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SR&Z LLP DRAFT
05/14/07
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INTERCREDITOR AGREEMENT
dated as of
May 15, 2007,
among
DUNE ENERGY, INC.,
as the Company,
certain Subsidiaries of the Company
from time to time party hereto,
WELLS FARGO FOOTHILL, INC.,
as First Priority Agent,
and
THE BANK OF NEW YORK,
as Second Priority Agent
THIS IS THE INTERCREDITOR AGREEMENT REFERRED TO IN (A) THE
INDENTURE, DATED AS
OF MAY 15, 2007, AMONG DUNE ENERGY, INC., CERTAIN OF ITS
SUBSIDIARIES FROM TIME
TO TIME PARTY THERETO AND THE BANK OF NEW YORK, AS TRUSTEE AND
COLLATERAL AGENT,
(B) THE CREDIT AGREEMENT, DATED AS OF MAY 15, 2007, AS AMENDED,
SUPPLEMENTED OR
OTHERWISE MODIFIED FROM TIME TO TIME, AMONG DUNE ENERGY, INC.,
CERTAIN OF ITS
SUBSIDIARIES FROM TIME TO TIME PARTY THERETO, THE LENDERS FROM
TIME TO TIME
PARTY THERETO AND WELLS FARGO FOOTHILL, INC., AS AGENT, (C) THE
OTHER LOAN
DOCUMENTS REFERRED TO IN SUCH CREDIT AGREEMENT, AND (D) THE
OTHER COLLATERAL
AGREEMENTS REFERRED TO IN SUCH INDENTURE.
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined
Terms..........................................2
SECTION 1.02. Other Defined
Terms............................................2
SECTION 1.03. Terms
Generally................................................9
ARTICLE II
LIEN PRIORITIES
SECTION 2.01. Relative
Priorities...........................................10
SECTION 2.02. Prohibition on Contesting
Liens...............................11
SECTION 2.03. No New
Liens..................................................11
SECTION 2.04. Similar
Collateral............................................11
ARTICLE III
ENFORCEMENT OF RIGHTS; MATTERS RELATING TO COLLATERAL
SECTION 3.01. Exercise of Rights and
Remedies...............................12
SECTION 3.02. No
Interference...............................................15
SECTION 3.03. Rights as Unsecured
Creditors.................................19
SECTION 3.04. Automatic Release of Second Priority
Liens....................19
SECTION 3.05. Automatic Release of First Priority
Liens.....................20
SECTION 3.06. Insurance and Condemnation
Awards.............................21
SECTION 3.07. Notification of Release of
Collateral.........................21
ARTICLE IV
PAYMENTS
SECTION 4.01. Application of
Proceeds.......................................22
SECTION 4.02. Payment
Over..................................................22
SECTION 4.03. Certain Agreements with Respect to Unenforceable
Liens........23
ARTICLE V
BAILMENT FOR PERFECTION OF CERTAIN SECURITY INTERESTS
ARTICLE VI
INSOLVENCY OR LIQUIDATION PROCEEDINGS
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SECTION 6.01. Finance and Sale
Matters......................................25
SECTION 6.02. Relief from the Automatic
Stay................................27
SECTION 6.03. Reorganization
Securities.....................................27
SECTION 6.04. Post-Petition
Interest........................................28
SECTION 6.05. Certain Waivers by the Second Priority Secured
Parties........28
SECTION 6.06. Certain Voting
Matters........................................28
ARTICLE VII
OTHER AGREEMENTS
SECTION 7.01. Matters Relating to Debt
Documents............................29
SECTION 7.02. Effect of Refinancing of Indebtedness under First
Priority
Debt
Documents..............................................29
SECTION 7.03. No Waiver by First Priority Secured
Parties...................30
SECTION 7.04.
Reinstatement.................................................30
SECTION 7.05. Authorization of Collateral
Agents............................30
SECTION 7.06. Further
Assurances............................................30
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
SECTION 8.01. Representations and Warranties of Each
Party..................31
SECTION 8.02. Representations and Warranties of Each Collateral
Agent.......31
ARTICLE IX
NO RELIANCE; NO LIABILITY; OBLIGATIONS ABSOLUTE
SECTION 9.01. No Reliance;
Information......................................31
SECTION 9.02. No Warranties or
Liability....................................32
SECTION 9.03. Obligations
Absolute..........................................32
ARTICLE X
MISCELLANEOUS
SECTION 10.01.
Notices......................................................33
SECTION 10.02.
Conflicts....................................................34
SECTION 10.03. Effectiveness; Survival;
Termination.........................34
SECTION 10.04.
Severability.................................................35
SECTION 10.05. Amendments;
Waivers..........................................35
SECTION 10.06. Postponement of
Subrogation..................................35
SECTION 10.07. Applicable Law; Jurisdiction; Consent to Service
of Process..35
SECTION 10.08. Waiver of Jury
Trial.........................................36
SECTION 10.09. Parties in
Interest..........................................36
SECTION 10.10. Specific
Performance.........................................37
SECTION 10.11.
Headings.....................................................37
SECTION 10.12.
Counterparts.................................................37
SECTION 10.13. Provisions Solely to Define Relative
Rights..................37
ii
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INTERCREDITOR AGREEMENT dated as of May 15, 2007 (this
"Agreement"), among
DUNE ENERGY, INC., a Delaware corporation (the "Company"), the
Subsidiaries of
the Company from time to time party hereto, WELLS FARGO
FOOTHILL, INC., as agent
for the First Priority Secured Parties (as defined below) (in
such capacity, the
"First Priority Agent"), and THE BANK OF NEW YORK, as collateral
agent for the
Second Priority Secured Parties (as defined below) (in such
capacity, the
"Second Priority Agent").
PRELIMINARY STATEMENT
Reference is made to (a) the Credit Agreement, dated as of May
15, 2007
(as amended, supplemented or otherwise modified from time to
time in accordance
with the terms hereof, the "First Priority Debt Agreement"),
among the Company,
certain of the Company's subsidiaries, the lenders from time to
time party
thereto (the "First Priority Creditors") and the First Priority
Agent, (b) the
Indenture, dated as of May 15, 2007 (as amended, supplemented or
otherwise
modified from time to time in accordance with the terms hereof,
the "Second
Priority Debt Agreement" and, together with the First Priority
Debt Agreement,
the "Debt Agreements"), among the Company, the Subsidiaries of
the Company from
time to time party thereto, THE BANK OF NEW YORK, as Trustee (in
such capacity,
the "Second Priority Trustee") and the Second Priority Agent,
(c) the Security
Agreement, dated as of May 15, 2007 (as amended, supplemented or
otherwise
modified from time to time in accordance with the terms hereof,
the "First
Priority Security Agreement"), among the Company, the
Subsidiaries of the
Company from time to time party thereto and the First Priority
Agent, (d) the
Security Agreement, dated as of May 15, 2007 (as amended,
supplemented or
otherwise modified from time to time in accordance with the
terms hereof, the
"Second Priority Security Agreement"), among the Company, the
Subsidiaries of
the Company from time to time party thereto and the Second
Priority Agent, (e)
the other Loan Documents as defined, and referred to, in the
First Priority Debt
Agreement, and (f) the other Collateral Agreements as defined,
and referred to,
in the Second Priority Debt Agreement.
RECITALS
A. The First Priority Creditors have agreed to make loans and
other
extensions of credit to the Company and certain of its
Subsidiaries pursuant to
the First Priority Debt Agreement on the condition, among
others, that the First
Priority Claims (such term and each other capitalized term used
but not defined
in the preliminary statement or these recitals having the
meaning given it in
Article I) shall be secured by first priority Liens on, and
security interests
in, the Collateral.
B. The Second Priority Creditors have agreed to purchase and/or
hold the
Notes issued by the Company from time to time pursuant to the
Second Priority
Debt Agreement on the condition, among others, that the Second
Priority Claims
shall be secured by second priority Liens on, and security
interests in, the
Collateral.
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C. The Debt Agreements require, among other things, that the
parties
thereto set forth in this Agreement, among other things, their
respective
rights, obligations and remedies with respect to the
Collateral.
Accordingly, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. ...Certain Defined Terms. Capitalized terms used
in
this Agreement and not otherwise defined herein shall, except to
the extent the
context otherwise requires, have the meanings set forth in the
Second Priority
Debt Agreement (as in effect on the date hereof) or the Second
Priority Security
Agreement (as in effect on the date hereof), as applicable.
SECTION 1.02. ...Other Defined Terms. As used in the Agreement,
the
following terms shall have the meanings specified below:
"Bankruptcy Code" shall mean Title 11 of the United States Code
entitled
"Bankruptcy," as now and hereinafter in effect, or any successor
statute.
"Bankruptcy Law" shall mean the Bankruptcy Code and any other
Federal,
state or foreign bankruptcy, insolvency, receivership or similar
law.
"Base Maximum Principal Amount" means $20,000,000, or upon
delivery to the
First Priority Agent of one or more certificates, each
substantially in the form
of Exhibit A attached hereto, such greater amount not exceeding
$50,000,000 as
is indicated in the certificate most recently received by the
First Priority
Agent; provided, that, the First Priority Agent (i) shall be
under no obligation
to ascertain or to inquire as to any calculations or any other
information
contained in any such certificate, and (ii) shall be entitled to
rely, and shall
be fully protected in relying, upon any such certificate
believed by it to be
genuine and correct and to have been signed, sent, or made by
the proper Person
or Persons, in each case without any further inquiry
whatsoever.
"Cash Management Obligations" means, with respect to any Person,
all
obligations, whether absolute or contingent, of such Person in
respect of
overdrafts, returned items and other liabilities owed to any
other Person that
arises from treasury, depository, foreign exchange (including
without limitation
foreign currency hedging obligations) or cash management
services, including
without limitation in connection with any automated clearing
house transfers of
funds, wire transfer services, controlled disbursement accounts
or similar
transactions, and all obligations in connection with any
commercial credit cards
or stored value cards.
"Collateral" shall mean, collectively, all "Collateral", as
defined in
each of the First Priority Debt Agreement or any other First
Priority Debt
Document and the Second Priority Debt Agreement or any other
Second Priority
Debt Document.
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"Collateral Agents" shall mean the First Priority Agent and the
Second
Priority Agent.
"Company" shall have the meaning assigned to such term in the
preliminary
statement to this Agreement.
"Debt Agreements" shall have the meaning assigned to such term
in the
preliminary statement of this Agreement.
"Debt Documents" shall mean the First Priority Debt Documents
and the
Second Priority Debt Documents.
"DIP Financing" shall have the meaning assigned to such term in
Section
6.01(a).
"DIP Financing Liens" shall have the meaning assigned to such
term in
Section 6.01(a).
"Discharge of First Priority Claims" shall mean, subject to
Sections 7.02
and 7.04(a), (a) payment in full in cash of the principal of and
interest
(including interest accruing during the pendency of any
Insolvency or
Liquidation Proceeding, regardless of whether allowed or
allowable in such
Insolvency or Liquidation Proceeding) and premium, if any, on
all Indebtedness
outstanding under the First Priority Debt Documents to the
extent constituting
First Priority Claims, (b) payment in full in cash of all other
First Priority
Claims that are due and payable (including, without limitation,
the First
Priority Cash Management Obligations and the First Priority
Hedging Obligations)
or otherwise accrued and owing at or prior to the time such
principal and
interest are paid, (c) cancellation of or the entry into
arrangements
satisfactory to the First Priority Agent and the Issuing Bank
with respect to
all Letters of Credit issued and outstanding under the First
Priority Debt
Agreement and (d) termination or expiration of all commitments
to lend and all
obligations to issue or extend Letters of Credit under the First
Priority Debt
Agreement.
"Discharge of Second Priority Claims" shall mean, subject to
Section
7.04(b), (a) payment in full in cash of the principal of and
interest (including
interest accruing during the pendency of any Insolvency or
Liquidation
Proceeding, regardless of whether allowed or allowable in such
Insolvency or
Liquidation Proceeding) and premium, if any, on all Indebtedness
outstanding
under the Second Priority Debt Documents to the extent
constituting Second
Priority Claims, (b) payment in full of all First Priority
Claims acquired by
the Second Priority Agent and/or any of the Second Priority
Secured Parties as
contemplated by Section 10.06 hereof, and (c) payment in full in
cash of all
other Second Priority Claims that are due and payable or
otherwise accrued and
owing at or prior to the time such principal and interest are
paid.
"Disposition" shall mean any sale, lease, exchange, transfer or
other
disposition. "Dispose" shall have a correlative meaning.
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"Excess Claims" shall have the meaning set forth in the last
paragraph of
the definition of the term "First Priority Claims".
"First Priority Agent" shall have the meaning assigned to such
term in the
preamble to this Agreement.
"First Priority Cash Management Obligations" shall mean any
Cash
Management Obligations secured by any Collateral under the same
First Priority
Debt Documents that secure Obligations under the First Priority
Debt Agreement.
"First Priority Claims" shall mean, subject to the immediately
succeeding
paragraph, (a) (i) the due and punctual payment of (A) the
principal of and
interest (including interest accruing during the pendency of any
Insolvency or
Liquidation Proceeding, regardless of whether allowed or
allowable in such
proceeding) on the loans and other advances outstanding under
the First Priority
Debt Agreement, whether at maturity, by acceleration, upon one
or more dates set
for prepayment or otherwise, (B) each payment required to be
made by the Company
under the First Priority Debt Agreement in respect of any Letter
of Credit,
including payments in respect of reimbursement of disbursements,
interest
thereon and obligations to provide cash collateral, and (C) all
other monetary
obligations of the Company to any of the First Priority Secured
Parties under
the First Priority Debt Agreement and each of the other First
Priority Debt
Documents, including fees (including any early termination or
prepayment fees),
costs, expenses (including fees and expenses of counsel) and
indemnities,
whether primary, secondary, direct, contingent, fixed or
otherwise (including
monetary obligations incurred during the pendency of any
Insolvency or
Liquidation Proceeding, regardless of whether allowed or
allowable in such
proceeding), (ii) the due and punctual performance of all other
obligations of
the Company under or pursuant to the First Priority Debt
Agreement and each of
the other First Priority Debt Documents, and (iii) the due and
punctual payment
and performance of all the obligations of each other Grantor
under or pursuant
to the First Priority Debt Agreement and each of the other First
Priority Debt
Documents; (b) the due and punctual payment and performance of
all First
Priority Hedging Obligations of each Grantor, and (c) First
Priority Cash
Management Obligations.
Notwithstanding the foregoing, to the extent that the sum of (1)
the
principal amount of any loans or other advances under the First
Priority Debt
Documents (excluding any First Priority Hedging Obligations and
First Priority
Cash Management Obligations of the type described in clause (b)
or (c) of the
immediately preceding paragraph which shall be deemed to
constitute First
Priority Claims irrespective of this paragraph) plus (2) the
aggregate face
amount of any Letters of Credit issued and undrawn or drawn but
not reimbursed
under the First Priority Debt Agreement exceeds the Maximum
First Priority
Indebtedness Amount, then all such amounts in excess of the
Maximum First
Priority Indebtedness Amount, together with interest on such
excess amounts,
shall not constitute First Priority Claims (such excess amounts
being referred
to herein as "Excess Claims"). This Agreement does not
constitute the consent by
the Second Priority Agent and/or any Second Priority Secured
Party to the
incurrence or existence of any Excess Claim, or to the provision
of collateral
security for any Excess Claim, that would constitute a "Default"
or "Event of
4
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Default" under the Second Priority Debt Agreement, nor does this
Agreement
constitute a waiver by the Second Priority Agent and/or any
Second Priority
Secured Party of any such "Default" or "Event of Default", and
nothing in this
Agreement shall be interpreted to effect such a consent or
waiver.
"First Priority Collateral" shall mean all "Collateral", as
defined in the
First Priority Debt Agreement or any other First Priority Debt
Document, and any
other assets of any Grantor now or at any time hereafter subject
to Liens
securing any First Priority Claims.
"First Priority Creditors" shall have the meaning assigned to
such term in
the preliminary statement of this Agreement.
"First Priority Debt Agreement" shall have the meaning assigned
to such
term in the preliminary statement of this Agreement.
"First Priority Debt Documents" shall mean the "Loan Documents",
as
defined in the First Priority Debt Agreement.
"First Priority Hedging Obligations" shall mean any
"Obligations" (as
defined in the Second Priority Debt Agreement as in effect on
the date hereof)
under each interest rate hedging, cap, collar, swap or other
similar agreement
or foreign exchange contract, currency swap agreement or other
similar agreement
that is entered into by any Grantor with any counterparty that
is the First
Priority Agent or a First Priority Creditor or an Affiliate of
the First
Priority Agent or a First Priority Creditor at the time such
interest rate
hedging, cap, collar, swap or other similar agreement or foreign
exchange
contract, currency swap agreement or other similar agreement is
entered into.
"First Priority Liens" shall mean all Liens on the First
Priority
Collateral securing the First Priority Claims, whether created
under the First
Priority Security Documents or acquired by possession, statute
(including any
judgment lien), operation of law, subrogation or otherwise.
"First Priority Mortgages" shall mean, collectively, each
mortgage, deed
of trust, leasehold mortgage, assignment of leases and rents,
modifications and
any other agreement, document or instrument pursuant to which a
Lien on real
property is granted by any Grantor to secure any First Priority
Claims or under
which rights or remedies with respect to any such Lien are
governed.
"First Priority Secured Parties" shall mean, at any time, (a)
the First
Priority Creditors, (b) the First Priority Agent, (d) the
Issuing Bank, (e) each
other Person to whom any of the First Priority Claims is owed
(including any
Affiliate of a First Priority Creditor to whom any First
Priority Claims of the
type described in clause (b) or (c) of the definition thereof is
owed) and (f)
the successors and assigns of each of the foregoing.
"First Priority Security Agreement" shall have the meaning
assigned to
such term in the preliminary statement of this Agreement.
5
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"First Priority Security Documents" shall mean the First
Priority Debt
Agreement, the First Priority Security Agreement and any other
agreement,
document or instrument pursuant to which a Lien is granted by
any Grantor to
secure any First Priority Claims or under which rights or
remedies with respect
to any such Lien are governed.
"Grantors" shall mean the Company and each of its Subsidiaries
that shall
have created or purported to create any First Priority Lien or
Second Priority
Lien on all or any part of its assets to secure any First
Priority Claims or any
Second Priority Claims.
"Guarantors" shall mean, collectively, each Grantor that has
guaranteed,
or that may from time to time hereafter guarantee, the First
Priority Claims or
the Second Priority Claims, whether by executing and delivering
the applicable
Debt Agreement, a supplement thereto or otherwise.
"Indebtedness" shall mean and includes all obligations that
constitute
"Indebtedness", as defined in the First Priority Debt Agreement
or the Second
Priority Debt Agreement, as applicable.
"Insolvency or Liquidation Proceeding" shall mean (a) any
voluntary or
involuntary proceeding under the Bankruptcy Code or any other
Bankruptcy Law
with respect to any Grantor, (b) any voluntary or involuntary
appointment of a
receiver, trustee, custodian, sequestrator, conservator or
similar official for
any Grantor or for a substantial part of the property or assets
of any Grantor,
(c) any voluntary or involuntary winding-up or liquidation of
any Grantor, or
(d) a general assignment for the benefit of creditors by any
Grantor.
"Inventory" means, with respect to any Grantor, all of such
Grantor's now
owned or hereafter acquired right, title, and interest with
respect to
inventory, including goods held for sale or lease or to be
furnished under a
contract of service, goods that are leased by such Grantor as
lessor, goods that
are furnished by such Grantor under a contract of service, and
raw materials,
work in process, or materials used or consumed in such Grantor's
business.
"Issuing Bank" shall mean the "Issuing Lender" as defined in the
First
Priority Debt Agreement.
"Letter of Credit" shall mean a "L/C" as defined in the First
Priority
Debt Agreement.
"Lien" shall mean, with respect to any asset, (a) any mortgage,
deed of
trust, lien, pledge, hypothecation, encumbrance, charge or
security interest in,
on or of such asset, (b) the interest of a vendor or a lessor
under any
conditional sale agreement, capital lease or title retention
agreement (or any
financing lease having substantially the same economic effect as
any of the
foregoing) relating to such asset and (c) in the case of
securities, any
purchase option, call or similar right of a third Person with
respect to such
securities.
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"Liquidation Sale" shall mean a so-called bulk sale, liquidation
sale or
"going out of business sale" conducted either by any Secured
Party or a Grantor
in respect to all or a substantial portion of such Grantor's
Collateral
following the occurrence and during the continuance of an Event
of Default
under, and as defined in, either the First Priority Debt
Documents or Second
Priority Debt Documents.
"Maximum First Priority Indebtedness Amount" shall mean the sum
of (i) the
then applicable Base Maximum Principal Amount less the aggregate
amount (other
than by virtue of any initial or subsequent refinancing of
Indebtedness under
the First Priority Debt Documents in whole or in part) applied
from time to time
to permanently reduce the principal of Indebtedness under the
First Priority
Debt Documents, (ii) the amount by which the U.S. dollar
equivalent of the
principal amount of the loans and Letters of Credit under the
First Priority
Debt Documents exceeds the amount allowed under the foregoing
clause (i) as a
result of currency fluctuations, and (iii) other Indebtedness in
an aggregate
principal amount not to exceed the unused portion of the
Indebtedness permitted
under clause (15) of the definition of "Permitted Indebtedness"
contained in the
Second Priority Debt Agreement.
For the sake of clarity, (i) the Maximum First Priority
Indebtedness
Amount is intended to be applicable only to the principal amount
of any loans or
advances under the First Priority Debt Documents and the
aggregate amount of any
undrawn or unreimbursed Letters of Credit issued thereunder; and
(ii) all
interest (including interest accruing during the pendency of any
Insolvency or
Liquidation Proceeding, regardless of whether allowed or
allowable in such
proceeding), (other than interest on Excess Claims), fees, costs
and indemnities
(whether or not charged to the Loan Account (as defined in the
First Priority
Debt Agreement) under the First Priority Debt Agreement) and
First Priority
Hedging Obligations and First Priority Cash Management
Obligations which are
included under the definition of First Priority Claims shall not
be subject to
the Maximum First Priority Indebtedness Amount, notwithstanding
that such
interest, fees, costs and indemnities and First Priority Hedging
Obligations and
First Priority Cash Management Obligation constitute First
Priority Claims
hereunder and not Excess Claims.
"Maximum Second Priority Indebtedness Amount" shall mean
$300,000,000.
"New First Priority Agent" shall have the meaning assigned to
such term in
Section 7.02.
"New First Priority Claims" shall have the meaning assigned to
such term
in Section 7.02.
"New First Priority Debt Documents" shall have the meaning
assigned to
such term in Section 7.02.
"Pledged or Controlled Collateral" shall have the meaning
assigned to such
term in Article V.
"Refinance" shall mean, in respect of any Indebtedness, to
refinance,
extend, renew, restructure (including by the amendment and
restatement of any
instrument or agreement evidencing such Indebtedness) or replace
or to issue
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<PAGE>
other Indebtedness in exchange or replacement for, such
Indebtedness, in whole
or in part. "Refinanced" and "Refinancing" shall have
correlative meanings.
"Refinancing Notice" shall have the meaning assigned to such
term in
Section 7.02.
"Release" shall have the meaning assigned to such term in
Section 3.04.
"Second Priority Agent" shall have the meaning assigned to such
term in
the preamble to this Agreement.
"Second Priority Claims" shall mean all "Obligations", as
defined in the
Second Priority Security Agreement of the Grantors under the
Second Priority
Debt Documents.
Notwithstanding the foregoing, if the aggregate principal amount
of any
notes (including the Notes), debentures, loans or other advances
under the
Second Priority Debt Documents exceeds the Maximum Second
Priority Indebtedness
Amount, then all such principal amounts in excess of the Maximum
Second Priority
Indebtedness Amount shall not constitute Second Priority
Claims.
"Second Priority Collateral" shall mean all "Collateral", as
defined in
any Second Priority Debt Document, and any other assets of any
Grantor now or at
any time hereafter subject to Liens securing any Second Priority
Claims.
"Second Priority Creditors" shall mean the "Holders", as defined
in the
Second Priority Debt Agreement.
"Second Priority Debt Agreement" shall have the meaning assigned
to such
term in the preliminary statement of this Agreement.
"Second Priority Debt Documents" shall mean the "Indenture
Documents", as
defined in the Second Priority Debt Agreement.
"Second Priority Liens" shall mean all Liens on the Second
Priority
Collateral securing the Second Priority Claims, whether created
under the Second
Priority Security Documents or acquired by possession, statute
(including any
judgment lien), operation of law, subrogation or otherwise.
"Second Priority Mortgages" shall mean, collectively, each
mortgage, deed
of trust, leasehold mortgage, assignment of leases and rents,
modifications and
any other agreement, document or instrument pursuant to which
any Lien on real
property is granted by any Grantor to secure any Second Priority
Claims or under
which rights or remedies with respect to any such Lien are
governed.
"Second Priority Permitted Actions" shall have the meaning
assigned to
such term in Section 3.01(a).
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<PAGE>
"Second Priority Secured Parties" shall mean, at any time, (a)
the Second
Priority Creditors, (b) the Second Priority Trustee, (c) the
Second Priority
Agent, (d) each other Person to whom any of the Second Priority
Claims
(including indemnification obligations) is owed and (e) the
successors and
assigns of each of the foregoing.
"Second Priority Security Agreement" shall have the meaning
assigned to
such term in the preliminary statement of this Agreement.
"Second Priority Security Documents" shall mean the
"Collateral
Agreements", as defined in the Second Priority Debt Agreement,
and any other
agreement, document or instrument pursuant to which a Lien is
granted by any
Grantor to secure any Second Priority Claims or under which
rights or remedies
with respect to any such Lien are governed.
"Secured Parties" shall mean, as the context may require, the
First
Priority Secured Parties and/or the Second Priority Secured
Parties.
"Security Documents" shall mean the First Priority Security
Documents and
the Second Priority Security Documents.
"Standstill Period" shall have the meaning assigned to such term
in
Section 3.02(a)(i).
"Uniform Commercial Code" or "UCC" shall mean the Uniform
Commercial Code
(or any similar or equivalent legislation) as in effect from
time to time in any
applicable jurisdiction.
SECTION 1.03. Terms Generally. The definitions of terms herein
shall
apply equally to the singular and plural forms of the terms
defined. Whenever
the context may require, any pronoun shall include the
corresponding masculine,
feminine and neuter forms. The words "include", "includes" and
"including" shall
be deemed to be followed by the phrase "without limitation." The
word "will"
shall be construed to have the same meaning and effect as the
word "shall".
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 or otherwise modified, (b) any reference
herein (i) to
any Person shall be construed to include such Person's
successors and assigns
and (ii) to the Company or any other Grantor shall be construed
to include the
Company or such Grantor as debtor and debtor-in-possession and
any receiver or
trustee for the Company or any other Grantor, as the case may
be, in any
Insolvency or Liquidation Proceeding or Liquidation Sale, (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 Articles or
Sections shall be
construed to refer to Articles or 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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ARTICLE II
Lien Priorities
SECTION 2.01. Relative Priorities. Notwithstanding the date,
manner
or order of grant, attachment or perfection of any Second
Priority Lien, any
First Priority Lien or any Lien that would constitute a First
Priority Lien but
for the fact that it purportedly secures any Excess Claims, and
notwithstanding
any provision of the UCC or any other applicable law or the
provisions of any
Security Document or any other Debt Document or any other
circumstance
whatsoever, each Collateral Agent, for itself and on behalf of
the Secured
Parties on whose behalf it acts in such capacity therefor,
hereby agrees that,
(a) so long as the Discharge of First Priority Claims has
not
occurred, (i) any First Priority Lien on any Collateral now or
hereafter
held by or for the benefit of any First Priority Secured Party
shall be
senior in right, priority, operation, effect and all other
respects to any
and all Second Priority Liens on any Collateral and (ii) any
Second
Priority Lien on any Collateral now or hereafter held by or for
the
benefit of any Second Priority Secured Party shall be junior
and
subordinate in right, priority, operation, effect and all other
respects
to any and all First Priority Liens on any Collateral, and the
First
Priority Liens on any Collateral shall be and remain senior in
right,
priority, operation, effect and all other respects to any Second
Priority
Liens on any Collateral for all purposes, whether or not any
First
Priority Liens on any Collateral are subordinated in any respect
to any
other Lien held by any Person (other than the Second Priority
Secured
Parties) securing any other obligation of the Company, any other
Grantor
or any other Person; and
(b) so long as the Discharge of Second Priority Claims has
not
occurred, (i) any Second Priority Lien now or hereafter held by
or for the
benefit of any Second Priority Secured Party that secure Second
Priority
Claims up to the Maximum Second Priority Indebtedness Amount
shall be
senior in right, priority, operation, effect and all other
respects to any
and all Liens that would have constituted First Priority Liens
but for the
fact that they secure Excess Claims and (ii) any such Lien now
or
hereafter held by or for the benefit of any Persons that would
otherwise
hold First Priority Secured Claims but for the operation of the
second
paragraph of the definition of the term "First Priority Claims"
shall be
junior and subordinate in right, priority, operation, effect and
all other
respects to any and all Second Priority Liens that secure Second
Priority
Claims up to the Maximum Second Priority Indebtedness Amount,
and the
Second Priority Liens shall be and remain senior in right,
priority,
operation, effect and all other respects to any such Liens for
all
purposes, whether or not any Second Priority Liens are
subordinated in any
respect to any other Lien held by any Person (other than the
First
Priority Secured Parties in respect of the First Priority
Claims) securing
any other obligation of the Company, any other Grantor or any
other
Person.
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<PAGE>
SECTION 2.02. Prohibition on Contesting Liens. Each
Collateral
Agent, for itself and on behalf of the other Secured Parties on
whose behalf it
acts in such capacity therefor, 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), the
priority, validity or
enforceability of any Second Priority Lien, any First Priority
Lien or any Lien
that would constitute a First Priority Lien but for the fact
that it purportedly
secures any Excess Claims, as the case may be; provided that
nothing in this
Agreement shall be construed to prevent or impair the rights of
any Collateral
Agent or any other Secured Party to enforce this Agreement to
the extent
provided hereby.
SECTION 2.03. No New Liens. (a) The parties hereto agree that,
so
long as the Discharge of First Priority Claims has not occurred,
none of the
Grantors shall, nor shall any Grantor permit any of its
subsidiaries to, (i)
grant or permit any additional Liens on any asset of a Grantor
to secure any
Second Priority Claim unless it has granted, or substantially
concurrently
therewith grants, a Lien on such asset of such Grantor to secure
the First
Priority Claims or (ii) grant or permit any additional Liens on
any asset of a
Grantor to secure any First Priority Claims unless it has
granted, or
substantially concurrently therewith grants, a Lien on such
asset of a Grantor
to secure the Second Priority Claims, with each such Lien to be
subject to the
provisions of this Agreement. To the extent that the provisions
of the
immediately preceding sentence are not complied with for any
reason, without
limiting any other right or remedy available to the First
Priority Agent or the
other First Priority Secured Parties, the Second Priority Agent
agrees, for
itself and on behalf of the other Second Priority Secured
Parties, that any
amounts received by or distributed to any Second Priority
Secured Party pursuant
to or as a result of any Lien granted in contravention of this
Section 2.03
shall be subject to Section 4.02(a).
(b) The parties hereto agree that, so long as the Discharge of
Second
Priority Claims has not occurred, none of the Grantors shall,
nor shall any
Grantor permit any of its subsidiaries to, grant or permit any
additional Liens
on any asset to secure any Excess Claims other than Liens that
would otherwise
constitute First Priority Liens but for the fact that such Liens
secured Excess
Claims. To the extent that the provisions of the immediately
preceding sentence
are not complied with for any reason, without limiting any other
right or remedy
available to the Second Priority Agent or the other Second
Priority Secured
Parties, each Person that holds Excess Claims agrees that any
amounts received
by or distributed to any such Person pursuant to or as a result
of any Lien
granted in contravention of this Section 2.03(b) shall be
subject to Section
4.02(b).
SECTION 2.04. Similar Collateral. The parties hereto acknowledge
and
agree that it is their intention that the First Priority
Collateral and the
Second Priority Collateral be identical. In furtherance of the
foregoing, the
parties hereto agree to cooperate in good faith in order to
determine, upon any
reasonable request by the First Priority Agent or the Second
Priority Agent, the
specific assets included in the First Priority Collateral and
the Second
Priority Collateral, the steps taken to perfect the First
Priority Liens and the
Second Priority Liens thereon and the identity of the respective
parties
obligated under the First Priority Debt Documents and the Second
Priority Debt
Documents in respect of the First Priority Claims and the Second
Priority
Claims, respectively.
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<PAGE>
ARTICLE III
Enforcement of Rights; Matters Relating to Collateral
SECTION 3.01. Exercise of Rights and Remedies. (a) So long as
the
Discharge of First Priority Claims has not occurred, whether or
not any
Insolvency or Liquidation Proceeding or Liquidation Sale has
been commenced, the
First Priority Agent and the other First Priority Secured
Parties shall have the
exclusive right to enforce rights and exercise remedies
(including any right of
setoff) with respect to the Collateral (including making
determinations
regarding the release, Disposition or restrictions with respect
to the
Collateral), or to commence or seek to commence any action or
proceeding with
respect to such rights or remedies (including any foreclosure
action or
proceeding or any Insolvency or Liquidation Proceeding or
Liquidation Sale), in
each case, without any consultation with or the consent of the
Second Priority
Agent or any other Second Priority Secured Party; provided that,
notwithstanding
the foregoing, (i) in any Insolvency or Liquidation Proceeding,
the Second
Priority Agent may file a proof of claim or statement of
interest with respect
to the Second Priority Claims; (ii) the Second Priority Agent
may take any
action to preserve or protect the validity and enforceability of
the Second
Priority Liens, provided that no such action is, or could
reasonably be expected
to be, (A) adverse to the First Priority Liens or the rights of
the First
Priority Agent or any other First Priority Secured Party to
exercise remedies in
respect thereof or (B) otherwise inconsistent with the terms of
this Agreement,
including the automatic release of Second Priority Liens
provided in Section
3.04; (iii) the Second Priority Secured Parties may file any
responsive or
defensive pleadings in opposition to any motion, claim,
adversary proceeding or
other pleading made by any Person objecting to or otherwise
seeking the
disallowance of the claims of the Second Priority Secured
Parties, including any
claims secured by the Collateral or otherwise make any
agreements or file any
motions pertaining to the Second Priority Claims, in each case,
to the extent
not inconsistent with the terms of this Agreement; (iv) the
Second Priority
Secured Parties may exercise rights and remedies as unsecured
creditors, as
provided in Section 3.03(a); and (v) subject to Section 3.02(a),
the Second
Priority Agent and the other Second Priority Secured Parties may
enforce any of
their rights and exercise any of their remedies with respect to
the Collateral
after the termination of the Standstill Period (the actions
described in this
proviso being referred to herein as the "Second Priority
Permitted Actions").
Except for the Second Priority Permitted Actions, unless and
until the Discharge
of First Priority Claims has occurred, the sole right of the
Second Priority
Agent and the other Second Priority Secured Parties with respect
to the
Collateral shall be to receive the proceeds of the Collateral,
if any, remaining
after the Discharge of First Priority Claims has occurred and in
accordance with
the Second Priority Debt Documents and applicable law.
(b) In exercising rights and remedies with respect to the
Collateral, the First Priority Agent and the other First
Priority Secured
Parties may enforce the provisions of the First Priority Debt
Documents and
exercise remedies thereunder, all in such order and in such
manner as they may
determine in their
12
<PAGE>
sole discretion. Such exercise and enforcement shall include the
rights of an
agent appointed by them to Dispose of Collateral upon
foreclosure, to incur
expenses in connection with any such Disposition and to exercise
all the rights
and remedies of a secured creditor under the Uniform Commercial
Code, the
Bankruptcy Code or any other Bankruptcy Law. The First Priority
Agent agrees to
provide at least ten Business Days' prior written notice to the
Second Priority
Agent of its intention to foreclose upon or Dispose of any
Collateral; provided,
however, that the failure to give any such notice shall not in
any way limit its
ability to foreclose upon or Dispose of any Collateral.
(c) The Second Priority Agent, for itself and on behalf of the
other
Second Priority Secured Parties, hereby acknowledges and agrees
that no
covenant, agreement or restriction contained in any Second
Priority Security
Document or any other Second Priority Debt Document shall be
deemed to restrict
in any way the rights and remedies of the First Priority Agent
or the other
First Priority Secured Parties with respect to the Collateral as
set forth in
this Agreement and the other First Priority Debt Documents.
(d) Notwithstanding anything in this Agreement to the
contrary,
following the acceleration of the Indebtedness then outstanding
under the First
Priority Debt Agreement, the Second Priority Secured Parties
may, at their sole
expense and effort, upon notice to the Company and the First
Priority Agent
(which notice shall be irrevocable), require the First Priority
Secured Parties
to transfer and assign to the Second Priority Secured Parties,
without warranty
or representation or recourse, all (but not less than all) of
the First Priority
Claims; provided that (x) such assignment shall not conflict
with any law, rule
or regulation or order of any court or other Governmental
Authority having
jurisdiction, and (y) the Second Priority Secured Parties shall
have paid to the
First Priority Agent, for the account of the First Priority
Secured Parties, in
immediately available funds, an amount equal to 100% of the
principal of such
Indebtedness plus all accrued and unpaid interest thereon plus
all accrued and
unpaid fees (other than any fees that become due as a result of
the prepayment
of the loans and other advances under, or early termination of,
the First
Priority Debt Agreement (such fees are referred to hereinafter
as "Termination
Fees")) plus all the other First Priority Claims then
outstanding (which shall
include, with respect to (i) the aggregate face amount of the
Letters of Credit
outstanding under the First Priority Debt Agreement, an amount
in cash equal to
105% thereof, (ii) each interest rate hedging, cap, collar, swap
or other
similar agreements that evidence any First Priority Hedging
Obligations, 100% of
the aggregate amount of such First Priority Claims, after giving
effect to any
netting arrangements, that the applicable Grantor would be
required to pay if
such interest rate hedging, cap, collar, swap or other similar
agreements were
terminated at such time, and (iii) each agreement that evidence
any First
Priority Cash Management Obligations, 100% of the aggregate
amount of such First
Priority Claims). In order to effectuate the foregoing, the
First Priority Agent
shall calculate, upon the written request of the Second Priority
Agent from time
to time, the amount in cash that would be necessary so to
purchase the First
Priority Claims. If the right set forth in this Section 3.01(d)
is exercised,
the parties shall endeavor to close promptly thereafter but in
any event within
ten Business Days of the request set forth in the first sentence
of this Section
3.01(d). If the Second Priority Secured Parties exercise the
right set forth in
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<PAGE>
this Section 3.01(d), it shall be exercised pursuant to
documentation mutually
acceptable to each of the First Priority Agent and the Second
Priority Agent.
Notwithstanding anything to the contrary herein, if, at any time
following the
consummation of such transfer and assignment and the occurrence
of the Discharge
of First Priority Claims and the Discharge of Second Priority
Claims (other
than, for the avoidance of doubt, the payment of any fees that
become due as a
result of the prepayment or termination of the Second Priority
Claims and the
payment of Second Priority Claims in excess of the Maximum
Second Priority
Indebtedness Amount), the Second Priority Secured Parties
recover any
Termination Fees prior to the first anniversary of the date of
such transfer and
assignment is consummated, they shall turn over such fees to
First Priority
Secured Parties in the form and to the extent received.
(e) So long as the Discharge of First Priority Claims has
occurred
and the Discharge of Second Priority Claims has not occurred,
whether or not any
Insolvency or Liquidation Proceeding has been commenced or
Liquidation Sale, the
Second Priority Agent and the other Second Priority Secured
Parties shall have
the exclusive right to enforce rights and exercise remedies
(including any right
of setoff) with respect to the Collateral (including making
determinations
regarding the release, Disposition or restrictions with respect
to the
Collateral), or to commence or seek to commence any action or
proceeding with
respect to such rights or remedies (including any foreclosure
action or
proceeding or any Insolvency or Liquidation Proceeding or
Liquidation Sale), in
each case, without any consultation with or the consent of any
Person that holds
Excess Claims; provided that, notwithstanding the foregoing, (i)
in any
Insolvency or Liquidation Proceeding, any such Person may file a
proof of claim
or statement of interest with respect to the Excess Claims; (ii)
any such Person
may take any action to preserve or protect the validity and
enforceability of
the Liens that would have constituted First Priority Liens but
for the fact that
such Liens secure Excess Claims, provided that no such action
is, or could
reasonably be expected to be, (A) adverse to the Second Priority
Liens or the
rights of the Second Priority Agent or any other Second Priority
Secured Party
to exercise remedies in respect thereof or (B) otherwise
inconsistent with the
terms of this Agreement, including the automatic release of such
Liens provided
in Section 3.05; (iii) any such Person may file any responsive
or defensive
pleadings in opposition to any motion, claim, adversary
proceeding or other
pleading made by any Person objecting to or otherwise seeking
the disallowance
of the claims of such Person, including any claims secured by
the Collateral or
otherwise make any agreements or file any motions pertaining to
the Excess
Claims, in each case, to the extent not inconsistent with the
terms of this
Agreement; (iv) any such Person may exercise rights and remedies
as unsecured
creditors, as provided in Section 3.03(b) (the actions described
in this proviso
being referred to herein as the "Excess Claims Permitted
Actions"). Except for
the Excess Claims Permitted Actions, unless and until the
Discharge of Second
Priority Claims has occurred, the sole right of any Person
holding Excess Claims
with respect to the Collateral shall be to receive the proceeds
of the
Collateral, if any, remaining after the occurrence of the
Discharge of First
Priority Claims and the Discharge of the Second Priority Claims
up to the
Maximum Second Priority Indebtedness Amount and in accordance
with the
agreements, instruments and other documents evidencing or
governing the Excess
Claims and applicable law.
14
<PAGE>
(f) In exercising rights and remedies with respect to the
Collateral, the Second Priority Agent and the other Second
Priority Secured
Parties may enforce the provisions of the Second Priority Debt
Documents and
exercise remedies thereunder, all in such order and in such
manner as they may
determine in their sole discretion, in each case, to the extent
that such
enforcement or exercise is not otherwise prohibited by clauses
(a) through (d)
of this Section 3.01. Such exercise and enforcement shall, in
each case, to the
extent that such enforcement or exercise is not otherwise
prohibited by clauses
(a) through (d) of this Section 3.01, include the rights of an
agent appointed
by them to Dispose of Collateral upon foreclosure, to incur
expenses in
connection with any such Disposition and to exercise all the
rights and remedies
of a secured creditor under the Uniform Commercial Code, the
Bankruptcy Code or
any other Bankruptcy Law. The Second Priority Agent agrees to
provide at least
ten Business Days' prior written notice to the First Priority
Agent of its
intention to foreclose upon or Dispose of any Collateral;
provided, however,
that the failure to give any such notice shall not in any way
limit its ability
to foreclose upon or Dispose of any Collateral to the extent
that such
foreclosure is not otherwise prohibited by clauses (a) through
(d) of this
Section 3.01.
(g) Each such Person hereby acknowledges and agrees that no
covenant, agreement or restriction contained in any agreement,
instrument or
other document that evidences or governs any Excess Claims
(other than the
provisions of this Agreement that in
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