INTERCREDITOR AND LIEN SUBORDINATION AGREEMENT
EXHIBIT 10.13
INTERCREDITOR AND LIEN SUBORDINATION AGREEMENT
THIS INTERCREDITOR AND LIEN SUBORDINATION AGREEMENT is entered into as of November 9, 2004, by and among S.A.C. CAPITAL ASSOCIATES, LLC, a limited liability company organized under the laws of Anguila, as “Administrative Agent” and “Collateral Agent” for all Second Lien Lenders (as hereinafter defined) party to the Second Lien Credit Agreement described below, THE WET SEAL, INC., a Delaware corporation (the “Lead Borrower”), THE WET SEAL RETAIL, INC., a Delaware corporation (“Wet Seal Retail”), WET SEAL CATALOG, INC., a Delaware corporation (collectively, with Wet Seal Retail and the Lead Borrower, the “Companies”), WET SEAL GC, INC., a Virginia corporation (the “Facility Guarantor”), and FLEET RETAIL GROUP, INC., as “Administrative Agent” and “Collateral Agent” for all of the First Lien Lenders (as hereinafter defined) party to the First Lien Credit Agreement described below.
R E C I T A L S
A. The Companies, the Facility Guarantor, the First Lien Agent (as hereinafter defined), Back Bay Capital Funding LLC, as Term Lender and the other First Lien Lenders have entered into an Amended and Restated Credit Agreement, dated as of September 22, 2004 (as the same may be amended, restated, supplemented or otherwise modified from time to time as permitted hereunder, the “First Lien Credit Agreement”), which amended and restated in its entirety that certain Credit Agreement dated as of May 26, 2004 (the “Existing Credit Agreement”) and pursuant to which, among other things, First Lien Lenders have agreed, subject to the terms and conditions set forth in the First Lien Credit Agreement, to make certain loans and financial accommodations to the Companies. All of the Companies’ obligations to First Lien Agent and First Lien Lenders under the First Lien Credit Agreement and the other First Lien Debt Documents (as hereinafter defined) are secured by first priority liens on and security interests in substantially all of the now existing and hereafter acquired real and personal property of each Company (collectively, the “Company Collateral”).
B. To induce First Lien Agent and First Lien Lenders to execute and deliver the Existing Credit Agreement, Facility Guarantor executed and delivered to First Lien Agent a certain Guarantee, dated as of May 26, 2004, pursuant to which Facility Guarantor guaranteed all of the Companies’ obligations to First Lien Agent and First Lien Lenders under the Existing Credit Agreement (as the same may be amended, restated, supplemented or otherwise modified from time to time as permitted hereunder, the “First Lien Guaranty”). To induce First Lien Agent and First Lien Lenders to execute and deliver the First Lien Credit Agreement, Facility Guarantor executed and delivered a Confirmation of Ancillary Loan Documents, dated as of September 22, 2004 (the “Confirmation of Ancillary Loan Documents”), which, among other things, confirmed and ratified Facility Guarantor’s obligations under the First Lien Guaranty and other First Lien Debt Documents (as hereinafter defined) and executed and delivered the First Lien Credit Agreement. All of the obligations of Facility Guarantor under the First Lien Guaranty and the other First Lien Debt Documents are secured by first priority liens on
and security interests in substantially all of the now existing and hereafter acquired real and personal property of Facility Guarantor (the “Facility Guarantor Collateral”). The Liens and other security interests granted by the Companies in connection with the Existing Credit Agreement have been affirmed under the Confirmation of Ancillary Loan Documents.
C. The Companies, the Facility Guarantor, the Second Lien Agent (as hereinafter defined) and the other Second Lien Lenders have entered into that certain Credit Agreement of even date herewith (as the same may be amended, restated, supplemented or otherwise modified from time to time as permitted hereunder, the “Second Lien Credit Agreement”) pursuant to which, among other things, the Second Lien Lenders have agreed, subject to the terms and conditions set forth in the Second Lien Credit Agreement, to make a certain term loan to the Companies. All of the Companies’ obligations to the Second Lien Agent and Second Lien Lenders under the Second Lien Credit Agreement and the other Second Lien Debt Documents (as hereinafter defined) are secured by second priority liens on and security interests in the Company Collateral.
D. To induce the Second Lien Agent and the Second Lien Lenders to execute and deliver the Second Lien Credit Agreement, Facility Guarantor executed and delivered to Second Lien Agent a certain Guaranty of even date herewith pursuant to which Facility Guarantor guaranteed all of the Companies’ obligations to the Second Lien Agent and Second Lien Lenders under the Second Lien Credit Agreement and the other Second Lien Debt Documents (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Second Lien Guaranty”). All of the obligations of Facility Guarantor under the Second Lien Guaranty and the other Second Lien Debt Documents are secured by second priority liens on and security interests in the Facility Guarantor Collateral.
E. As an inducement to and as one of the conditions precedent to the agreement of First Lien Agent and First Lien Lenders to consummate the transactions contemplated by the First Amendment to Amended and Restated Credit Agreement, dated of even date herewith (the “First Amendment”), First Lien Agent and First Lien Lenders have required the execution and delivery of this Agreement by the Second Lien Agent, for and on behalf of the Second Lien Lenders and itself, and the Credit Parties (as hereinafter defined) in order to set forth the relative rights and priorities of First Lien Agent, First Lien Lenders, Second Lien Agent and the Second Lien Lenders under the First Lien Debt Documents and the Second Lien Debt Documents and in respect of the Collateral (as hereinafter defined).
NOW, THEREFORE, in order to induce First Lien Agent and First Lien Lenders to consummate the transactions contemplated by the First Amendment, and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto hereby agree as follows:
1. Definitions. The following terms shall have the following meanings in this Agreement:
“Additional Interest” means, at the time of determination, an increase in applicable interest with respect to the First Lien Debt in excess of the rate of interest assessed by the First Lien Agent pursuant to the terms of the First Lien Debt Documents as of the date hereof plus 200 basis points, except any increases in connection with the imposition of default rate of interest in accordance with the terms of the First Lien Debt Documents and as expressly contemplated by the definitions of the terms “Prime Rate” and “LIBO Rate”, respectively, in each case as set forth in the First Lien Debt Documents (as in effect on the date hereof).
“Agreement” means this Intercreditor and Lien Subordination Agreement, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“Aggregate Borrowing Bases” means collectively the Borrowing Base and the Term Loan Borrowing Base.
“Asset Sale Revolver Reserve” shall have the meaning set forth in Section 2.4 (a) hereof.
“Back-in-O/A” shall mean First Lien Principal Obligations exceeding the Maximum First Lien Debt following a recalculation of Maximum First Lien Debt when the Borrowing Base Certificate delivered to the First Lien Agent prior to such recalculation showed that First Lien Principal Obligations were less than Maximum First Lien Debt.
“Bankruptcy Code” shall mean the provisions of Title 11 of the United States Code, as amended from time to time and any successor statute and all rules and regulations promulgated thereunder or any state insolvency, debtor relief or assignment for the benefit of creditor law.
“Borrowing Base” means the Borrowing Base as defined in the First Lien Credit Agreement.
“Borrowing Base Certificate” means the Borrowing Base Certificate as defined in the First Lien Credit Agreement (as in effect on the date hereof).
“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in Boston, Massachusetts or New York, New York are authorized or required by law to remain closed.
“Collateral” shall mean, collectively, the Company Collateral, the Facility Guarantor Collateral and any and all additional property and interests in property that secures all or any portion of the First Lien Debt and/or the Second Lien Debt.
“Credit Parties” shall mean, collectively, the Companies, Facility Guarantor and any other guarantor of all or any portion of the First Lien Debt and/or the Second Lien Debt.
“Discharge of all First Lien Debt” shall mean the occurrence of all of the following: (i) termination of all commitments to extend credit that would constitute First Lien Debt, (ii) Payment in Full of all First Lien Debt (other than contingent indemnification obligations to the extent no bona fide claim giving rise thereto has been asserted) and (iii) termination, cancellation or cash collateralization (in each case, in accordance with the terms of this Agreement) of all outstanding Letter of Credit Liabilities that constitute First Lien Debt.
“Enforcement Action” shall mean (a) to foreclose on, collect on, take possession of or control of, or sell or otherwise realize upon (judicially or non-judicially) any Collateral or otherwise enforce rights with respect to Collateral under any applicable agreement, document or instrument pertaining thereto (including, without limitation, by way of setoff, notification of account debtors, notification of depositary banks under deposit account control agreements or exercise of rights under landlord consents), (b) to receive a transfer of Collateral in satisfaction of any indebtedness secured thereby or (c) to otherwise enforce any security interest or other right or remedy pertaining to the Collateral at law, in equity or pursuant to a First Lien Security Document or Second Lien Security Document, as applicable (including, without limitation, the commencement of any applicable legal proceedings against or with respect to all or any of the Collateral to facilitate the actions described in the immediately preceding clause (a) and clause (b), commencing any applicable Proceeding and exercising voting rights in respect of any equity interests comprising Collateral).
“Excluded First Lien Debt” shall mean, (a) any obligation, liabilities or indebtedness of the Credit Parties relating to Hedging Agreements (as defined in the First Lien Credit Agreement as of the date hereof), (b) that portion of the First Lien Principal Obligations (including interest due thereon) which when made or incurred caused the First Lien Principal Obligations to exceed the Maximum First Lien Debt and (c) any Additional Interest. Excluded First Lien Debt shall not include any portion of the First Lien Principal Obligations (and interest due thereon) which, (x) on the date of funding by the First Lien Lenders in the case of the Revolving Credit Loans or the date of issuance, renewal or amendment in the case of the Letter of Credit Liabilities represented by the outstanding Letters of Credit, did not cause the First Lien Principal Obligations to exceed the Maximum First Lien Debt as calculated based upon the most recent Borrowing Base Certificate received by the First Lien Agent prior to such funding or issuance, renewal or amendment (even if such Borrowing Base Certificate proved to be inaccurate based upon, but not limited to, errors, fraud or changes in collateral values) or (y) First Lien Principal Obligations (and interest thereon) to the extent that the Revolving Credit Loans are funded or the Letter of Credit Liabilities are incurred at a time following a Back-in-O/A so long as such amounts do not exceed an amount equal to the Maximum First Lien Debt as calculated based upon the most recent Borrowing Base Certificate received by the First Lien Agent prior to the occurrence of a Back-in-O/A minus the amount of the First Lien Principal Obligations outstanding on such date.
“Existing Credit Agreement” shall have the meaning provided in the Recitals hereto.
“First Lien Agent” shall mean Fleet Retail Group, Inc., as First Lien Agent for the First Lien Lenders, or any other Person appointed by the holders of the First Lien Debt as agent for purposes of the First Lien Debt Documents and this Agreement; provided that, after the consummation of any Permitted Refinancing, the term “First Lien Agent” shall refer to any Person appointed by the holders of the First Lien Debt at such time as agent for themselves for purposes of, among other things, this Agreement.
“First Lien Debt” shall mean all obligations, liabilities and indebtedness of every nature of each Credit Party from time to time owed to First Lien Agent or any First Lien Lender under the First Lien Debt Documents, including, without limitation, the principal amount of all debts, claims and indebtedness, accrued and unpaid interest accruing thereon (including, without limitation, interest accruing after the commencement of a Proceeding, without regard to whether or not such interest is an allowed claim) and all fees, costs and expenses, whether primary, secondary, direct, contingent, fixed or otherwise, heretofore, now and from time to time hereafter owing, due or payable, (including, without limitation, all obligations, liabilities and indebtedness arising from or in connection with any transactions which arise out of cash management, depository, investment, letter of credit or other banking or financial services) whether before or after the filing of a Proceeding under the Bankruptcy Code (including without limitation a DIP Financing); provided, however, “First Lien Debt” shall not include any Excluded First Lien Debt.
“First Lien Debt Documents” shall mean the First Lien Credit Agreement and all other agreements, documents and instruments executed from time to time in connection therewith (including without limitation the First Lien Guaranty and each other First Lien Security Document), as the same may be amended, restated, supplemented or otherwise modified from time to time as permitted herein.
“First Lien Default” shall mean an “Event of Default” that arises pursuant to Section 7.01 of the First Lien Credit Agreement.
“First Lien Lender Parties” shall mean the First Lien Agent and each of the First Lien Lenders.
“First Lien Lenders” shall mean the holders of the First Lien Debt, and shall include, without limitation, the “Lenders”, as such term is defined in the First Lien Credit Agreement.
“First Lien Principal Obligations” shall mean the (a) outstanding principal amount of the Revolving Credit Loans and the Term Loan and (b) the Letter of Credit Liabilities.
“First Lien Security Documents” means any agreement, document or instrument executed concurrently with the First Lien Credit Agreement or at any time hereafter pursuant to which one or more Credit Parties or any other Person either (i) guarantees payment or performance of all or any portion of the First Lien Debt (including, without limitation, the First Lien Guaranty) and/or (ii) provides, as security for all or any portion
of the First Lien Debt, a Lien on any of its Property in favor of the First Lien Agent (for the benefit of the First Lien Lenders), as any or all of the same may be amended, supplemented, restated or otherwise modified from time to time.
“Insurance Reserve” shall have the meaning set forth in Section 7 hereof.
“Letter of Credit Liabilities” shall mean all “L/C Disbursements”, “Letter of Credit Outstandings”, “Letter of Credit Fees” (each as defined in the First Lien Credit Agreement) and all other Indebtedness that arises in connection with the issuance, renewal or extension of any “Letter of Credit” pursuant to the terms of the First Lien Credit Agreement.
“Lien” shall mean, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind, or any other type of preferential arrangement that has the practical effect of creating a security interest, in respect of such asset.
“Maximum First Lien Debt” shall mean on any date of determination thereof, First Lien Debt in an amount equal to (a) the lesser of (i) $50,000,000 and (ii) the result of (A) the greater of the (I) the Borrowing Base and (II) the Term Loan Borrowing Base (as such terms (including the component definitions thereof) are defined in the First Lien Credit Agreement as of the date hereof) minus (B) the Minimum Required Excess Availability (as such term (including the component definitions thereof) is defined in the First Lien Credit Agreement as of the date hereof); plus (b) $8,000,000; plus, (c) the Permitted Overadvance Amount, minus (d) all Asset Sale Revolver Reserves, all Insurance Reserves and all Term Loan Permanent Reductions.
“Minimum Required Excess Availability” shall mean the “Minimum Required Excess Availability” as defined in the First Lien Credit Agreement.
“New Debt” shall have the meaning provided in Section 2.11 hereof.
“Paid in Full” or “Payment in Full” shall mean the payment in full in cash of all First Lien Debt (provided that cash collateral in an amount of 103% of the aggregate undrawn amount of the letters of credit provided under the First Lien Debt Documents may be furnished in lieu of payment in cash for such related Letter of Credit Liabilities) and termination of all commitments to lend or make other financial accommodations under the First Lien Debt Documents.
“Permitted Overadvance Amount” shall mean up to $7,500,000.
“Permitted Refinancing” shall mean any refinancing of the First Lien Debt under the First Lien Debt Documents provided that the financing documentation entered into by the Credit Parties in connection with such Permitted Refinancing constitutes Permitted Refinancing First Lien Debt Documents.
“Permitted Refinancing First Lien Debt Documents” shall mean any financing documentation which replaces the First Lien Debt Documents and pursuant to which the
First Lien Debt under the First Lien Debt Documents is refinanced, as such financing documentation may be amended, restated, supplemented or otherwise modified from time to time in compliance with this Agreement, but specifically excluding any such financing documentation to the extent that it contains, either initially or by amendment or other modification, any material terms, conditions, covenants or defaults other than those which (a) exist at the time of the Permitted Refinancing in the First Lien Debt Documents or (b) could be included in the First Lien Debt Documents by an amendment or other modification that would not be prohibited by the terms of this Agreement.
“Person” shall mean any natural person, corporation, general or limited partnership, limited liability company, firm, trust, association, government, governmental agency or other entity, whether acting in an individual, fiduciary or other capacity.
“Proceeding” shall mean any voluntary or involuntary insolvency, bankruptcy, receivership, custodianship, liquidation, dissolution, reorganization, assignment for the benefit of creditors, appointment of a custodian, receiver, trustee or other officer with similar powers or any other proceeding for the liquidation, dissolution or other winding up of a Person.
“Property” shall mean, with respect to any Person, all assets, property and interests in property of such Person, whether real, personal or mixed, whether now owned or existing or hereafter acquired or arising and wheresoever located.
“Revolving Credit Loans” shall mean the “Revolving Credit Loans” as defined in the First Lien Credit Agreement.
“Sale Event” shall mean the date upon which both (i) a First Lien Default has occurred and is continuing and (ii) First Lien Agent or Second Lien Agent has retained, or has caused or directed a Credit Party to retain, a broker or investment banker or liquidating agent or agent to sell all or a substantial portion of a Credit Party’s business or operations and/or the Collateral. A Sale Event shall be deemed terminated when First Lien Agent or Second Lien Agent who has commenced such Sale Event has so advised Companies in writing.
“Second Lien Actionable Default” shall mean, collectively to the extent that such events have not been cured or waived, (a) an “Event of Default” that arises pursuant to (i) the incurrence of indebtedness that is pari passu or senior in right of payment to the Second Lien Debt in contravention of Section 6.01 of the Second Lien Credit Agreement and (ii) Section 7.01(a) of the Second Lien Credit Agreement (as in effect on the date hereof), (b) the First Lien Principal Obligations exceeds the Maximum First Lien Debt, (c) after the occurrence of a First Lien Default (which shall not have been cured or waived) if at such time the First Lien Agent shall be in breach of any material term or provision of this Agreement and such breach shall not have been cured within five (5) Business Days of the date of receipt of written notice of such breach from the Second Lien Agent and (d) the Borrowers shall have failed to deliver the Borrowing Base Certificate required pursuant to Section 5.01(f) of the First Lien Credit Agreement (as in effect on the date hereof).
“Second Lien Agent” shall mean S.A.C. Capital Associates, LLC, as Second Lien Agent for the Second Lien Lenders, or any other Person appointed by the holders of the Second Lien Debt as agent for purposes of the Second Lien Debt Documents and this Agreement.
“Second Lien Debt” shall mean all obligations, liabilities and indebtedness of every nature of each Credit Party from time to time owed to Second Lien Agent or any Second Lien Lender under the Second Lien Debt Documents, including, without limitation, the principal amount of all debts, claims and indebtedness, accrued and unpaid interest, including capitalized interest, accruing thereon (including, without limitation, interest accruing after the commencement of a Proceeding, without regard to whether or not such interest is an allowed claim and all fees, costs and expenses, whether primary, secondary, direct, contingent, fixed or otherwise, heretofore, now and from time to time hereafter owing, due or payable, whether before or after the filing of a Proceeding under the Bankruptcy Code.
“Second Lien Debt Documents” shall mean the Second Lien Credit Agreement, the Second Lien Guaranty, any other guaranty with respect to the Second Lien Debt, each other Second Lien Security Document and all other documents, agreements and instruments now existing or hereinafter entered into evidencing or pertaining to all or any portion of the Second Lien Debt.
“Second Lien Default Notice” shall mean a written notice from Second Lien Agent to First Lien Agent pursuant to which First Lien Agent is notified of the occurrence of a Second Lien Actionable Default, which notice incorporates a reasonably detailed description of such Second Lien Actionable Default and states that such notice is a “Second Lien Default Notice” for purposes of this Agreement.
“Second Lien Guaranty” shall have the meaning provided in the Recitals hereto.
“Second Lien Lender Parties” shall mean the Second Lien Agent and each of the Second Lien Lenders.
“Second Lien Lenders” shall mean holders of the Second Lien Debt.
“Second Lien Security Documents” shall mean any agreement, document or instrument executed concurrently with the Second Lien Credit Agreement or at any time hereafter pursuant to which one or more Credit Parties or any other Person either (i) guarantees payment or performance of all or any portion of the Second Lien Debt (including, without limitation, the Second Lien Guaranty) and/or (ii) provides, as security for all or any portion of the Second Lien Debt, a Lien on any of its Property in favor of the Second Lien Agent, for the benefit of the Second Lien Lenders and itself, as any or all of the same may be amended, supplemented, restated or otherwise modified from time to time.
“Term Loan” shall mean the “Term Loan” as defined in the First Lien Credit Agreement.
“Term Loan Borrowing Base” shall mean the “Term Loan Borrowing Base” as such term is defined in the First Lien Credit Agreement.
“Term Loan Permanent Reductions” shall have the meaning set forth in Section 2.4 (a) hereof.
2. Lien Subordination.
2.1. Subordination of Liens Securing Second Lien Debt to Liens Securing First Lien Debt. Each Credit Party, each First Lien Lender Party and each Second Lien Lender Party hereby acknowledge and agree that, notwithstanding the time, date, manner or order of grant, attachment or perfection of the Liens on all or any part of the Collateral granted to the First Lien Agent or the Second Lien Agent, as the case may be, (i) all Liens granted on all or any part of the Collateral pursuant to the First Lien Security Documents to the First Lien Agent for the benefit of the First Lien Lender Parties shall be a “first” prior, senior and continuing Lien on all such Collateral to the extent of the First Lien Debt, and (ii) all Liens granted on all or any part of the Collateral pursuant to the Second Lien Security Documents to the Second Lien Agent, for the benefit of the Second Lien Lender Parties, regardless of when or how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall be in all respects and for all purposes subject to, junior to and subordinate to all Liens on all or any part of the Collateral in favor of the First Lien Agent to the extent of the First Lien Debt, on the terms and conditions set forth in this Agreement.
2.2. Liquidation, Dissolution, Bankruptcy. The provisions of this Agreement will be applicable both before and after any Proceeding involving any Credit Party and all references herein to any Credit Party shall be deemed to apply to the trustee for such Credit Party and such Credit Party as a debtor-in-possession. The relative rights of the First Lien Agent and the Second Lien Agent as set forth in this Agreement in or to any distributions in respect of the Collateral shall continue after the filing of any Proceeding on the same basis as prior to the date of such filing. In the event of any Proceeding involving any Credit Party:
(a) Except as otherwise specifically permitted in this Agreement, until the First Lien Debt shall have been Paid in Full, the Second Lien Agent and each Second Lien Lender shall not assert, without the prior written consent of the First Lien Agent, any claim, motion, objection or argument in respect of all or any part of the Collateral in connection with such Proceeding which could otherwise be asserted or raised in connection with such Proceeding by such Second Lien Lender Party as a secured creditor of any Credit Party. Without limiting the generality of the foregoing, the Second Lien Agent, for itself and each Second Lien Lender, agrees that it will (i) not object to or oppose (or support any other Person in objecting to or opposing) any sale or other disposition of all or any part of the Collateral free and clear of Liens or other claims of the Second Lien Agent and each Second Lien Lender
under Section 363 of the Bankruptcy Code or any other provision of the Bankruptcy Code or any other law applicable to such Proceeding if the relevant First Lien Lender Parties have consented to such sale or disposition, (ii) subject to Section 2.11 hereof, not challenge (or support any other Person in challenging) any use of cash collateral or debtor-in-possession financing consented to or provided by any First Lien Lender Parties (whether consented to or provided by the First Lien Lender Parties, a “DIP Financing”) it being agreed by each Second Lien Lender Party that such DIP Financing shall be on such terms and conditions and in such amounts as such First Lien Lender Parties, in their sole discretion, may decide and, in connection therewith, any Credit Party may grant to such participating First Lien Lender Parties (or any agent or representative thereof) Liens upon all of the Property of such Credit Party, which Liens (A) shall secure payment of all First Lien Debt whether such First Lien Debt arose prior to the commencement of such Proceeding or at any time thereafter and all other financing provided by any First Lien Lender Parties during the Proceeding (provided that, to the extent that such Liens secure First Lien Debt which arose prior to the commencement of such Proceeding, such Liens shall also secure the Second Lien Debt, subject to the conditions and terms set forth herein) and (B) shall be superior in priority to the liens and security interests, if any, in favor of Second Lien Agent for the benefit of the Second Lien Lender Parties on the Property of such Credit Party on the same terms and conditions as provided herein; provided, however that in connection with any such use of cash collateral or DIP Financing, the Second Lien Lender Parties shall have received as adequate protection of their interests a replacement Lien in post-petition assets of the Credit Parties which shall be junior and subordinate to all Liens granted pursuant to such consent to use cash collateral or DIP Financing with the same priorities afforded the Liens granted to the Second Lien Agent pursuant to this Agreement; (iii) not to assert (or support any other Person in asserting) any right it may have to “adequate protection” of its interest in any Collateral in any Proceeding, (iv) turn over to the First Lien Agent for the pro rata benefit of the First Lien Lender Parties any “adequate protection” of their interest in any Collateral that they receive in any Proceeding for application to the First Lien Debt owed to the First Lien Lender Parties, and (v) not seek to have the automatic stay of Section 362 of the Bankruptcy Code lifted or modified with respect to any Collateral, to appoint a trustee or examiner under Section 1104 of the Bankruptcy Code or to convert or dismiss (or support any other Person in converting or dismissing) such Proceeding under Section 1112 of the Bankruptcy Code, in each case without the prior written consent of the First Lien Agent; provided, that, in the case of this clause (v), if the First Lien Lender Parties seek such aforementioned relief, the Second Lien Lender Parties hereby irrevocably consents thereto and shall join in any such motion or application seeking such relief if requested by the First Lien Agent. The Second Lien Agent, for each
Second Lien Lender Party, waives any claim it may now or hereafter have arising out of the election of the First Lien Lender Parties, in any Proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b) of the Bankruptcy Code. The Second Lien Agent shall be permitted to participate on any creditor’s committee; provided, that the Second Lien Agent or any other Person participating on such creditor’s committee shall not directly or indirectly take any action or vote in any manner that would be in violation of this Agreement or inconsistent with or result in a breach of this Agreement.
(b) Except as otherwise expressly set forth herein, the First Lien Agent shall have the exclusive right to file proofs of claim and other pleadings and motions with respect to any Collateral in any Proceeding. Subject to the limitations set forth in this Agreement, the First Lien Agent may (but shall have no obligation or duty to) file appropriate proofs of claim and other pleadings and motions with respect to any Second Lien Debt in any Proceeding if and to the extent a proper proof of claim with respect to such Second Lien Debt has not been filed by the Second Lien Agent for and on behalf of the Second Lien Lender Parties in the form required in such Proceeding at least ten (10) days prior to the expiration of the time for filing thereof. In furtherance of the foregoing, the Second Lien Agent, for each Second Lien Lender Party, hereby appoints the First Lien Agent as its attorney-in-fact, with full authority in the place and stead of such Second Lien Lender Party and full power of substitution and in the name of such Second Lien Lender Party or otherwise, to execute, file and deliver any document or instrument that the First Lien Agent is required or permitted to file or deliver pursuant to this Section 2.2(b), such appointment being coupled with an interest and irrevocable.
(c) The Second Lien Agent shall execute and deliver to the First Lien Agent all such agreements, instruments and other documents confirming the above authorizations and all such proofs of claim, assignments of claim and other instruments and documentation, and shall take all such other action as may be reasonably requested by the First Lien Agent to enforce such claims and carry out the intent of this Section 2.2.
(d) The First Lien Debt shall continue to be treated as First Lien Debt and the provisions of this Agreement shall continue to govern the relative rights and priorities of the First Lien Lender Parties and the Second Lien Lender Parties even if all or part of the First Lien Debt or the Liens securing same are subordinated, set aside, avoided, invalidated or disallowed in connection with any Proceeding.
(e) To the extent that any First Lien Lender Party receives payments (whether in cash, Property or securities) on the First Lien Debt or proceeds of Collateral which are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a
trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or proceeds received, the First Lien Debt, or part thereof, intended to be satisfied shall be revived and continue in full force and effect as if such payments or proceeds had not been received by such First Lien Lender Party.
(f) Notwithstanding any other provision of this Agreement, but subject to Section 2.2(a), (i) the Second Lien Agent shall be entitled to file any necessary responsive or defensive pleadings in opposition to any motion, claim, adversary proceeding or other pleading made by any Person objecting to or otherwise seeking the disallowance of the claims of the Second Lien Agent, including without limitation any claims secured by the Collateral, if any, (ii) the Second Lien Agent shall be entitled to file any pleadings, objections, motions or agreements which assert rights or interests available to unsecured creditors of the Credit Parties arising under either the Bankruptcy Code or applicable non-bankruptcy law, and (iii) the Second Lien Agent shall be entitled to file any proof of claim and other filings and make any arguments and motions that are, in each case, in accordance with the terms of this Agreement and necessary to preserve their rights, in accordance with the terms of this Agreement, with respect to the Second Lien Debt and the Collateral; provided, that notice of intent to take any such action shall be given by the Second Lien Agent to the First Lien Agent not less than the earlier of (x) five (5) Business Days prior to the taking of such action and (y) five (5) Business Days less than the number of days available by order of any applicable bankruptcy court in which to file any such claim, filing, pleading, objection, motion or agreement, as the case may be.
2.3. Lien Enforcement Provisions.
The First Lien Lender Parties shall have the exclusive right, prior to the Discharge of all First Lien Debt, to direct the enforcement by the Second Lien Lender Parties of all of their rights and remedies with respect to all or any part of the Collateral, (i) by judicial proceedings for the enforcement of the Liens created under the Second Lien Security Documents, (ii) by the sale of the Collateral or any part thereof, (iii) otherwise by the exercise of the power of entry or sale conferred by the Second Lien Debt Documents, or (iv) by taking any other Enforcement Action against, or exercising any other rights or remedies with respect to, all or any part of the Collateral; provided, that upon the Discharge of all First Lien Debt, the Second Lien Agent may exercise the rights or remedies specified in this Section 2.3 and in the Second Lien Security Documents. Except as the same pertains to the Collateral or as otherwise expressly prohibited by this Agreement, the Second Lien Agent may exercise any right or power, enforce any remedy, give any direction, consent or waiver or make any determination, under or in respect of any provision of any Second Lien Debt Document. Notwithstanding the foregoing, subject at all times to the provisions of Section 2.1 and Section 2.9 of this Agreement, if a Second Lien Actionable Default shall have occurred and be continuing, the Second Lien
Lender Parties may take any Enforcement Action under the Second Lien Debt Documents, including, without limitation, any Enforcement Action with respect to all or any part of the Collateral, after the passage of ninety (90) days from the date of delivery of a Second Lien Default Notice to the First Lien Agent (to the extent that such Second Lien Actionable Default described therein shall not have been cured or waived within such period), provided that no Enforcement Action may be taken by any Second Lien Lender Party at any time if the First Lien Agent is diligently pursuing in good faith an Enforcement Action on a material portion of the Collateral, provided further, that such ninety (90) day period shall be tolled for any period during which the First Lien Lender Parties and Second Lien Lender Parties are prevented by applicable law from exercising their default and enforcement rights and remedies against all or any part of the Collateral; and provided, further, that if following the acceleration of the First Lien Debt by any First Lien Lender Party such acceleration is rescinded (whether or not any other existing “Event of Default” (as such term is defined in the First Lien Credit Agreement) has been cured or waived), then all Enforcement Actions taken by the Second Lien Lender Parties shall likewise be rescinded if such Enforcement Action is based solely on the acceleration of the First Lien Debt.
2.4. Release of Liens. In the event that all or any part of the Collateral is sold, transferred or otherwise disposed of by any Credit Party, acting with the consent of the First Lien Lender Parties, or by the First Lien Lender Parties, in each case pursuant to the terms of the First Lien Debt Documents:
(a) prior to the commencement of a Proceeding (whether or not a Default or Event of Default (each as defined in the First Lien Credit Agreement) has occurred), any sale or other disposition of assets so long as the proceeds (net of transaction costs) received by the Credit Parties from any such sale or other disposition of assets are used to permanently reduce the amount that the Credit Parties are permitted to borrow under the First Lien Credit Agreement, either, as determined by the First Lien Lender Parties, as (A) a prepayment of the Term Loans (the “Term Loan Permanent Reduction”) and/or (B) the establishment of reserves against the Aggregate Borrowing Bases in an amount equal to the total proceeds (net of transaction costs) received by the Credit Parties minus the amount by which the Aggregate Borrowing Bases were reduced (if any) in connection with such sale or other disposition (the “Asset Sale Revolver Reserve”).
(b) following the commencement of a Proceeding, in connection with:
(i) the entry of an order by a bankruptcy court authorizing the sale, transfer or other disposition of all or substantially all of the Collateral of any Credit Party; or
(ii) the taking of any Enforcement Action by the First Lien Lender Parties;
then, in any such case, concurrently upon the release of any Liens of the First Lien Lender Parties with respect to such Collateral, the Liens of the Second Lien Lender Parties on such Collateral shall be automatically released and terminated, without any action by or notice to the Second Lien Lender Parties required hereunder, and the First Lien Agent shall be authorized by the Second Lien Agent on behalf of the Second Lien Lender Parties (and is hereby authorized and directed by the Second Lien Agent on behalf of the Second Lien Lender Parties) to file UCC termination statements or any other documents or instruments to terminate the Second Lien Agent’s Lien on such Collateral to evidence such automatic release and termination. The Second Lien Agent agrees that no further act or documentation shall be necessary to evidence the release and termination by the Second Lien Agent of such Lien, provided that, such Second Lien Agent shall promptly execute and deliver to the First Lien Agent such releases and terminations as the First Lien Agent shall reasonably request to evidence such automatic release and termination of the Liens of Second Lien Agent on such Collateral. In furtherance of the foregoing, the Second Lien Agent, on behalf of the Second Lien Lender Parties, hereby irrevocably appoints First Lien Agent its attorney-in-fact, with full authority in the place and stead of such Second Lien Lender Party and in the name of such Second Lien Lender Party or otherwise, to execute and deliver any document or instrument which such Second Lien Lender Party may be required to deliver pursuant to this Section 2.4.
2.5. First Lien Agent’s Actions with respect to the Collateral. Subject to Section 2.2(f) as the following may relate to a Proceeding, in furtherance and not in limitation of the other terms and provisions of this Agreement, each of the Second Lien Lender Parties agrees that (i) it will not take any action (or support any other Person in taking any action) that would hinder, delay, limit or prohibit any exercise of rights and remedies by any of the First Lien Lender Parties under or pursuant to the First Lien Debt Documents to the extent permitted thereunder and hereunder, including, without limitation, any collection, sale, lease, exchange, transfer or other disposition of the Collateral, whether by foreclosure or otherwise, or that would limit, invalidate, avoid or set aside any Lien or First Lien Security Document or subordinate the priority of the First Lien Debt to the Second Lien Debt or grant the Liens securing the Second Lien Debt equal ranking to the Liens securing the First Lien Debt and (ii) it hereby waives any and all rights it or the other Second Lien Lender Parties may have as a junior lien creditor or otherwise (whether arising under the Uniform Commercial Code or under any other law) to object to the manner in which the First Lien Lender Parties seek to enforce or collect the First Lien Debt or the Liens granted in any of the Collateral, regardless of whether any action or failure to act by or on behalf of the First Lien Lender Parties is adverse to the interests of any Second Lien Lender Party. Furthermore, and without limiting any other provision of any First Lien Debt Document, so long as the Discharge of all First Lien Debt has not occurred, in no event shall any Second Lien Lender Party (i) contest, protest or object to any Enforcement Action, any Sale Event or other action brought by any First Lien Lender Party or any other exercise by a First Lien Lender Party of any rights and remedies relating to the Collateral under the
First Lien Security Documents or otherwise or (ii) object to the forbearance by the First Lien Lender Parties from bringing or pursuing any Enforcement Action, any Sale Event or other action or any other exercise of any rights or remedies relating to the Collateral, in each case so long as such action or inaction does not constitute a breach of the obligations of the First Lien Lender Parties under this Agreement and the respective interests of such Second Lien Lender Party attach to the proceeds thereof subject to the relative priorities set forth in this Agreement. In exercising rights and remedies with respect to the Collateral, the First Lien Lender Parties may enforce the provisions of the First Lien Debt Documents and exercise remedies thereunder, all in such order and in such manner as they may determine in the exercise of their sole discretion. Such exercise and enforcement shall include the rights of an agent appointed by them to sell or otherwise dispose of Collateral upon foreclosure, to incur expenses in connection with such sale or disposition, and to exercise all the rights and remedies of a secured creditor under the Uniform Commercial Code of any applicable jurisdiction or any other applicable law and of a secured creditor under the Bankruptcy Code or any jurisdiction pursuant to which a Proceeding is then being conducted.
2.6. Turnover Provisions. In the event that any proceeds of Collateral are received by any Second Lien Lender Party at a time when such payment is not expressly permitted by the terms of this Agreement, any such proceeds shall not be commingled with any of the assets of any Second Lien Lender Party, shall be received and held in trust for the benefit of the First Lien Lender Parties and shall be promptly paid over to the First Lien Agent, for the benefit of the First Lien Lender Parties, or delivered in the same form as received, with any necessary endorsements or as a court of competent jurisdiction may otherwise direct, to the extent necessary to make Payment in Full of all First Lien Debt in accordance with its terms. In the event that any Second Lien Lender Party fails to provide any endorsement, as contemplated by the immediately preceding sentence, the First Lien Agent, or any of its officers or employees, is hereby irrevocably authorized to make the same (which authorization, being coupled with an interest, is irrevocable). After the Discharge of all First Lien Debt, any remaining proceeds of Collateral shall be delivered to the Second Lien Agent for application to the Second Lien Debt in accordance with the Second Lien Debt Documents, except as otherwise required pursuant to applicable law.
2.7. Agreement Not to Contest. Each of the First Lien Lender Parties and each of the Second Lien Lender Parties hereby agrees not to, directly or indirectly, whether in connection with a Proceeding or otherwise, take any action or vote in any way that would be in violation of, or inconsistent with, or result in a breach of, this Agreement or challenge or contest (i) the validity, perfection, priority or enforceability of any First Lien Debt or Second Lien Debt or the Lien held by the First Lien Agent, for the benefit of the First Lien Lender Parties, or the Lien held by the Second Lien Agent, for the benefit of the Second Lien Lender Parties, to secure the payment, performance or observance of all or any part of the First Lien Debt or the Second Lien Debt, (ii) the rights of the First Lien
Lender Parties or the Second Lien Lender Parties set forth in any of the First Lien Debt Documents or Second Lien Debt Documents, respectively, with respect to any such Lien, or (iii) the validity or enforceability of any of the First Lien Debt Documents or any of the Second Lien Debt Documents; provided that nothing in this Section 2.7 is intended or shall be deemed or construed to limit in any way the ability of the parties hereto to enforce all of the terms and provisions of this Agreement.
2.8. Sale, Transfer or other Disposition of Second Lien Debt.
(a) No First Lien Lender Party or Second Lien Lender Party shall sell, assign, pledge, dispose of or otherwise transfer all or any portion of the First Lien Debt or any First Lien Debt Document or Second Lien Debt or any Second Lien Debt Document, as the case may be: (i) without giving prior written notice of such action to the First Lien Agent or the Second Lien Agent, respectively, and (ii) unless, concurrently with the consummation of any such action, the transferee thereof shall agree to be bound by this Agreement.
(b) Notwithstanding the failure of any transferee to execute or deliver an agreement substantially identical to this Agreement (or joinder to this to this Agreement), the subordination effected hereby shall survive any sale, assignment, pledge, disposition or other transfer of all or any portion of the Second Lien Debt, and the terms of this Agreement shall be binding upon the successors and assigns of any Second Lien Lender Party, as provided in Section 13 hereof.
(c) The Credit Parties shall not refinance the Second Lien Debt, or otherwise prepay the Second Lien Debt in violation of the terms of the First Lien Credit Agreement, and the Second Lien Lender Parties shall not accept any such prepayment, unless (i) the terms and conditions of such refinancing documentation are acceptable to First Lien Agent and (ii) the lenders thereunder and the Credit Parties have executed and delivered to First Lien Agent an agreement substantially similar to this Agreement.
2.9. Application of Proceeds from Sale or other Disposition of the Collateral.
(a) Prior to a First Lien Default, all proceeds of dispositions of Collateral, insurance proceeds in connection with a casualty event and condemnation awards with respect to any Collateral shall be applied to the First Lien Debt.
(b) After the occurrence and during the continuance of a First Lien Default, all proceeds of Collateral collected by any First Lien Lender Party or any Second Lien Lender Party, shall, in each case, be applied as
follows: first, Payment in Full of the First Lien Debt; second, payment in full in cash of the Second Lien Debt; and third, to any Excluded First Lien Debt. Any balance remaining shall be delivered to the Credit Parties or to whomever may be lawfully entitled to receive such balance or as a court of competent jurisdiction may direct. Each Credit Party acknowledges the foregoing application of proceeds and agrees to same. In carrying out the foregoing, (a) amounts received shall be applied in the numerical order provided until exhausted prior to the application to the next succeeding category and (b) each of the Persons entitled to receive a payment in any particular category shall receive an amount equal to its pro rata share of amounts available to be applied pursuant thereto.
2.10. Legends. Until the termination of this Agreement in accordance with Section 20 hereof, each Second Lien Lender Party will cause to be clearly, conspicuously and prominently inserted in the Second Lien Credit Agreement and any other Second Lien Debt Document that grants a Lien or evidences the Second Lien Debt, as well as any renewals or replacements thereof, the following legend in substantially the form hereof:
“The liens and security interests securing the indebtedness and other obligations incurred or arising under or evidenced by this instrument and the rights and obligations evidenced hereby with respect to such liens are subordinate in the manner and to the extent set forth in that certain Intercreditor and Lien Subordination Agreement (as the same may be amended or otherwise modified from time to time pursuant to the terms thereof, the “Subordination Agreement”) dated as of November 9, 2004 among S.A.C. CAPITAL ASSOCIATES, LLC, a limited liability company organized under the laws of Anguila (“Second Lien Agent”), THE WET SEAL, INC., a Delaware corporation, (the “Lead Borrower”), THE WET SEAL RETAIL, INC., a Delaware corporation (“Wet Seal Retail”), WET SEAL CATALOG, INC., a Delaware corporation (collectively, with Wet Seal Retail and the Lead Borrower, the “Companies”), WET SEAL GC, INC., a Virginia corporation (the “Facility Guarantor”), FLEET RETAIL GROUP, INC., (“First Lien Agent”), and BACK BAY CAPITAL FUNDING LLC, as Term Lender under the First Lien Credit Agreement hereinafter described to the liens and security interests securing indebtedness (including interest) owed by the Companies pursuant to that certain Amended and Restated Credit Agreement dated as of September 22, 2004 (the “First Lien Credit Agreement”) among the Companies, First Lien Agent, the lenders from time to time party thereto and Fleet National Bank, as Issuing Lender, and certain guarantees of the indebtedness evidenced thereby, as such First Lien Credit Agreement and such guarantees have been and hereafter may be amended, restated, supplemented or otherwise modified from time to time as permitted under the Subordination Agreement and to the liens and security interests securing indebtedness refinancing the indebtedness under such agreements as permitted by the Subordination Agreement; and
each holder of this instrument, by its acceptance hereof, irrevocably agrees to be bound by the provisions of the Subordination Agreement.”
2.11. Antilayering. The First Lien Agent, on behalf of the First Lien Lender Parties, hereby agrees not to create any indebtedness under the First Lien Debt Documents or create or consent to any DIP Financing (collectively, “New Debt”) (whether entered into before or after the commencement of a Proceeding) unless such New Debt constitutes either First Lien Debt or Excluded First Lien Debt.
3. Modifications.
3.1. Modifications to First Lien Debt Documents. The First Lien Lender Parties may at any time and from time to time without the consent of or notice to any Second Lien Lender Party, without incurring liability to any Second Lien Lender Party and without impairing or releasing the obligations of any Second Lien Lender Party under this Agreement, change the manner or place of payment or extend the time of payment of or renew or alter any of the terms of the First Lien Debt, or amend or otherwise modify in any manner any of the First Lien Debt Documents; provided that the First Lien Lender Parties shall not (a) increase any applicable interest rate with respect to the First Lien Debt by more than 200 basis points, except in connection with (i) the imposition of a default rate of interest in accordance with the terms of the First Lien Debt Documents or (ii) as expressly contemplated by the definitions of the terms “Prime Rate” and “LIBO Rate”, respectively, in each case as set forth in the First Lien Debt Documents as in effect on the date hereof; or (b) a release of any Asset Sale Reserve or Insurance Reserve.
3.2. Modifications to Second Lien Debt Documents. Until the First Lien Debt has been Paid in Full, and notwithstanding anything to the contrary contained in the Second Lien Debt Documents, the Second Lien Lender Parties shall not, without the prior written consent of First Lien Agent, agree to any amendment, modification or supplement to the Second Lien Debt Documents the effect of which is to (i) increase the maximum principal amount of the Second Lien Debt (other than as a result of the capitalization of interest)or rate of interest or paid in kind nature of interest on any of the Second Lien Debt, (ii) change the dates upon which payments of principal or interest on the Second Lien Debt are due, except in connection with the imposition of the default rate of interest in accordance with the Second Lien Debt Documents as in effect on the date hereof; provided, however that the maturity date of the Second Lien Debt may be extended through and until Xxxxx 00, 0000, (xxx) change or add any event of default or any covenant with respect to the Second Lien Debt, (iv) change any redemption or prepayment provisions of the Second Lien Debt, (v) subordinate the Second Lien Debt to any other indebtedness, (vi) take any Liens on any Property of any Credit Party unless the same has been offered in writing to the First Lien Agent for the benefit of the First Lien Lender Parties or (vii) change or amend any other term of the Second Lien Debt Documents if such change or amendment would
result in a First Lien Default, increase the obligations of any Credit Party or confer additional material rights on any Second Lien Lender Party or any other holder of the Second Lien Debt in a manner adverse in any material respect to any Credit Party or any of the First Lien Lender Parties.
3.3. Waiver of Events of Default. Until the First Lien Debt has been Paid in Full, and notwithstanding anything to the contrary contained in the Second Lien Debt Documents, the Second Lien Agent, on behalf of the Second Lien Lender Parties, hereby agrees to waive any “Event of Default” contained or arising under the Second Lien Debt Documents to the extent that the First Lien Lender Parties shall have waived any counterpart “Event of Default” contained or arising under the First Lien Debt Documents; provided, however that the Second Lien Lender Parties shall not, as a result of this Section 3.3 (a) be obligated to waive an event of default arising under clauses (a) through (c) of the definition of “Second Lien Actionable Default” or (b) be deemed to have waived the imposition of the default rate of interest set forth in the Second Lien Debt Documents (as in effect on the date hereof) which would arise but for the foregoing waiver provisions of this Section 3.3.
4. Waiver of Certain Rights by the Second Lien Lender Parties
4.1. Acceptance. The Second Lien Agent, on behalf of the Second Lien Lender Parties, hereby waives all notice of the acceptance by First Lien Lender Parties of the lien subordination and other provisions of this Agreement and all the notices not specifically required pursuant to the terms of this Agreement or under the Uniform Commercial Code or other applicable law in connection with foreclosure on or sale of all or any portion of the Collateral, and the Second Lien Agent expressly consents to the reliance by the First Lien Lender Parties upon the subordination and other agreements as herein provided.
4.2. Marshaling.
(a) The Second Lien Agent, on behalf of the Second Lien Lender Parties, hereby waives any rights it may have under applicable law to assert the doctrine of marshaling or to otherwise require the First Lien Agent or any other First Lien Lender Party to marshal any Property of any Credit Party for the benefit of any Second Lien Lender Party. The Second Lien Agent, on behalf of the Second Lien Lender Parties, further waives any right to demand, request, plead or otherwise assert or otherwise claim the benefit of any appraisal, valuation or other similar right that may otherwise be available under applicable law with respect to the Collateral or any other similar rights a junior creditor may have under applicable law.
(b) The Second Lien Agent, on behalf of the Second Lien Lender Parties, agrees that no First Lien Lender Party shall have any liability to any Second Lien Lender Party, and such Second Lien Lender
Party hereby waives any claims against any First Lien Lender Party, arising out of any and all actions which any First Lien Lender Party may take or permit or omit to take with respect to (i) the First Lien Debt Documents, (ii) the collection of the First Lien Debt or (iii) the foreclosure upon, or sale, liquidation or other disposition or realization of, any Collateral, in each case, except for gross negligence or willful misconduct as determined pursuant to a final non-appealable order of a court of competent jurisdiction. The Second Lien Agent, on behalf of the Second Lien Lender Parties, agrees that no First Lien Lender Party shall have any duty, express or implied, fiduciary or otherwise, to it in respect of the maintenance or preservation of any Collateral, any Second Lien Debt or otherwise. The First Lien Agent, on behalf of the First Lien Lender Parties, agrees that no Second Lien Lender Party shall have any duty, express or implied, fiduciary or otherwise, to it in respect of the maintenance or preservation of any Collateral, any First Lien Debt or otherwise. No First Lien Lender Party, no Second Lien Lender Party nor any of their respective directors, officers, employees or agents will be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so, or will be under any obligation to sell or otherwise dispose of any Collateral upon the request of a Credit Party, any First Lien Lender Party, any Second Lien Lender Party or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof.
5. Representations and Warranties.
5.1. Representations and Warranties of Second Lien Agent. To induce First Lien Agent to execute and deliver this Agreement, the Second Lien Agent hereby represents and warrants to First Lien Agent that as of the date hereof: (a) the Second Lien Agent is an entity duly formed and validly existing under the laws of Anguila; (b) the Second Lien Agent has the power and authority to enter into, execute, deliver and carry out the terms of this Agreement, all of which have been duly authorized by all proper and necessary action; (c) the execution of this Agreement by the Second Lien Agent will not violate or conflict with the organizational documents of the Second Lien Agent, any material agreement binding upon the Second Lien Agent or any law, regulation or order or require any consent or approval which has not been obtained; (d) this Agreement is the legal, valid and binding obligation of the Second Lien Agent, enforceable against the Second Lien Agent, in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by equitable principles; and (e) the Second Lien Agent is the sole owner, beneficially and of record, of its portion of the Second Lien Debt Documents and the Second Lien Debt.
5.2. Representations and Warranties of First Lien Agent. To induce the Second Lien Agent to execute and deliver this Agreement, First Lien
Agent hereby represents and warrants to the Second Lien Agent that as of the date hereof: (a) First Lien Agent is a corporation duly formed and validly existing under the laws of the State of Delaware; (b) First Lien Agent has the power and authority to enter into, execute, deliver and carry out the terms of this Agreement, all of which have been duly authorized by all proper and necessary action; (c) the execution of this Agreement by First Lien Agent will not violate or conflict with the organizational documents of First Lien Agent, any material agreement binding upon First Lien Agent or any law, regulation or order or require any consent or approval which has not been obtained; and (d) this Agreement is the legal, valid and binding obligation of First Lien Agent, enforceable against First Lien Agent in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles.
6. No New Lien. Each of the First Lien Lender Parties, each of the Second Lien Lender Parties and each Credit Party hereby agrees that no Credit Party shall, or shall permit its Subsidiaries to, grant or permit any Lien, or take any action to perfect a Lien, on any Property to secure any the First Lien Debt or the Second Lien Debt unless such Lien is granted to each of the First Lien Agent, for the benefit of the First Lien Lender Parties, and the Second Lien Agent, for the benefit of the Second Lien Lender Parties, respectively; provided that nothing in this Section 6 shall limit the rights of (i) the First Lien Lender Parties from holding cash collateral pursuant to the terms of the First Lien Debt Documents and exercising their rights and remedies against such cash collateral, or (ii) the First Lien Lender Parties from exercising customary rights of setoff against accounts maintained with such Person, in each case pursuant to the terms and provisions of the First Lien Debt Documents. In addition, the Second Lien Lender Parties shall not be permitted to restrict, in any manner, a Credit Party from granting a Lien on any Property for the benefit of the First Lien Lenders.
7. Insurance Proceeds. Until the Discharge of all First Lien Debt, the First Lien Agent shall have the sole and exclusive right, as against the Second Lien Lender Parties, to adjust settlement of insurance claims in the event of any covered loss (including, without limitation, any theft or destruction of any or any part of such Collateral) or condemnation awards in the event of a condemnation or to permit the Credit Parties to reinvest any insurance proceeds in replacement assets; provided, however that following any Enforcement Action, the First Lien Agent shall establish reserves against the Aggregate Borrowing Base in an amount of such proceeds (the “Insurance Reserve”). At the request of the First Lien Agent, the Second Lien Lender Parties shall cooperate in a reasonable manner in effecting the payment of insurance proceeds and condemnation awards to the First Lien Lender Parties. In the event the First Lien Lender Parties, in their discretion or pursuant to any agreement with any Credit Party, permit such Credit Party to utilize the proceeds of insurance or condemnation award to replace Collateral, the consent of the First Lien Lender Parties shall be deemed to include the consent of each Second Lien Lender Party.
8. Second Lien Lender Party Purchase Option.
(a) Notwithstanding anything herein to the contrary, (i) at least two (2) Business Days’ prior to the commencement of any Enforcement Action by any First Lien Lender Party constituting a foreclosure (including a sale under the Uniform Commercial Code) of all or any material portion of the Collateral, (ii) at least five (5) Business Days prior to a proposed sale or other disposition of Collateral in an amount to exceed $5,800,000 in the aggregate from the date hereof (but excluding any such sales or other disposition of Collateral conducted in connection with or as a result of store closures permitted under the First Lien Credit Agreement) or (iii) in the event three (3) consecutive Business Days have elapsed during which time First Lien Lenders with a Revolving Loan Credit Commitment (as defined in the First Lien Credit Agreement) have failed to advance Revolving Credit Loans (as defined in the First Lien Credit Agreement) following the Companies’ request therefor as a result of a failure to satisfy the conditions precedent thereto, the First Lien Agent shall provide the Second Lien Agent with written notice thereof (a “Purchase Option Notice”) and afford the Second Lien Agent the opportunity to purchase all, but not less than all, of the First Lien Debt pursuant to this Section 8. The Purchase Option Notice will indicate the aggregate amount of First Lien Debt then outstanding.
(b) The Second Lien Agent shall have five (5) Business Days after receipt of such Purchase Option Notice to notify the First Lien Agent of its intention to exercise its option to purchase the First Lien Debt pursuant to this Section 8. If no such notice is received from a Second Lien Agent within such five (5) Business Day period, the option granted pursuant to this Section 8 to the Second Lien Agent to purchase the First Lien Debt shall irrevocably expire and such Second Lien Lender Party shall have no further rights under this Section 8 except if the Sale Event or such Enforcement Action is not commenced or, if commenced, is permanently terminated, in which event the option contained herein continue until a subsequent Purchase Option Notice is issued by First Lien Agent.
(c) If a Second Lien Agent delivers notice to the First Lien Agent that it or any Second Lien Lender Party is exercising its option to purchase the First Lien Debt pursuant to this Section 8, such notice delivered to the First Lien Agent shall be irrevocable and such holder shall be required to purchase the First Lien Debt within two (2) Business Days after the First Lien Agent’s receipt of such notice.
(d) Upon the date of such purchase and sale, the purchaser or purchasers of the First Lien Debt shall,
(i) pay to the First Lien Agent, for the benefit of the First Lien Lender Parties, as the purchase price therefor the full amount of all First Lien Debt (with all debt purchased at par) outstanding as of the date of such purchase and sale and unpaid (including all documented principal, interest, fees, costs, charges and expenses, including reasonable attorneys’ fees and legal expenses),
(ii) furnish cash collateral to the First Lien Agent in such amounts as the First Lien Agent determines is reasonably necessary to secure the First Lien Lender Parties in connection with (A) any issued and outstanding letters of credit provided by First Lien Agent (or letters of credit that First Lien Agent has arranged to be provided by third parties pursuant to the financing arrangements of the First Lien Agent with the Credit Parties) for the benefit of any Credit Party entered into by any First Lien Lender Party for the benefit of any Credit Party (provided that such amount shall not exceed 103% of the aggregate undrawn amount and) and (B) any outstanding Hedging Agreements (as such term is defined in the First Lien Credit Agreement), and
(iii) provide cash collateral acceptable to the First Lien Lender Parties in respect of bona fide outstanding claims for indemnification; provided, however that the First Lien Agent shall release any such cash collateral upon the determination, in the First Lien Agent’s sole discretion, that the claim giving rise to such indemnification right shall no longer be asserted or assertable.
(e) Such purchase price and cash collateral shall be remitted, without set-off or counterclaim or otherwise, by wire transfer in federal funds to such bank account of the First Lien Agent, as the First Lien Agent may designate in writing to Second Lien Agent for such purpose. Interest shall be calculated to but excluding the business day on which such purchase and sale shall occur if the amounts so paid by the purchasers of First Lien Debt to the bank account designated by First Lien Agent are received in such bank account prior to 1:00 p.m., Boston time and interest shall be calculated to and including such business day if the amounts so paid by such Persons to the bank account designated by First Lien Agent are received in such bank account later than 1:00 p.m., Boston time.
(f) Each Second Lien Lender Party will have the right, pursuant to this Section 8, to purchase up to its pro rata share of the First Lien Debt; provided that if any Second Lien Lender elects not to exercise it option to purchase the First Lien Debt, that holder’s pro rata share may be allocated to any other Second Lien Lender exercising its option under this Section 8. Each notice delivered by a Second Lien Lender to the First Lien Agent pursuant to this Section 8 shall indicate what portion of the
First Lien Debt such holder elects to purchase. First Lien Debt purchased hereunder will be purchased pro rata from each First Lien Lender based on the amount of First Lien Debt held by Such First Lien Lender. In the event that the amount of First Lien Debt that the Second Lien Lenders elect to purchase pursuant to this Section 8, (a) exceeds the aggregate outstanding amount of First Lien Debt, each holder of Second Lien Debt electing to purchase the First Lien Debt will be permitted to purchase its pro rata portion of such First Lien Debt based on the amount of First Lien Debt that each such holder elected to purchase, or (b) is less than all of the First Lien, then the option set forth in this Section 8 (including with respect to options which have been exercised) shall irrevocably expire and this Section 8 shall be of no further force or effect.
(g) Upon notice to the Credit Parties that the purchase of First Lien Debt has been consummated by delivery of the purchase price to the First Lien Agent, each Credit Party shall treat the applicable holders of Second Lien Debt as holders of the First Lien Debt purchased pursuant to this Section 8 for all purposes hereunder and under each agreement, document and instrument relating to the First Lien Debt. Any sale will be made without recourse or warranty, other than customary representations by each holder of First Lien Debt as to its authority to sell its First Lien Debt and its ownership thereof. In connection with any purchase of First Lien Debt pursuant to this Section 8, each holder of First Lien Debt agrees, as the cost of the Credit Parties, to enter into all agreement, instruments and documents necessary or desirable to evidence the transfer of such First Lien Debt hereunder.
9. Appraisals/Interest/Expenses.
(a) Notwithstanding anything to the contrary in the Second Lien Debt Documents, neither the Second Lien Agent nor any Second Lien Lender Party (whether directly or by virtue of third parties retained by such Second Lien Lender Party) shall conduct any appraisals; provided, however upon request of the Second Lien Agent, the First Lien Agent hereby agrees to provide the Second Lien Agent with copies of appraisals conducted by the First Lien Agent upon delivery by Second Lien Agent of a release letter in form and substance satisfactory to the First Lien Agent; provided, further, however that (x) the failure of the First Lien Agent to provide a copy of any such appraisals shall not impair the effectiveness of this Agreement or be deemed a breach hereof and (y) the Second Lien Agent may not in any way use or rely on any information set forth in such appraisal to challenge the First Lien Agent’s computation and other evaluations of the Aggregate Borrowing Bases. Notwithstanding anything to the contrary in the Second Lien Debt Documents, on or prior to February 28, 2005 (or March 31, 2005 if the Maturity Date (as defined in the Second Lien Credit Agreement) is extended in accordance with the terms of the Second Lien Credit Agreement), neither the Second Lien Agent nor any Second Lien Lender Party (whether directly or by virtue of third parties retained by such Second Lien
Lender Party) shall participate in and/or conduct any physical inventory or any commercial finance examinations or other evaluations of Aggregate Borrowing Bases regarding any Loan Party (as defined in the Second Lien Credit Agreement) or any Subsidiary (as defined in the Second Lien Credit Agreement) thereof.
(b) Notwithstanding anything to the contrary in the Second Lien Debt Documents, the Second Lien Agent, on behalf of the Second Lien Lender Parties, hereby acknowledges and agrees that until the First Lien Debt shall have been Paid in Full, the Credit Parties may not make, and the Second Lien Lender Parties shall not be entitled to receive, (x) any cash interest payments pursuant to the Second Lien Debt Documents (whether as regularly scheduled payments of interest or as a result of the imposition of a default rate of interest under the Second Lien Debt Documents) and that solely capitalized interest is permitted to accrue under the Second Lien Debt Documents and (y) any payments in connection with mandatory or optional redemption provisions set forth under the Second Lien Debt Documents.
(c) Notwithstanding anything to the contrary set forth in the Second Lien Debt Documents, the Second Lien Agent, on behalf of the Second Lien Lender Parties, hereby acknowledges and agrees that until the First Lien Debt shall have been Paid in Full, the Credit Parties shall not be permitted to make, and the Second Lien Lender Parties shall not be entitled to receive, any cash reimbursement of expenses (including fees and disbursements of counsel) other than cash reimbursement of the fees and disbursements of counsel to the Second Lien Agent plus fees and disbursements of counsel of no more than one counsel representing all other Second Lien Lender Parties. Any other expenses and fees and disbursements of counsel to the Second Lien Lender Parties arising under the Second Lien Debt Documents shall be capitalized and added to the outstanding principal amount of the Second Lien Debt.
10. Subrogation. Subject to the Payment in Full of all First Lien Debt, the Second Lien Lender Parties shall be subrogated to the extent of any payments or distributions made by the Second Lien Lender Parties to the First Lien Agent on behalf of the First Lien Lender Parties, or otherwise applied to payment of such First Lien Debt solely by reason of the provisions of this Agreement, to any rights of the First Lien Lender Parties to receive payments and distribution of cash, securities and other property applicable to the First Lien Debt, if any, until the Second Lien Debt shall have been paid in full. For purposes of such subrogation, no payments or distributions to the First Lien Lender Parties of any cash, securities or other property to which the Second Lien Lender Parties would have been entitled, except for the provisions of this Agreement, and no payments pursuant to the provisions of this Agreement to the First Lien Agent on behalf of the First Lien Lender Parties by any Second Lien Lender Party, shall be deemed to be a payment or distribution by any Credit Party to or on account of the First Lien Debt, it being understood and agreed that the provisions of this Agreement are solely for the purpose of defining the relative rights of the First Lien Lender Parties on the one hand, and the Second Lien Lender Parties on the other hand.
11. Modification. Any modification or waiver of any provision of this Agreement, or any consent to any departure by any party from the terms hereof, shall not be effective in any event unless the same is in writing and signed by each Credit Party, First Lien Agent and the Second Lien Agent and then such modification, waiver or consent shall be effective only in the specific instance and for the specific purpose given. Any notice to or demand on any party hereto in any event not specifically required hereunder shall not entitle the party receiving such notice or demand to any other or further notice or demand in the same, similar or other circumstances unless specifically required hereunder.
12. Further Assurances. Each party to this Agreement promptly will execute and deliver such further instruments and agreements and do such further acts and things as may be reasonably requested in writing by any other party hereto that may be necessary or desirable in order to effect fully the purposes of this Agreement.
13. Notices. Unless otherwise specifically provided herein, any notice delivered under this Agreement shall be in writing addressed to the respective party as set forth below and may be personally served, sent by facsimile transmission or sent by overnight courier service or certified or registered United States mail and shall be deemed to have been given (a) if delivered in person, when delivered; (b) if delivered by facsimile transmission, on the date of transmission if transmitted on a business day before 4:00 p.m. (Boston time) or, if not, on the next succeeding business day; (c) if delivered by overnight courier, one business day after delivery to such courier properly addressed; or (d) if by United States mail, four business days after deposit in the United States mail, postage prepaid and properly addressed.
Notices shall be addressed as follows:
If to any Second Lien Lender Party:
S.A.C. Capital Associates, LLC
c/o S.A.C. Capital Advisors, LLC
00 Xxxxxxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: General Counsel
Facsimile No. (000) 000-0000
With a copy to:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxxxxxx, Esq.
Facsimile: (000) 000-0000
If to any Credit Party:
The Wet Seal, Inc.
00000 Xxxxxxx Xxxxxx
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
With a copy to:
Akin, Gump, Strauss, Xxxxx & Xxxx, LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Facsimile: (000) 000-0000
If to any First Lien Lender Party:
Fleet Retail Group
c/o Bank of America Retail Finance Group
00 Xxxxx Xx., 00xx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Director
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx & Xxxxxxxxxx, LLP
Xxxxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
And with a copy to:
Back Bay Capital Funding LLC
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx, Managing Director
Facsimile: (000) 000-0000
And with a copy to:
Xxxxxxx XxXxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. X. Xxxxx, Esq.
Facsimile: (000) 000-0000
or in any case, to such other address as the party addressed shall have previously designated by written notice to the serving party, given in accordance with this Section 12.
14. Successors and Assigns. This Agreement shall inure to the benefit of, and shall be binding upon, the respective successors and assigns of each First Lien Lender Party, each Second Lien Lender Party and each Credit Party. To the extent permitted under the First Lien Debt Documents, First Lien Lenders may, from time to time, with notice to any Second Lien Lender Party, assign or transfer any or all of the First Lien Debt or any interest therein to any Person and, notwithstanding any such assignment or transfer, or any subsequent assignment or transfer, the First Lien Debt shall, subject to the terms hereof, be and remain First Lien Debt for purposes of this Agreement, and every permitted assignee or transferee of any of the First Lien Debt or of any interest therein shall, to the extent of the interest of such permitted assignee or transferee in the First Lien Debt, be entitled to rely upon and be the third party beneficiary of the lien subordination provided under this Agreement and shall be entitled to enforce the terms and provisions hereof to the same extent as if such assignee or transferee were initially a party hereto.
15. Relative Rights; No Third Parties Benefited.
(a) This Agreement shall define the relative rights of the First Lien Lender Parties and the Second Lien Lender Parties, respectively. Nothing in this Agreement shall (a) impair, as among the Credit Parties and the First Lien Lender Parties on the one hand, and as between the Credit Parties and the Second Lien Lender Parties, on the other hand, the obligation of the Credit Parties with respect to the payment of the First Lien Debt and the Second Lien Debt, as the case may be, in accordance with their respective terms or (b) affect the relative rights of the First Lien Lender Parties or the Second Lien Lender Parties with respect to any other creditors of the Credit Parties. The terms of this Agreement shall govern even if all or any part of the First Lien Debt or the Liens in favor of the First Lien Agent or any other First Lien Lender Party are avoided, disallowed, unperfected, set aside or otherwise invalidated in any judicial proceeding or otherwise.
(b) It is not the intention of the parties hereto to confer any third-party beneficiary rights, and this Agreement shall not be construed so as to confer any such rights upon any other Person or Persons not party hereto. Notwithstanding the foregoing, neither the Companies nor any of their respective subsidiaries nor any other Person or Persons (other than a party hereto) shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement.
16. Contractual Representative for Purposes of Perfection. Each Second Lien Lender Party hereby appoints the First Lien Agent as such Person’s contractual representative solely for purposes of perfecting such Person’s Liens on any of the Collateral in the possession or under the “control” (as such term is defined in the Uniform Commercial Code) of the First Lien Agent, and the First Lien Agent hereby acknowledges that it holds possession of or otherwise controls any such Collateral as the contractual representative of the Second Lien Lender Parties for such purposes; provided, that, the First Lien Agent shall not have any duty or liability to protect or preserve any rights pertaining to any of the Collateral and, except for gross negligence or willful misconduct as determined pursuant to a final non-appealable order of a court of competent jurisdiction, each Second Lien Lender Party hereby waives and releases the First Lien Agent and each of the other First Lien Lender Parties from, and hereby indemnifies and agrees to hold harmless the First Lien Agent and each of the other First Lien Lender Parties against, all claims and liabilities arising as a result of or in connection with the First Lien Agent’s role as contractual representative agent with respect to the Collateral. At the expense of the Credit Parties, promptly upon the Discharge of all First Lien Debt, the First Lien Agent shall deliver the remainder of the Collateral, if any, in its possession to the Second Lien Agent and, to the extent practicable, transfer control of the remainder of the Collateral, if any, under its control to the Second Lien Agent, in each case, except as may otherwise be required by applicable law or court order (it being understood that prior to the Discharge of all First Lien Debt, the provisions of this Agreement shall apply to all such documents and each other document relating to all or any part of the Collateral, including, without limitation, the provisions restricting the Second Lien Agent from taking action to enforce rights in and to the Collateral pursuant to such documents) (including, without limitation, cooperate with the Second Lien Agent in assigning or transferring any rights of the First Lien Agent under landlord agreements, bailee agreements, cash management control agreements or any other similar agreements to the extend that such rights are assignable).
17. Conflict. In the event of any conflict between any term, covenant or condition of this Agreement and any term, covenant or condition of any of the First Lien Debt Documents or any of the Second Lien Debt Documents, the provisions of this Agreement shall control and govern.
18. Headings. The paragraph headings used in this Agreement are for convenience only and shall not affect the interpretation of any of the provisions hereof.
19. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of photocopies of the signature pages to this Agreement by facsimile shall be effective as delivery of a manually executed counterpart hereof.
20. Severability. In the event that any provision of this Agreement is deemed to be invalid, illegal or unenforceable by reason of the operation of any law or by reason of the interpretation placed thereon by any court or governmental authority, the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby, and the affected provision shall be modified to the minimum extent permitted by law so as most fully to achieve the intention of this Agreement.
21. Continuation of Subordination; Termination of Agreement. This Agreement shall remain in full force and effect until Payment in Full of the First Lien Debt, after which this Agreement shall terminate without further action on the part of the parties hereto.
22. GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES. EACH PARTY HERETO HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED THEREIN AND IRREVOCABLY AGREES THAT, SUBJECT TO FIRST LIEN AGENT’S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH COURTS. EACH PARTY HERETO EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. EACH PARTY HERETO HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO SUCH PARTY, AS THE CASE MAY BE, AT SUCH PERSON’S ADDRESS SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.
23. WAIVER OF JURY TRIAL. EACH SECOND LIEN LENDER PARTY, EACH CREDIT PARTY AND FIRST LIEN AGENT (FOR ITSELF AND FOR AND ON BEHALF OF EACH FIRST LIEN LENDER) HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH SECOND LIEN LENDER PARTY, EACH CREDIT PARTY AND FIRST LIEN AGENT (FOR ITSELF AND FOR AND ON BEHALF OF THE FIRST LIEN
LENDERS) ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT, THE SECOND LIEN DEBT DOCUMENTS AND THE FIRST LIEN DEBT DOCUMENTS, AS THE CASE MAY BE, AND THAT SUCH PERSONS WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RESPECTIVE RELATED FUTURE DEALINGS. EACH OF EACH SECOND LIEN LENDER PARTY, EACH CREDIT PARTY AND FIRST LIEN AGENT (FOR ITSELF AND FOR AND ON BEHALF OF EACH FIRST LIEN LENDER) WARRANTS AND REPRESENTS THAT SUCH PERSON HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT SUCH PERSON KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Second Lien Agent, the Credit Parties and the First Lien Agent have caused this Agreement to be executed as of the date first above written.
| THE SECOND LIEN AGENT:
S.A.C. CAPITAL ASSOCIATES, LLC, as Administrative Agent and Collateral Agent | ||||
| By: | /s/ Xxxxx Xxxxxxxx | |||
| Name: |
Xxxxx Xxxxxxxx | |||
| Title: |
General Counsel | |||
| THE COMPANIES:
THE WET SEAL, INC. | ||||
| By: | /s/ Xxxxxxx X. Xxxxxxxxx | |||
| Name: |
Xxxxxxx X. Xxxxxxxxx | |||
| Title: |
EVP-CFO | |||
| THE WET SEAL RETAIL, INC. | ||||
| By: | /s/ Xxxxxxx X. Xxxxxxxxx | |||
| Name: |
Xxxxxxx X. Xxxxxxxxx | |||
| Title: |
Secretary | |||
| WET SEAL CATALOG, INC. | ||||
| By: | /s/ Xxxxxxx X. Xxxxxxxxx | |||
| Name: |
Xxxxxxx X. Xxxxxxxxx | |||
| Title: |
Secretary | |||
| THE FACILITY GUARANTOR:
WET SEAL GC, INC. | ||||
| By: | /s/ Xxxxxxx X. Xxxxxxxxx | |||
| Name: |
Xxxxxxx X. Xxxxxxxxx | |||
| Title: |
Secretary | |||
| THE FIRST LIEN AGENT:
FLEET RETAIL GROUP, INC. | ||||
| By: | /s/ Xxxxxx X. Xxxxx | |||
| Name: |
Xxxxxx X. Xxxxx | |||
| Title: |
Director | |||
