AMENDED AND RESTATED INTERCREDITOR AGREEMENT

 

 

among them, in accordance with such priorities, of proceeds of such assets and properties upon any foreclosure thereon or other disposition thereof;

 

WHEREAS, the Note Indenture has been or is about to be amended and supplemented by the First Supplemental Indenture dated as of the date hereof the (the “Supplemental Indenture”) to, inter alia, permit the Debtors to borrow under a separate credit facility up to an additional $15.0 million (plus the principal amount of new notes issued in connection with the accrual of interest thereunder in respect of the principal amount of such Notes) of secured debt, in the form of $15.0 million aggregate principal amount (plus new PIK notes) of Third Priority Senior Secured Notes due 2008 and to provide for permitted liens to secure such debt;

 

WHEREAS, each of Creditors desires to amend and restate the Existing Intercreditor Agreement to (i) confirm the relative priority of the security interests of Creditors in the assets and properties of Debtor and (ii) provide for the orderly sharing among them, in accordance with such priorities, of proceeds of such assets and properties upon any foreclosure thereon or other disposition thereof.

 

NOW THEREFORE, in consideration of the mutual benefits accruing to Creditors hereunder and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby agree as follows:

 

1.                                       DEFINITIONS

 

As used above and in this Intercreditor Agreement, the following terms shall have the meanings ascribed to them below:

 

1.1                                 “Agreements” shall mean, collectively, the Revolving Loan Agreements, the Noteholder Agreements and the Third Priority Agreements.

 

1.2                                 “Capital Stock Assets” shall mean all Capital Stock of Atlantic Express Transportation Corp. owned by Atlantic Express Transportation Group, Inc., and all Capital Stock of each direct or indirect subsidiary of Atlantic Express Transportation Corp. owned by the Atlantic Express Transportation Corp. or any such subsidiary, and in each case all proceeds thereof.

 

1.3                                 “Capital Stock” shall mean, with respect to any Person, any and all shares, interests (including membership interests in limited liability companies), participations, rights (including options, warrants and the like convertible or exercisable into shares of Capital Stock) or other equivalents (however designated, whether voting or non-voting) of such Person’s capital, whether outstanding on, or issued after, the Effective Date.

 

1.4                                 “Collateral” shall mean all of the property and interests in property, real or personal, tangible or intangible, now owned or hereafter acquired by Debtors or any of Obligors in or upon which any or all of Creditors at any time has a Lien, and including, without limitation, all proceeds of such property and interests in property.

 

1.5                                 “Creditors” shall mean, collectively, Note Collateral Agent, on behalf or itself, the Trustee and the Noteholders, Revolving Loan Agent, on behalf of itself and the Revolving Loan

 

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Lenders and their respective successors and assigns, and Third Priority Collateral Agent, on behalf or itself, and the Third Priority Noteholders.  Each of Note Collateral Agent, Revolving Loan Agent and Third Priority Collateral Agent being sometimes referred to herein individually as a “Creditor”.

 

1.6                                 “Debtors” shall mean Atlantic Express Transportation Corp., a New York corporation, and substantially all of the subsidiaries of Atlantic Express Transportation Group, Inc., and Atlantic Express Transportation Corp., as more particularly set forth on Schedule 1 hereto and their respective successors and assigns, including, without limitation, a receiver, trustee or debtor-in-possession on behalf of such person or on behalf of any such successor or assign.

 

1.7                                 “Enforcement Action” shall mean the exercise by any Creditor of any of its material enforcement rights and remedies as a secured creditor under its Agreements, applicable law or otherwise at any time following the occurrence and during the continuance of an event of default under its Agreements (including, without limitation, the demand for the immediate payment of all of the debt owed to it, the solicitation of bids from third parties to conduct the liquidation of the Collateral, the engagement or retention of sales brokers, marketing agents, investment bankers, accountants, appraisers, auctioneers or other third parties for the purposes of valuing, marketing, promoting and selling the Collateral, the commencement of any action to foreclose on the security interests or liens of such Creditor in all or any material portion of the Collateral, notification of account debtors to make payments to such Creditor (in the case of Revolving Loan Agent), any action to take possession of all or any material portion of the Collateral or commencement of any legal proceedings or actions against or with respect to all or any portion of the Collateral)

 

1.8                                 “Fixtures” shall mean all fixtures of Debtors, whether now owned and hereafter acquired and wherever located and proceeds of the foregoing.  The term “fixtures” as used in this definition shall mean heating, ventilating, air conditioning equipment, boilers, generators, plumbing and electrical equipment, wall and floor coverings, walls and ceilings and other similar equipment installed in and affixed to the Real Property and any other similar equipment which is so related to any particular Real Property that an interest therein arises under applicable real estate law

 

1.9                                 “Insolvency Proceeding” shall mean, as to any Debtor, any of the following, occurring after the date hereof:  (a) any case or proceeding with respect to such Debtor under the U.S. Bankruptcy Code, any other federal, state or provincial bankruptcy, insolvency, reorganization or other law affecting creditors’ rights generally or any other or similar proceedings of any other jurisdiction or otherwise seeking any stay, reorganization, arrangement, liquidation, dissolution, composition or readjustment of the obligations and indebtedness of such Debtor or (b) any proceeding seeking the appointment of any receiver, administrative receiver, receiver and manager, examiner, judicial custodian, trustee, liquidator, official manager, administrator or similar official for any Debtor or any material part of its properties or (c) any proceedings for liquidation, dissolution or other winding up of the business of such Debtor or (d) the sale of all or substantially all of the assets or capital stock of such Debtor or (e) any assignment for the benefit of creditors or any marshaling of assets of such Debtor.

 

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1.10                           “Lien” shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, security interest, encumbrance (including, but not limited to, easements, rights of way and the like), lien (statutory or other), security agreement or transfer intended as security, including without limitation, any conditional sale or other title retention agreement, the interest of a lessor under a capital lease or any financing lease having substantially the same economic effect as any of the foregoing.

 

1.11                           “Motor Vehicles” shall mean all motor vehicles, tractors, trailers and other like property, whether or not title thereto is governed by a certificate of title or ownership.

 

1.12                           “Note Indenture” shall have the meaning set forth in the second recital of the Intercreditor Agreement.

 

1.13                           “Noteholder Agreements” shall mean the Note Indenture, the Supplemental Indenture and the agreements set forth on Schedule 3 hereto and all other agreements, documents and instruments at any time executed and/or delivered by Debtors, Obligors or any other person with, to or in favor of Noteholder or in connection therewith or related thereto, as all of the foregoing now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated, refinanced, replaced or restructured.

 

1.14                           “Noteholder Collateral” shall mean the Noteholder First Priority Real Property Collateral and the Noteholder Motor Vehicle Collateral.

 

1.15                           “Noteholder Debt” shall mean any and all obligations, liabilities and indebtedness of every kind, nature and description owing by Debtors or any of Obligors to the Noteholders, Trustee and Noteholder Collateral Agent under the Noteholder Agreements, including, principal, interest, charges, fees, premiums, indemnities and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of the Noteholder Agreements or after the commencement of any case with respect to Debtor or any of Obligors under the U.S. Bankruptcy Code or any similar statute (including the payment of interest and other amounts which would accrue and become due but for the commencement of such case, whether or not such amounts are allowed or allowable in whole or in part in such case), whether direct or indirect; absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, secured or unsecured, and whether arising directly or howsoever acquired by the Noteholders.

 

1.16                           “Noteholder First Priority Real Property Collateral” shall mean all of the Real Property of Debtors and Obligors (including without limitation the Real Property described in Schedule 1.16 hereto) and the proceeds of any disposition thereof; provided, that, Noteholder First Priority Real Property Collateral shall not include the Real Property of Debtors located in Bordentown, New Jersey or the Revolving Loan Real Property Collateral.

 

1.17                           “Noteholder Motor Vehicle Collateral” shall mean all of the Motor Vehicles owned by Debtors in which Noteholder Collateral Agent has a Lien and the proceeds of any disposition thereof.

 

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1.18                           “Noteholders” shall mean collectively, the holders of Noteholder Debt and their respective successors and assigns; sometimes being referred to herein individually as a “Noteholder”.

 

1.19                           “Obligors” shall mean, individually and collectively, any person liable on or in respect of the Revolving Loan Debt, the Noteholder Debt or the Third Priority Debt, and its successors and assigns, including, without limitation, a receiver, trustee or debtor-in-possession on behalf of such person or on behalf of any such successor or assign, other than Debtors.

 

1.20                           “Person” or “person” shall mean any individual, sole proprietorship, partnership, corporation (including, without imitation, any corporation which elects subchapter S status under the Internal Revenue Code of 1986, as amended), limited liability company, limited liability partnership, business trust, unincorporated association, joint stock company, trust, joint venture, or other entity or any government or any agency or instrumentality or political subdivision thereof.

 

1.21                           “Real Property” shall mean all real property of Debtors and Obligors, whether now owned or hereafter acquired and wherever located, including leasehold interests, together with all Fixtures located thereon and all licenses, easements and appurtenances relating thereto, wherever located and the proceeds of all of the foregoing.

 

1.22                           “Revolving Loan Agent” shall mean Congress Financial Corporation, a Delaware corporation in its capacity as agent pursuant to the Loan Agreement, acting for the benefit and on behalf of Revolving Loan Lenders, and its successors and assigns (and including, without limitation, any successor, assignee or additional person at any time acting as agent for the benefit of or on behalf of it and/or Revolving Loan Lenders).

 

1.23                           “Revolving Loan Agreements” shall mean, collectively, the Second Amended Loan and Security Agreement, dated April 22, 2004, by and among Revolving Loan Agent, the Revolving Loan Lenders and Debtors and all agreements, documents and instruments at any time executed and/or delivered by any Debtor, Obligors or any other person with, to or in favor of Revolving Loan Agent or Revolving Loan Lenders in connection therewith or related thereto, as all of the foregoing now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated, refinanced, replaced or restructured (in whole or in part and including any agreements with, to or in favor of any other lender or group of lenders that at any time refinances, replaces or succeeds to all or any portion of the Revolving Loan Debt).

 

1.24                           “Revolving Loan Collateral” shall mean all Collateral except for the Noteholder Motor Vehicle Collateral.

 

1.25                           “Revolving Loan Debt” shall mean, all obligations, liabilities and indebtedness of every kind, nature and description owing by Debtor or any of Obligors to Revolving Loan Agent and Revolving Loan Lenders, including principal, interest, charges, fees, premiums, indemnities and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, whether arising under the Revolving Loan Agreements or otherwise, (including, without limitation the “Obligations” as such term is defined in the Revolving Loan Agreements), whether now existing or hereafter arising, whether arising before, during or after the initial or any

 

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renewal term of the Revolving Loan Agreements or after the commencement of any case with respect to any Debtor or any of Obligors under the U.S. Bankruptcy Code or any similar statute (including the payment of interest and other amounts which would accrue and become due but for the commencement of such case, whether or not such amounts are allowed or allowable in whole or in part in such case), whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, secured or unsecured, and whether arising directly or howsoever acquired by Congress.

 

1.26                           “Revolving Loan Lenders” shall mean, collectively, Congress Financial Corporation and its successors and assigns (including any other lender or group of lenders that at any time succeeds to or refinances, replaces or substitutes for all or any portion of the Revolving Loan Debt at any time and from time to time in accordance with Section 4.2(c) hereof); sometimes being referred to herein individually as a “Revolving Loan Lender”.

 

1.27                           “Revolving Loan Priority Amount” shall mean the sum of (a) (i) the outstanding principal amount of Revolving Loan Debt not to exceed $23,000,000 in the aggregate, plus (ii) the aggregate amount of Letter of Credit Accommodations and LC Advances (as such terms are defined in the Revolving Loan Agreements) in an amount not to exceed $10,000,000, plus (iii) the outstanding principal amount of any other Revolving Loan Debt (in excess of the Revolving Loan Debt referenced in clause (i) above) to the extent that such Revolving Loan Debt is permitted under Section 4.12 of the Indenture and clause (14) of the definition of “Permitted Indebtedness” contained therein, plus (b) accrued but unpaid interest on and fees and charges payable in connection with the Revolving Loan Debt set forth in clause (a) above (including, without limitation, interest and fees accruing during any Insolvency Proceeding whether or not allowable in whole or in part therein), plus (c) Revolving Loan Agent’s costs and expenses paid or incurred and other payments made in connection with collecting the Revolving Loan Debt and enforcing Revolving Loan Lenders’ rights and remedies under the Revolving Loan Agreements and applicable law, to the extent that such costs, expenses and payments are chargeable to or are required to be paid or reimbursed by Debtors under the Revolving Loan Agreements (including, without limitation, such amounts arising during any Insolvency Proceeding whether or not allowable in whole or in part therein).

 

1.28                           “Revolving Loan Real Property Collateral” shall mean the Real Property of Metro Affiliates, Inc. located at 46-81 Metropolitan Avenue, Ridgewood, New York and the proceeds thereof.

 

1.29                           “Secured Debt” shall mean either the Noteholder Debt, the Revolving Loan Debt, or the Third Priority Debt, or any or all of these, as the case may be.

 

1.30                           “Supplemental Indenture” shall have the meaning set forth in the fourth recital of this Intercreditor Agreement.

 

1.31                           “Third Priority Agreements” shall mean, collectively, (i) the Third Priority Note Purchase Agreement, (ii) the agreements set forth on Schedule 4 hereto and (iii) all other agreements, documents and instruments at any time executed and/or delivered by Debtors, Obligors or any other person with, to or in favor of the Third Priority Noteholders or in connection therewith or related thereto, as all of the foregoing now exist or may hereafter be

 

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amended, modified, supplemented, extended, renewed, restated, refinanced, replaced or restructured.

 

1.32                           “Third Priority Debt” shall mean any and all obligations, liabilities and indebtedness of every kind, nature and description owing by Debtors or any of Obligors to the Third Priority Noteholders and Third Priority Collateral Agent under the Third Priority Agreements, including, principal, interest, charges, fees, premiums, indemnities and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of the Third Priority Agreements or after the commencement of any case with respect to Debtor or any of Obligors under the U.S. Bankruptcy Code or any similar statute (including the payment of interest and other amounts which would accrue and become due but for the commencement of such case, whether or not such amounts are allowed or allowable in whole or in part in such case), whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, secured or unsecured, and whether arising directly or howsoever acquired by the Third Priority Noteholders.

 

1.33                           “Third Priority Noteholders” shall mean collectively, the holders of Third Priority Debt and their respective successors and assigns; sometimes being referred to herein individually as a “Third Priority Noteholder.”

 

1.34                           “Third Priority Note Purchase Agreement” shall mean that certain Note and Warrant Purchase Agreement dated as of the date hereof among Atlantic Express Transportation Corp. and Airlie Opportunity Capital Management, L.P.

 

All terms defined in the Uniform Commercial Code, unless otherwise defined herein shall have the meanings set forth therein.  All references to any term in the plural shall include the singular and all references to any term in the singular shall include the plural.

 

2.                                       SECURITY INTERESTS; PRIORITIES; REMEDIES

 

2.1                                 Acknowledgement of Liens.  Each Creditor hereby acknowledges that:

 

(a)                                  Noteholder Collateral Agent, for the benefit of the Noteholders, has been granted a Lien upon the Collateral pursuant to the Noteholder Agreements to secure the Noteholder Debt;

 

(b)                                 Revolving Loan Agent, for the benefit of Revolving Loan Lenders has been granted a Lien upon all of the Collateral (other than the Noteholder Motor Vehicle Collateral) pursuant to the Revolving Loan Agreements to secure the Revolving Loan Debt;

 

(c)                                  Third Priority Collateral Agent, for the benefit of the Third Priority Noteholders, has been granted a Lien upon the Collateral (other than Noteholder Motor Vehicle Collateral)  pursuant to the Third Priority Agreements to secure the Third Priority Debt; and

 

(d)                                 None of the Revolving Loan Agent, the Noteholder Collateral Agent or the Third Priority Collateral Agent has a Lien on the Capital Stock Assets.

 

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2.2                                 Priority of Liens.  Notwithstanding the time of incurrence of any Secured Debt, the order or method of attachment or perfection of any Liens securing any Secured Debt, the time or order of filing or recording of financing statements or other documents filed or recorded to perfect any Lien upon any Collateral, the rules for determining priority under any law governing relative priorities of Liens on the Collateral or any conflicting terms or conditions which may be contained in any of the Agreements:

 

(a)                                  The following Lien priorities shall strictly apply in defining the respective Lien priorities of each Creditor in the Revolving Loan Collateral (other than the Noteholder First Priority Real Property Collateral):

 

(i)                                     first:  the Liens upon such Collateral of Revolving Agent and Revolving Loan Lenders to the full extent of the Revolving Loan Debt;

 

(ii)                                  second:  the Liens upon such Collateral of Noteholder Collateral Agent, Trustee and Noteholders to the full extent of the Noteholder Debt; and

 

(iii)                               third: the Liens upon such Collateral of Third Priority Collateral Agent and Third Priority Noteholders to the full extent of the Third Priority Debt.

 

(b)                                 The following Lien priorities shall strictly apply in defining the respective Lien priorities of each Creditor in the Noteholder First Priority Real Property Collateral:

 

(i)                                     first:  the Liens upon such Collateral of Noteholder Collateral Agent, Trustee and Noteholders to the full extent of the Noteholder Debt;

 

(ii)                                  second:  the Liens upon such Collateral of Revolving Loan Agent and Revolving Loan Lenders to the full extent of the Revolving Loan Debt; and

 

(iii)                               third: the Liens upon such Collateral of Third Priority Collateral Agent and Third Priority Noteholders to the full extent of the Third Priority Debt.

 

(c)                                  Only Noteholder Collateral Agent has a Lien on the Motor Vehicles.

 

(d)                                 Notwithstanding anything to the contrary contained herein, the principal amount of the Revolving Loan Debt in excess of Revolving Loan Priority Amount shall not be entitled to the benefit of the priority of the Liens of Revolving Loan Agent provided for in this Section 2.2.

 

2.3                                 Proceeds of Revolving Loan Collateral.  Subject to Section 2.7 below, the proceeds of any sale, disposition or other realization upon all or any part of the Revolving Loan Collateral (other than Noteholder First Priority Real Property Collateral) in connection with an Enforcement Action shall be applied in the following order of priorities:

 

(a)                                  first, to Revolving Loan Agent for the payment in full in cash or other immediately available funds of the outstanding Revolving Loan Debt up to the Revolving Loan Priority Amount, in such order as may be provided in the Revolving Loan Agreements;

 

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(b)                                 second, to the Noteholder Collateral Agent for the payment in full in cash or other immediately available funds of all of the Noteholder Debt in such order as may be provided in the Noteholder Agreements;

 

(c)                                  third, to the Third Priority Collateral Agent for the payment in full in cash or other immediately available funds of all of the Third Priority Debt in such order as may be provided in the Third Priority Agreements;

 

(d)                                 fourth, to the Revolving Loan Agent for the payment of the Revolving Debt in excess of the Revolving Loan Priority Amount until the Revolving Debt has been paid in full in cash or other immediately available funds; and

 

(e)                                  fifth, to the Debtors, or their respective successors or assigns or as required by applicable law.

 

2.4                                 Proceeds of Noteholder First Priority Real Property Collateral.  Subject to Section 2.7 below, the proceeds of any sale, disposition or other realization upon all or any part of the Noteholder First Priority Real Property Collateral shall be applied in the following order of priorities:

 

(a)                                  first, to the Noteholder Collateral Agent for the payment of the Noteholder Debt until such Noteholder Debt has been paid in full in cash or other immediately available funds, in such order as may be provided in the Noteholder Agreements; and

 

(b)                                 second, to the Revolving Loan Agent for the payment in full in cash or other immediately available funds of the outstanding Revolving Loan Debt up to the Revolving Priority Amount, in such order as may be provided for in the Revolving Loan Agreements;

 

(c)                                  third, to the Third Priority Collateral Agent for the payment of the Third Priority Debt until such Third Priority Debt has been paid in full in cash or other immediately available funds, in such order as may be provided in the Third Priority Agreements;

 

(d)                                 fourth, to the Revolving Loan Agent for the payment of the Revolving Debt in excess of the Revolving Loan Priority Amount until the Revolving Debt has been paid in full in cash or other immediately available funds; and

 

(e)                                  fifth, to the Debtors, or their respective successors or assigns or as required by applicable law.

 

2.5                                 Proceeds of Noteholder Motor Vehicle Collateral.  Subject to Section 2.7 below, the proceeds of any sale, disposition or other realization upon all or any part of the Noteholder Motor Vehicle Collateral shall be applied to the payment in full in cash or other immediately available funds of the Noteholder Debt in whatever manner and order Noteholder Collateral Agent chooses in accordance with the Noteholder Agreements and applicable law.

 

2.6                                 Priorities Unaffected by Action on Inaction.  The lien priorities provided in Section 2.2 shall not be altered or otherwise affected by any amendment, modification, supplement, extension, renewal, restatement, replacement or refinancing of the Revolving Loan

 

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Debt, the Noteholder Debt or the Third Priority Debt nor by any action or inaction which any Creditor may take or fail to take in respect of the Collateral.

 

2.7                                 Perfection; No Contest of Liens.  Subject to Section 4.5, each Creditor shall be solely responsible for perfecting and maintaining the perfection of its Lien in and to each item constituting the Collateral in which such Creditor has been granted a Lien.  The foregoing provisions of this Intercreditor Agreement are intended solely to govern the respective Lien priorities as between the Creditors and shall not impose on any Creditor any obligations in respect of the disposition of proceeds of foreclosure on any Collateral which would conflict with prior perfected claims therein in favor of any other person or any order or decree of any court or other governmental authority or any applicable law.  Each Creditor agrees that it will not contest the validity, perfection, priority or enforceability of the Liens upon the Collateral of the other Creditors and that as between Creditors, the terms of this Intercreditor Agreement shall govern even if part or all of the Revolving Loan Debt, the Noteholder Debt or the Third Priority Debt or the Liens securing payment and performance thereof are avoided, disallowed, set aside or otherwise invalidated in any judicial proceeding or otherwise.

 

2.8                                 Right to Enforce Security Interests.

 

(a)                                  With respect to (i) the Noteholder Collateral Agent, so long as any Noteholder Debt remains outstanding, (ii) the Revolving Loan Agent, so long as any Revolving Loan Debt remains outstanding, and (iii) the Third Priority Collateral Agent, so long as any of the Third Priority Debt remains outstanding, the Agent with the senior Lien on any of the Collateral will have the sole and exclusive right to control, administer, account for and otherwise deal with such Collateral, and to determine the manner of every sale or other disposition of such Collateral upon enforcement of such