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EXHIBIT 10.68
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INTERCREDITOR AGREEMENT
dated as of August 24, 2007,
among
PACIFIC ENERGY ALASKA OPERATING LLC,
as the Borrower,
PACIFIC ENERGY ALASKA HOLDINGS, LLC,
SILVER POINT FINANCE, LLC,
as the First Lien Collateral Agent
and
SILVER POINT FINANCE, LLC,
as the Second Lien Collateral Agent
This is the Intercreditor Agreement referred to in (a) the First
Lien Credit
Agreement dated as of the date hereof among Pacific Energy Alaska
Operating LLC,
Pacific Energy Holdings, LLC, the lenders from time to time party
thereto and
Silver Point, as Agent, (b) the First Lien Collateral and Guarantee
Agreement
dated as of the date hereof among Pacific Energy Alaska Operating
LLC, Pacific
Energy Holdings, LLC, the other Loan Parties from time to time
party thereto and
Silver Point, as Agent, (c) the Second Lien Credit Agreement dated
as of the
date hereof among Pacific Energy Alaska Operating LLC, Pacific
Energy Holdings,
LLC, the lenders from time to time party thereto and Silver Point,
as Agent, (d)
the Second Lien Collateral and Guarantee Agreement dated as of the
date hereof
among Pacific Energy Alaska Operating LLC, Pacific Energy Holdings,
LLC, the
other Loan Parties from time to time party thereto and Silver
Point, as Agent
and (e) the other Security Documents referred to in the Credit
Agreements
referred to herein.
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TABLE OF CONTENTS
Page
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ARTICLE I
Definitions
SECTION 1.01. Certain Defined
Terms................................... 2
SECTION 1.02. Other Defined
Terms..................................... 2
SECTION 1.03. Terms
Generally......................................... 10
ARTICLE II
Lien Priorities
SECTION 2.01. Relative
Priorities..................................... 10
SECTION 2.02. Prohibition on
Contesting Liens......................... 11
SECTION 2.03. No New Liens or
Alteration of Priority ................. 11
SECTION 2.04. Similar Liens and
Agreements............................ 12
ARTICLE III
Enforcement of Rights; Matters Relating to Collateral
SECTION 3.01. Exercise of Rights and
Remedies......................... 12
SECTION 3.02. Second Lien Secured
Parties' Purchase Option............ 14
SECTION 3.03. No
Interference......................................... 16
SECTION 3.04. Rights as Unsecured
Creditors........................... 18
SECTION 3.05. Automatic Release of
Second Priority Liens ............. 18
SECTION 3.06. Insurance and
Condemnation Awards....................... 19
ARTICLE IV
Payments
SECTION 4.01. Application of
Proceeds................................. 20
SECTION 4.02. Payment
Over............................................ 20
SECTION 4.03. Certain Agreements
with Respect to Unenforceable Liens.. 20
i
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SECTION 10.03.
Effectiveness; Survival.................................
32
SECTION 10.04.
Severability............................................
32
SECTION 10.05.
Amendments; Waivers.....................................
33
SECTION 10.06.
Subrogation.............................................
33
SECTION 10.07.
Applicable Law; Jurisdiction; Consent to Service of
Process.............................................. 33
SECTION 10.08.
Waiver of Jury Trial....................................
34
SECTION 10.09.
Parties in Interest.....................................
34
SECTION 10.10.
Specific Performance....................................
34
SECTION 10.1l.
Headings................................................
35
SECTION 10.12.
Counterparts............................................
35
SECTION 10.13.
Provisions Solely to Define Relative Rights.............
35
iii
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INTERCREDITOR AGREEMENT dated as of August 24, 2007 (the
"Agreement"),
among PACIFIC ENERGY ALASKA OPERATING LLC, a limited liability
company organized
under the laws of the State of Delaware (the "Borrower"), PACIFIC
ENERGY
HOLDINGS, LLC, a limited liability company organized under the laws
of the State
of Delaware ("Holdings"), SILVER POINT FINANCE, LLC ("Silver
Point"), as the
First Lien Collateral Agent and the Second Lien Collateral
Agent.
PRELIMINARY STATEMENT
Reference is made to (a) the First Lien Credit Agreement dated as
of
August 24, 2007 (the "First Lien Credit Agreement"), among the
Borrower,
Holdings, the lenders from time to time party thereto (the "First
Lien Lenders")
and Silver Point, as administrative agent for the First Lien
Lenders, (b) the
Second Lien Credit Agreement dated as of August 24, 2007 (the
"Second Lien
Credit Agreement" and, together with the First Lien Credit
Agreement, the
"Credit Agreements"), among the Borrower, Holdings, the lenders
from time to
time party thereto (the "Second Lien Lenders") and Silver Point,
as
administrative agent for the Second Lien Lenders, (c) the First
Lien Guarantee
and Collateral Agreement dated as of August 24, 2007 (the "First
Lien Collateral
Agreement"), among the Borrower, Holdings, the other Loan Parties
from time to
time party thereto and Silver Point, as the First Lien Agent, (d)
the Second
Lien Guarantee and Collateral Agreement dated as of August 24, 2007
(the "Second
Lien Collateral Agreement"), among the Borrower, Holdings, the
other Loan
Parties from time to time party thereto and Silver Point, as the
Second Lien
Collateral Agent, (e) the Second Lien Guaranty (the "Second Lien
Guaranty")
among Pacific Energy Resources Ltd. ("PERL"), the other Guarantors
(as defined
therein) party thereto, and Silver Point, (f) the Second Lien
Pledge and
Security Agreement (the "Second Lien Pledge and Security
Agreement") dated as of
August 24, 2007 between each of the Grantors party thereto and
Silver Point, as
collateral agent for the Lender Parties and (g) the other Security
Documents
referred to in the Credit Agreements.
RECITALS
A. The First Lien Lenders have agreed to make loans to the
Borrower
pursuant to the First Lien Credit Agreement on the condition, among
others, that
the First Lien Obligations (such term and each other capitalized
term used but
not defined in the preliminary statement or these recitals having
the meaning
given to it in Article I) shall be secured by first priority Liens
on, and
security interests in, the Collateral.
B. The Second Lien Lenders have agreed to make loans to the
Borrower
pursuant to the Second Lien Credit Agreement on the condition,
among others,
that the Second Lien Obligations shall be secured by second
priority Liens on,
and security interests in, the Collateral.
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C. The Credit Agreements require, among other things, that the
parties
thereto set forth in this Agreement, among other things, their
rights,
obligations and remedies with respect to the Collateral.
Accordingly, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Certain Defined Terms. Each capitalized term used
in
this Agreement and not otherwise defined herein shall have the
meaning set forth
in the First Lien Credit Agreement, the Second Lien Credit
Agreement, the First
Lien Collateral Agreement or the Second Lien Collateral Agreement,
as
applicable.
SECTION 1.02. Other Defined Terms. As used in the Agreement,
the
following terms shall have the meanings specified below:
"Agreement" shall have the meaning assigned to such term in the
introductory paragraph.
"Bankruptcy Code" shall mean Title 11 of the United States Code
entitled "Bankruptcy," as now and hereinafter in effect, or any
successor
statute.
"Bankruptcy Law" shall mean the Bankruptcy Code and any other
Federal,
state or foreign bankruptcy, insolvency, receivership or similar
law.
"Borrower" shall have the meaning assigned to such term in the
introductory paragraph to this Agreement.
"Collateral" shall mean, collectively, the First Lien Collateral
and
the Second Lien Collateral (other than Collateral as defined in the
Second Lien
Pledge and Security Agreement to secured Guaranteed Obligations
pursuant to the
Second Lien Guaranty).
"Comparable Second Lien Security Document" shall mean, in relation
to
any Collateral subject to any Lien created under any First Lien
Security
Document, the Second Lien Security Document that creates a Lien on
the same
Collateral, granted by the same Grantor.
"Credit Agreements" shall have the meaning assigned to such term
in
the preliminary statement to this Agreement.
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"DIP Financing" shall have the meaning assigned to such term in
Section 6.01.
"DIP Financing Liens" shall have the meaning assigned to such term
in
Section 6.01.
"Discharge of First Lien Obligations" shall mean (unless
otherwise
required by law or court order), subject to Sections 7.02 and 7.04,
(a) payment
in full in cash of the principal of and interest (including
interest accruing
during the pendency of any Insolvency or Liquidation Proceeding,
regardless of
whether allowed or allowable in such Insolvency or Liquidation
Proceeding) and
premium, if any, on all Indebtedness outstanding under the First
Lien Loan
Documents, (b) payment in full of all other monetary First Lien
Obligations that
are due and payable or otherwise accrued and owing at or prior to
the time such
principal and interest are paid and (c) termination or expiration
of all
commitments to lend under the First Lien Credit Agreement.
"Disposition" shall mean any sale, lease, exchange, transfer or
other
disposition. "Dispose" shall have a correlative meaning.
"Enforcement Action" shall mean upon the occurrence and during
the
continuation of any Event of Default and in connection with the
exercise of
remedies (i) any action by any First Lien Secured Party or Second
Lien Secured
Party to foreclose on the Lien of such Person in any Collateral,
(ii) any action
by any First Lien Secured Party or Second Lien Secured Party to
take possession
of, or sell or otherwise realize upon, or to exercise any other
rights or
remedies with respect to, any Collateral, including a sale or other
disposition
after the occurrence of an Event of Default of any Collateral by
the Borrower
with the consent of, or at the direction of, a First Lien Secured
Party or
Second Lien Secured Party, (iii) the acceleration of any
Obligations, (iv) the
taking of any other actions by a First Lien Secured Party or Second
Lien Secured
Party to collect or enforce all or any part of the Obligations
payable to such
First Lien Secured Party or Second Lien Secured Party or any claims
in respect
thereof (x) against the Borrower or (y) any of its property or
assets, including
the taking of control or possession of, or the exercise of any
right of setoff
with respect to, any property or assets of Borrower or the sale or
other
disposition of any interest in such property or assets and/or (v)
the
commencement by any First Lien Secured Party or Second Lien Secured
Party of any
legal proceedings or actions against or with respect to (x) the
Borrower or (y)
any of its property or assets or any Collateral to facilitate the
actions
described in clauses (i), (ii) and (iii) above, including any
Insolvency or
Liquidation Proceeding and action to have the automatic stay lifted
in any
Insolvency or Liquidation Proceeding of the Borrower; provided that
the filing
of any notice of or voting any claim in any Insolvency or
Liquidation Proceeding
involving a Borrower shall not be deemed to be an Enforcement
Action.
"Enforcement Actions Against Collateral" means the actions
described
in clauses (i), (ii), (iv)(y) and (v)(y) of the definition of
Enforcement
Action.
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"Event of Default" means each "Event of Default" or similar term,
as
such term is defined in any First Lien Loan Document or any Second
Lien Loan
Document.
"Excess First Lien Loan Amount" means, collectively, as of any date
of
determination, (a) the aggregate principal amount of any extensions
of credit
made by the First Lien Secured Parties to Borrower pursuant to the
First Lien
Loan Documents (other than Hedging Agreements (as defined in the
First Lien
Credit Agreement) that constitute First Lien Obligations) that at
the time of
such extensions of credit exceed the Maximum First Lien Principal
Amount, and
(b) any interest, fees, indemnities, costs or expenses payable on
account of
such excess principal amount under the First Lien Loan Documents or
in respect
thereof.
"First Lien Agent"
shall mean Silver Point, as administrative and
collateral agent for the First Lien Secured Parties.
"First Lien Collateral" shall mean all "Collateral", as defined in
the
First Lien Security Documents, and any other assets of any Grantor
now or at any
time hereafter subject to Liens securing any First Lien
Obligations.
"First Lien Collateral Agent" shall mean Silver Point, as
collateral
agent for the First Lien Secured Parties.
"First Lien Credit Agreement" shall have the meaning assigned to
such
term in the preliminary statement of this Agreement.
"First Lien Default Notice" means with respect to any Event of
Default
under the First Lien Loan Documents, a written notice from the
First Lien Agent
to the Second Lien Agent describing such Event of Default in
reasonable detail.
"First Lien Lenders" shall have the meaning assigned to such term
in
the preliminary statement of this Agreement.
"First Lien Loan Documents" shall mean the "Loan Documents," as
defined in the First Lien Credit Agreement
"First Lien Loans" shall mean "Loans", as defined in the First
Lien
Credit Agreement.
"First Lien Mortgages" shall mean the "Mortgages", as defined in
the
First Lien Credit Agreement.
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"First Lien Obligations" shall mean the "Obligations", as defined
in
the First Lien Credit Agreement.
"First Lien Required Lenders" shall mean the "Required Lenders",
as
defined in the First Lien Credit Agreement.
"First Lien Secured Parties" shall mean the "Secured Parties",
as
defined in the First Lien Collateral Agreement.
"First Lien Security Documents" shall mean the "Security
Documents",
as defined in the First Lien Credit Agreement, and any other
agreement, document
or instrument pursuant to which a Lien is granted by Holdings, the
Borrowers or
their respective direct or indirect subsidiaries to secure any
First Lien
Obligations or under which rights or remedies with respect to any
such Lien are
governed.
"First Priority Liens" shall mean all Liens on the First Lien
Collateral securing the First Lien Obligations, whether created
under the First
Lien Security Documents or acquired by possession, statute
(including any
judgment lien), operation of law, subrogation or otherwise.
"Grantors" shall mean Holdings, the Borrower and each direct or
indirect subsidiary of Holdings or the Borrower, that shall have
created or
purported to create any First Priority Lien or Second Priority Lien
on all or
any part of its assets to secure any First Lien Obligations or any
Second Lien
Obligations.
"Guarantors" shall mean Holdings, the Borrower and each direct
or
indirect subsidiary of Holdings or the Borrower, that has
Guaranteed, or that
may from time to time hereafter Guarantee, the First Lien
Obligations or the
Second Lien Obligations.
"Indebtedness" shall mean and includes all obligations that
constitute
"Indebtedness", as defined in the First Lien Credit Agreement or
the Second Lien
Credit Agreement, as applicable.
"Insolvency or Liquidation Proceeding" shall mean (a) any voluntary
or
involuntary proceeding under the Bankruptcy Code or any other
Bankruptcy Law
with respect to any Grantor, (b) any voluntary or involuntary
appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar
official for
any Grantor or for a substantial part of the property or assets of
any Grantor,
(c) any voluntary or involuntary winding-up or liquidation of any
Grantor or (d)
a general assignment for the benefit of creditors by any
Grantor.
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"Lien" shall mean, with respect to any asset, (a) any mortgage,
deed
of trust, lien, pledge, encumbrance, charge or security interest in
or on such
asset, (b) the interest of a vendor or a lessor under any
conditional sale
agreement, capital lease or title retention agreement (or any
financing lease
having substantially the same economic effect as any of the
foregoing) relating
to such asset and (c) in the case of securities, any purchase
option, call or
similar right of a third party with respect to such securities.
"Loan Documents" shall mean the First Lien Loan Documents and
the
Second Lien Loan Documents.
"Loan Party" shall mean "Loan Party", as defined in the First
Lien
Credit Agreement or the Second Lien Credit Agreement.
"Maximum First Lien Principal Amount" means, as of any date of
determination, the sum of (a) the least of (i) the most recently
established
Borrowing Base under the First Lien Credit Agreement, determined by
the First
Lien Agent in its sole discretion in accordance with the terms of
the First Lien
Credit Agreement, (ii) the Aggregate Maximum Credit Amounts less
any reductions
thereof or (iii) $200,000,000 and (b) any of the following which is
applicable
(but without duplication): (i) the principal amount of any
Borrowing Base
Deficiency or (ii) any outstanding principal under the First Lien
Credit
Agreement not repaid in connection with a reduction of the
Aggregate Maximum
Credit Amounts which results in Revolving Credit Exposures
exceeding the
Aggregate Maximum Credit Amounts then in effect; provided, however,
the amount
set forth in clause (b) shall not include (A) any additional
amounts in respect
of principal to the extent such excess is the result of additional
Loans
advanced or letters of credit issued (other than renewal of
outstanding letters
of credit in amounts not exceeding the outstanding face amounts)
while a
Borrowing Base Deficiency is in effect or (B) any Loans or letters
of credit to
the extent advancing such funds or issuing such letter of credit
(other than
renewal of outstanding letters of credit in amounts not exceeding
the
outstanding face amounts) would cause a Borrowing Base Deficiency
or would
exceed the Aggregate Maximum Credit Amounts then in effect. For the
avoidance of
doubt the calculation of Maximum First Lien Principal Amount refers
only to the
outstanding principal balance of Loans and the face amount of
outstanding
Letters of Credit under the First Lien Loan Documents and does not
include
interest, fees and other amounts due under the First Lien Credit
Agreement.
"New First Lien Collateral Agent" shall have the meaning assigned
to
such term in Section 7.02.
"New First Lien Loan Documents" shall have the meaning assigned
to
such term in Section 7.02.
"New First Lien Obligations" shall have the meaning assigned to
such
term in Section 7.02.
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"Non Funding Event" means the occurrence of one or more Events
of
Default under the First Lien Loan Agreement which remain continuing
and unwaived
as a result of which the First Lien Agent and/or the First Lien
Lenders refuse
to fund loans under the Revolving Loan (as defined in the First
Lien Loan
Agreement) for a period of five (5) or more consecutive Business
Days (a
"Funding Suspension"); provided that a "Non Funding Event" shall
cease to remain
continuing (and shall not be deemed to be a Trigger Event) if,
after a Funding
Suspension, the First Lien Agent and/or First Lien Lenders make
loans available
under the Revolving Loan for a period of three (3) or more
consecutive Business
Days (a "Funding Resumption"). Following a Funding Resumption, if a
Funding
Suspension shall occur again, a new "Non Funding Event" shall be
deemed to occur
and shall remain continuing unless and until a subsequent Funding
Resumption
shall occur.
"Obligations" shall mean the First Lien Obligations and the
Second
Lien Obligations.
"Obligor" shall mean Holdings, the Borrower and each other Person
that
is a subsidiary of Holdings liable on or in respect of the
Obligations or that
has granted a Lien on any property or assets as collateral for the
Obligations,
together with such Person's successors and assigns, including a
receiver,
trustee or debtor-in-possession on behalf of such Person.
"PERL" shall have the meaning assigned to such term in the
preliminary
statement of this Agreement.
"PERL First Lien Credit Agreement" shall mean that certain
First
Lien Credit and
Guaranty Agreement dated as of November 30, 2006, among PERL,
certain subsidiaries
of PERL the lenders from time to time party thereto and J.
Aron & Company, as
administrative agent for the First Lien Lenders.
"PERL First Lien Loan Documents" shall mean the "Transaction
Documents," as defined in the PERL First Lien Credit Agreement
"Pledged or Controlled Collateral" shall have the meaning assigned
to
such term in Article V.
"Refinance" shall mean, in respect of any Indebtedness, to
refinance,
extend, renew, restructure or replace or to issue other
Indebtedness in exchange
or replacement for, such Indebtedness, in whole or in part.
"Refinanced" and
"Refinancing" shall have correlative meanings.
"Refinancing Notice" shall have the meaning assigned to such term
in
Section 7.02.
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"Release" shall have the meaning assigned to such term in
Section
3.05.
"Second Lien Collateral" shall mean all "Collateral", as defined
in
the Second Lien Security Documents and any other assets of any
Grantor now or at
any time hereafter subject to Liens securing any Second Lien
Obligations.
"Second Lien Collateral Agent" shall mean Silver Point, as
collateral
agent for the Second Lien Secured Parties.
"Second Lien Agent" shall mean Silver Point, as administrative
and
collateral agent for the Second Lien Secured Parties.
"Second Lien Collateral Agreement" shall have the meaning assigned
to
such term in the preliminary statement to this Agreement.
"Second Lien Credit Agreement" shall have the meaning assigned to
such
term in the preliminary statement to this Agreement.
"Second Lien Default Notice" means with respect to any Event of
Default under the Second Lien Loan Documents, a written notice from
the Second
Lien Agent to the First Lien Agent describing such Event of Default
in
reasonable detail.
"Second Lien Guaranty" shall have the meaning assigned to such term
in
the preliminary statement of this Agreement.
"Second Lien Lenders"
shall have the meaning assigned to such term in
the preliminary statement of this Agreement.
"Second Lien Loans" shall mean "Loans", as defined in the Second
Lien
Credit Agreement.
"Second Lien Loan Documents" shall mean the "Loan Documents",
as
defined in the Second Lien Credit Agreement.
"Second Lien Mortgages" shall mean the "Mortgages", as defined in
the
Second Lien Credit Agreement.
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"Second Lien Obligations" shall mean the "Loan Document
Obligations",
as defined in the Second Lien Credit Agreement.
"Second Lien Permitted Actions" shall have the meaning assigned
to
such term in Section 3.01(a).
"Second Lien Required Lenders" shall mean the "Required Lenders",
as
defined in the Second Lien Credit Agreement.
"Second Lien Secured Parties" shall mean the "Secured Parties",
as
defined in the Second Lien Collateral Agreement.
"Second Lien Security Documents" shall mean the "Security
Documents",
as defined in the Second Lien Credit Agreement, and any other
agreement,
document or instrument pursuant to which a Lien is granted by
Holdings, Borrower
or any of their respective direct or indirect subsidiaries to
secure any Second
Lien Obligations or under which rights or remedies with respect to
any such Lien
are governed, but excluding any security documents pursuant to
which PERL or any
of its direct or indirect subsidiaries (other than Borrower,
Holdings or their
respective direct or indirect subsidiaries) grant security
interests.
"Second Priority Liens" shall mean all Liens on the Second Lien
Collateral to secure the Second Lien Obligations, whether created
under the
Second Lien Security Documents or acquired by possession, statute
(including any
judgment lien), operation of law, subrogation or otherwise.
"Security Documents" shall mean the First Lien Security Documents
and
the Second Lien Security Documents.
"Standstill Period" shall have the meaning assigned to such term
in
Section 3.03(a).
"subsidiary" shall mean, with respect to any person (herein
referred
to as the "parent"), any corporation, partnership, limited
liability company,
association or other business entity (a) of which securities or
other ownership
interests representing more than 50% of the equity or more than 50%
of the
ordinary voting power or more than 50% of the general partnership
interests are,
at the time any determination is being made, directly or
indirectly, owned,
Controlled or held or (b) that is, at the time any determination is
made,
otherwise Controlled, by the parent or one or more subsidiaries of
the parent or
by the parent and one or more subsidiaries of the parent.
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"Subsidiary" shall mean any subsidiary of the Borrower.
"Uniform Commercial Code" or "UCC" shall mean the Uniform
Commercial
Code (or any similar or equivalent legislation) as in effect from
time to time
in any applicable jurisdiction.
SECTION 1.03. Terms Generally. The definitions of terms herein
shall
apply equally to the singular and plural forms of the terms
defined. Whenever
the context may require, any pronoun shall include the
corresponding masculine,
feminine and neuter forms. The words "include", "includes" and
"including" shall
be deemed to be followed by the phrase "without limitation". The
word "will"
shall be construed to have the same meaning and effect as the word
"shall"; and
the words "asset" and "property" shall be construed as having the
same meaning
and effect and to refer to any and all tangible and intangible
assets and
properties, including cash, securities, accounts and contract
rights. All
references herein to Articles, Sections, Exhibits and Schedules
shall be deemed
references to Articles and Sections of, and Exhibits and Schedules
to, this
Agreement unless the context shall otherwise require. Unless the
context
requires otherwise (a) any definition of or reference to any
agreement,
instrument or other document herein shall be construed as referring
to such
agreement, instrument or other document as from time to time
amended,
supplemented or otherwise modified (subject to any restrictions on
such
amendments, supplements or modifications set forth herein), (b) any
definition
of or reference to any statute, regulation or other law herein
shall be
construed (i) as referring to such statute, regulation or other law
as from time
to time amended, supplemented or otherwise modified (including by
succession of
comparable successor statutes, regulations or other laws) and (ii)
to include
all official rulings and interpretations thereunder, (c) any
reference herein to
any person shall be construed to include such person's successors
and assigns
and (d) the words "herein", "hereof' and "hereunder", and words of
similar
import, shall be construed to refer to this Agreement in its
entirety and not to
any particular provision hereof.
ARTICLE II
Lien Priorities
SECTION 2.01. Relative Priorities.
(a) Notwithstanding the date, manner or order of grant,
attachment or perfection of any Second Priority Lien or any First
Priority Lien,
and notwithstanding any provision of the UCC or any other
applicable law or the
provisions of any Security Document or any other Loan Document or
any other
circumstance whatsoever, the Second Lien Collateral Agent, for
itself and on
behalf of the other Second Lien Secured Parties, hereby agrees
that, so long as
the Discharge of First Lien Obligations has not occurred, (i) any
First Priority
Lien now or hereafter held by or for the benefit of any First Lien
Secured Party
shall be senior in right, priority, operation, effect and all other
respects to
any and all Second Priority Liens and (ii) any Second Priority Lien
now or
hereafter held by or for the benefit of any Second Lien Secured
Party shall be
junior and subordinate in right, priority, operation, effect and
all other
respects to any and all First Priority Liens.
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(b) Notwithstanding the foregoing clause (a) or anything else
in
this Agreement to the contrary, to the extent that the First Lien
Secured
Parties make any extensions of credit to the Borrower pursuant to
the First Lien
Loan Documents that at the time of such extensions of credit
constitute any
Excess First Lien Loan Amount, then the amount of such Excess First
Lien Loan
Amount shall not be considered First Lien Obligations for the
purposes of the
Lien priorities set forth in clause (a) above. To the extent
provided under the
applicable Documents, all such extensions of credit shall continue
to be secured
by the Collateral; provided, that the Liens upon any of the
Collateral securing
the Excess First Lien Loan Amount shall be junior and subordinate
to the Liens
securing the Second Lien Obligations.
SECTION 2.02. Prohibition on Contesting Liens. Each of the First
Lien
Collateral Agent, for itself and on behalf of the other First Lien
Secured
Parties, and the Second Lien Collateral Agent, for itself and on
behalf of the
other Second Lien Secured Parties, agrees that it will not, and
hereby waives
any right to, (a) contest or support any other person in
contesting, in any
proceeding (including any Insolvency or Liquidation Proceeding),
the priority,
validity or enforceability of any Second Priority Lien or any First
Priority
Lien, as the case may be or (b) subject to the provisions of
Section 6.04
hereof, assert that in any Insolvency or Liquidation Proceeding
that the First
Lien Secured Parties or the Second Lien Secured Parties are not
fully secured or
that the First Lien Secured Parties or the Second Lien Secured
Parties are not
entitled to the payment of any post-petition interests, costs or
expenses;
provided that nothing in this Agreement shall be construed to
prevent or impair
the rights of the First Lien Collateral Agent or any other First
Lien Secured
Party to enforce this Agreement.
SECTION 2.03. No New Liens or Alteration of Priority.
(a) The parties hereto agree that, so long as the Discharge of
First Lien Obligations has not occurred, none of the Grantors
shall, or shall
permit any of its subsidiaries to, (i) grant or permit any
additional Liens on
any asset to secure any Second Lien Obligation unless it has
granted, or
concurrently therewith grants, a Lien on such asset to secure the
First Lien
Obligations or (ii) grant or permit any additional Liens on any
asset to secure
any First Lien Obligations unless it has granted, or concurrently
therewith
grants, a Lien on such asset to secure the Second Lien Obligations,
with each
such Lien to be subject to the provisions of this Agreement. To the
extent that
the provisions of the immediately preceding sentence are not
complied with for
any reason, without limiting any other right or remedy available to
the First
Lien Collateral Agent or the other First Lien Secured Parties, the
Second Lien
Collateral Agent agrees, for itself and on behalf of the other
Second Lien
Secured Parties, that any amounts received by or distributed to any
Second Lien
Secured Party pursuant to or as a result of any Lien granted in
contravention of
this Section shall be subject to Section 4.02.
(b) Except as set permitted by Section 3.02 of this Agreement,
the First Lien Agent agrees not to enter into any agreement with
another
creditor of Borrower or any other Obligor to (i) subordinate the
Liens of the
First Lien Secured Parties in all or substantially all Collateral
under the
First Lien Loan Documents to the Liens securing Indebtedness (for
this paragraph
as defined in the First Lien Credit Agreement) of such other
creditor in the
Collateral, or (ii) subordinate the right of the First Lien Secured
Parties to
the payment of the First Lien
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Obligations to the payment of the indebtedness or claim of any
other creditor of
Borrower, in each case without the prior written consent of the
Second Lien
Collateral Agent or the Second Lien Required Lenders.
SECTION 2.04. Similar Liens and Agreements. The parties hereto
acknowledge and agree that, other than with respect to the liens
granted to the
Second Lien Lenders pursuant to the Second Lien Pledge and Security
Agreement,
it is their intention that the First Lien Collateral and the Second
Lien
Collateral be identical. In furtherance of the foregoing, the
parties hereto
agree:
(a) to cooperate in good faith (and to direct their counsel to
cooperate in good faith) in order to determine, upon any reasonable
request by
the First Lien Collateral Agent or the Second Lien Collateral
Agent, the
specific assets included in the First Lien Collateral and the
Second Lien
Collateral, the steps taken to perfect the First Priority Liens and
the Second
Priority Liens thereon and the identity of the parties obligated
under the First
Lien Loan Documents and the Second Lien Loan Documents; and
(b) that the documents, agreements and instruments creating or
evidencing the Second Lien Collateral and the Second Priority Liens
shall be in
all material respects in the same form as the documents, agreements
and
instruments creating or evidencing the First Lien Collateral and
the First
Priority Liens, other than with respect to the first priority and
second
priority nature of the Liens created or evidenced thereunder, the
identity of
the secured parties that are parties thereto or secured thereby and
other
matters contemplated by this Agreement.
ARTICLE III
Enforcement of Rights; Matters Relating to Collateral
SECTION 3.01. Exercise of Rights and Remedies, (a) So long as
the
Discharge of First Lien Obligations has not occurred, whether or
not any
Insolvency or Liquidation Proceeding has been commenced, the First
Lien Agent
and the other First Lien Secured Parties shall have the exclusive
right to take
Enforcement Actions Against Collateral without any consultation
with or the
consent of the Second Lien Agent or any other Second Lien Secured
Party;
provided that, notwithstanding the foregoing, (i) in any Insolvency
or
Liquidation Proceeding, the Second Lien Collateral Agent may file a
proof of
claim or statement of interest with respect to the Second Lien
Obligations, (ii)
the Second Lien Collateral Agent may take any action to create,
perfect,
preserve or protect the validity and enforceability of the Second
Priority
Liens; provided that no such action is, or could reasonably be
expected to be,
(A) adverse to the First Priority Liens or the rights of the First
Lien
Collateral Agent or any other First Lien Secured Party to exercise
remedies in
respect thereof or (B) otherwise inconsistent with the terms of
this Agreement,
including the automatic release of Second Priority Liens provided
in Section
3.05, (iii) the Second Lien Secured Parties may file any 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 Secured
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Parties, including any claims secured by the Collateral or
otherwise make any
agreements or file any motions pertaining to the Second Lien
Obligations, in
each case, to the extent not inconsistent with the terms of this
Agreement, (iv)
the Second Lien Secured Parties may exercise rights and remedies as
unsecured
creditors, as provided in Section 3.04, (v) the Second Lien Secured
Parties may
vote on any plan of reorganization, make other filings, and make
any arguments
and motions that are, in each case, in accordance with the terms of
this
Agreement with respect to the Second Priority Liens, (vi) the
Second Lien
Secured Parties may bid for (including, but not limited to a credit
bid) or
purchase Collateral at any private or judicial foreclosure sale or
sale upon
such Collateral, in each instance, initiated by the First Lien
Secured Parties,
(vii) the Second Lien Secured Parties may hold a Lien on the
Collateral pursuant
to the Second Lien Collateral Documents for the period and to the
extent granted
therein and (viii) subject to Section 3.03(a), the Second Lien
Collateral Agent
and the other Second Lien Secured Parties may enforce any of their
rights and
exercise any of their remedies with respect to the Collateral after
the
termination of the Standstill Period (the actions described in this
proviso
being referred to herein as the "Second Lien Permitted Actions").
Except for the
Second Lien Permitted Actions, unless and until the Discharge of
First Lien
Obligations has occurred, the sole right of the Second Lien
Collateral Agent and
the other Second Lien Secured Parties with respect to the
Collateral shall be to
receive proceeds of the Collateral, if any, after the Discharge of
First Lien
Obligations has occurred and in accordance with the Second Lien
Loan Documents
and applicable law.
(b) In exercising rights and remedies with respect to the
Collateral, the First Lien Collateral Agent and the other First
Lien Secured
Parties may enforce the provisions of the First Lien Loan Documents
and exercise
remedies thereunder, all in such order and in such manner as they
may determine
in their sole discretion and in accordance with the First Lien Loan
Documents
and applicable law. Such exercise and enforcement shall include the
rights of an
agent appointed by them to Dispose of Collateral upon foreclosure,
to incur
expenses in connection with any such Disposition and to exercise
all the rights
and remedies of a secured creditor under the Uniform Commercial
Code, the
Bankruptcy Code or any other Bankruptcy Law. The First Lien
Collateral Agent
agrees to provide at least five days' prior written notice to the
Second Lien
Collateral Agent of its intention to foreclose upon or Dispose of
any
Collateral.
(c) Notices of Default. Each First Lien Secured Party or Second
Lien Secured Party shall give to the other First Lien Secured Party
or Second
Lien Secured Party (or the agent therefor) concurrently with the
giving thereof
to the Borrower (i) a copy of any written notice by such First Lien
Secured
Party or Second Lien Secured Party of an Event of Default under the
First Lien
Loan Documents or Second Lien Loan Documents or a written notice of
demand for
payment from the Borrower, and (ii) a copy of any written notice
sent by such
First Lien Secured Party or Second Lien Secured Party to the
Borrower stating
such First Lien Secured Party's or Second Lien Secured Party's
intention to
exercise any Enforcement Action rights or remedies against the
Borrower,
including written notice pertaining to any foreclosure on all or
any material
part of the Collateral or other judicial or non-judicial remedy in
respect
thereof, and any legal process served or filed in connection
therewith; provided
that except for notices required to be provided by a First Lien
Secured Party or
Second Lien Secured Party to another First Lien Secured Party or
Second Lien
Secured Party under any other section of this
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Agreement the failure of any First Lien Secured Party or Second
Lien Secured
Party to give such required notice shall not result in any
liability to such
First Lien Secured Party or Second Lien Secured Party or affect
the
enforceability of any provision of this Agreement, including the
relative
priorities of the Liens of the First Lien Secured Party or Second
Lien Secured
Party as provided herein, and shall not affect the validity or
effectiveness of
any such notice as against the Borrower. Each of First Lien
Collateral Agent and
Second Lien Collateral Agent will provide such information as it
may have to the
other as the other may from time to time reasonably request
concerning the
status of the exercise of any Enforcement Action and First Lien
Collateral Agent
and Second Lien Collateral Agent shall be available on a reasonable
basis during
normal business hours to review with each other alternatives
available in
exercising such rights, including, but not limited to, advising
each other of
any offers which may be made from time to time by prospective
purchasers of the
Collateral (except to the extent the notifying party reasonably
believes that a
conflict of interest may result or a confidentiality provision may
be violated),
provided, that, the failure of any party to do any of the foregoing
shall not
affect the relative priorities of First Lien Collateral Agent's or
Second Lien
Collateral Agent's respective Liens as provided herein or the
validity or
effectiveness of any notices or demands as against Borrower. The
Borrower hereby
consents and agrees to each First Lien Secured Party or Second Lien
Secured
Party providing any such information to the other First Lien
Secured Parties or
Second Lien Secured Parties and to such actions by the First Lien
Secured
Parties or Second Lien Secured Parties and waive any rights or
claims against
any First Lien Secured Parties or Second Lien Secured Parties
arising as a
result of such information or actions.
SECTION 3.02. Second Lien Secured Parties' Purchase Option.
(a) Purchase Notice. Upon the occurrence of any of the
following,
the First Lien Collateral Agent shall provide notice to the Second
Lien
Collateral Agent (the "Agent's Notice") that (i) First Lien
Collateral Agent or
any First Lien Lender has been contacted by the Borrower regarding
(a) the
insolvency of the Borrower including, but not limited to a
bankruptcy filing,
(b) the restructuring of the Borrower's debt obligations, (c)
providing
additional financing to the Borrower including, but not limited
to,
debtor-in-possession financing, (ii) First Lien Collateral Agent
takes or
intends to take any Enforcement Action, (iii) a Non-Funding Event
shall have
occurred and remain continuing or (iv) an Insolvency or Liquidation
Proceeding
with respect to the Borrower has been commenced (each of (i)
through (iv) above,
a "Purchase Trigger"), the Second Lien Secured Parties (along with
other
potential lenders) shall have the option to purchase from the First
Lien Secured
Parties all of the First Lien Obligations owing to the First Lien
Secured
Parties by the Second Lien Collateral Agent giving a written notice
(the
"Purchase Notice") to the First Lien Collateral Agent no later than
fifteen (15)
Business Days after receipt by the Second Lien Collateral Agent of
the Agent's
Notice. The Purchase Notice from the Second Lien Collateral Agent
to the First
Lien Collateral Agent shall be irrevocable.
(b) Purchase Option
Closing. On the date specified by the Second
Lien Agent in the Purchase Notice (which shall not be less than six
(6) Business
Days nor more than thirty (30) days, after the receipt by the First
Lien Agent
of the Purchase Notice) (the "Purchase Date"), the First Lien
Secured Parties
shall sell to the applicable Second Lien Secured Parties
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and any additional lenders (designated by the Second Lien Agent),
and the
applicable Second Lien Secured Parties and any additional lenders
designated by
the Second Lien Agent shall purchase from the First Lien Secured
Parties, the
First Lien Obligations owing to the First Lien Secured Parties, and
(subject to
the last sentence of Section 3.02(e)) during such period, the First
Lien Secured
Parties shall not take any Enforcement Action without the consent
of the Second
Lien Agent (other than acceleration of any or all of the First Lien
Obligations
and exercise of control over Borrower's depository accounts).
(c) Purchase Price. Such purchase and sale shall be made on the
Purchase Date by execution and delivery by the applicable First
Lien Secured
Parties and/or Second Lien Secured Parties of an Assignment
Agreement in the
form attached to the First Lien Credit Agreement. Upon the Purchase
Date, the
applicable Second Lien Secured Parties and any additional lenders
approved by
the Second Lien Agent shall (i) pay to the First Lien Agent for the
benefit of
the First Lien Secured Parties as the purchase price therefor the
sum of (a) the
full amount of all the First Lien Obligations then outstanding and
unpaid
(including principal, interest, fees and expenses, including
reasonable
attorneys' fees and legal expenses and, with respect to Hedging
Agreements that
constitute First Lien Obligations, 100% of the aggregate amount of
such First
Lien Obligations (calculated in accordance with the terms of such
Hedging
Agreements and giving effect to any netting arrangements) that the
applicable
Loan Party would be required to pay if such Hedging Agreements were
terminated
at such time) plus (b) any early termination fee, prepayment fee or
other
similar fee payable pursuant to the First Lien Credit Agreement
(calculated as
if such assigned First Lien Obligations were repaid in full by the
Borrowers at
such time, it being understood that no processing fee will be
changed in
connection with such assignment) and (ii) provide for letters of
credit to back
up all outstanding letters of credit issued under the First Lien
Loan Documents
and then outstanding in an amount equal to 101% of the undrawn
amount of such
then outstanding letters of credit or provide cash collateral to
secure the
reimbursement obligations with respect to such letters of credit in
such amount.
Such purchase price and cash collateral shall be remitted by wire
transfer of
immediately available funds to such bank account of the First Lien
Agent as the
First Lien Agent may designate in writing to the applicable Second
Lien Secured
Parties 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 Second Lien Secured Parties to the bank account designated
by the First
Lien Agent are received in such bank account prior to 1:00 p.m.,
New York City
time and interest shall be calculated to and including such
Business Day if the
amounts so paid by the applicable Second Lien Secured Parties and
any additional
lenders approved by the Second Lien Agent to the bank account
designated by the
First Lien Agent are received in such bank account later than 1:00
p.m., New
York City time.
(d) Nature of Sale. Such purchase and sale shall be expressly
made
without representation or warranty of any kind by the First Lien
Secured Parties
as to the First Lien Obligations or otherwise and without recourse
to the First
Lien Secured Parties, except for several (not joint)
representations and
warranties as to the following: (i) the amount of the First Lien
Obligations
being purchased (including as to the principal of and accrued and
unpaid
interest on such First Lien Obligations, fees and expenses
thereof), (ii) that
the First Lien Secured Parties own the First Lien Obligations free
and clear of
any Liens, and (iii) each First
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Lien Lender has the full right and power to assign its First Lien
Obligations
and such assignment has been duly authorized by all necessary
corporate action
by such First Lien Lender.
(e) Notice of Proposed
Action. The First Lien Agent agrees that
it will use
