Exhibit 4.72
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INTERCREDITOR AGREEMENT
between
FOOTHILL CAPITAL CORPORATION
and
STATE STREET BANK AND TRUST COMPANY
Dated as March 31, 1998
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INTERCREDITOR AGREEMENT
THIS INTERCREDITOR AGREEMENT dated as of March 31, 1998 (this
"Agreement") is made by and between State Street Bank and Trust Company (the
"Subordinated Creditor") solely in its capacity as trustee and collateral agent
under and pursuant to the Subordinated Creditor Indenture (as hereinafter
defined), and Foothill Capital Corporation, a California corporation (the
"Lender"), as senior secured lender under and pursuant to the Lender Credit
Agreement (as hereinafter defined).
RECITALS
A. Discovery Zone, Inc., a Delaware corporation (the "Borrower"),
certain subsidiaries of the Borrower, and the Subordinated Creditor entered into
an Indenture, dated July 22, 1997 (the "Subordinated Creditor Indenture"),
pursuant to which and upon the terms and conditions stated there in indebtedness
was incurred by the Borrower (the "Subordinated Indenture Indebtedness"), the
repayment of which is secured by security interests in and liens on the assets
and properties (the "Collateral") described in the Security Agreement (the
"Security Agreement") and the Collateral Assignment of Trademarks (the
"Trademark Assignment" and together with the Security Agreement and the
Subordinated Creditor Indenture, the "Subordinated Indenture Agreements"), each
dated July 22, 1997, and each by and between the Borrower and the Subordinated
Creditor.
B. As of March __, 1998, the Borrower and the Lender entered into a
Loan and Security Agreement (the "Lender Credit Agreement") pursuant to which
the Lender agreed, upon the terms and conditions stated therein, to make loans
and advances to or to issue letters of credit (or guaranties in respect thereof)
on account of the Borrower (and certain of its subsidiaries) in an aggregate
principal amount and undrawn amount, as the case may be, not to exceed in the
aggregate $10 million (such aggregate principal and undrawn amount, together
with all interest, fees, and expenses payable thereon or with respect thereto
being the "Maximum Senior Indebtedness"), secured by security interests in and
liens on the Collateral pursuant to the Lender Credit Agreement and the
collateral security documents executed and delivered in connection therewith
(the "Senior Security Agreements" and together with the Lender Credit Agreement,
the "Senior Loan Agreements")
C. One of the conditions of the Lender Credit Agreement is that the
priority of the security interests in and liens on the Collateral under the
Senior Loan Agreements be senior to the security interests in and liens on the
Collateral under the Subordinated Indenture Agreements, in the manner and to the
extent provided in this Agreement.
D. The Lender and the Subordinated Creditor desire to enter into this
Agreement concerning the respective rights of the Lender and the Subordinated
Creditor with respect to the priority of their respective security interests in
and liens on the Collateral.
E. The terms of Sections 10.02. 12.01 and 12.02 of the Subordinated
Creditor Indenture permit the Borrower to enter into the Lender Credit
Agreement, subject to compliance with certain conditions, and in connection
therewith authorize and direct the Subordinated Creditor to enter into a
subordination agreement substantially in the form of this Agreement.
F. The Lender and the Subordinated Creditor hereby agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01. Terms Defined Above and in the Recitals. As used in this
Agreement, the following terms shall have the respective meanings indicated in
the opening paragraph hereof and in the above Recitals:
"Agreement"
"Borrower"
"Collateral"
"Lender"
"Lender Credit Agreement"
"Maximum Senior Indebtedness"
"Security Agreement"
"Senior Security Agreements"
"Senior Loan Agreements"
"Subordinated Creditor"
"Subordinated Creditor Indenture"
"Subordinated Indenture Indebtedness"
"Subordinated Indenture Agreements"
"Trademark Assignment"
Section 1.02. Other Definitions. As used in this Agreement, the
following terms shall have the meanings set forth below:
"Event of Default" shall have the meaning ascribed thereto in the
Lender Credit Agreement.
"Fully Paid" shall mean the payment in cash in full of all obligations
under each Lender Loan Document at such time when there shall no longer be any
obligation of the Lender to make loans or advances or issue letters of credit
(or guaranties in respect thereof) and there shall no
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longer be any letter of credit (or guaranty in respect thereof) outstanding
thereunder or such letter of credit (or guaranty in respect thereof) shall have
been cash collateralized in an amount not less than 105% of the undrawn amount
thereof.
"Insolvency Proceeding" shall mean any proceeding for the purposes of
dissolution, winding up, liquidation, arrangement or reorganization of the
Borrower or its subsidiaries, or their respective successors or assigns, whether
in bankruptcy, insolvency, arrangement, reorganization or receivership
proceedings or upon an assignment for the benefit of creditors or any other
marshaling of the assets and liabilities of the Borrower or its subsidiaries, or
their respective successors or assigns.
"Issue Date" shall have the meaning ascribed thereto in the
Subordinated Creditor Indenture.
"Lender Loan Documents" shall mean the Senior Loan Agreements, the
collateral documents and instruments executed and delivered in connection
therewith, and such other agreements, instruments and certificates as defined or
referred to in the Lender Credit Agreement, as any or all of the same may be
amended or supplemented from time to time.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction,
excluding true lease and consignment filings).
"Lien Priority" shall mean with respect to any Lien of the Lender or
the Subordinated Creditor in the Collateral, the order of priority of such Lien
as specified in Section 2.01.
"Loan Documents" shall mean the Lender Loan Documents and the
Subordinated Creditor Loan Documents.
"McDonald's" shall mean the XxXxxxxx'x Corporation, a Delaware
corporation, and its successors and assigns.
"McDonald's Collateral" shall mean those certain fourteen parcels of
real property and related fixtures, including any proceeds thereof which
properties and proceeds are subject to McDonald's Senior Liens.
"McDonald's Secured Note" shall mean a secured promissory note issued
on the Issue Date by the Borrower in favor of McDonald's pursuant to the Plan of
Reorganization represents restructured secured claims against the Borrower in an
estimated aggregate principal amount of up to $4,600,000.
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"McDonald's Secured Rent Deferral Notes" shall mean secured promissory
notes to be issued on the Issue Date by the Borrower in favor of McDonald's
pursuant to the Plan of Reorganization, which notes represent restructuring of
rent deferrals which McDonald's granted to the Borrower during bankruptcy
proceedings of the Borrower in an estimated aggregate principal amount of to
$300 000.
"McDonald's Senior Liens" shall mean the first priority Liens of
McDonald's on the McDonald's Collateral, as set forth in the first mortgages,
deeds of trust and/or deeds to secure debt, which Liens secure, among other
things, the payment of the McDonald's Secured Note, the McDonald's Secured Rent
Deferral Notes and any obligations of the Debtors (as defined in the Plan of
Reorganization) or the Borrower or any of the other Reorganized Debtors (as
defined in the Plan of Reorganization) that may arise under (i) the agreement to
indemnify as set forth in Section 10.3(f) and Section 11.2(a) (iii) of the
Agreement and Plan of-Merger, dated as of August 30, 1994, by and among
Discovery Zone, Inc., Discovery Zone International, Inc., Leaps & Bounds, Inc.
and McDonald's and (ii) the Stipulation and Order Between Debtors and McDonald's
Providing for the Resolution, Settlement and Compromise of Disputes and for Rent
Deferrals and Allowance of Certain Claims, entered by the United States
Bankruptcy Court for the District of Delaware on November 18, 1996, which Liens
are senior to the subordinate liens on the McDonald's Collateral granted by the
Borrower to Subordinated Creditor as set forth in the Subordination Agreement,
dated as of July ___, 1997, by and between McDonald's and the Subordinated
Creditor.
"Party" shall mean any signatory to this Agreement.
"Plan of Reorganization" shall have the meaning ascribed thereto in the
Subordinated Creditor Indenture.
"Senior Liabilities" shall mean the "Obligations", contingent or
otherwise, of the Borrower to the Lender as defined in the Lender Credit
Agreement and the obligations, contingent or otherwise, of the subsidiaries of
the Borrower arising under or pursuant to the Lender Loan Documents, including,
in each case, interest, fees and expenses accruing after the initiation of any
Insolvency Proceeding (irrespective of whether allowed as a claim in such
proceeding), and including the secured claims of the Lender in respect of the
Collateral in any Insolvency Proceeding.
"Subordinated Creditor Enforcement Event" shall mean the occurrence and
continuance of an "Event of Default" under Section 6.01 of the Subordinated
Creditor Indenture.
"Subordinated Creditor Loan Documents" shall mean the Subordinated
Indenture Agreements, the Collateral Agreements (as defined in the Subordinated
Creditor Indenture), the Subordinated Creditor Notes, the real property
mortgages referred to in the Subordinated Creditor Indenture (now existing or
hereafter negotiated, executed, delivered and recorded), and such other
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agreements, instruments and certificates as defined or referred to in the
Subordinated Creditor Indenture, as any or all of the same may be amended or
supplemented from time to time.
"Subordinated Creditor Notes" shall mean the notes issued to the
holders thereof pursuant to the Subordinated Creditor Indenture.
"Subordinated Liabilities" shall mean the "Obligations", contingent or
otherwise, of the Borrower and the Subsidiary Guarantors (as defined in the
Subordinated Creditor Indenture) to the Subordinated Creditor and the holders of
the Subordinated Creditor Notes defined in Section 1.01 of the Subordinated
Creditor Indenture, including, in each case, interest, fees and expenses
accruing after the initiation of any Insolvency Proceeding (irrespective of
whether allowed as a claim in such proceeding), and including the secured claim
of the Subordinated Creditor in respect of the Collateral in any Insolvency
Proceeding.
"Trigger Event" shall mean any of (a) the occurrence of an Event of
Default, (b) the acceleration of or demand for payment with respect to the
Senior Liabilities by the Lender pursuant to the Lender Credit Agreement, or (c)
the commencement of any action by the Lender, whether judicial or otherwise, for
the enforcement of the Lender's rights and remedies under any of the Lender Loan
Documents, including (i) commencement of any receivership or foreclosure
proceedings against or any other sale of, collection on or disposition of any
Collateral, including any notification to third parties to make payment directly
to the Lender, (ii) exercise of any right of set-off, (iii) commencement of any
Insolvency Proceeding, and (iv) commencement of any action or proceeding against
the Borrower to recover all or any part of the Senior Liabilities.
Section 1.03. Singular and Plural. All definitions herein (whether set
forth herein directly or by reference to definitions in other documents) shall
be equally applicable to both the singular and the plural forms of the terms
defined.
Section 1.04. Miscellaneous. The words "hereof", "herein" or
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Article and section references are to articles and sections of this
Agreement unless otherwise specified. The term "including" shall mean
"including, without limitation."
ARTICLE II.
LIEN PRIORITY
Section 2.01. Agreement to Subordinate. The Subordinated Creditor
hereby agrees that the Liens of the Subordinated Creditor in the Collateral are
and shall be subordinate in priority to the Lender's Liens in the Collateral
securing the Senior Liabilities up to and not exceeding the Maximum Senior
Indebtedness; provided, however, that the terms, provisions and restrictions of
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this Agreement shall be void and of no further force and effect in the event,
but only to the extent, that the Lender's Liens in the Collateral are avoided,
disallowed, set aside or otherwise invalidated in any judicial proceeding by a
court, tribunal or administrative agency of competent jurisdiction. The
subordination of Liens by Subordinated Creditor in favor of the Lender herein
shall not be deemed to subordinate the Subordinated Creditor's Liens to the
Liens of any other Person.
Section 2.02. Standstill Period. If a Subordinated Creditor Enforcement
Event has occurred and is continuing, the Subordinated Creditor may give the
Lender written notice thereof, specifying the nature of the Subordinated
Creditor Enforcement Event in reasonable detail. If such Subordinated Creditor
Enforcement Event is continuing for more than 180 days after the delivery of
such notice, and if the Lender has not on or before the expiration of such
180-day period notified the Subordinated Creditor that the Lender has commenced
one or more types of enforcement actions described in Section 3.01 or that the
Borrower is the subject of an Insolvency Proceeding, then the Subordinated
Creditor may, subject to the Lien Priority and prior application of proceeds of
the Collateral to the Senior Liabilities, as provided herein, take one or more
types of enforcement actions described in Section 3.01 or otherwise available to
the Subordinated Creditor under the Subordinated Creditor Indenture and the
other Subordinated Creditor Loan Documents. If Lender has taken or commenced any
such enforcement action within such 180-day period and thereafter discontinues
such enforcement action or actions, and no Insolvency Proceeding is pending
against the Borrower and no action described in Section 2.01 is then being taken
by the Lender, and if, following the expiration of such 180-day period, such
Subordinated Creditor Enforcement Event is then continuing, then the
Subordinated Creditor may, subject to the Lien Priority and prior application of
proceeds of the Collateral to the Senior Liabilities, as provided herein, take
one or more types of enforcement actions described in Section 3.01 or otherwise
available to the Subordinated Creditor under the Subordinated Creditor Indenture
and the other Subordinated Creditor Loan Documents.
Section 2.03. Exercise of Rights.
(a) Subject to Section 2.02, the Subordinated Creditor may
exercise, and nothing herein shall constitute a waiver of any right it may have
at law or equity to receive notice of, or to commence or join with any creditor
in commencing any Insolvency Proceeding or to join or participate in, any action
or proceeding or other activity described in Section 3.01; provided, however,
that exercise of any such right by the Subordinated Creditor shall be subject to
the Lien Priority and prior application of proceeds of Collateral to the Senior
Liabilities as provided herein.
(b) The Subordinated Creditor may make such demands or file
such claims in respect of the Subordinated Liabilities as may be necessary to
prevent the waiver or bar of such claims under applicable statutes of
limitations or other statutes, court orders or rules of procedure, but except as
provided in this Section 2.03, the Subordinated Creditor shall not take any
actions restricted by Section 3.01 in respect of such claims until the Senior
Liabilities up to the amount of the Maximum Senior Indebtedness are Fully Paid.
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Section 2.04. Priority of Liens. Irrespective of the order of recording
of mortgages, financing statements, security agreements or other instruments,
and irrespective of the descriptions of Collateral contained in the Loan
Documents, including any financing statements, the Parties agree among
themselves that their respective Liens and security interests in the Collateral
shall be governed by the Lien Priority, which shall be controlling in the event
of any conflict between this Agreement and any of the Loan Documents.
Section 2.05. Notice of Trigger Event. The Lender and the Subordinated
Creditor each agree that it will notify the other if it receives actual notice
of the occurrence of a Trigger Event or Subordinated Creditor Enforcement Event,
respectively, not later than 30 days after the date of any such occurrence, such
notices to be sent in accordance with Section 5.06. The foregoing to the
contrary notwithstanding, the Lender and the Subordinated Creditor shall not
incur any liability to the other for the failure to provide any such notice so
long as the failure to so provide such notice was not the result of wilful
misconduct, bad faith, or gross negligence.
ARTICLE III.
ACTIONS OF THE PARTIES
Section 3.01. Limitation on Certain Actions. Subject to Section 2.02,
so long as any of the Senior Liabilities up to the amount of the Maximum Senior
Indebtedness are not Fully Paid, the Subordinated Creditor will not, without the
prior written consent of the Lender, take any of the following actions:
(a) commencement of any action, whether judicial or otherwise, for the
enforcement of the Lender's rights and remedies as a secured creditor with
respect to the Collateral including commencement of any receivership or
foreclosure proceedings against or any other sale of, collection on, or
disposition of any Collateral, or
(b) notifying any third party account debtors of the Borrower or its
subsidiaries to make payment directly to it or to any of its agents or other
Persons acting on its behalf.
Section 3.02. Notices. The Lender shall provide the Subordinated
Creditor with written notice at least 15 days prior to the Lender first
exercising any of its secured creditor remedies with respect to the Collateral.
The foregoing to the contrary notwithstanding, the Lender (a) shall not be
obligated to provide such prior written notice in the event that exigent
circumstances require that the Lender act immediately in order to preserve,
protect, or obtain possession or control over the Collateral or any portion
thereof; provided, however, that, in the event that any such exigent
circumstances do require the Lender to so act immediately, the Lender agrees
promptly to provide the Subordinated Creditor with written notice as soon as
practicable following the Lender first exercising any of its secured creditor
remedies with respect to the Collateral, and (b) the Lender shall not incur any
liability to the Subordinated Creditor for the failure to provide any such
notice
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so long as the failure to so provide such notice was not the result of wilful
misconduct, bad faith, or gross negligence.
Section (a) Perfection of Possessory Security Interests. For the
limited purpose of perfecting the security interests of the Parties in those
types or items of Collateral in which a security interest only may be perfected
by possession or control, each Party hereby appoints the other as its
representative for the limited purpose of possessing on its behalf any such
Collateral that may come into the possession or control of such other Party from
time to time, and each Party agrees to act as the other's representative for
such limited purpose of perfecting the other's security interest by possession
or control through a representative, provided that neither Party shall incur any
liability to the other by virtue of acting as the other's representative
hereunder, and either Party may relinquish possession of Collateral in its
possession or control without the consent of the other Party, and without
incurring liability to the other Party unless there is an express written
agreement to the contrary in effect between the Parties.
ARTICLE IV.
ENFORCEMENT OF PRIORITIES
Section 4.01. In Furtherance of Lien Priorities. The Lender and the
Subordinated Creditor agree as follows:
(a) Upon any distribution of all or any of the assets of the
Borrower or its subsidiaries to creditors of the Borrower or its subsidiaries
(whether in cash, securities or other property) in connection with any
Insolvency Proceeding, which otherwise would be payable or deliverable upon or
with respect to the Collateral, such assets shall be paid or delivered by the
Subordinated Creditor directly to the Lender for application (in the case of
cash) to or as collateral (in the case of securities or other non-cash property)
for the payment or prepayment of the Senior Liabilities until the Senior
Liabilities up to the Maximum Senior Indebtedness shall have been Fully Paid.
(b) If any Insolvency Proceeding is commenced by or against
the Borrower or its subsidiaries, the Subordinated Creditor, to the extent party
to any such Insolvency Proceeding, and to the extent it has commenced any action
described in Section 3.01, shall (i) use its commercially reasonable efforts to
duly and promptly take such action as the Lender may reasonably request to
collect the proceeds of Collateral for the account of the Lender at Lender's
reasonable cost and expense and to file appropriate claims or proofs of claim in
respect of the Subordinated Liabilities and (ii) receive any and all payments or
distributions which may be payable or deliverable upon or with respect to the
Collateral and to hold such payments or distributions in trust for the Lender to
the extent set forth herein; provided, however, that Subordinated Creditor shall
have no liability to the Lender regarding the adequacy of any such proceeds or
for any action
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taken pursuant to Lender's request under clause (i) except for liabilities
resulting from Subordinated Creditor's wilful misconduct, bad faith, or gross
negligence.
(c) All payments or distributions upon or with respect to the
Subordinated Liabilities which are received by the Subordinated Creditor
contrary to the provisions of this Agreement shall be segregated from other
funds and property held by the Subordinated Creditor and shall be held in trust
for the Lender and Subordinated Creditor shall forthwith pay over such remaining
proceeds to the Lender in the same form as so received (with any necessary
endorsement without recourse or warranty) to be applied (in the case of cash) to
or held as Collateral (in the case of non-cash property or securities) for the
payment or prepayment of the Senior Liabilities up to the Maximum Senior
Indebtedness in accordance with the terms of the Lender Credit Agreement;
provided, however, that if, after such application of proceeds, the Senior
Liabilities up to the Maximum Senior Indebtedness are Fully Paid, the balance of
any amounts received by the Lender from the Subordinated Creditor shall be
segregated by the Lender from the Lender's other funds and properties and the
Lender shall hold such surplus amounts in trust for the Subordinated Creditor
and shall forthwith pay over such amounts to the Subordinated Creditor in the
same form as so received (with any necessary endorsement without recourse or
warranty) to be applied (in the case of cash) to or held as Collateral (in the
case of non-cash property or securities) for the payment or prepayment of the
Subordinated Liabilities in accordance with the terms of the Subordinated
Creditor Indenture.
(d) Each of the Lender and the Subordinated Creditor is hereby
authorized to demand specific performance of this Agreement, whether or not the
Borrower shall have complied with any of the provisions hereof applicable to it,
at any time when the other shall have failed to comply with any of the
provisions of this Agreement applicable to it, provided, however, the remedy of
specific performance shall not be available, and the asserting party shall be
free to assert any and all legal defenses it may possess, if such remedy would
result in, or otherwise constitute, a violation of the Employee Retirement
Income Security Act of 1974, as amended. Each of the Lender and the Subordinated
Creditor hereby irrevocably waives any defense based on the adequacy of a remedy
at law, which might be asserted as a bar to such remedy of specific performance.
(e) This Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the Senior
Liabilities is, other than as a result of any wilful misconduct, bad faith, or
gross negligence of the Lender, rescinded or must otherwise be returned by the
Lender upon the insolvency, bankruptcy or reorganization of the Borrower or
otherwise, all as though such payment had not been made.
4.02 Control of Dispositions of Collateral and Effect thereof on Junior
Liens.
Except to the extent, if any, expressly prohibited by the terms and
conditions of Section 4.15 or Section 5.01 of the Subordinated Creditor
Indenture,
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(a) each Party hereby agrees that if the Party with the senior security
interest in such Collateral shall have agreed with the Borrower (or its
subsidiary, as applicable) that the Borrower (or its subsidiary, as
applicable) may sell or otherwise dispose of such Collateral, then the
security interest of the other Party in such Collateral shall be
released by such other Party concurrently with such sale or other
disposition and the net cash proceeds therefrom may, at the sole
election of the Party with the senior security interest therein, be
applied to the claims of the Parties in the manner provided for herein,
or be used by the Borrower (or its subsidiary, as applicable) for its
lawful general corporate purposes,
(b) each Party hereby further agrees that any UCC collection, sale, or
other disposition of Collateral by the Lender shall be free and clear
of any Lien of the Subordinated Creditor in such Collateral, provided
that the Subordinated Creditor shall retain a Lien (having the same
priority as the Lien it previously had on the item of Collateral that
was sold or otherwise disposed of) on the proceeds of such collection,
sale, or other disposition (except to the extent such proceeds are
applied to the Senior Liabilities, as provided herein, or are used by
the Borrower (or its subsidiary, as applicable) for general corporate
purposes as set forth in subsection (a) of this Section 4.02), and
(c) to the extent reasonably requested by either Party, the other Party
will cooperate in providing any necessary or appropriate releases to
permit a collection, sale, or other disposition of Collateral, as
provided in subsections (a) or (b) of this Section 4.02, by the Party
holding the senior Lien therein free and clear of the other Party's
junior Lien.
ARTICLE V.
MISCELLANEOUS
Section 5.01. Rights of Subrogation. The Subordinated Creditor agrees
that no payment or distribution to the Lender pursuant to the provisions of this
Agreement shall entitle the Subordinated Creditor to exercise any rights of
subrogation in respect thereof until the Senior Liabilities up to the Maximum
Senior Indebtedness shall have been Fully Paid.
Section 5.02. Further Assurances. The Parties will, at their own
expense and at any time and from time to time, promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that either Party may reasonably request, in order to
protect any right or interest granted or purported to be granted hereby or to
enable the Lender or the Subordinated Creditor to exercise and enforce its
rights and remedies hereunder; provided, however, that neither Party shall be
required to execute any instruments or documents, or take any other action
referred to in this Section 5.02 to the extent that such action would contravene
any law, order or other legal requirement binding upon such Party, and in the
event of a controversy or dispute, either Party may interplead any payment or
distribution in any
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court of competent jurisdiction, without further responsibility in respect of
such payment or distribution under this Section 5.02.
Section 5.03. Defenses Similar to Suretyship Defenses. All rights and
interests of the Lender hereunder, and all agreements and obligations of the
Subordinated Creditor under this Agreement, shall remain in full force and
effect irrespective of:
(a) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Senior Liabilities, or any other
amendment or waiver of or any consent to departure from the Lender Loan
Documents, provided, however, that this clause (a) shall not apply to, and the
Subordinated Creditor's Liens and security interests in the Collateral shall not
be subordinated in priority by virtue of this Agreement to the Lender's Liens
and security interests therein to the extent that the Senior Liabilities exceed
the Maximum Senior Indebtedness without the express written consent of the
Subordinated Creditor; or
(b) any release or non-enforcement of the Lender's Liens with
respect to any Collateral, or any release, amendment or waiver of or consent to
departure from any guaranty for all or any of the Senior Liabilities.
Section 5.04. Waiver. Except as otherwise provided herein, to the
maximum extent permitted by applicable law, the Subordinated Creditor hereby
waives, with respect to the Collateral to which the Lien Priority hereunder
relates (i) any failure, omission, delay or lack on the part of the Lender to
enforce, assert or exercise any right, power or remedy conferred on the Lender
in any of the Lender Loan Documents or this Agreement or the inability of the
Lender to enforce any provision of the Lender Loan Documents or this Agreement,
and (ii) without limiting the generality of the foregoing, any requirement that
the Lender protect, secure, perfect or insure any Liens or other lien or any
property subject thereto or exhaust any right or take any action against the
Borrower or any other Person or any Collateral; provided, however, that the
foregoing shall not be deemed to conflict with the proviso to Section 2.01.
Section 5.05. Amendments, Etc. No amendment or waiver of any provision
of this Agreement nor consent to any departure by any Party shall in any event
be effective unless the same shall be in writing and signed by the each Party,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
Section 5.06. Addresses for Notices. All demands, notices and other
communications provided for hereunder shall be in writing and,
if to the Subordinated Creditor, mailed or sent by telecopy or delivered to it,
addressed to it as follows:
State Street Bank and Trust Company
Xxx Xxxxxxxxxxxxx Xxxxx
00
Xxxxxx, XX 00000
Attention: Corporate Trust Department
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
if to the Lender, mailed or sent by telecopy or delivered to it, addressed to it
as follows:
Foothill Capital Corporation
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Business Finance Division Manager
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
, or as to any party at such other address as shall be designated by such party
in a written notice to the other parties complying as to delivery with the terms
of this Section. All such demands, notices and other communications shall be
effective, when mailed, two business days after deposit in the mails, postage
prepaid, when sent by telecopy, when receipt is acknowledged by the receiving
telecopy equipment (or at the opening of the next business day if receipt is
after normal business hours), or when delivered, as the case may be, addressed
as aforesaid.
Section 5.07. No Waiver, Remedies. No failure on the part of any Party
to exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
Section 5.08. Continuing Agreement, Transfer of Senior Liabilities.
This Agreement is a continuing agreement and shall (i) remain in full force and
effect until the Senior Liabilities and, solely for the purposes of Section
5.14, the Subordinated Liabilities shall have been Fully Paid, (ii) be binding
upon the Parties and their successors and assigns, and (iii) inure to the
benefit of and be enforceable by the Parties and their respective successors,
transferees and assigns. Without limiting the generality of the foregoing clause
(iii), the Lender or the Subordinated Creditor may assign or otherwise transfer
the Senior Liabilities or the Subordinated Liabilities, as applicable, to any
other Person (other than Borrower or an Affiliate of Borrower), and such other
Person shall thereupon become vested with all the rights in respect thereof
granted to the Lender or Subordinated Creditor, as the case may be, herein or
otherwise.
Section 5.09. Governing Law; Entire Agreement. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of New York
except as otherwise preempted by applicable federal law. This Agreement
constitutes the entire agreement and understanding among the Parties with
respect to the subject matter hereof and supersedes any prior agreements,
written or oral, with respect thereto.
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Section 5.10. Counterparts. This Agreement may be executed in any
number of counterparts, and it is not necessary that the signatures of all
Parties be contained on any one counterpart hereof, each counterpart will be
deemed to be an original, and all together shall constitute one and the same
document.
Section 5.11. No Third Party Beneficiary. This Agreement is solely for
the benefit of the Parties (and their successors and assigns). No other Person
(including the Borrower or any subsidiaries or affiliates of the Borrower) shall
be deemed to be a third party beneficiary of this Agreement.
Section 5.12 Headings. The headings of the articles and Sections of
this Agreement are inserted for purposes of convenience only and shall not be
construed to affect the meaning or construction of any of the provisions hereof.
Section 5.13. Severability. If any of the provisions in this Agreement
shall for any reason, be held invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement and shall not invalidate the Lien Priority or any
other priority set forth in this Agreement.
Section 5.14. Payment in Full of Senior Liabilities. From and after the
date on which the Senior Liabilities (up to the Maximum Senior Indebtedness)
have been Fully Paid:
(a) All payments or distributions received by the Lender with
respect to the Collateral shall be segregated from other funds and property held
by the Lender and held in trust by the Lender for the Subordinated Creditor and
shall be promptly paid over to the Subordinated Creditor in the same form as
received (with any necessary endorsement without recourse or warranty) to be
applied to or held for the payment or prepayment of the Subordinated Liabilities
in accordance with the terms of the Subordinated Creditor Indenture; and
(b) The Lender will promptly execute and deliver all further
instruments and documents, and take all further acts that may be necessary or
desirable, or that the Subordinated Creditor may reasonably request, to permit
the Subordinated Creditor to enforce the Subordinated Liabilities or recover any
proceeds of the Collateral;
provided, however, that the Lender shall not be required to pay over any payment
or distribution, execute any instruments or documents, or take any other action
referred to in this Section 5.14 to the extent that such action would contravene
any law, order or other legal requirement binding upon the Lender, and in the
event of a controversy or dispute, the Lender may interplead any payment or
distribution in any court of competent jurisdiction, without further
responsibility in respect of such payment or distribution under this Section
5.14.
Section 5.15. Other Non-Subordinated Encumbered Assets. Notwithstanding
any term herein to the contrary, it is hereby acknowledged and agreed that the
subordination set forth in this
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Agreement (and the term "Collateral" as defined in this Agreement) does not
include or apply to (i) cash, securities instruments and/or certificates in an
escrow account established with and pledged to the Subordinated Creditor under
and pursuant to a certain Escrow and Security Agreement between the Borrower and
the Subordinated Creditor dated July 22, 1997, and (ii) McDonald's rights in the
McDonald's Collateral encumbered by the McDonald's Senior Liens.
Section 5.16. Subordinated Creditor Trustee Status. Notwithstanding any
term herein to the contrary, it is hereby expressly agreed and acknowledged that
the subordination and related agreements set forth herein by the Subordinated
Creditor are made solely in its capacity as trustee and collateral agent under
the Subordinated Creditor Indenture and with respect to the Subordinated
Creditor Notes (and not in its individual commercial capacity, except to the
extent that it is or becomes the holder of any such Subordinated Creditor Note).
The Subordinated Creditor shall not have any duties, obligations, or
responsibilities to the Lender under this Agreement except as expressly set
forth herein. Nothing in this Agreement shall be construed to operate as a
waiver by the Subordinated Creditor, with respect to the Borrower or any holder
of any Subordinated Indenture Indebtedness, of the benefit of any exculpatory
provisions, presumptions, indemnities, or reliance rights contained in the
Subordinated Creditor Indenture, and the Borrower expressly agrees that as
between itself and the Subordinated Creditor, the Subordinated Creditor shall
have such benefit with respect to all actions or omissions by the Subordinated
Creditor pursuant to this Agreement. For all purposes of this Agreement,
Subordinated Creditor may (a) rely in good faith, as to matters of fact, on any
representation of fact believed by Subordinated Creditor to be true (without any
duty of investigation) and that is contained in a written certificate of any
authorized representative of Borrower, of the Lender, or of any holder of any
Subordinated Indenture Indebtedness, (b) rely in good faith, as to matters of
law, on any advice received from its legal counsel, and shall have no liability
for any action or omission taken in reliance thereon, and (c) assume in good
faith (without any duty of investigation), and rely upon, the genuineness, due
authority, validity, and accuracy of any certificate, instrument, notice, or
other document believed by it in good faith to be genuine and presented by the
proper person.
[Signature page to follow.]
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IN WITNESS WHEREOF, the Lender and the Subordinated Creditor each has
caused this Agreement to be duty executed and delivered as of the date first
above written.
LENDER: FOOTHILL CAPITAL CORPORATION
By: /s/ Xxxxx Xxxxx
---------------------------------
Name: Xxxxx Xxxxx
Title: AVP
SUBORDINATED CREDITOR: STATE STREET BANK AND TRUST COMPANY,
as trustee and collateral agent
By: /s/ Xxxx Xxx Xxxxxx
---------------------------------
Name: Xxxx Xxx Xxxxxx
Title: Vice President
15
ACKNOWLEDGMENT
The undersigned ("Borrower"), hereby acknowledges that it has
received a copy of the foregoing Intercreditor Agreement and consents thereto,
and agrees to recognize all rights granted thereby to the parties thereto, and
will not do any act or perform any obligation which is not in accordance with
the agreements set forth in such Intercreditor Agreement. Borrower further
acknowledges that it is not an intended beneficiary or third party beneficiary
under the Intercreditor Agreement.
Dated as of March 31, 1998.
DISCOVERY ZONE, INC.
a Delaware corporation
By: /s/ Xxxxxx Xxxxxx
---------------------------------
Name: Xxxxxx Xxxxxx
Title: Senior Vice President-Chief Financial
Officer
