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EXHIBIT 10.3
Execution Version
INTERCREDITOR AGREEMENT
This INTERCREDITOR AGREEMENT is dated as of October 12, 2006,
and
entered into by and between GUGGENHEIM CORPORATE FUNDING, LLC,
in its capacity
as administrative agent for the holders of the First Lien
Obligations (as
defined below) (including its successors and assigns from time
to time, the
"FIRST LIEN AGENT"), and WELLS FARGO BANK, N.A.("TRUSTEE"), in
its capacity as
trustee and collateral agent for the holders of the Second Lien
Obligations (as
defined below) (including its successors and assigns from time
to time, the
"SECOND LIEN AGENT"), and acknowledged and agreed to by NATIONAL
COAL
CORPORATION., a Tennessee corporation (the "COMPANY"), NATIONAL
COAL CORP., a
Florida corporation ("HOLDINGS") and each of the other
Guarantors (as defined
below). Capitalized terms used herein but not otherwise defined
herein have the
meanings set forth in SECTION 1 below.
RECITALS
WHEREAS, the Company, as borrower (in such capacity, the "FIRST
LIEN
DEBTOR"), and the subsidiaries of the Company party thereto from
time to time as
guarantors (collectively, the "FIRST LIEN GUARANTORS"), the
lender(s) party
thereto, and GUGGENHEIM CORPORATE FUNDING, LLC, as the First
Lien Agent, have
entered into that certain Credit Agreement, dated as of October
12 2006,
providing for loans to the First Lien Debtor thereunder (as
Modified or
Refinanced from time to time pursuant to a Permitted
Modification or a Permitted
Refinancing, the "FIRST LIEN FINANCING AGREEMENT");
WHEREAS, as security for the First Lien Obligations, the First
Lien
Debtor executed and delivered, among other instruments, those
First Lien
Collateral Documents identified on Exhibit B attached hereto and
made a part
hereof, which instruments were recorded in the recording offices
as identified
on Exhibit B hereto;
WHEREAS, the Company, as issuer of the Notes (defined below) (in
such
capacity, the "SECOND LIEN DEBTOR"; the First Lien Debtor and
the Second Lien
Debtor, collectively, the "DEBTOR"), and the subsidiaries of the
Company party
thereto from time to time as guarantors (collectively, the
"SECOND LIEN
GUARANTORS"; the First Lien Guarantors and the Second Lien
Guarantors,
collectively, the "Guarantors"), the purchasers party thereto,
and WELLS FARGO
BANK, N.A., as Trustee, have entered into that certain
Indenture, dated as of
December 29, 2005 (the "INDENTURE"); pursuant to which the
Second Lien Debtor
has issued its 10.5% Senior Secured Notes due 2010 (the
"NOTES"), which Notes
are guaranteed by the Second Lien Guarantors (the "SECOND LIEN
GUARANTEES");
WHEREAS, as security for the Second Lien Obligations, the Second
Lien
Debtor executed and delivered, among other instruments, those
Second Lien
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Collateral Documents identified on Exhibit C attached hereto and
made a part
hereof, which instruments were recorded in the recording offices
as identified
on Exhibit C hereto;
WHEREAS, the parties hereto intend that the First Lien
Obligations will
be secured on a first priority basis by Liens on the Common
Collateral pursuant
to the terms of the First Lien Documents;
WHEREAS, the parties hereto intend that the Second Lien
Obligations
will be secured on a second priority basis by Liens on the
Common Collateral
pursuant to the terms of the Second Lien Collateral Documents;
and
WHEREAS, the First Lien Documents and the Second Lien
Documents
provide, among other things, that the parties thereto shall set
forth in this
Agreement their respective rights and remedies with respect to
the Common
Collateral;
NOW, THEREFORE, 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:
"AGREEMENT" means this Intercreditor Agreement, as Modified from
time
to time in accordance with the terms hereof.
"ASSIGNMENT AND ACCEPTANCE AGREEMENT" has the meaning set forth
in
SECTION 5.7(J) hereof.
"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 bankruptcy, insolvency, reorganization or other
similar laws
affecting the enforcement of creditors' rights generally.
"BUSINESS DAY" means a day other than a Saturday, Sunday or
other day
on which commercial banks in New York City are expressly
authorized or required
by law to close.
"COMMON COLLATERAL" means, at any time of determination,
collectively,
the First Lien Collateral, and all of the other property of
Grantor, in each
case above in which each of the First Lien Agent, on behalf of
itself and the
First Lien Claimholders, and the Second Lien Agent, on behalf of
itself and the
Second Lien Claimholders, has a valid and perfected Lien (which
Lien has not
been avoided, disallowed, set aside, invalidated or subordinated
pursuant to
Chapter 5 of the Bankruptcy Code or otherwise) securing payment
of First Lien
Obligations or Second Lien Obligations, respectively.
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"COMPANY" has the meaning set forth in the Preamble hereto.
"CREDITORS" means, collectively, the First Lien Agent, on behalf
of
itself and the First Lien Claimholders, and the Second Lien
Agent, on behalf of
itself and the Second Lien Claimholders, and their respective
successors and
assigns.
"CUT-OFF DATE" has the meaning set forth in SECTION 5.7(B)
hereof.
"DEBTOR" has the meaning set forth in the Recitals hereto.
"DIP FINANCING" means any financing provided by a lender under
Section
364 of the Bankruptcy Code or consent to the use of cash
collateral under
Section 363 of the Bankruptcy Code.
"DISCHARGE OF FIRST LIEN OBLIGATIONS" means the payment in full
in cash
of the principal of and interest and premium, if any, in respect
of the
indebtedness of the First Lien Debtor and of the First Lien
Guarantors under the
First Lien Financing Agreement or, with respect to Hedging
Obligations or
letters of credit outstanding thereunder, delivery of cash
collateral or
backstop letters of credit in respect thereof in compliance with
the First Lien
Financing Agreement, in each case after or concurrently with
termination of all
commitments to extend credit thereunder, and payment in full in
cash of any
other First Lien Obligations that are due and payable or
otherwise accrued and
owing at or prior to the time such principal, interest and
premium, if any, are
paid. If after receipt of any payment of, or of proceeds of
Common Collateral
applied to the payment of, any First Lien Obligations, any First
Lien
Claimholder is required to surrender or return such payment or
proceeds to any
Person for any reason, then the First Lien Obligations intended
to be satisfied
and discharged by such payment or proceeds shall be reinstated
and continue as
if such payment or proceeds had not been received by such
holder.
"DISPOSITION" has the meaning set forth in SECTION
5.1(A)(I).
"ENFORCEMENT ACTION" means any action under applicable law:
(1) to foreclose, execute or levy on, collect on, take
possession of or
control of, or sell or otherwise realize upon (judicially or
non-judicially) or
to lease, license or otherwise dispose of (whether publicly or
privately), any
Common Collateral or otherwise to exercise or enforce remedial
rights with
respect to Common Collateral under the First Lien Documents or
the Second Lien
Documents, as applicable, or any other applicable agreement,
document or
instrument pertaining thereto (including, without limitation, by
way of setoff,
noticing of any public or private sale or other disposition
pursuant to the UCC
or other applicable law, notification of account debtors,
notification of
depositary banks under deposit account control agreements or
exercise of rights
under landlord consents, if applicable),
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(2) to solicit bids from third parties to conduct the
liquidation or
disposition of any Common Collateral or to engage or retain
sales brokers,
marketing agents, investment bankers, accountants, appraisers,
auctioneers or
other third parties for the purposes of valuing, marketing,
promoting and
selling any Common Collateral,
(3) to receive a transfer of Common Collateral in satisfaction
of any
indebtedness or other obligation secured thereby, or
(4) to otherwise enforce any security interest or other right
or
remedy, as a secured creditor or otherwise, pertaining to the
Common Collateral
at law, in equity or pursuant to the First Lien Documents or the
Second Lien
Documents, as applicable, or any other applicable agreement,
document or
instrument pertaining thereto (including, without limitation,
the commencement
of any applicable legal proceedings or other actions against or
with respect to
all or any portion of the Common Collateral to facilitate the
actions described
in the immediately preceding clauses (1), (2) and (3), and
exercising voting
rights in respect of any equity interests comprising Common
Collateral);
PROVIDED that "Enforcement Action" shall not be deemed to
include the
commencement of, or joinder in filing of a petition for
commencement of, an
Insolvency Proceeding against the owner of Common
Collateral.
"FIRST LIEN AGENT" has the meaning set forth in the preamble
hereto.
"FIRST LIEN ANCILLARY OBLIGATIONS" has the meaning set forth in
Section
5.7(a) hereof.
"FIRST LIEN CLAIMHOLDERS" means, at any relevant time, the
holders of
First Lien Obligations at such time, including without
limitation the First Lien
Lenders and the First Lien Agent under the First Lien Financing
Agreement.
"FIRST LIEN COLLATERAL" means all of the real property, and
interests
therein, and all of the personal property of Grantor, whether
now owned or
hereafter acquired or existing, whether tangible or intangible,
and wherever
located, with respect to which a Lien is granted in favor of
First Lien Agent
for the benefit of itself and the other First Lien Claimholders
to secure any
First Lien Obligations (which Lien has not been released by
First Lien Agent).
"FIRST LIEN COLLATERAL DOCUMENTS" means the Security Documents
(as
defined in the First Lien Financing Agreement) and any other
agreement, document
or instrument (including any mortgage or deed of trust or
fixture filing)
pursuant to which a Lien is granted securing any First Lien
Obligations or under
which rights or remedies with respect to such Liens are
governed.
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"FIRST LIEN DEBTOR" has the meaning set forth in the Recitals
hereto.
"FIRST LIEN DOCUMENTS" means the First Lien Financing Agreement,
the
First Lien Guaranty, the First Lien Collateral Documents and all
other
agreements, documents and instruments at any time entered into
by Grantor or any
other Person with or in favor of the First Lien Agent and/or the
First Lien
Lenders in connection therewith or related thereto, including
this Agreement, as
all of the foregoing now exist or may hereafter be Modified
pursuant to a
Permitted Modification or be Refinanced pursuant to a Permitted
Refinancing.
"FIRST LIEN FINANCING AGREEMENT" has the meaning set forth in
the
Recitals hereto.
"FIRST LIEN GUARANTORS" has the meaning set forth in the
Recitals
hereto.
"FIRST LIEN GUARANTY" means any guaranty of any First Lien
Guarantor
pursuant to which such First Lien Guarantor shall guarantee the
First Lien
Obligations of the First Lien Debtor.
"FIRST LIEN LENDERS" means the "LENDERS" under and as defined in
the
First Lien Financing Agreement and any other lenders from time
to time under the
First Lien Financing Agreement.
"FIRST LIEN OBLIGATIONS" means, at any time of determination,
but
subject to the limitations set forth in Section 5.3(a), all
Obligations (in an
aggregate amount not to exceed the Maximum First Lien Debt
Amount) then secured
by a Lien on the Common Collateral, and owing by Grantor to the
First Lien Agent
and/or the First Lien Lenders, under the First Lien Documents,
including
principal, premium (if any), interest (including interest
accruing on or after
the filing of any petition in bankruptcy or for reorganization
relating to the
Grantor to the extent a claim for post-filing interest is
allowed in such
proceedings), fees, charges, expenses, reimbursement
obligations, and all other
amounts payable thereunder or in respect thereof, including
Obligations of any
Grantor in respect of Hedging Obligations under the First Lien
Documents in
respect of interest on First Lien Principal Obligations. To the
extent any
payment with respect to the First Lien Obligations (whether by
or on behalf of
Grantor, as proceeds of security, enforcement of any right of
set-off or
otherwise) is declared to be fraudulent or preferential in any
respect, set
aside or required to be paid to a debtor in possession, trustee,
receiver or
similar Person, then the obligation or part thereof originally
intended to be
satisfied shall be deemed to be reinstated and outstanding as if
such payment
had not occurred.
"FIRST LIEN PLEDGED COLLATERAL" has the meaning set forth in
SECTION
5.5 hereof.
"FIRST LIEN PRINCIPAL OBLIGATIONS" means, at any time of
determination,
the aggregate unpaid amount of the First Lien Obligations
constituting principal
of indebtedness (with letters of credit being deemed to have a
principal amount
equal to the maximum potential liability of the First Lien
Debtor and First Lien
Guarantors thereunder or in respect thereof).
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"GOVERNMENTAL AUTHORITY" means the government of the United
States of
America, any other nation or any political subdivision thereof,
whether state or
local, and any agency, authority, instrumentality, regulatory
body, court,
central bank or other entity exercising executive, legislative,
judicial,
taxing, regulatory or administrative powers or functions of or
pertaining to
government (including any supra-national bodies such as the
European Union or
the European Central Bank).
"GRANTOR" means the collective reference to the Debtor and
the
Guarantors, or any one or more of them, as the context may
require.
"GUARANTORS" has the meaning set forth in the Recitals
hereto.
"HEDGING OBLIGATIONS" means, with respect to any specified
Person, the
obligations of such Person under:
(1) interest rate swap agreements (whether from fixed to
floating or
from floating to fixed), interest rate cap agreements and
interest rate collar
agreements;
(2) other agreements or arrangements designed to manage interest
rates
or interest rate risk; and
(3) other agreements or arrangements designed to protect such
Person
against fluctuations in currency exchange rates or commodity
prices,
in each case entered into in the ordinary course of business and
not for
speculative purposes.
"INDENTURE" has the meaning set forth in the Recitals
hereto.
"INSOLVENCY PROCEEDING" means (a) any voluntary or involuntary
case or
proceeding under Bankruptcy Law with respect to Grantor, (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 Grantor or with respect to a material
portion of its
assets, (c) any liquidation, dissolution, reorganization or
winding up of
Grantor whether voluntary or involuntary and whether or not
involving insolvency
or bankruptcy or (d) any assignment for the benefit of creditors
or any other
marshalling of assets and liabilities of Grantor.
"LIEN" means any mortgage, deed of trust, pledge,
hypothecation,
assignment, charge, deposit arrangement, encumbrance (including
easements,
rights-of-way and the like), lien (statutory or other), security
interest or
preference, priority or other security agreement, transfer
intended as security
or preferential arrangement of any kind or nature whatsoever
intended to assure
payment of any indebtedness or other Obligation, including any
conditional sale
or other title retention agreement, the interest of a lessor
under a capital
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lease, or any financing lease having substantially the same
economic effect as
any of the foregoing, in the case of securities, any purchase
option, call or
similar right of a third party with respect to such securities,
and the filing
of any financing statement under the Uniform Commercial Code or
comparable law
of any jurisdiction naming the owner of the asset to which such
Lien relates as
debtor.
"MAJOR EVENT OF DEFAULT" means the occurrence or existence of
any event
or condition described in the following Sections of the
Indenture: 601(1),
601(2), 601(3), 601(4), 601(5) (solely in respect of the
covenants and
agreements of the Company and any other Grantor contained in
Articles 3, 4, 5,
9, 10 and 11 of the Indenture), and any comparable provisions of
any Second Lien
Financing Agreements evidencing any Permitted Modification or
Permitted
Refinancing thereof .
"MAXIMUM FIRST LIEN DEBT AMOUNT" means the sum of (i) the
outstanding
amount of First Lien Principal Obligations not to exceed (x)
$10,000,000 in the
aggregate (calculated, in the case of any such First Lien
Principal Obligations
issued at a discount, at the aggregate amount due at maturity
thereof) less (y)
the aggregate amount of all repayments of term indebtedness
constituting First
Lien Principal Obligations and all repayments of revolving
credit indebtedness
constituting First Lien Principal Obligations (effected with a
corresponding
commitment reduction under the First Lien Financing Agreement)
pursuant to
clause (i) of the second paragraph of Section 4.10 of the
Indenture plus (ii)
accrued but unpaid interest and, if applicable, premiums on the
amount of such
principal not in excess of the amount referred to in clause (i)
above plus (iii)
all fees, expenses, reimbursement obligations, guarantees and
all other amounts
of a type not referred to in clause (i) or (ii) above payable in
respect
thereof) plus (iv) Hedging Obligations in respect of interest on
First Lien
Principal Obligations referred to in clause (i) above, in each
case above
payable pursuant to the First Lien Documents.
"MODIFICATION" means, with respect to any agreement or other
document,
any amendment, supplement, extension, renewal, restatement,
restructuring or
other modification thereof, and "MODIFY" and "MODIFIED" shall
have correlative
meanings.
"NEW AGENT" has the meaning set forth in SECTION 5.6 hereof.
"OBLIGATIONS" means all obligations of every nature outstanding
from
time to time, whether for principal, interest, fees, expenses,
charges,
premiums, indemnification or otherwise.
"OPINION OF COUNSEL" means an opinion from legal counsel who
is
reasonably acceptable to the Trustee. The counsel may be an
employee of or
counsel to the Company, any Subsidiary of the Company or the
Trustee.
"PERMITTED MODIFICATION" means a Modification that complies
with
SECTION 5.3(A) or (B), as applicable, including each proviso
thereto.
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"PERMITTED REFINANCING" means a Refinancing that complies with
SECTION
5.3(A) or (B), as applicable, including each proviso
thereto.
"PERSON" means any natural person, corporation, limited
liability
company, trust, joint venture, association, company,
partnership, Governmental
Authority or other entity.
"PURCHASE COMMITMENT" has the meaning set forth in SECTION
5.7(B)
hereof.
"PURCHASE DATE" has the meaning set forth in SECTION 5.7(B)
hereof.
"PURCHASE OPTION EVENT" means any of (i) the First Lien Agent's
or any
First Lien Claimholder's (A) commencement of any Enforcement
Action against the
First Lien Collateral or (B) acceleration of the First Lien
Obligations (other
than pursuant to commencement by any Person other than any First
Lien
Claimholder of an Insolvency Proceeding relating to any Grantor)
or (C)
commencement of, or joinder in filing a petition for the
commencement of, an
Insolvency Proceeding against any Grantor, (ii) the occurrence
of an Event of
Default under the Indenture and (iii) the occurrence of an
Insolvency Proceeding
in respect of any Grantor.
"PURCHASE OPTION EVENT NOTICE" has the meaning set forth in
SECTION
5.7(A) hereof.
"PURCHASE OPTION STANDSTILL PERIOD" has the meaning set forth
in
SECTION 5.7(A) hereof.
"PURCHASE NOTICE" has the meaning set forth in SECTION 5.7(F)
hereof.
"PURCHASE OPTION PERIOD" has the meaning set forth in SECTION
5.7(B)
hereof.
"PURCHASE PERCENTAGE" has the meaning set forth in SECTION
5.7(F)
hereof.
"PURCHASE SHORTFALL" has the meaning set forth in SECTION
5.7(D)
hereof.
"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, other than pursuant to a DIP
Financing, and
"REFINANCED" and "REFINANCING" shall have correlative
meanings.
"REPLACEMENT FIRST LIEN AGENT" has the meaning set forth in
Section
5.7(j) hereof.
"SECOND LIEN AGENT" has the meaning set forth in the preamble
hereto.
"SECOND LIEN CLAIMHOLDERS" means, at any relevant time, the
holders of
Second Lien Obligations at such time, including without
limitation the Second
Lien Noteholders and the Second Lien Agent under the Second Lien
Financing
Agreements.
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"SECOND LIEN CLAIMHOLDER CONSENT" means the written consent of
Holders
(as defined in the Indenture, or any comparable term contained
in any successor
Second Lien Financing Agreement) of Notes (or other relevant
Second Lien
Obligations) in the minimum aggregate principal amount required
under Article 9
of the Indenture (or any comparable provision of any successor
Second Lien
Financing Agreement).
"SECOND LIEN COLLATERAL" means all of the real property, and
interest
therein, and all of the personal property of Grantor, whether
now owned or
hereafter acquired or existing, whether tangible or intangible,
and wherever
located, with respect to which a Lien is granted in favor of
Second Lien Agent
for the benefit of itself and the other Second Lien Claimholders
to secure any
Second Lien Obligations (which Lien has not been released by
Second Lien Agent).
"SECOND LIEN COLLATERAL DOCUMENTS" means the Second Lien
Financing
Agreements, the Second Lien Security Agreement and any other
agreement, document
or instrument (including any mortgage, deed of trust or fixture
filing) pursuant
to which a Lien is granted securing any Second Lien Obligations
or under which
rights or remedies with respect to such Liens are governed.
"SECOND LIEN DEBTOR" has the meaning set forth in the Recitals
hereto.
"SECOND LIEN DOCUMENTS" means the Second Lien Financing
Agreements and
the Second Lien Collateral Documents.
"SECOND LIEN FINANCING AGREEMENTS" means the Indenture, the
Notes, and
the Second Lien Guarantees, and all of the other agreements,
documents and
instruments at any time entered into by Grantor or any other
Person with or in
favor of the Second Lien Agent and/or the Second Lien Lenders in
connection
therewith or related thereto, including this Agreement, as all
of the foregoing
now exist or may hereafter be Modified pursuant to a Permitted
Modification or
be Refinanced pursuant to a Permitted Refinancing.
"SECOND LIEN GUARANTORS" has the meaning set forth in the
Recitals
hereto.
"SECOND LIEN GUARANTEES" has the meaning set forth in the
Recitals
hereto.
"SECOND LIEN NOTEHOLDERS" means the "HOLDERS" under and as
defined in
the Indenture and any other lenders from time to time under the
Second Lien
Financing Agreements.
"SECOND LIEN OBLIGATIONS" means, at any time of determination,
all
Obligations outstanding under the Second Lien Financing
Agreements and the other
Second Lien Documents owing by the Company or any other Grantor
to the Second
Lien Agent and/or the Second Lien Noteholders thereunder,
however evidenced,
whether as principal, surety, endorser, guarantor or otherwise,
whether arising
(i) during or after the initial or any renewal term of the
Second Lien Documents
pursuant to a Permitted Modification or (ii) after the
commencement of any case
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with respect to Grantor under Bankruptcy Law, including the
payment of interest
and other amounts which would accrue and become due but for the
commencement of
such case, to the extent such amounts are allowed or allowable
in any such
case), whether direct or indirect, absolute or contingent, joint
or several, due
or not due, primary or secondary, liquidated or unliquidated. To
the extent any
payment with respect to the Second Lien Obligations (whether by
or on behalf of
Grantor, as proceeds of security, enforcement of any right of
set-off or
otherwise) is declared to be fraudulent or preferential in any
respect, set
aside or required to be paid to a debtor in possession, trustee,
receiver or
similar Person, then the obligation or part thereof originally
intended to be
satisfied shall be deemed to be reinstated and outstanding as if
such payment
had not occurred.
"SECOND LIEN PLEDGED COLLATERAL" has the meaning set forth in
SECTION
5.5 hereof.
"SECOND LIEN SECURITY AGREEMENT" means the Security Agreement,
dated as
of December 29, 2005, among the Second Lien Debtor, the Second
Lien Guarantors
and the Second Lien Agent.
"STANDSTILL PERIOD" has the meaning set forth in SECTION
3.1(A)(I)
hereof.
"SUBSIDIARY" means, with respect to any Person, any
corporation,
partnership, 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.
"UNIFORM COMMERCIAL CODE" or "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 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."
Unless the context requires or provides otherwise (a) subject,
where applicable,
to the limitations set forth in this Agreement, 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, (b) any reference
herein to any
Person shall be construed to include such Person's 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
Exhibits or Sections
shall be construed to refer to Exhibits or Sections of this
Agreement and (e)
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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.
Section 2 LIEN PRIORITIES.
2.1 RELATIVE PRIORITIES.
(a) Each Creditor hereby acknowledges its understanding
that the other Creditor has been granted a Lien upon the Common
Collateral.
Notwithstanding the date, manner or order of grant, attachment
or perfection of
any Liens securing the Second Lien Obligations granted on the
Common Collateral
or of any Liens securing the First Lien Obligations granted on
the Common
Collateral and notwithstanding any provision of the UCC or any
other applicable
law or the provisions of the Second Lien Documents or any other
circumstance
whatsoever, each of the Second Lien Agent, on behalf of itself
and the Second
Lien Claimholders, and the First Lien Agent, on behalf of itself
and the First
Lien Claimholders hereby agrees that:
(i) all Liens granted under or pursuant to the First Lien
Documents on the Common Collateral securing the First
Lien Obligations up to but not exceeding the Maximum
First Lien Debt Amount now or hereafter held by or on
behalf of the First Lien Agent or any First Lien
Claimholder, or any agent or trustee therefor, shall,
so long as such Liens are valid and perfected, be and
remain senior in all respects and prior to all Liens
granted to the Second Lien Agent or the Second Lien
Claimholders under or pursuant to the Second Lien
Collateral Documents on the Common Collateral
securing any Second Lien Obligations;
(ii) any Lien granted under or pursuant to the Second Lien
Collateral Documents on the Common Collateral now or
hereafter held by or on behalf of the Second Lien
Agent or any Second Lien Claimholders or any agent or
trustee therefor, shall be junior and subordinate in
all respects to the Liens granted under or pursuant
to the First Lien Documents on the Common Collateral
securing the First Lien Obligations up to the Maximum
First Lien Debt Amount, so long as such Liens under
or pursuant to the First Lien Documents are valid and
perfected; and
(iii) provided that Second Lien Claimholder Consent shall
have been obtained to (i) the incurrence of
Obligations pursuant to the First Lien Documents in
excess of the Maximum First Lien Debt Amount and (ii)
the Liens granted pursuant to the First Lien
Documents on any Common Collateral securing any such
excess amounts, and subject to Section 5.3(a), all
Liens of the Second Lien Agent and the Second Lien
Claimholders on the Common Collateral shall, so long
as such Liens are valid and perfected, have priority
over the Liens of the First Lien Agent or the First
Lien Claimholders on the Common Collateral to the
extent that the Liens of the First Lien Agent or the
First Lien Claimholders secure First Lien Obligations
in excess of the Maximum First Lien Debt Amount, and
to the extent that the Liens of the First Lien Agent
or the First Lien Claimholders on the Common
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Collateral secure First Lien Obligations in excess of
the Maximum First Lien Debt Amount, but only with
respect to such excess amounts, such Liens of the
First Lien Agent and the First Lien Claimholders
shall be junior and subordinate in all respects to
the Liens of the Second Lien Agent and the Second
Lien Claimholders granted under or pursuant to the
Second Lien Documents on the Common Collateral so
long as such Liens under or pursuant to the Second
Lien Documents are valid and perfected, and the First
Lien Agent and First Lien Claimholders shall have,
mutatis mutandis, with respect thereto, and to Common
Collateral held or received therefor (including
proceeds), analogous obligations (other than the
obligations in respect of the Standstill Period) to
the Second Lien Agent and Second Lien Claimholders
under this Agreement as the Second Lien Agent and
Second Lien Claimholders have under this Agreement in
favor of the First Lien Agent and First Lien
Claimholders with respect to the First Lien
Obligations not exceeding the Maximum First Lien Debt
Amount and the Common Collateral securing such First
Lien Obligations not exceeding the Maximum First Lien
Debt Amount, and the Second Lien Agent and Second
Lien Claimholders shall have, mutatis mutandis, the
same limitations on responsibilities, duties and
liability in respect of the foregoing as the First
Lien Agent and First Lien Claimholders have under
this Agreement with respect to the Second Lien Agent
and Second Lien Claimholders.
(b) The lien priorities provided in this SECTION 2.1 in
respect of the Common Collateral on or in which the Creditors
have a valid and
perfected Lien shall not be altered or otherwise affected by any
Permitted
Modification of the Second Lien Documents or Permitted
Modification of the First
Lien Documents or any Permitted Refinancing of the Second Lien
Obligations or
Permitted Refinancing of the First Lien Obligations, or by any
action that any
Creditor may take or fail to take in respect of Grantor or the
Common Collateral
(other than failure to maintain the validity or perfection of
their respective
Liens).
2.2 PROHIBITION ON CONTESTING LIENS. Each of the Second Lien
Agent, for itself and on behalf of each Second Lien Claimholder,
and the First
Lien Agent, for itself and on behalf of each First Lien
Claimholder, agrees that
it will not contest the validity, perfection, priority (as set
forth in SECTION
2.1) or enforceability of the Liens of the other Creditor upon
the assets of the
Debtor or the Guarantors that are Common Collateral and that as
between First
Lien Claimholders and Second Lien Claimholders, the terms of
this Agreement
shall govern the priority of their respective valid and
perfected Liens on or in
the Common Collateral securing the First Lien Obligations or
Second Lien
Obligations, respectively. For avoidance of doubt, the parties
confirm that the
assertion in any proceeding or otherwise by one party (Party A)
of invalidity or
nonperfection of the other party's (Party B's) security interest
as a defense to
a claim or assertion by Party B against Party A for or alleging
breach of this
Agreement arising out of Party A's exercise of rights or
enforcement of remedies
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under this Agreement or any First Lien Documents or Second Lien
Documents, as
applicable, shall not be deemed to be a "contest" for purposes
of this SECTION
2.2. In the event that Second Lien Agent or any Second Lien
Claimholder
believes, in good faith, that the Lien in favor of First Lien
Agent in any
assets of Grantor is invalid or unperfected, prior to the
commencement by Second
Lien Agent or any Second Lien Claimholder of any such exercise
of rights or
enforcement of remedies which would violate this Agreement but
for such
invalidity or nonperfection of First Lien Agent's Lien, the
Second Lien Agent or
Second Lien Claimholder will furnish to the First Lien Agent not
less than five
Business Days' prior written notice of the contemplated
commencement of such
exercise or enforcement, which notice shall identify the basis
for the belief by
the Second Lien Agent or Second Lien Claimholder, as the case
may be, that such
invalidity or nonperfection exists.
2.3 SIMILAR LIENS AND AGREEMENTS. The parties hereto agree that
it
is their intention that the First Lien Collateral constituting
Common Collateral
and the Second Lien Collateral constituting Common Collateral be
identical. In
furtherance of the foregoing, the parties hereto agree, subject
to the other
provisions of this Agreement, upon request by the First Lien
Agent or the Second
Lien Agent, to cooperate in good faith (and to direct their
counsel to cooperate
in good faith) from time to time in order to determine the
specific items
included in the First Lien Collateral and the Second Lien
Collateral and the
steps taken to perfect their respective Liens thereon and the
identity of the
respective parties obligated under the First Lien Documents and
the Second Lien
Documents.
2.4 LIMITATIONS ON DUTIES AND OBLIGATIONS. Each of the Second
Lien
Agent, for itself and on behalf of each Second Lien Claimholder,
and the First
Lien Agent, for itself and on behalf of each First Lien
Claimholder, agrees
that, except in the case of (i) the obligations of the First
Lien Agent under
SECTION 5.5 as bailee and agent for perfection for the Second
Lien Agent and
(ii) the obligations of the Second Lien Agent under SECTION 5.5
as bailee and
agent for perfection for the First Lien Agent, each of the First
Lien Agent (on
behalf of the First Lien Claimholders) and the Second Lien Agent
(on behalf of
the Second Lien Claimholders) shall be solely responsible for
perfecting and
maintaining the perfection of its Lien in and to each item
constituting the
Common Collateral in which the First Lien Agent (on behalf of
the First Lien
Claimholders) or the Second Lien Agent (on behalf of the Second
Lien
Claimholders) has been granted a Lien. The foregoing provisions
of this
Agreement are intended solely to govern the respective Lien
priorities as
between the Creditors and shall not impose on either the First
Lien Agent (on
behalf of the First Lien Claimholders) or the Second Lien Agent
(on behalf of
the Second Lien Claimholders) any obligations in respect of the
disposition of
proceeds of foreclosure on any Common Collateral that would
conflict with prior
perfected claims therein in favor of any other Person or any
order or decree of
any court or other Governmental Authority or any applicable
law.
Section 3 ENFORCEMENT.
3.1 EXERCISE OF REMEDIES.
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(a) So long as the Discharge of First Lien Obligations
has not occurred, whether or not any Insolvency Proceeding has
been commenced by
or against Grantor:
(i) the Second Lien Agent and the Second Lien
Claimholders:
(x) will not take any Enforcement Action with
respect to any Common Collateral; PROVIDED,
HOWEVER, that the Second Lien Agent or the
other Second Lien Claimholders may take any
such Enforcement Action with respect to the
Common Collateral after the expiration of a
period of 180 days following the date on
which the Second Lien Agent shall have (1)
declared, and notified the First Lien Agent
of, the existence of any "Event of Default"
or event of default, under or as defined in
the Second Lien Financing Agreements, that
is a Major Event of Default, or (2)
accelerated any of the Second Lien
Obligations under the Second Lien Financing
Agreements (such 180 day period, the
"STANDSTILL PERIOD"); PROVIDED that, at the
time of such exercise, either any "Event of
Default" or event of default under or as
defined in the Second Lien Financing
Agreements that is a Major Event of Default
shall exist or any of the Second Lien
Obligations shall have been accelerated or
otherwise have become due and payable; and
PROVIDED, FURTHER, however, that
notwithstanding anything herein to the
contrary, in no event shall the Second Lien
Agent or any Second Lien Claimholder take
any Enforcement Action with respect to the
Common Collateral if, notwithstanding the
expiration of the Standstill Period, the
First Lien Agent or First Lien Claimholders
shall have commenced Enforcement Action with
respect to all or any material portion of
the Common Collateral (which Enforcement
Action of the First Lien Agent is other than
the exercise of set off or analogous
remedies in respect of cash and cash
equivalents or deposit or cash collateral
accounts) (prompt notice of any such
exercise to be given by the First Lien Agent
to the Second Lien Agent),
(y) will not contest or protest or object to any
foreclosure proceeding or action brought by
the First Lien Agent or any First Lien
Claimholder, or any other exercise by the
First Lien Agent or any First Lien
Claimholder of any rights and remedies, in
each case relating to the Common Collateral
(whether under the First Lien Documents or
otherwise) provided that such foreclosure or
exercise is in compliance with applicable
law and is not prohibited by SECTION 5.7, or
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(z) subject to their rights under clause (i)(x)
above, will not object to the forbearance by
the First Lien 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 Common Collateral,
in each case in clauses (x), (y) and (z)
above so long as the respective Liens of the
Second Lien Agent and the other Second Lien
Claimholders attach to the proceeds thereof
subject to the relative priorities described
in SECTION 2 hereof; and
(ii) notwithstanding anything to the contrary set forth in
the Second Lien Documents, but subject to SECTION
3.1(A)(I), SECTION 5.1(A), SECTION 5.7 and any other
express provision of this Agreement, and subject to
applicable law, the First Lien Agent and the First
Lien Claimholders shall have the exclusive right to
manage the Common Collateral and enforce rights,
exercise remedies (including set-off) and make
determinations regarding the sale, transfer or other
disposition of Common Collateral (whether by the
First Lien Agent, any agent of the First Lien Agent
or Grantor with the consent of the First Lien Agent)
or restrictions with respect to the Common
Collateral, without any consultation with or the
consent of the Second Lien Agent or any Second Lien
Claimholder; PROVIDED that (A) in any Insolvency
Proceeding commenced by or against Grantor, the
Second Lien Agent and each other Second Lien
Claimholder may file a claim or statement of interest
with respect to the Second Lien Obligations not
inconsistent with the terms and agreements set forth
in this Agreement, (B) the Second Lien Agent and each
other Second Lien Claimholder may take any action
(not adverse to the prior valid and perfected Liens
on the Common Collateral securing the First Lien
Obligations, or the rights of the First Lien Agent or
any First Lien Claimholders to exercise remedies in
respect thereof (except as otherwise provided in this
Agreement), and not inconsistent with the terms of
this Agreement) in order to preserve or protect its
Lien on the Common Collateral (including actions
permitted pursuant to SECTION 6.3), (C) the Second
Lien Agent and each other Second Lien Claimholder
shall be entitled to file any necessary responsive or
defensive pleadings in opposition to any motion,
claim, adversary proceeding or other pleading made by
any Person objecting to or otherwise seeking the
disallowance, avoidance, subordination or other
modification of the claims or Liens of the Second
Lien Agent or any other Second Lien Claimholders,
including without limitation any claims secured by
the Common Collateral, if any, in each case in a
manner not inconsistent with the other terms of this
Agreement, (D) the Second Lien Agent and each other
Second Lien Claimholder shall be entitled to file any
pleadings, objections, motions or agreements that
assert rights or interests available to unsecured
creditors of Grantor arising under either Bankruptcy
Law or applicable non-bankruptcy law, (E) the Second
Lien Agent and each other Second Lien Claimholder
shall be entitled to file any proof of claim and
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other filings and make any arguments and motions that
are, in each case, not inconsistent with the terms of
this Agreement, with respect to the Second Lien
Obligations and the Common Collateral and (F) the
Second Lien Agent or any Second Lien Claimholder may
exercise any of its rights or remedies with respect
to the Common Collateral after the termination of the
Standstill Period to the extent permitted by clause
(i)(x) above. In exercising rights and remedies with
respect to the Common Collateral, subject to the
provisions hereof, the First Lien Agent and the First
Lien Claimholders may enforce the provisions of the
First Lien 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, subject to the provisions hereof, the rights
of an agent appointed by them to sell or otherwise
dispose of Common Collateral in accordance with
applicable law upon foreclosure, to incur expenses in
connection with such sale or disposition, and to
exercise all the rights and remedies of a secured
creditor under the Uniform Commercial Code of any
applicable jurisdiction and of a secured creditor
under Bankruptcy Laws of any applicable jurisdiction.
The First Lien Agent shall comply with the provisions
of SECTION 5.7 in connection with its exercise and
enforcement of its rights or remedies with respect to
the Common Collateral.
(b) The Second Lien Agent, on behalf of itself and the
Second Lien Claimholders, agrees that prior to the expiration of
the Standstill
Period, it will not take or receive any Common Collateral or any
proceeds of
Common Collateral in connection with the exercise by it of any
Enforcement
Action with respect to any Common Collateral, unless and until
the Discharge of
First Lien Obligations has occurred, except as otherwise
expressly provided in
the proviso in clause (ii) of SECTION 3.1(A), subject in any
event to SECTION
4.2. Without limiting the generality of the foregoing, prior to
the expiration
of the Standstill Period, unless and until the Discharge of
First Lien
Obligations has occurred, and except as otherwise expressly
provided in SECTION
2.2 and in the proviso in clause (ii) of SECTION 3.1(A) and any
other express
provision of this Agreement, the sole right of the Second Lien
Agent and the
Second Lien Claimholders with respect to the Common Collateral
is to hold and
maintain perfection of a Lien on the Common 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 the
First Lien Obligations has occurred in accordance with the terms
of the Second
Lien Documents and applicable law. The exercise of rights or
enforcement of
remedies by the Second Lien Agent is subject, where applicable,
to the last
sentence of SECTION 2.2.
(c) Subject to its and their rights after the expiration
of the Standstill Period and subject to SECTION 2.2 and the
proviso in clause
(ii) of SECTION 3.1(A) and any other express provision of this
Agreement, (i)
the Second Lien Agent, for itself and on behalf of the Second
Lien Claimholders,
agrees that the Second Lien Agent and the Second Lien
Claimholders will not take
any action that would hinder any exercise of remedies by the
First Lien Agent or
the First Lien
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Claimholders in respect of the Common Collateral under the First
Lien Documents
or that is otherwise prohibited hereunder, including any sale,
lease, exchange,
transfer or other disposition of the Common Collateral prior to
the expiration
of the Standstill Period, whether by foreclosure or otherwise,
and (ii) the
Second Lien 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 to object to the manner in which the
First Lien Agent or
the First Lien Claimholders seek to enforce or collect the First
Lien
Obligations or the Liens granted in any of the First Lien
Collateral (PROVIDED
that such enforcement or collection complies with applicable law
and this
Agreement), regardless of whether any action or failure to act
by or on behalf
of the First Lien Agent or First Lien Claimholders is adverse to
the interest of
the Second Lien Claimholders.
(d) The Second Lien Agent hereby acknowledges and agrees
that no covenant, agreement or restriction contained in the
Second Lien
Collateral Documents or any other Second Lien Document (other
than this
Agreement) shall be deemed to restrict in any way the rights and
remedies of the
First Lien Agent or the First Lien Claimholders with respect to
the Common
Collateral as set forth in this Agreement and the First Lien
Documents, subject,
however, to the provisions hereof and of applicable law.
Section 4 PAYMENTS.
4.1 APPLICATION OF PROCEEDS AND PAYMENTS. So long as the
Discharge
of First Lien Obligations has not occurred, any Common
Collateral or proceeds
thereof received by the First Lien Agent in connection with the
sale or other
disposition of, or collection on, such Common Collateral upon
the exercise of
remedies, shall be applied by the First Lien Agent to the First
Lien Obligations
in such order, if any, as is specified in the relevant First
Lien Documents,
PROVIDED HOWEVER that notwithstanding the foregoing, amounts
received by the
First Lien Agent or any other First Lien Claimholder in respect
of Obligations
outstanding under any First Lien Document shall be deemed for
all purposes of
this Agreement, including determination of Discharge of First
Lien Obligations,
to be applied first to payment and satisfaction of all
outstanding First Lien
Obligations and thereafter to payment of Obligations thereunder,
if any, not
constituting First Lien Obligations. Upon the Discharge of the
First Lien
Obligations, the First Lien Agent shall deliver to the Second
Lien Agent (except
as may otherwise be required by applicable law or any court
order) any proceeds
of Common Collateral held by it in the same form as received,
with any necessary
endorsements, or as a court of competent jurisdiction may
otherwise direct, to
be applied by the Second Lien Agent to the Second Lien
Obligations in such
order, if any, as is specified in the relevant Second Lien
Collateral Documents.
4.2 PAYMENTS OVER. So long as the Discharge of First Lien
Obligations has not occurred, any Common Collateral or proceeds
of sale or other
disposition thereof received by the Second Lien Agent or any
Second Lien
Claimholders in connection with the exercise of any right or
remedy (including
set-off) relating to the Common Collateral not otherwise
permitted by this
Agreement, and any Common Collateral or proceeds of the sale or
other
disposition thereof received by the Second Lien Agent or any
Second Lien
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Claimholders solely as a result of an Enforcement Action taken
by the Second
Lien Agent or any Second Lien Claimholders in respect of the
Common Collateral,
shall be segregated and held in trust and forthwith paid over to
the First Lien
Agent for the benefit of the First Lien Claimholders in the same
form as
received, with any necessary endorsements, for immediate
application to the
repayment of the First Lien Obligations, or as a court of
competent jurisdiction
may otherwise direct. The First Lien Agent is hereby authorized
to make any such
endorsements as agent for the Second Lien Agent or any such
Second Lien
Claimholders. This authorization is coupled with an interest and
is irrevocable
until such time as this Agreement is terminated in accordance
with its terms.
Section 5 OTHER AGREEMENTS.
5.1 RELEASES.
(a) If, in connection with:
(i) any sale, exchange, transfer or other disposition of
ownership (collectively, a "DISPOSITION") of any
Common Collateral permitted under the terms of the
First Lien Documents as in effect on the date hereof
and not involving any exercise of remedies referred
to in clause (ii) below, or
(ii) the exercise of any of the First Lien Agent's
remedies in respect of the Common Collateral provided
for in SECTION 3.1 upon or following acceleration or
maturity of the First Lien Obligations and
non-payment thereof, including any Disposition of any
such Common Collateral pursuant to any such exercise
of remedies,
the First Lien Agent, for itself or on behalf of any of the
First Lien
Claimholders, releases any of its Liens on any part of the
Common Collateral,
and/or releases any Grantor from its obligations under its
guaranty of the First
Lien Obligations the outstanding equity interests of which
Grantor have been
disposed of in connection with a Disposition under clause (i) or
(ii) above
(such Grantor, a "DISPOSED GRANTOR"), in each case above (x)
other than in
connection with the Discharge of First Lien Obligations and (y)
in the case of
clause (i) above, other than after the occurrence and during the
continuance of
any Default, default, Event of Default or event of default under
or as defined
in the Second Lien Financing Agreements, and upon the request of
the Company
pursuant to an Officer's Certificate (as defined in the
Indenture) certifying
that all conditions precedent under the Indenture have been met,
then the Liens,
if any, of the Second Lien Agent, for itself or for the benefit
of the Second
Lien Claimholders, on such Common Collateral, and, if
applicable, the
obligations of such Disposed Grantor under its guaranty of the
Second Lien
Obligations, shall be automatically, unconditionally and
simultaneously released
and the Second Lien Agent, for itself or on behalf of any such
Second Lien
Claimholders, promptly shall execute and deliver to the First
Lien Agent or such
Grantor such termination statements, releases and other
documents as the First
Lien Agent or such Grantor may request to effectively confirm
such release;
PROVIDED that notwithstanding the foregoing, (x) in the case of
a Disposition
under SECTION 5.1(A)(I), the Liens, if any, of the Second Lien
Agent, for itself
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or for the benefit of the Second Lien Claimholders, on any
Common Collateral
and, if applicable, the obligations of any Disposed Grantor
under its guaranty
of the Second Lien Obligations, shall not be automatically
released, and such
Disposition shall result in an Event of Default or event of
default under or as
defined in the Second Lien Financing Agreements, if such
Disposition is not then
expressly permitted under the terms of the Second Lien Financing
Agreements and
(y ) in the case of a Disposition under SECTION 5.1(A)(I) or
(II), the Liens, if
any, of the Second Lien Agent, for itself or for the benefit of
the Second Lien
Claimholders, on all proceeds of any Common Collateral
(including all amounts
and other property received upon such Disposition or exercise of
remedies) shall
continue (subject to the priorities set forth in SECTION 2.1)
and shall not be
automatically released.
(b) Until the Discharge of First Lien Obligations occurs,
the Second Lien Agent, for itself and on behalf of the Second
Lien Claimholders,
hereby irrevocably constitutes and appoints the First Lien Agent
and any officer
or agent of the First Lien Agent, with full power of
substitution, as its true
and lawful attorney-in-fact (which appointment is coupled with
an interest) with
full irrevocable power and authority in the place and stead of
the Second Lien
Agent or such Second Lien Claimholder or in the First Lien
Agent's own name,
from time to time in the First Lien Agent's discretion, for the
purpose of
carrying out the terms of this SECTION 5.1, but subject to the
limitations
contained herein, to take any and all appropriate action and to
execute any and
all documents and instruments that may be necessary to
accomplish the purposes
of this SECTION 5.1 in accordance herewith, including any
endorsements or other
instruments of transfer or release.
(c) Until the Discharge of First Lien Obligations occurs,
to the extent that the First Lien Claimholders (i) have released
any Lien on
Common Collateral or Grantor from its obligation under its
guaranty and any such
Lien or guaranty is later reinstated or (ii) obtain any new
first priority Liens
or additional guarantees from any Grantor, then the Second Lien
Claimholders
shall be granted a second priority Lien on any such Common
Collateral and an
equivalent additional guaranty, as the case may be
5.2 INSURANCE. Unless and until the Discharge of First Lien
Obligations has occurred, the First Lien Agent and the First
Lien Claimholders
shall have the sole and exclusive right, subject to the rights
of Grantor under
the First Lien Documents, to adjust settlement for any insurance
policy covering
the Common Collateral in the event of any loss thereunder and to
approve any
award granted in any condemnation or similar proceeding (or any
deed in lieu of
condemnation) affecting the Common Collateral. Unless and until
the Discharge of
First Lien Obligations has occurred, and subject to the rights
of the Grantor
under the First Lien Documents, all proceeds of any such policy
and any such
award (or any payments with respect to a deed in lieu of
condemnation), if in
respect of the Common Collateral, shall be paid to the First
Lien Agent for the
benefit of the First Lien Claimholders pursuant to the terms of
the First Lien
Documents, if, but only if, so required and thereafter, if the
Discharge of
First Lien Obligations has occurred, or initially, if such
proceeds are not so
required to be paid to the First Lien Agent for the benefit of
the First Lien
Claimholders, and subject to the rights of the applicable
Grantor under the
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Second Lien Collateral Documents, to the Second Lien Agent for
the benefit of
the Second Lien Claimholders to the extent required under the
Second Lien
Collateral Documents and then, to the extent no mandatory
prepayment or
repayment of the Second Lien Obligations is then required, to
the owner of the
subject property, or such other Person as may be entitled
thereto or as a court
of competent jurisdiction may otherwise direct, PROVIDED that if
such owner or
other Person is a Grantor, such proceeds or award (or any
payments with respect
thereto) shall constitute Common Collateral to the extent
constituting First
Lien Collateral in which the security interest of the First Lien
Agent for the
benefit of the First Lien Claimholders pursuant to the terms of
the First Lien
Documents is perfected and be pledged to the Second Lien Agent
(which pledge
shall be fully perfected) pursuant to the terms of the Second
Lien Collateral
Documents for the benefit of the Second Lien Noteholders. Until
the Discharge of
First Lien Obligations has occurred, and if such proceeds or
award or payment
are required to have been paid to the First Lien Agent pursuant
to the
provisions of the First Lien Documents, if the Second Lien Agent
or any Second
Lien Claimholders shall, at any time, receive any proceeds of
any such insurance
policy or any such award or payment in contravention of this
Agreement, it shall
pay such proceeds over to the First Lien Agent in accordance
with the terms of
SECTION 4.2.
5.3 CERTAIN PROVISIONS OF FIRST LIEN DOCUMENTS; AMENDMENTS
TO
FIRST LIEN DOCUMENTS AND SECOND LIEN DOCUMENTS.
(a) The First Lien Documents shall not: (i) provide for
or permit the principal amount of loans and other extensions of
credit
thereunder, including, without limitation, outstanding First
Lien Principal
Obligations, to exceed $10,000,000 at any time or the
outstanding Obligations
under the First Lien Documents exceed the Maximum First Lien
Debt Amount, in
each case above without having previously obtained the Second
Lien Claimholder
Consent) or (ii) provide for a scheduled final maturity date of
the First Lien
Principal Obligations under the First Lien Financing Agreement
or any
Refinancing thereof that is within one year before or after the
scheduled final
maturity date of the Notes as in effect on the date hereof. The
First Lien
Documents may be Modified in accordance with their terms, and
the First Lien
Financing Agreement may be Refinanced, in each case, without the
consent of the
Second Lien Agent or the Second Lien Claimholders, PROVIDED,
HOWEVER, that in
the case of a Refinancing, such Refinancing is designated by the
Company, by
notice to Second Lien Agent, as a Permitted Refinancing to which
this Agreement
shall apply, and the holders of such Refinancing debt, if such
Refinancing debt
is secured by a Lien on the Common Collateral, shall bind
themselves in writing
to the terms of this Agreement, and PROVIDED FURTHER that the
First Lien Credit
Documents and any such Modification or Refinancing shall not:
(i) provide for or
permit the principal amount of loans and other extensions of
credit thereunder,
including, without limitation, outstanding First Lien Principal
Obligations, to
exceed $10,000,000 at any time or the outstanding Obligations
under the First
Lien Documents exceed the Maximum First Lien Debt Amount without
the Second Lien
Claimholder Consent) or (ii) extend the scheduled final maturity
date of the
First Lien Principal Obligations under the First Lien
Financing
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Agreement or any Refinancing thereof to a date within one year
before or after
the scheduled final maturity date of the Notes as in effect on
the date hereof .
As a condition to having the benefits of this Agreement, the
holders of any such
Refinancing debt, if such Refinancing debt is secured by a Lien
on the Common
Collateral, shall bind themselves in writing to the terms of
this Agreement.
(b) The Second Lien Documents may be Modified in
accordance with their terms, and the Second Lien Financing
Agreements may be
Refinanced, in each case, without the consent of the First Lien
Agent or the
First Lien Lenders; PROVIDED, HOWEVER, that in the case of a
Refinancing, such
Refinancing is designated by the Company, by notice to First
Lien Agent, as a
Permitted Refinancing to which this Agreement shall apply, and
the holders of
such Refinancing debt, if such Refinancing debt is secured by a
Lien on the
Common Collateral, shall bind themselves in writing to the terms
of this
Agreement, PROVIDED FURTHER, that any such Modification or
Refinancing of the
Second Lien Documents shall not, without the consent of the
First Lien Agent or
the First Lien Lenders, (i) provide for or permit the principal
amount of loans
and other extensions of credit thereunder to be incurred
pursuant to such
Modification or Refinancing or thereafter to exceed the amount
permitted to be
incurred pursuant to the provisions of the First Lien Documents
as then in
effect, (ii) amend covenants or events of default, along with
related
definitions, to make them more restrictive than those contained
from time to
time in the First Lien Financing Agreement, or (iii) shorten the
scheduled final
maturity date of the Notes or any debt Refinancing the Notes to
a date prior to
the stated maturity date of the Notes as in effect on the date
hereof. As a
condition to having the benefits of this Agreement, the holders
of any such
Refinancing debt, if such Refinancing debt is secured by a Lien
on the Common
Collateral, shall bind themselves in writing to the terms of
this Agreement.
5.4 RIGHTS AS UNSECURED CREDITORS, ETC.. The Second Lien
Obligations shall constitute senior indebtedness of each
Grantor, PARI PASSU in
right of payment to all other senior indebtedness of such
Grantor, including the
First Lien Obligations. Except as otherwise set forth in SECTION
3.1, the Second
Lien Agent and the Second Lien Claimholders may exercise rights
and remedies as
creditors against Debtor or any other Grantor in accordance with
the terms of
the Second Lien Documents and applicable law, PROVIDED that the
Second Lien
Agent and the Second Lien Claimholders may not exercise any such
rights or
remedies against the Common Collateral except as provided in
SECTION 3.1, and
FURTHER PROVIDED that enforcement of any judgment lien by the
Second Lien Agent
or the Second Lien Claimholders against the Common Collateral
shall be subject
to the same limitations and restrictions as apply to an
Enforcement Action under
SECTION 3.1(A) hereof. Except as otherwise set forth in SECTION
2.1 or SECTION
3.1, nothing in this Agreement shall prohibit or subordinate the
receipt by the
Second Lien Agent or any Second Lien Claimholders of (or its
right to receive)
the required payments of all Second Lien Obligations or
subordinate the claims
of the Second Lien Agent and the Second Lien Claimholders in
respect of property
of Grantor that is not Common Collateral.
5.5 BAILEE FOR PERFECTION, ETC.
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(a) First Lien Agent hereby agrees and acknowledges that,
to the extent that it holds, or a third party (as bailee, agent
or otherwise)
holds on its behalf, physical possession of or "control" (as
defined in the UCC)
over Common Collateral (including proceeds thereof) pursuant to
any of the First
Lien Documents (the "FIRST LIEN PLEDGED COLLATERAL"), First Lien
Agent (and
others holding on its behalf) holds such First Lien Pledged
Collateral as bailee
and agent for perfection for the benefit of the Second Lien
Agent and Second
Lien Claimholders and their successors and assigns (such holding
for the benefit
of the Second Lien Agent and Second Lien Claimholders being
intended, among
other things, to satisfy the requirements of Sections
8-301(a)(2) and 9-313(c)
of the UCC) and in each case solely to the extent required to
perfect and
enforce the security interests of Second Lien Agent in such
First Lien Pledged
Collateral.
(b) Second Lien Agent hereby agrees and acknowledges
that, to the extent that it holds, or a third party (as bailee,
agent or
otherwise) holds on its behalf, physical possession of or
"control" (as defined
in the UCC) over Common Collateral (including proceeds thereof)
pursuant to any
of the Second Lien Documents (the "SECOND LIEN PLEDGED
COLLATERAL") prior to the
Discharge of First Lien Obligations, Second Lien Agent (and
others holding on
its behalf) holds such Second Lien Pledged Collateral as bailee
and agent for
perfection for the benefit of the First Lien Agent and First
Lien Claimholders
and their successors and assigns (such holding for the benefit
of the First Lien
Agent and First Lien Claimholders being intended, among other
things, to satisfy
the requirements of Sections 8-301(a)(2) and 9-313(c) of the
UCC) and in each
case solely to the extent required to perfect and enforce the
security interests
of First Lien Agent in such Second Lien Pledged Collateral.
(c) Subject to the terms of this Agreement and applicable
law, until the Discharge of First Lien Obligations has occurred,
the First Lien
Agent shall be entitled to deal with the First Lien Pledged
Collateral in
accordance with the terms of the First Lien Documents as if the
Liens of the
Second Lien Agent under the Second Lien Collateral Documents did
not exist. The
rights of the Second Lien Agent in the Common Collateral shall
at all times
prior to the Discharge of First Lien Obligations be subject to
the terms of this
Agreement.
(d) The First Lien Agent shall have no obligation
whatsoever to the Second Lien Agent or any Second Lien
Claimholder to ensure
that the First Lien Pledged Collateral is genuine or owned by
Grantor. The
duties or responsibilities of the First Lien Agent under this
SECTION 5.5 shall
be limited solely to holding the First Lien Pledged Collateral
as bailee and
agent for perfection for the benefit of the Second Lien Agent
and Second Lien
Claimholders and their successors and assigns, which duty and
responsibility the
First Lien Agent shall fulfill using the same degree of care
with respect
thereto as it uses for similar property pledged to it as
collateral for
indebtedness of others to the First Lien Agent, and the First
Lien Agent shall
have no liability in connection therewith except for its
negligence or willful
misconduct as determined pursuant to a final non-appealable
order of a court of
competent jurisdiction.
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<PAGE>
(e) The Second Lien Agent shall have no obligation
whatsoever to the First Lien Agent or any First Lien Claimholder
to ensure that
the Second Lien Pledged Collateral is genuine or owned by
Grantor. The duties or
responsibilities of the Second Lien Agent under this SECTION 5.5
shall be
limited solely to holding the Second Lien Pledged Collateral as
bailee and agent
for perfection for the benefit of the First Lien Agent and First
Lien
Claimholders and their successors and assigns, which duty and
responsibility the
Second Lien Agent shall fulfill using the same degree of care
with respect
thereto as it uses for similar property pledged to it as
collateral for
indebtedness of others to the Second Lien Agent, and the Second
Lien Agent shall
have no liability in connection therewith except for its
negligence or willful
misconduct as determined pursuant to a final non-appealable
order of a court of
competent jurisdiction.
(f) The First Lien Agent acting pursuant to this SECTION
5.5 shall not have by reason of the First Lien Documents, the
Second Lien
Collateral Documents, this Agreement or any other related
document a fiduciary
relationship in respect of the Second Lien Agent or any Second
Lien Claimholder.
(g) The Second Lien Agent acting pursuant to this SECTION
5.5 shall not have by reason of the First Lien Documents, the
Second Lien
Collateral Documents, this Agreement or any other related
document a fiduciary
relationship in respect of the First Lien Agent or any First
Lien Claimholder.
(h) First Lien Agent and the other First Lien
Claimholders (and any third Person acting on its or their
behalf, as agent,
bailee or otherwise) shall not have any duty to the Second Lien
Agent or the
other Second Lien Claimholders with respect to the First Lien
Pledged Collateral
or to provide the Second Lien Claimholders with any rights with
respect to such
First Lien Pledged Collateral EXCEPT (1) as specified in this
Agreement and (2)
promptly upon the Discharge of First Lien Obligations, subject
to SECTIONS 2.2
and 2.4 hereof, and at the expense of Grantor, First Lien Agent
and each other
First Lien Claimholder shall (and shall cause each Person acting
on behalf of
any of the foregoing, as agent, bailee or otherwise, to) deliver
all First Lien
Pledged Collateral (if any), together with any necessary
endorsements and other
documents (including any applicable stock powers or bond
powers), then in its
possession or in the possession of its agent or bailee, or turn
over control as
to any First Lien Pledged Collateral for which it or its agent
or bailee then
has control, as the case may be, to Second Lien Agent, except to
the extent that
(i) First Lien Agent or any other First Lien Claimholder has
retained or
otherwise acquired such First Lien Pledged Collateral in
satisfaction of all or
any part of the First Lien Obligations, (ii) such First Lien
Pledged Collateral
has been sold or otherwise disposed of by First Lien Agent or
First Lien
Claimholders in accordance with this Agreement or by Grantor in
accordance with
this Agreement and the Second Lien Documents or (iii) it may
otherwise be
required by applicable law or any order of any court or other
Governmental
Authority. First Lien Agent and, where applicable, the First
Lien Claimholders
shall cause each Person act
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