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Exhibit 4.6
INTERCREDITOR
AGREEMENT
This INTERCREDITOR AGREEMENT
(“ Agreement ”), is dated as of December 31,
2004, and entered into by and among MODTECH HOLDINGS, INC. (the
“Company”), WELLS FARGO BANK, NATIONAL ASSOCIATION
(“ Wells Fargo ”), in its capacity as collateral
agent and representative for the First Lien Obligations (as defined
below) (in such capacity, together with any replacement or
successor collateral agent and representative the “ First
Lien Collateral Agent ”), and AMULET LIMITED, an exempt
company organized under the laws of the Cayman Islands (“
Amulet ”), in its capacity as collateral agent and
representative for the Second Lien Obligations (as defined below),
(in such capacity, together with any replacement or successor
collateral agent and representative the “Second Lien
Collateral Agent”). Capitalized terms used in this Agreement
have the meanings assigned to them in Section 1 below.
RECITALS
The Company, the lenders and
agents party thereto, and Wells Fargo, as Administrative Agent,
have entered into that Credit Agreement dated as of December 26,
2001 providing for a revolving credit facility and term loan (as
amended, restated, supplemented, modified, extended, renewed,
replaced or Refinanced from time to time (including as of the date
hereof), the “ First Lien Credit Agreement
”);
The Company and the lenders
party thereto entered into that Securities Purchase Agreement dated
as of the date hereof providing for the issuance of convertible
senior subordinated notes (as amended, restated, supplemented,
modified, extended, renewed, replaced or Refinanced from time to
time in accordance with the terms of this Agreement, the “
Second Lien Credit Agreement ”);
Pursuant to (i) the First
Lien Credit Agreement, certain current Subsidiaries of the Company
have agreed to guaranty the First Lien Obligations and Holdings has
agreed to cause certain future Subsidiaries of the Company to
guaranty the First Lien Obligations (as amended, restated,
supplemented, modified, extended, renewed, replaced or Refinanced
from time to time the “ First Lien Subsidiary Guaranty
”); and (ii) the Second Lien Credit Agreement, certain
current Subsidiaries of the Company have agreed to guaranty the
Second Lien Obligations and the Company has agreed to cause certain
future Subsidiaries of the Company to guaranty the Second Lien
Obligations (as amended, restated, supplemented, modified,
extended, renewed, replaced or Refinanced from time to time in
accordance with the terms of this Agreement, the “ Second
Lien Subsidiary Guaranty ”);
The obligations of the
Company under the First Lien Credit Agreement and any Hedge
Agreements with the First Lien Lenders (or any of their Affiliates)
and the obligations of the Subsidiaries under the First Lien
Subsidiary Guaranty will be secured on a first priority basis by
liens on all the assets of the Company and certain Subsidiaries
(such current and future Subsidiaries of the Company providing a
guaranty thereof, the “ Guarantor Subsidiaries
”), respectively, pursuant to the terms of the First Lien
Collateral Documents;
The obligations of the
Company under the Second Lien Credit Agreement and the obligations
of the Subsidiaries under the Second Lien Subsidiary Guaranty will
be secured on a second priority basis by liens on substantially all
the assets of the Company and the Guarantor Subsidiaries,
respectively, pursuant to the terms of the Second Lien Collateral
Documents;
The First Lien Loan Documents
and the Second Lien Loan Documents provide, among other things,
that the parties thereto shall set forth in this Agreement their
respective rights and remedies with respect to the Collateral;
and
In order to induce the First
Lien Collateral Agent and the First Lien Claimholders to consent to
the Grantors incurring the Second Lien Obligations and to induce
the First Lien Claimholders to extend and maintain credit and other
financial accommodations and lend monies to or for the benefit of
the Company, or any other Grantor, the Second Lien Collateral Agent
on behalf of the Second Lien Claimholders has agreed to the
intercreditor and other provisions set forth in this
Agreement.
AGREEMENT
In consideration of the
foregoing, the mutual covenants and obligations herein set forth
and for other good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
SECTION 1.
Definitions.
1.1 Defined Terms . As
used in the Agreement, the following terms shall have the following
meanings:
“ Affiliate
” means, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with the
Person specified. For purposes of this definition, a Person shall
be deemed to “control” or be “controlled
by” a Person if such Person possesses, directly or
indirectly, power to direct or cause the direction of the
management or policies of such Person whether through ownership of
equity interests, by contract or otherwise.
“ Agreement
” means this Intercreditor Agreement, as amended, restated,
renewed, extended, supplemented or otherwise modified from time to
time.
“ Asset Sale
” has the meaning assigned to that term in the First Lien
Credit Agreement.
“ Bankruptcy
Code ” means Title 11 of the United States Code entitled
“Bankruptcy,” as now and hereafter in effect, or any
successor statute.
“ Bankruptcy Law
” means the Bankruptcy Code and any similar federal, state or
foreign law for the relief of debtors.
“ Business Day
” means a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required
by law to close.
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“ Collateral
” means all of the assets and property of any Grantor,
whether real, personal or mixed, constituting both First Lien
Collateral and Second Lien Collateral; provided, however, that in
no event shall Collateral include the irrevocable standby letter of
credit no.
, dated, December 31, 2004, issued by U.S. Bank National
Association for the Company’s account for benefit of Amphora
Limited, in the maximum amount of $10,000,000 to secure certain of
the Second Lien Obligations (the “Second Lien Letter of
Credit”), or drawings thereunder but shall include any
collateral pledged to support such letter of credit.
“ Collateral
Documents ” means this Agreement, the First Lien
Collateral Documents and the Second Lien Collateral
Documents.
“ Company
” has the meaning assigned to that term in the Preamble to
this Agreement.
“ Comparable Second
Lien Collateral Document ” means, in relation to any
Collateral subject to any Lien created under any First Lien
Collateral Document, that Second Lien Loan Document which creates a
Lien on the same Collateral, granted by the same
Grantor.
“ Currency
Agreement ” means any foreign exchange contract, currency
swap agreement, futures contract, option contract, synthetic cap or
other similar agreement or arrangement, each of which is for the
purpose of hedging the foreign currency risk associated with the
Company’s and its Subsidiaries’ operations and not for
speculative purposes.
“ DIP Financing
” has the meaning assigned to that term in Section
6.1.
“ Discharge of First
Lien Obligations ” means, except to the extent otherwise
expressly provided in Section 5.5 and subject to Section
6.5:
(a) payment in full in cash
of the principal of and interest (including interest accruing on or
after the commencement of any Insolvency or Liquidation Proceeding,
whether or not such interest would be allowed in such Insolvency or
Liquidation Proceeding), and premium, if any, on all Indebtedness
outstanding under the First Lien Loan Documents;
(b) payment in full in cash
under any Hedging Obligations entered into with a First Lien
Claimholder (or any of their Affiliates);
(c) payment in full in cash
of all other 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;
(d) termination or expiration
of all commitments, if any, to extend credit that would constitute
First Lien Obligations; and
(e) termination (without any
prior demand for payment thereunder having been made or, if made,
with such demand having been fully reimbursed in cash) or cash
collateralization (in an amount and manner, and on terms,
satisfactory to the First Lien Collateral Agent) of all letters of
credit issued under the First Lien Loan Documents.
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“ Disposition
” has the meaning assigned to that term in Section
5.1(b).
“ First Lien
Claimholders ” means, at any relevant time, the holders
of First Lien Obligations at that time, including without
limitation the First Lien Lenders (or any Lender Counterparty) and
the agents under the First Lien Loan Documents.
“ First Lien
Collateral Agent ” has the meaning assigned to that term
in the Recitals to this Agreement.
“ First Lien
Collateral ” means all of the assets and property of any
Grantor, whether real, personal or mixed, in which a Lien is
purported to be granted as security for any First Lien
Obligations.
“ First Lien
Collateral Documents ” means the Collateral Documents (as
defined in the First Lien Credit Agreement), First Lien Mortgages,
and any other agreement, document or instrument which is intended
to grant to the First Lien Collateral Agent or any of the First
Lien Claimholders a Lien securing any First Lien Obligations or
under which rights or remedies with respect to such Liens are
governed, as each may be amended, restated, supplemented, modified,
renewed, extended or Refinanced from time to time in accordance
with the terms hereof and thereof.
“ First Lien Credit
Agreement ” has the meaning assigned to that term in the
Recitals to this Agreement.
“ First Lien
Lenders ” means the “Lenders” under and as
defined in the First Lien Loan Documents, and any successor to, or
replacements of, such Lenders.
“ First Lien Loan
Documents ” means the First Lien Credit Agreement and the
Loan Documents (as defined in the First Lien Credit Agreement) and
each of the other agreements, documents and instruments providing
for or evidencing or relating to any other First Lien Obligation,
and any other agreement, writing, document or instrument executed
or delivered at any time in connection with any First Lien
Obligations, including any intercreditor or joinder agreement among
holders of First Lien Obligations, to the extent such are effective
at the relevant time, as each may be amended, restated,
supplemented, modified, renewed, extended or Refinanced from time
to time in accordance with the terms hereof and thereof.
“ First Lien
Mortgages ” means a collective reference to each
mortgage, deed of trust and other document or instrument under
which any Lien on real property owned or leased by any Grantor is
purported to be granted to secure any First Lien Obligations or
under which rights or remedies with respect to any such Liens are
governed.
“ First Lien
Obligations ” means, subject to the next sentence, all
Obligations, whether outstanding or contingent, evidenced by or
arising under: (i) the First Lien Credit Agreement and/or (ii) any
of the other First Lien Loan Documents and/or (iii) Hedge
Agreements entered into with any First Lien Lender (or any Lender
Counterparty). “First Lien Obligations” shall include:
(a) all interest accrued or accruing (or which would, absent
commencement of an Insolvency or Liquidation Proceeding (and the
effect of provisions such as Section 502(b)(2) of the Bankruptcy
Code), accrue) after commencement of an Insolvency or
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Liquidation Proceeding in accordance
with the rate specified in the relevant First Lien Credit Document
whether or not the claim for such interest is allowed as a claim in
such Insolvency or Liquidation Proceeding; and (b) any and all fees
and expenses (including attorneys’ and/or financial
consultants’ fees and expenses) incurred by the First Lien
Collateral Agent or the other First Lien Claimholders after the
commencement of an Insolvency or Liquidation Proceeding, whether or
not the claim for fees and expenses is allowed under Section 506(b)
of the Bankruptcy Code or any other provision of the Bankruptcy
Code or Bankruptcy Law as a claim in such Insolvency or Liquidation
Proceeding.
Notwithstanding the
foregoing, if the sum of: (1) Indebtedness constituting principal
outstanding under the First Lien Credit Agreement and the other
First Lien Documents plus (2) the aggregate face amount of any
letters of credit issued under the First Lien Credit Agreement, is
in excess of $57,000,000 in the aggregate (the “Cap
Amount”), then only that portion of such Indebtedness and
such aggregate face amount of letters of credit equal to the Cap
Amount shall be included in Priority First Lien Obligations (any
such principal and reimbursement obligations with respect to such
letters of credit in excess of the Cap Amount, collectively, the
“Excluded First Lien Obligations”).
“ First Lien
Subsidiary Guaranty ” has the meaning assigned to that
term in the Recitals to this Agreement.
“ Governmental
Authority ” means any federal, state, municipal, national
or other government, governmental department, commission, board,
bureau, court, agency or instrumentality or political subdivision
thereof or any entity or officer exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining
to any government or any court, in each case whether associated
with a state of the United States, the United States, or a foreign
entity or government.
“ Grantors
” means the Company, each of the Guarantor Subsidiaries and
each other Person that may from time to time hereafter execute and
deliver a First Lien Collateral Document or a Second Lien
Collateral Document as a “Grantor” (or the equivalent
thereof).
“ Guarantor
Subsidiaries ” has the meaning set forth in the Recitals
to this Agreement.
“ Hedge
Agreements ” means an Interest Rate Agreement or a
Currency Agreement entered into with a Lender Counterparty and a
Grantor.
“ Hedging
Obligation ” of any Person means any obligation of such
Person pursuant to any Hedge Agreements.
“ Indebtedness
” means and includes all Obligations that constitute
“Indebtedness” within the meaning of the First Lien
Credit Agreement or the Second Lien Credit Agreement, as
applicable.
“ Insolvency or
Liquidation Proceeding ” means:
(a) any voluntary or
involuntary case or proceeding under the Bankruptcy Code with
respect to any Grantor;
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(b) any other voluntary or
involuntary insolvency, reorganization or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or
other similar case or proceeding with respect to any Grantor or
with respect to a material portion of their respective
assets;
(c) any liquidation,
dissolution, reorganization or winding up of any Grantor whether
voluntary or involuntary and whether or not involving insolvency or
bankruptcy other than any liquidation, dissolution, reorganized or
winding up permitted by the terms of the First Lien Credit
Agreement; or
(d) any general assignment
for the benefit of creditors or any other marshalling of assets and
liabilities of any Grantor.
“ Interest Rate
Agreement ” means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement,
interest rate hedging agreement or other similar agreement or
arrangement each of which is for the purposes of hedging the
interest rate exposure associated with the Company’s and its
Subsidiaries’ operations and not for speculative
purposes.
“ Lender
Counterparty ” means each First Lien Lender or any
Affiliate of a First Lien Lender counterparty to a Hedge Agreement
(including any Person who is a First Lien Lender (and any Affiliate
thereof) as of the date hereof but subsequently, whether before or
after entering into a Hedge Agreement, ceases to be a First Lien
Lender) including, without limitation, each such Affiliate that
enders into a joinder agreement with the First Lien Collateral
Agent.
“ Lien ”
means any lien, mortgage, pledge, assignment, security interest,
charge or encumbrance of any kind (including any agreement to give
any of the foregoing, any conditional sale or other title retention
agreement, and any lease in the nature thereof) and any option,
trust, UCC financing statement or other preferential arrangement
having the practical effect of any of the foregoing.
“ Lien Enforcement
Action ” means: (a) the taking of any action to enforce
or realize upon any Lien, (b) the exercise of any right or remedy
provided to a secured creditor on account of a Lien under any of
the Collateral Documents or under applicable law, including the
election to retain any collateral in satisfaction of a Lien, (c)
the taking of any action or the exercise of any right or remedy in
respect of the collection on, set off against, marshaling of, or
foreclosure on the Collateral (including, without limitation, the
notification of account debtors), (d) the sale, lease, license, or
other disposition of all or any portion of the Collateral by
private or public sale or any other means permissible under
applicable law, (e) the exercise of any other right of a secured
creditor under Article 9 of the UCC, (f) the adjustment of any
insurance claim, and (g) the commencement of any legal proceedings
against the Company or any other Grantor or with respect to any
Collateral for any relief described in clauses (a) though (f)
above.
“ New Agent
” has the meaning assigned to that term in Section
5.5.
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“ Obligations
” means all obligations of every nature of each Grantor from
time to time owed to any agent or trustee, the First Lien
Claimholders, the Second Lien Claimholders or any of them or their
respective Affiliates under the First Lien Loan Documents, the
Second Lien Loan Documents or Hedge Agreements, including, without
limitation, (a) any principal of or interest or premium on any
indebtedness, including any reimbursement obligation in respect of
any letter of credit, or any other liability, including interest
accruing after the filing of a petition initiating any proceeding
under the Bankruptcy Code, (b) any fees, indemnification
obligations, charges, costs, expense reimbursement obligations or
other liabilities payable under the documentation governing any
indebtedness, (c) any obligation to post cash collateral in respect
of letters of credit or any other obligations, (d) in the case of
the First Lien Obligations, any Hedging Obligations (including
payments for early termination), and (e) all performance
obligations under the documentation governing any indebtedness, in
each case, whether direct or indirect, absolute or contingent,
joint or several, in each case, whether or not the claim for such
amounts is allowed under Section 506(b) of the Bankruptcy Code or
any other provision of the Bankruptcy Code or Bankruptcy Law as a
claim in such Insolvency or Liquidation Proceeding.
“ Person ”
means any natural person, corporation, limited liability company,
limited liability partnerships, trust, joint venture, association,
company, bank, general or limited partnership, Governmental
Authority or other entity or organization, whether or not legal
entities.
“ Pledged
Collateral ” has the meaning set forth in Section
5.4(a).
“ Priority First
Lien Obligations ” means all First Lien Obligations other
than Excluded First Lien Obligations.
“ Recovery
” has the meaning set forth in Section 6.5.
“ Refinance
” means, in respect of any Indebtedness, to refinance,
extend, renew, defease, amend, modify, supplement, restructure,
replace, refund or repay, or to issue other indebtedness, in
exchange or replacement for, such Indebtedness in whole or in part,
whether pursuant to one or more agreements, with the same and/or
different lenders and/or agents. “Refinanced” and
“Refinancing” shall have correlative
meanings.
“ Second Lien
Claimholders ” means, at any relevant time, the holders
of Second Lien Obligations at that time, including without
limitation the Second Lien Lenders and the agents under the Second
Lien Loan Documents.
“ Second Lien
Collateral ” means all of the assets and property of any
Grantor, whether real, personal or mixed, with respect to which a
Lien is purported to be granted as security for any Second Lien
Obligations.
“ Second Lien
Collateral Agent ” has the meaning set assigned to that
term in the Preamble of this Agreement.
“ Second Lien
Collateral Documents ” means the Pledge and Security
Agreement (as defined in the Second Lien Credit Agreement), the
Second Lien Mortgages, and any other agreement, document or
instrument which is intended to grant to the Second Lien
Collateral
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Agent or any of the Second Lien
Claimholders a Lien securing any Second Lien Obligations or under
which rights or remedies with respect to such Liens are governed as
each may be amended, restated, supplemented, modified, renewed,
extended or Refinanced from time to time in accordance with the
terms hereof and thereof.
“ Second Lien Credit
Agreement ” has the meaning assigned to that term in the
Recitals to this Agreement.
“ Second Lien
Lenders ” means the “Lenders” under and as
defined in the Second Lien Credit Agreement, and any successors to,
or replacements of, such Lenders.
“ Second Lien Letter
of Credit ” has the meaning set forth in the definition
of “Collateral” herein.
“ Second Lien Loan
Documents ” means the Second Lien Credit Agreement, the
Second Lien Notes and the Transaction Documents (as defined in the
Second Lien Credit Agreement) and each of the other agreements,
documents and instruments providing for or evidencing or relating
to any other Second Lien Obligation, and any other agreement,
writing, document or instrument executed or delivered at any time
in connection with any Second Lien Obligations, including any
intercreditor or joinder agreement among holders of Second Lien
Obligations to the extent such are effective at the relevant time,
as each may be amended, restated, supplemented, modified, renewed,
extended or Refinanced from time to time in accordance with the
provisions of this Agreement.
“ Second Lien
Mortgages ” means a collective reference to each
mortgage, deed of trust and any other document or instrument under
which any Lien on real property owned or leased by any Grantor is
purported to be granted to secure any Second Lien Obligations or
under which rights or remedies with respect to any such Liens are
governed.
“ Second Lien
Notes ” means the Senior Subordinated Secured Convertible
Notes, dated the date hereof, issued by the Company in favor of the
Second Lien Lenders, in the original aggregate principal amount of
$25,000,000, as amended, restated, supplemented, modified, renewed,
extended or Refinanced from time to time in accordance with the
terms hereof and thereof.
“ Second Lien
Obligations ” means all Obligations, whether outstanding
or contingent, evidenced by or arising under: (i) the Second Lien
Credit Agreement and/or (ii) any of the other Second Lien Loan
Documents. “Second Lien Obligations” shall include: (a)
all interest accrued or accruing (or which would, absent
commencement of an Insolvency or Liquidation Proceeding (and the
effect of provisions such as Section 502(b)(2) of the Bankruptcy
Code), accrue) after commencement of an Insolvency or Liquidation
Proceeding in accordance with the rate specified in the relevant
Second Lien Credit Document whether or not the claim for such
interest is allowed as a claim in such Insolvency or Liquidation
Proceeding; and (b) any and all fees and expenses (including
attorneys’ and/or financial consultants’ fees and
expenses) incurred by the Second Lien Collateral Agent or the other
Second Lien Claimholders after the commencement of an Insolvency or
Liquidation Proceeding, whether or not the claim for fees and
expenses is allowed under Section 506(b) of the Bankruptcy Code or
any other provision of the Bankruptcy Code or Bankruptcy Law as a
claim in such Insolvency or Liquidation Proceeding..
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“ Second Lien
Subsidiary Guaranty ” has the meaning assigned to that
term in the Recitals to this Agreement.
“ Standstill
Period ” has the meaning set forth in Section
3.1(a)(5).
“ Subsidiary
” means, with respect to any Person, any corporation,
partnership, limited liability company, association, joint venture
or other business entity of which more than 50% of the total voting
power of shares of stock or other ownership interests entitled
(without regard to the occurrence of any contingency) to vote in
the election of the Person or Persons (whether directors, managers,
trustees or other Persons performing similar functions) having the
power to direct or cause the direction of the management and
policies thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof.
“ UCC ”
means the Uniform Commercial Code (or any similar or equivalent
legislation) as in effect in any applicable
jurisdiction.
1.2 Terms Generally .
The definitions of terms in this Agreement 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.” 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, restated,
supplemented, modified, renewed or extended subject to the
limitations set forth herein;
(b) any reference herein to
any Person shall be construed to include such Person’s
permitted successors and assigns;
(c) 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;
(d) all references herein to
Sections shall be construed to refer to Sections of this Agreement;
and
(e) the words
“asset” and “property” shall be construed
to have 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.
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SECTION 2. Lien
Priorities.
2.1 Relative
Priorities . Notwithstanding the date, time, method, manner or
order of grant, attachment or perfection of any Liens securing the
Second Lien Obligations granted on the Collateral or of any Liens
securing the First Lien Obligations granted on the Collateral and
notwithstanding any provision of the UCC, or any statutory,
decisional or other applicable law that would provide for a
contrary ordering of priorities, or the Second Lien Loan Documents
or any defect or deficiencies in, or failure to perfect, the Liens
securing the First Lien Obligations or any other circumstance
whatsoever, each of the Grantors, the First Lien Collateral Agent,
and the Second Lien Collateral Agent, on behalf of itself and the
Second Lien Claimholders, hereby acknowledges and agrees
that:
(a) any Lien purported to be
granted on the Collateral securing any First Lien Obligations now
or hereafter held by or on behalf of the First Lien Collateral
Agent or any First Lien Claimholders or any agent or trustee
therefor, regardless of how or when acquired, whether by grant,
possession, statute, operation of law, subrogation or otherwise,
shall be “first” priority and senior in all respects
and prior to any Lien on the Collateral securing any Second Lien
Obligations; and
(b) any Lien purported to be
granted on the Collateral securing any Second Lien Obligations now
or hereafter held by or on behalf of the Second Lien Collateral
Agent, any Second Lien Claimholders or any agent or trustee
therefor regardless of how acquired, whether by grant, possession,
statute, operation of law, subrogation or otherwise, shall be
“second” priority and junior and subordinate and
subject in all respects to all Liens on the Collateral securing any
First Lien Obligations. All Liens on the Collateral securing any
First Lien Obligations shall be and remain senior in all respects
and prior to all Liens on the Collateral securing any Second Lien
Obligations for all purposes, whether or not such Liens securing
any First Lien Obligations are subordinated to any Lien securing
any other obligation of the Company, any other Grantor or any other
Person.
2.2 Prohibition on
Contesting Liens . Each of the Second Lien Collateral Agent,
for itself and on behalf of each Second Lien Claimholder, and the
First Lien Collateral Agent, for itself and on behalf of each First
Lien Claimholder, agrees that it will not (and hereby waives any
right to) contest or support any other Person in contesting, in any
proceeding (including any Insolvency or Liquidation Proceeding),
(i) the priority, validity or enforceability of a Lien held by or
on behalf of any of the First Lien Claimholders in the First Lien
Collateral or by or on behalf of any of the Second Lien
Claimholders in the Second Lien Collateral, as the case may be;
provided that nothing in this Agreement shall be construed to
prevent or impair the rights of the First Lien Collateral Agent or
any First Lien Claimholder to enforce this Agreement, including the
provisions of this Agreement relating to the priority of the Liens
securing the First Lien Obligations as provided in Sections 2.1 and
3.1, (ii) the validity or enforceability of any Collateral
Documents (including this Agreement) or any Obligation or other
obligation thereunder, or (iii) except as expressly set forth
herein, the relative rights and duties of the First Lien
Claimholders and the Second Lien Claimholders granted and/or
established pursuant to this Agreement or any other Collateral
Document.
2.3 No New Liens . So
long as the Discharge of First Lien Obligations has not occurred,
whether or not any Insolvency or Liquidation Proceeding has been
commenced by or
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against the Company or any other
Grantor, the parties hereto agree that the Company shall not, and
shall not permit any other Grantor to (and the Second Lien
Claimholders agree that they shall not receive) grant or permit any
additional Liens, or take any action to perfect a Lien, on any
asset or property to secure any Second Lien Obligation unless a
first priority Lien is granted to the First Lien Collateral Agent
on such asset or property to secure the First Lien Obligations. To
the extent that the foregoing provisions are not complied with for
any reason, without limiting any other rights and remedies
available to the First Lien Collateral Agent and/or the First Lien
Claimholders, the Second Lien Collateral Agent, on behalf of Second
Lien Claimholders, agrees that any amounts received by or
distributed to any of them pursuant to or as a result of Liens
granted in contravention of this Section 2.3 shall be subject to
Section 4.2.
SECTION 3.
Enforcement.
3.1 Exercise of
Remedies.
(a) Until the Discharge of
First Lien Obligations has occurred, whether or not any Insolvency
or Liquidation Proceeding has been commenced by or against the
Company or any other Grantor, the Second Lien Collateral Agent and
the Second Lien Claimholders:
(1) will not exercise or seek
to exercise any rights or remedies with respect to any Collateral
(including, without limitation, the exercise of any right of setoff
or any right under any lockbox agreement, account control
agreement, landlord waiver or bailee’s letter or similar
agreement or arrangement to which the Second Lien Collateral Agent
or any Second Lien Claimholder is a party) or institute any action
or proceeding with respect to such rights or remedies (including
any action of foreclosure) or take any other Lien Enforcement
Action;
(2) will not contest, protest
or object to any foreclosure proceeding or action brought by the
First Lien Collateral Agent or any First Lien Claimholder or any
other exercise by the First Lien Collateral Agent or any First Lien
Claimholder of any rights and remedies relating to the Collateral
under the First Lien Loan Documents or otherwise;
(3) will not object to the
forbearance by the First Lien Collateral Agent or the First Lien
Claimholders from bringing or pursuing any foreclosure proceeding
or action or any other exercise of any rights or remedies relating
to the Collateral, in each case so long as the Liens granted to
secure the Second Lien Obligations of the Second Lien Claimholders
attach to the proceeds thereof subject to the relative priorities
described in Section 2;
(4) will not initiate or join
in or petition for or vote in favor of any resolution for or
instigate or support, any Insolvency or Liquidation Proceeding;
and
(5) will not:
(i) accelerate any payment of
all or any of the Second Lien Obligations;
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(ii) collect the Second Lien
Obligations or any part thereof;
(iii) enforce any right of
repayment of any Second Lien Obligations; or
(iv) initiate (or join in) or
file or prosecute any proceeding or judicial action with respect to
the Second Lien Obligations;
provided that, upon 5
Business Days prior written notice to the First Lien Collateral
Agent after the Standstill Period, to the extent permitted by the
terms of the Second Lien Loan Documents, the Second Lien Collateral
Agent may accelerate the Second Lien Obligations and may, subject
to the terms of clause (4) above and the other provisions of this
Agreement, file and prosecute a lawsuit to collect the Second Lien
Obligations.
As used in this Section
3.1(a)(5), the term “Standstill Period” means the
period beginning on the occurrence of an Event of Default under and
as defined in the Second Lien Loan Documents and ending on the date
that is 540 days following the latest date after both (1) any
Second Lien Collateral Agent shall have given notice (making
specific reference to this Section 3.1(a)(5) and describing such
Event of Default that is subject to such notice) to the First Lien
Collateral Agent that any such Event of Default under the Second
Lien Loan Documents shall have occurred and be continuing and of
such Second Lien Collateral Agent’s intent to exercise rights
and remedies and (2) the commencement of material work under all of
the contracts that any of the Grantors then have entered into as of
the time of the delivery of the notice in the preceding clause
(1).
(b) Until the Discharge of
First Lien Obligations has occurred, whether or not any Insolvency
or Liquidation Proceeding has been commenced by or against the
Company or any other Grantor, the First Lien Collateral Agent and
the First Lien Claimholders shall have the exclusive right to
manage, perform and enforce the terms of the First Lien Loan
Documents in respect of the Collateral, to exercise and enforce
rights, exercise remedies (including set-off and the right to
credit bid their debt) and make determinations in its sole
discretion regarding the release, disposition, or restrictions with
respect to the Collateral, including, without limitation, the
exclusive right to take or retake control or possession of the
Collateral and to hold, prepare for sale, process, lease, sell,
dispose of or liquidate the Collateral, all without any
consultation with or the consent of the Second Lien Collateral
Agent or any Second Lien Claimholder. In exercising rights and
remedies with respect to the Collateral, the First Lien Collateral
Agent and the First Lien Claimholders 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 the
exercise of their sole discretion. Such exercise and enforcement
shall include the rights of an agent appointed by them to sell or
otherwise dispose of Collateral upon foreclosure, to incur expenses
in connection with such sale or disposition, and to exercise all
the rights and remedies of a secured creditor under the UCC and of
a secured creditor under Bankruptcy Laws of any applicable
jurisdiction.
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(c) Notwithstanding the
foregoing, the Second Lien Collateral Agent and any Second Lien
Claimholder may:
(1) file a claim or statement
of interest with respect to the Second Lien Obligations; provided
that an Insolvency or Liquidation Proceeding has been commenced by
or against the Company or any other Grantor;
(2) take any action (not
adverse to the priority status of the Liens on the Collateral
securing the First Lien Obligations, or the rights of any First
Lien Collateral Agent or the First Lien Claimholders to exercise
remedies in respect thereof) in order to create, perfect or
maintain its Lien on the Collateral, subject to the terms of this
Agreement;
(3) ask the Company for
scheduled payments with respect to Second Lien Obligations required
to be made in accordance with the terms of the Second Lien Loan
Documents then due and owing but no acceleration of such
obligations;
(4) exercise any and all of
their rights and remedies in respect of conversion to common equity
of any Second Lien Obligations; and
(5) sell, assign or otherwise
transfer any and all of the Second Lien Obligations and their
rights relating thereto, subject to and in compliance with the
provisions of this Agreement, so long as any such subsequent holder
agrees in writing to be bound by the terms of this
Agreement.
The Second Lien Collateral
Agent, on behalf of itself and the Second Lien Claimholders, agrees
that it will not take or receive any Collateral or any proceeds of
Collateral in connection with the exercise of any right or remedy
(including set-off) with respect to any Collateral, unless and
until the Discharge of First Lien Obligations has occurred. Without
limiting the generality of the foregoing, unless and until the
Discharge of First Lien Obligations has occurred, except as
expressly provided in Section 3.1(c), the sole right of the Second
Lien Collateral Agent and the Second Lien Claimholders with respect
to the Collateral is to hold a Lien on the Collateral pursuant to
the Second Lien Collateral Documents for the period and to the
extent granted therein and to receive a share of the proceeds
thereof, if any, after the Discharge of First Lien Obligations has
occurred.
(d) (1) The Second Lien
Collateral Agent, for itself and on behalf of the Second Lien
Claimholders, agrees that the Second Lien Collateral Agent and the
Second Lien Claimholders will not take any action that would
hinder, delay, limit or prohibit any exercise of remedies under the
First Lien Loan Documents or is otherwise prohibited hereunder,
including any sale, lease, exchange, transfer or other disposition
of the Collateral, whether by foreclosure or otherwise or that
would limit, invalidate, avoid or set aside any Lien or Collateral
Document or subordinate the priority of the First Lien Obligations
to the Second Lien Obligations or afford the Liens securing the
Second Lien Obligations equal ranking to the Liens securing the
First Lien Obligations;
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(2) the Second Lien
Collateral Agent, for itself and on behalf of the Second Lien
Claimholders, hereby waives any and all rights it or the Second
Lien Claimholders may have as a junior lien creditor or otherwise
(whether arising under the UCC or any other law) to object to the
manner in which the First Lien Collateral Agent or the First Lien
Claimholders seek to enforce or collect the First Lien Obligations
or the Liens securing the First Lien Obligations granted in any of
the First Lien Collateral, regardless of whether any action or
failure to act by or on behalf of the First Lien Collateral Agent
or First Lien Claimholders is adverse to the interest of the Second
Lien Claimholders; and
(3) the Second Lien
Collateral Agent hereby acknowledges and agrees that no covenant,
agreement or restriction contained in the Second Lien Collateral
Documents or any other Second Lien Loan Document shall be deemed to
restrict in any way the rights and remedies of the First Lien
Collateral Agent or the First Lien Claimholders with respect to the
Collateral as set forth in this Agreement and the First Lien Credit
Documents.
(e) Except as specifically
set forth in Sections 3.1(a) and (d) and subject to Section 3.1(f),
the Second Lien Collateral Agent and the Second Lien Claimholders
may exercise rights and remedies as unsecured creditors against the
Company or any other Grantor that has guaranteed or granted Liens
to secure the Second Lien Obligations in accordance with the terms
of this Agreement, the Second Lien Loan Documents and applicable
law; provided that in the event that any Second Lien Claimholder
becomes a judgment Lien creditor in respect of Collateral as a
result of its enforcement of its rights as an unsecured creditor
with respect to the Second Lien Obligations, such judgment Lien
shall be subject to the terms of this Agreement for all purposes
(including in relation to the First Lien Obligations and being
subordinate thereto) as the other Liens securing the Second Lien
Obligations subject to this Agreement.
(f) Except as specifically
set forth in Sections 3.1(a) and (d) and Section 4.3, nothing in
this Agreement shall prohibit the receipt by the Second Lien
Collateral Agent or any Second Lien Claimholders of the required
payments of interest, principal and other amounts owed in respect
of the Second Lien Obligations so long as both such payment does
not constitute proceeds of Collateral and such receipt is not the
direct or indirect result of the exercise by the Second Lien
Collateral Agent or any Second Lien Claimholders of rights or
remedies as a secured creditor (including set-off) or enforcement
in contravention of this Agreement of any Lien held by any of them.
Nothing in this Agreement impairs or otherwise adversely affects
any rights or remedies the First Lien Collateral Agent or the First
Lien Claimholders may have with respect to the First Lien
Collateral.
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SECTION 4. Payments.
4.1 Application of
Proceeds .
(a) So long as the Discharge
of First Lien Obligations has not occurred, whether or not any
Insolvency or Liquidation Proceeding has been commenced by or
against the Company or any other Grantor, all Collateral or
proceeds thereof received or collected in connection with the sale
or other disposition of, or collection on, all such Collateral
(whether made or affected by a Grantor, a Creditor or any other
Person) (i) pursuant to the enforcement of any Collateral Document
or the exercise of any remedial provision thereunder or under or
pursuant to any applicable law, and all proceeds of Collateral that
are recovered pursuant to an avoidance action or (ii) that
otherwise are to be paid over to or for the account of the First
Lien Collateral Agent or any other First Lien Claimholder or the
Second Lien Collateral Agent or any other Second Lien Claimholder
in accordance with or pursuant to any of the First Lien Credit
Documents or any of the Second Lien Credit Documents, together with
all other proceeds received by the First Lien Collateral Agent or
the Second Lien Collateral Agent hereunder (including all funds
received in respect of post-petition interest or fees and expenses)
as a result of any such enforcement or the exercise of any such
remedial provision or as a result of any distribution of or in
respect of any Collateral (whether or not expressly characterized
as such, including amounts representing proceeds turned over to any
such Granter or the estate of any such Grantor by First Lien
Collateral Agent or any other First Lien Claimholder or the Second
Lien Collateral Agent or any other Second Lien Claimholder as a
result of any avoidance action) upon or in any Insolvency or
Liquidation Proceeding with respect to any Grantor, or the
application of any Collateral (or proceeds thereof) to the payment
of any of the First Lien Obligations or Second Lien Obligations or
any distribution of Collateral (or proceeds thereof) upon the
liquidation or dissolution of any Grantor, or the winding up of the
assets or business of any Grantor, shall be applied first ,
to payment of the First Lien Obligations and the provision of cash
collateral in respect of issued and outstanding Letters of Credit
in accordance with the First Lien Loan Documents and in respect of
Hedge Agreements in accordance with the First Lien Loan Documents,
and second , to payment of the Second Lien Obligations then
due and payable, and third , to payment of Excluded First
Lien Obligations and, with respect to Excluded First Lien
Obligations consisting of issued and outstanding Letters of Credit
and Hedge Agreements, the provision of cash collateral in respect
of such Letters of Credit and such Hedge Agreements in accordance
with the First Lien Loan Documents.
(b) It is understood and
agreed that the Grantors remain jointly and severally liable to the
relevant creditors for any deficiency between (x) the amount of the
proceeds of the Collateral received by such creditors hereunder and
(y) the aggregate amount of the Obligations owing to such
creditors.
4.2 Payments Over . So
long as the Discharge of First Lien Obligations has not occurred
but subject to Section 6.5 in any event, whether or not any
Insolvency or Liquidation Proceeding has been commenced by or
against the Company or any other Grantor, any Collateral or
proceeds thereof (or any distribution in respect of Collateral)
(whether or not characterized as such) (including assets or
proceeds subject to Liens referred to in the final sentence of
Section 2.3) received by the Second Lien Collateral Agent or any
Second Lien Claimholders, whether received from any Grantor or any
other Person, in connection with the exercise of any right or
remedy (including set-off) relating to the Collateral or otherwise
that is inconsistent or in
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contravention of this Agreement shall be
segregated and held in trust and forthwith paid over to the First
Lien Collateral Agent for the benefit of the First Lien
Claimholders in the same form as received, with any necessary
endorsements. The First Lien Collateral Agent is hereby authorized
to make any such endorsements as agent for the Second Lien
Collateral Agent or any such Second Lien Claimholders. This
authorization is coupled with an interest and is irrevocable until
the Discharge of First Lien Obligations.
4.3 No Payment . None
of the Second Lien Claimholders (including the Second Lien
Collateral Agent) shall accept or receive, call or demand, and none
of the Grantors shall make, (x) any payment in respect of the
Second Lien Obligations at a time when a default or event of
default exists, or would result from any such payment, under the
First Lien Loan Documents, (y) any voluntary prepayment of any
portion of the principal amount (or interest thereon) or other
amounts in respect of the Second Lien Obligations or (z) any other
payment, mandatory prepayment or redemption of any portion of the
principal amount (or interest thereon) or other amounts in respect
of the Second Lien Obligations other than in compliance with the
terms of First Lien Loan Documents (as Refinanced) and the Second
Lien Loan Documents; provided that the Second Lien Lenders may
exercise any and all rights under the Second Lien Loan Documents to
convert the Second Lien Obligations into common equity of the
Company; provided further that so long as no default or event of
default exists, or would result from any such payment, under the
First Lien Loan Documents, the Second Lien Lenders may receive
payment of principal in cash at the final scheduled maturity date
of the Second Lien Notes; provided further however, it being
understood and agreed that the terms of the First Lien Loan
Documents will provide for certain permitted mandatory redemptions
as follows:
(a) subject to the following
terms, the Second Lien Lenders shall have the right to cause the
Company to redeem up to $8.33 million on each of the following
anniversary dates following the issuance of the Second Lien Notes:
(i) 18 months (“First Redemption Date”), (ii) 30 months
(“Second Redemption Date”), and (iii) 48 months
(“Third Redemption Date”) (collectively, the
“Redemption Dates”);
(b) if the Second Lien
Lender
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