Proceeding of Senior Lender Claims consisting of post-petition interest, fees or
expenses to the extent of the value of the Senior Lender Lien, without regard to
the existence of the Noteholder Common Lien.
(b) Neither the Senior Agent nor any Senior Lender shall oppose or
seek to challenge any claim by the Trustee, the Collateral Agent or any
Noteholder for allowance in any Insolvency or Liquidation Proceeding of
Noteholder Claims consisting of post-petition interest, fees or expenses to the
extent of the value of the Noteholder Priority Lien and the Noteholder Common
Lien (after taking into account the Senior Lender Liens).
6.9 Noteholder DIP Financing. Nothing contained in this Agreement
shall prevent any Noteholder from providing DIP Financing in any Insolvency or
Liquidation Proceeding, provided, however, that in the event that any such DIP
Financing is secured by a priming Lien under Section 364 of the Bankruptcy Code,
such priming Lien will (if it primes Senior Lender Liens) also prime the
Noteholder Priority Lien and Noteholder Common Lien.
SECTION 7. RELIANCE; WAIVERS; ETC.
7.1 Reliance. The consent by the Senior Lenders to the execution and
delivery of the Noteholder Documents and the grant to the Collateral Agent on
behalf of the Noteholders of a Lien on the Common Collateral and all loans and
other extensions of credit made or deemed made on and after the date hereof by
the Senior Lenders to Obligors (that are borrowers) shall be deemed to have been
given and made in reliance upon this Agreement.
7.2 No Warranties or Liability. The Trustee, on behalf of itself and
the Noteholders, and the Collateral Agent, acknowledge and agree that each of
the Senior Agent and the Senior Lenders have made no express or implied
representation or warranty, including, without limitation, with respect to the
execution, validity, legality, completeness, collectibility or enforceability of
any of the Senior Lender Documents. The Senior Lenders will be entitled to
manage and supervise their respective loans and extensions of credit to the
Obligors (that are borrowers) in accordance with law and as they may otherwise,
in their sole discretion, deem appropriate, and the Senior Lenders may manage
their loans and extensions of credit without regard to any rights or interests
that the Trustee, the Collateral Agent or any of the Noteholders have in the
Common Collateral or otherwise, except as otherwise provided in this Agreement.
Neither the Senior Agent nor any Senior Lender shall have any duty to the
Trustee or any of the Noteholders to act or refrain from acting in a manner
which allows, or results in, the occurrence or continuance of an event of
default or default under any agreements with any Obligor (including, without
limitation, the Noteholder Documents), regardless of any knowledge thereof which
they may have or be charged with.
7.3 No Waiver of Lien Priorities.
(a) No right of the Senior Lenders, the Senior Agent or any of them
to enforce any provision of this Agreement shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of any Obligor
or by any act or failure to act by any Senior Lender or the Senior Agent, or by
any noncompliance by any Person with the terms, provisions and covenants of this
Agreement, any of the Senior Lender Documents or any of the Noteholder
Documents, regardless of any knowledge
15
thereof which the Senior Agent or the Senior Lenders, or any of them, may have
or be otherwise charged with.
(b) To the fullest extent permitted by law, the Collateral Agent,
the Noteholders and the Trustee agree not to assert or enforce at any time prior
to the Discharge of Senior Lender Claims:
(1) any right of subrogation to the rights or interests of
holders of Senior Lender Liens or Senior Lender Claims (or any claim or defense
based upon impairment of any such right of subrogation); provided, however, that
promptly following the Discharge of Senior Lender Claims, the Senior Agent and
Senior Lenders shall execute and deliver to the Trustee and the Collateral Agent
appropriate documents (without recourse and without representation or warranty)
necessary to evidence any transfer by subrogation to the Trustee and the
Collateral Agent of an interest in the Senior Lender Claims resulting from,
among other things, any turnover by the Trustee, the Collateral Agent and/or the
Noteholders of proceeds of Common Collateral to the Senior Agent or Senior
Lenders so long as the reasonable costs and expenses incurred by the Senior
Agent and Senior Lenders in connection with the preparation and delivery of such
appropriate documents are paid by the Trustee, the Collateral Agent and/or the
Noteholders;
(2) any right of marshalling accorded to a junior lienholder,
as against a priority lienholder, under equitable principles; and
(3) any statutory right of appraisal or valuation accorded to
a junior lienholder in a proceeding to foreclose a senior lien,
that otherwise may be enforceable in respect of any Noteholder Common Lien or as
against any holder of Senior Lender Liens.
(c) Without in any way limiting the generality of the foregoing,
each holder of Senior Lender Claims or Senior Lender Liens may at any time and
from time to time, without the consent of or notice to the Trustee or any holder
of Noteholder Claims, Noteholder Priority Liens or Noteholder Common Liens
without incurring any responsibility or liability to any holder of Noteholder
Claims, Noteholder Priority Liens or Noteholder Common Liens and without in any
manner prejudicing, affecting or impairing the ranking agreements and other
obligations set forth in this Agreement:
(1) make loans and advances to any Obligor or issue, guaranty
or obtain letters of credit for account of any Obligor or otherwise extend
credit to any Obligor, in any amount (subject to the provisions of this
Agreement relating to the maximum amount of principal of Indebtedness
constituting Senior Lender Claims) and on any terms, whether pursuant to a
commitment or as a discretionary advance and whether or not any default or event
of default or failure of condition is then continuing;
(2) change the manner, place or terms of payment or extend the
time of payment of, or renew or alter, compromise, accelerate, extend or
refinance, any Senior Lender Claims or any agreement, guaranty, Lien or
obligation of any Obligor or any other person or entity in any manner related
thereto, or otherwise amend, supplement or change in any manner any Senior
Lender Claims or Senior Lender Liens or any such agreement, guaranty, lien or
obligation;
(3) increase or reduce the amount of any Senior Lender Claims
(subject to the provisions of this Agreement relating to the maximum amount of
principal of Indebtedness constituting Senior Lender Claims) or the interest,
premium, fees or other amounts payable in respect thereof;
16
(4) release or discharge any Senior Lender Claims or any
guaranty thereof or any agreement or obligation of any Obligor or any other
person or entity with respect thereto;
(5) take or fail to take any Senior Lender Lien or any other
collateral security for any Senior Lender Claims or take or fail to take any
action which may be necessary or appropriate to ensure that any Senior Lender
Lien or any other Lien upon any property is duly enforceable or perfected or
entitled to priority as against any other Lien or to ensure that any proceeds of
any property subject to any Lien are applied to the payment of any Senior Lender
Claim or any other obligation secured thereby;
(6) release, discharge or permit the lapse of any or all
Senior Lender Liens or any other Liens upon any property at any time securing
any Senior Lender Claims;
(7) exercise or enforce, in any manner, order or sequence, or
fail to exercise or enforce, any right or remedy against any Obligor or any
collateral security or any other person, entity or property in respect of any
Senior Lender Claims or any Senior Lender Lien or other Lien securing any Senior
Lender Claims or any right or power under this Agreement, and apply any payment
or proceeds of collateral in any order of application; or
(8) sell, exchange, release, foreclose upon or otherwise deal
with any property that may at any time be subject to any Senior Lender Lien or
any other Lien securing any Senior Lender Claims.
(d) To the maximum extent permitted by law, the Trustee, on behalf
of itself and each of the Noteholders, and the Collateral Agent, waive any claim
it may have against the Senior Agent or any Senior Lender with respect to or
arising out of any action or failure to act or any error (whether constituting
negligence or gross negligence but excluding errors due to willful misconduct or
breach of this Agreement) on the part of the Senior Agent or any Senior Lender
or their respective directors, officers, employees or agents with respect to any
exercise of rights or remedies in respect of the Senior Lender Liens or the
Senior Lender Claims or under the Senior Lender Documents or any transaction
relating to the Common Collateral. Neither the Senior Agent nor any Senior
Lender nor any of their respective directors, officers, employees or agents will
be liable for failure to demand, collect or realize upon any of the Common
Collateral or for any delay in doing so, except to the extent arising out of the
breach of this agreement by, or the willful misconduct of, the Senior Agent or
any Senior Lender or any of their respective directors, officers, employees or
agents, and will be under no obligation to sell or otherwise dispose of any
Common Collateral upon the request of any Obligor or upon the request of any
holder of Noteholder Claims, Noteholder Priority Liens or Noteholder Common
Liens or any other Person or to take any other action whatsoever with regard to
the Common Collateral or any part thereof. The Trustee, on behalf of itself and
the Noteholders, agrees that the Senior Lenders and the Senior Agent have no
duty to them in respect of the maintenance or preservation of the Senior Lender
Collateral, the Senior Lender Claims or otherwise.
(e) The Senior Lenders, on the one hand, and the Noteholders, on the
other hand, shall each be responsible for keeping themselves informed of the
financial condition of the Obligors and all other circumstances bearing upon the
risk of nonpayment of the Senior Lender Claims or Noteholder Claims. The Senior
Lenders and the Senior Agent shall have no duty to advise the Collateral Agent,
the Trustee or any Noteholder of information regarding such condition or
circumstances or as to any other matter. If any Senior Lender or the Senior
Agent, in its sole discretion, undertakes at any time or from time to time to
provide any such information, it shall have no duty to supply any such
information on any other occasion.
17
(f) None of the Senior Agent or any Senior Lender will have any
duty, express or implied, fiduciary or otherwise, to Noteholder, the Collateral
Agent or to the Trustee except for the contractual obligations hereunder.
7.4 Obligations Unconditional. All rights, interests, agreements and
obligations of the Senior Agent and the Senior Lenders and the Collateral Agent,
the Trustee and the Noteholders, respectively, hereunder shall remain in full
force and effect irrespective of:
(a) any lack of validity or enforceability of any Senior Lender
Documents or any Noteholder Documents or any setting aside or avoidance of any
Senior Lender Lien or Noteholder Priority Lien;
(b) any change in the time, manner or place of payment of, or in any
other terms of, all or any of the Senior Lender Claims or Noteholder Claims, or
any amendment or waiver or other modification, including, without limitation,
any increase in the amount thereof (to the extent not prohibited by the
Indenture as in effect on the date hereof), whether by course of conduct or
otherwise, of the terms of the Senior Credit Agreement or any other Senior
Lender Document or of the terms of the Indenture or any other Noteholder
Document;
(c) any exchange of any security interest in any Common Collateral,
Noteholder Priority Collateral or any other collateral, or any amendment, waiver
or other modification, whether in writing or by course of conduct or otherwise,
of all or any of the Senior Lender Claims or Noteholder Claims or any guarantee
thereof;
(d) the commencement of any Insolvency or Liquidation Proceeding in
respect of any Obligor; or
(e) any other circumstances which otherwise might constitute a
defense available to, or a discharge of, any Obligor in respect of the Senior
Lender Claims, or of the Trustee, the Collateral Agent, any Noteholder, the
Senior Agent or any Senior Lender in respect of this Agreement.
SECTION 8. MISCELLANEOUS.
8.1 Conflicts. In the event of any conflict between the provisions
of this Agreement and the provisions of the Senior Lender Documents or the
Noteholder Documents, the provisions of this Agreement shall govern.
8.2 Continuing Nature of this Agreement. This Agreement shall
continue to be effective until the Discharge of Senior Lender Claims shall have
occurred. This is a continuing agreement of lien subordination and the Senior
Lenders may continue, at any time and without notice to the Trustee or any
Noteholder, to extend credit and other financial accommodations and lend monies
to or for the benefit of the Borrower constituting Senior Lender Claims on the
faith hereof. The Collateral Agent, on behalf of itself and the Noteholders, and
the Trustee, hereby waive any right any of them may have under applicable law to
revoke this Agreement or any of the provisions of this Agreement. The terms of
this Agreement shall survive, and shall continue in full force and effect, in
any Insolvency or Liquidation Proceeding.
8.3 Amendments; Waivers. No amendment, modification or waiver of any
of the provisions of this Agreement by the Trustee, the Collateral Agent or the
Senior Agent shall be deemed to be made unless the same shall be in writing
signed on behalf of the party to be charged or its authorized agent and each
waiver, if any, shall be a waiver only with respect to the specific instance
involved and
18
shall in no way impair the rights of the parties making such waiver or the
obligations of the other parties to such party in any other respect or at any
other time. No Obligor shall have any right to amend, modify or waive any
provision of this Agreement without the consent of the Trustee, the Collateral
Agent and the Senior Agent, nor shall any consent or signed writing be required
of any of them to effect any amendment, modification or waiver of any provision
of this Agreement, except that no amendment, modification or waiver affecting
any obligation of any Obligor hereunder shall be made without the consent of
such Obligor.
8.4 Representations.
(a) Each of the Trustee and the Collateral Agent represents and
warrants to the Senior Agent and the Senior Lenders that it has all requisite
corporate power and authority to enter into this Agreement, is authorized to do
so, has duly executed and delivered this Agreement by a duly authorized officer
and its execution and deliver of this Agreement binds the Trustee and the
Collateral Agent, respectively, and each present and future Noteholder.
(b) The Senior Agent represents and warrants to the Trustee and the
Noteholders that it has all requisite corporate power and authority to enter
into this Agreement, is authorized to do so under the Senior Credit Agreement,
has duly executed and delivered this Agreement by a duly authorized signatory
and its execution and deliver of this Agreement binds the Senior Agent, and each
present and future Senior Lender.
8.5 Successor Collateral Agent.
(a) Each successor Collateral Agent and Trustee under the Indenture
shall execute and deliver a counterpart of and become a party to this Agreement,
and no replacement or resignation of the Collateral Agent or Trustee shall be
effective until the successor Collateral Agent or Trustee, as the case may be,
shall have executed and delivered a counterpart of this Agreement.
(b) Each successor Senior Agent under the Senior Credit Agreement
shall execute and deliver a counterpart of and become a party to this Agreement,
and no replacement or resignation of the Senior Agent shall be effective until
the successor Senior Agent shall have executed and delivered a counterpart of
this Agreement.
8.6 Application of Payments. All payments received by the Senior
Lenders may be applied, reversed and reapplied, in whole or in part, to such
part of the Senior Lender Claims as the Senior Lenders, in their sole
discretion, deem appropriate. The Collateral Agent, on behalf of itself and the
Noteholders, and the Trustee, assent to any extension or postponement of the
time of payment of the Senior Lender Claims or any part thereof and to any other
indulgence with respect thereto, to any substitution, exchange or release of any
security which may at any time secure any part of the Senior Lender Claims and
to the addition or release of any other Person primarily or secondarily liable
therefor.
8.7 Consent to Jurisdiction; Waivers. The parties hereto consent to
the jurisdiction of any state or federal court located in Borough of Manhattan,
City of New York, New York, and consent that all service of process may be made
by registered mail directed to such party as provided in Section 8.8 below for
such party. Service so made shall be deemed to be completed three (3) days after
the same shall be posted as aforesaid. The parties hereto waive any objection to
any action instituted hereunder based on forum non conveniens, and any objection
to the venue of any action instituted hereunder. EACH OF THE PARTIES HERETO
WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
SENIOR LENDER
19
DOCUMENT OR NOTEHOLDER DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
VERBAL OR WRITTEN STATEMENT OR ACTION OF ANY PARTY HERETO.
8.8 Notices. All notices to the Collateral Agent, the Trustee and
the Senior Lenders permitted or required under this Agreement may be sent to the
Collateral Agent, the Trustee and the Senior Agent, respectively. Unless
otherwise specifically provided herein, any notice or other communication herein
required or permitted to be given shall be in writing and may be personally
served, telecopied, electronically mailed or sent by courier service or U.S.
registered or certified mail and shall be deemed to have been given when
delivered in person or by courier service, upon receipt of a telecopy or
electronic mail or four Business Days after deposit in the U.S. mail (registered
or certified, with postage prepaid and properly addressed). For the purposes
hereof, the addresses of the parties hereto shall be as set forth below each
party's name on the signature pages hereto, or, as to each party, at such other
address as may be designated by such party in a written notice to all of the
other parties.
8.9 Further Assurances.
(a) The Trustee, on behalf of itself and the Noteholders, and the
Collateral Agent, agree that each of them shall take such further action and
shall execute and deliver to the Senior Agent and the Senior Lenders such
additional documents and instruments (in recordable form, if requested) as the
Senior Agent or the Senior Lenders may reasonably request to effectuate the
terms of and the lien priorities contemplated by this Agreement.
(b) The Senior Agent, on behalf of itself and the Senior Lenders,
agrees that it shall take such further action and shall execute and deliver to
the Collateral Agent and the Trustee such additional documents and instruments
(in recordable form, if requested) as the Collateral Agent or the Trustee may
reasonably request to effectuate the terms of and the lien priorities
contemplated by this Agreement.
8.10 Governing Law. This Agreement has been delivered and accepted
at and shall be deemed to have been made at New York, New York and shall be
interpreted, and the rights and liabilities of the parties bound hereby
determined, in accordance with the laws of the State of New York.
8.11 Binding on Successors and Assigns No Third Party Beneficiaries.
This Agreement shall be binding upon and inure to the benefit of the Senior
Agent, the Senior Lenders, the Collateral Agent, Trustee, the Noteholders and
their respective successors and assigns. No other Person, shall have or be
entitled to assert rights or benefits hereunder. This Agreement shall be binding
upon the Obligors and their successors and assigns, provided, however, that no
Obligor or any successor or assign thereof shall be entitled to enforce any
provision of this Agreement.
8.12 Specific Performance. The Senior Agent may demand specific
performance of this Agreement. The Collateral Agent, on behalf of itself and the
Noteholders and the Trustee, hereby irrevocably waive any defense based on the
adequacy of a remedy at law and any other defense which might be asserted to bar
the remedy of specific performance in any action which may be brought by the
Senior Agent.
8.13 Section Titles; Time Periods. The section titles contained in
this Agreement are and shall be without substantive meaning or content of any
kind whatsoever and are not a part of this Agreement. In the computation of time
periods, unless otherwise specified, the word "from" means "from and including"
and each of the words "to" and "until" means "to but excluding" and the word
"through" means "to and including".
20
8.14 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which shall together
constitute one and the same document.
8.15 Authorization. By its signature, each Person executing this
Agreement on behalf of a party hereto represents and warrants to the other
parties hereto that it is duly authorized to execute this Agreement.
8.16 Credit Agreement. On behalf of itself and the Noteholders, the
Trustee agrees and acknowledges that the Senior Credit Agreement is the "Credit
Agreement" as such term is defined in the Indenture.
8.17 Effectiveness. This Agreement shall become effective when
executed and delivered by the parties listed below. This Agreement shall be
effective both before and after the commencement of any Insolvency or
Liquidation Proceeding. All references to any Obligor shall include any Obligor
as debtor and debtor-in-possession and any receiver or trustee for such Obligor
(as the case may be) in any Insolvency or Liquidation Proceeding.
21
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first written above.
Senior Agent:
GENERAL ELECTRIC CAPITAL CORPORATION,
as Senior Agent
By: /s/ LAURENT PARIS
----------------------------------------
Name: Laurent Paris
Title: Vice President and Duly
Authorized Signatory
Address:
βββ βββββββ ββββββ
βββ ββββ, βββ ββββ βββββ
Attention: Golfsmith - Account Officer
Telecopy no.: (βββ) βββ-ββββ
Collateral Agent:
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Collateral Agent
By: /s/ βββββββ β. ββββββ
---------------------------------------
Name: βββββββ β. ββββββ
Title: Vice President
Address:
βββ ββββ βββββ ββββββ
ββ. ββββ, βββββββββ βββββ
Attention:
Telecopy no.: (βββ) βββ-ββββ
SIGNATURE PAGE TO GOLFSMITH INTERCREDITOR AGREEMENT
Trustee:
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee
By: /s/ βββββββ β. ββββββ
----------------------------------------
Name: βββββββ β. ββββββ
Title: Vice President
Address:
βββ ββββ βββββ ββββββ
ββ. ββββ, βββββββββ βββββ
Attention:
Telecopy no.: (βββ) βββ-ββββ
Credit Parties:
Address for all Credit Parties:
c/o Golfsmith International, Inc.
βββββ βββββ ββ-ββ
ββββββ, βββββ βββββ
Attn: ββββββββ βββββ
With a copy to:
First Atlantic Capital, Ltd.
βββ ββββ ββββ ββββββ
βββ ββββ, βββ ββββ βββββ
Attn: ββββ ββββββ
Fax: (βββ) βββ-ββββ
GOLFSMITH INTERNATIONAL, L.P.
By Golfsmith GP, L.L.C., as General Partner
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General
Partner
By /s/ ββββ β. ββββββ
----------------------------------------
ββββ β. ββββββ
Vice President
SIGNATURE PAGE TO GOLFSMITH INTERCREDITOR AGREEMENT
GOLFSMITH NU, L.L.C.
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General
Partner
By /s/ ββββ β. ββββββ
----------------------------------------
ββββ β. ββββββ
Vice President
GOLFSMITH USA, L.L.C.
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General
Partner
By /s/ ββββ β. ββββββ
----------------------------------------
ββββ β. ββββββ
Vice President
GOLFSMITH INTERNATIONAL, INC.
By /s/ ββββ β. ββββββ
----------------------------------------
ββββ β. ββββββ
Vice President
GOLFSMITH INTERNATIONAL HOLDINGS, INC.
By /s/ ββββ β. ββββββ
----------------------------------------
ββββ β. ββββββ
Vice President
GOLFSMITH GP HOLDINGS, INC.
By /s/ ββββ β. ββββββ
----------------------------------------
ββββ β. ββββββ
Vice President
SIGNATURE PAGE TO GOLFSMITH INTERCREDITOR AGREEMENT
GOLFSMITH HOLDINGS, L.P.
By Golfsmith GP Holdings, Inc., as General
Partner
By /s/ ββββ β. ββββββ
----------------------------------------
ββββ β. ββββββ
Vice President
GOLFSMITH GP, L.L.C.
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General
Partner
By /s/ ββββ β. ββββββ
----------------------------------------
ββββ β. ββββββ
Vice President
GOLFSMITH DELAWARE, L.L.C.
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General
Partner
By /s/ ββββ β. ββββββ
----------------------------------------
ββββ β. ββββββ
Vice President
GOLFSMITH CANADA, L.L.C.
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General
Partner
By /s/ ββββ β. ββββββ
----------------------------------------
ββββ β. ββββββ
Vice President
GOLFSMITH EUROPE, L.L.C.
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General
Partner
By /s/ ββββ β. ββββββ
----------------------------------------
ββββ β. ββββββ
Vice President
SIGNATURE PAGE TO GOLFSMITH INTERCREDITOR AGREEMENT
GOLFSMITH LICENSING, L.L.C.
By Golfsmith Holdings, L.P., as Sole Member
By Golfsmith GP Holdings, Inc., as General
Partner
By /s/ ββββ β. ββββββ
----------------------------------------
ββββ β. ββββββ
Vice President
SIGNATURE PAGE TO GOLFSMITH INTERCREDITOR AGREEMENT