Exhibit 10.4
INTERCREDITOR AGREEMENT
This INTERCREDITOR AGREEMENT (“
Agreement ”), is
dated as of August 29, 2007, and entered into between GENERAL
ELECTRIC CAPITAL CORPORATION (“ GECC ”), in its capacity as
administrative agent for the First Lien Obligations (as defined
below), including its successors and assigns from time to time and
the collateral agent under any amendment, restatement, modification
or Refinancing of the First Lien Credit Agreement as defined below
(the “ First Lien Collateral
Agent ”), and MONROE CAPITAL
MANAGEMENT ADVISORS LLC (“
Monroe ”) in its
capacity as administrative agent for the Second Lien Obligations
(as defined below), including its successors and assigns from time
to time (the “ Second Lien
Collateral Agent ”) and
acknowledged and agreed by Butler Service Group, Inc., on behalf of
itself and its Subsidiaries (as defined in the First Lien Credit
Agreement). Capitalized terms used in this Agreement have the
meanings assigned to them in Section
1 below.
RECITALS
WHEREAS, GECC, as First Lien Collateral Agent, has
entered into that Second Amended and Restated Credit Agreement,
dated as of September 28. 2001, among Butler International, Inc., a
Maryland corporation (“ Holdings ”), Butler Service
Group, Inc., a New Jersey corporation, as Borrower (the
“ Borrower ”), the other Credit Parties signatory thereto, GECC for
itself as a Lender and as Agent for the Lenders and the other
Lenders signatory thereto from time to time, providing for a
revolving credit facility, letters of credit and term loans (as
amended, restated, supplemented, modified or Refinanced from time
to time to the extent permitted herein, the “
First Lien Credit Agreement
”);
WHEREAS, Monroe, as Second Lien Collateral Agent,
has entered into that Second Lien Credit Agreement, dated as of the
date hereof, among Holdings, Borrower, the other credit parties
signatory thereto, Monroe for itself as a lender and as agent for
the lenders and the other lenders signatory thereto from time to
time, providing for a term loan (as amended, restated,
supplemented, modified or Refinanced from time to time to the
extent permitted herein, the “ Second Lien Credit Agreement ”);
WHEREAS, pursuant to (i) that certain Subsidiary
Guaranty, dated September 28, 2001, executed by the Guarantors in
favor of the First Lien Collateral Agent (as amended, restated,
supplemented or modified from time to time, the “
First Lien Subsidiary Guaranty
”), the Guarantors have guaranteed the First
Lien Obligations; and (ii) that certain Subsidiary Guaranty, dated
as of the date hereof, executed by the Guarantors in favor of the
Second Lien Collateral Agent (as amended, restated, supplemented or
modified from time to time, the “ Second Lien Subsidiary Guaranty ”), the Guarantors have guaranteed the Second Lien
Obligations;
WHEREAS, pursuant to that certain Mortgage and
Security Agreement, dated September 30, 2002, the Borrower has
granted a first priority lien on the Second Lien Priority Assets to
Park National Bank (“ Park
National ”), successor in interest
to GMAC Commercial Mortgage Corporation;
WHEREAS, the First Lien Obligations under the First
Lien Credit Agreement will be secured on a first priority basis by
liens on the Collateral and on a second priority basis by liens on
the Second Lien Priority Assets (subject only to Permitted
Encumbrances and the lien on the Second Lien Priority Assets in
favor of Park National), in each case, pursuant to the terms of the
First Lien Collateral Documents;
WHEREAS, the Second Lien Obligations under the
Second Lien Credit Agreement will be secured on a second priority
basis by liens on the Collateral and on a first priority basis by
liens on the Second Lien Priority Assets (subject only to the
Permitted Encumbrances (as defined in the Second Lien Credit
Agreement)) pursuant to the terms of the Second Lien Collateral
Documents;
WHEREAS, the First Lien Loan Documents and the
Second Lien Loan Documents provide, among other things, that the
parties thereto shall set forth in this Agreement their respective
rights and remedies with respect to the Collateral; and
WHEREAS, in order to induce the First Lien
Collateral Agent and the First Lien Claimholders to consent to the
Grantors incurring the Second Lien Obligations and to induce the
First Lien Claimholders and the Second Lien Claimholders to extend
credit and other financial accommodations and lend monies to or for
the benefit of the Borrower or any other Grantor, the Second Lien
Collateral Agent on behalf of the Second Lien Claimholders and the
First Lien Collateral Agent on behalf of the First Lien
Claimholders have agreed to the intercreditor and other provisions
set forth in this Agreement.
AGREEMENT
In consideration of the foregoing, the mutual
covenants and obligations herein set forth and for other good and
valuable consideration, the sufficiency and receipt of which are
hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
SECTION 1. Definitions .
1.1
Defined Terms . As used
in this Agreement, including the Recitals hereof, the following
terms shall have the following meanings and capitalized terms
defined in the First Lien Credit Agreement used (but not otherwise
defined herein) shall have the meanings ascribed to them in the
First Lien Credit Agreement as in effect on the date
hereof:
“ Actionable Second
Lien Event of Default ” means, on
any date of determination thereof, an Event of Default that has
occurred and is continuing on such date under (and as defined
in) Section 8.1(a) , (b) (solely as a consequence of a breach by the Borrower of a
financial covenant set forth in Annex
G of the Second Lien Credit
Agreement), (h) or (i) of
the Second Lien Credit Agreement.
“ Affiliate ” means, with respect
to a specified Person, another Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by or
is under common control with the Person specified. For purposes of
this definition, a Person shall be deemed to “control”
or be “controlled by” a Person if such Person
possesses, directly or indirectly, power to
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direct or cause the direction of the management or
policies of such Person whether through ownership of equity
interests, by contract or otherwise.
“ Agreement ” means this
Intercreditor Agreement, as amended, restated, renewed, extended,
supplemented or otherwise modified from time to time.
“ Bankruptcy
Code ” means title 11 of the United
States Code entitled “Bankruptcy,” as now and hereafter
in effect, or any successor statute.
“ Bankruptcy
Court ” means any court, including
any United States Bankruptcy Court or United States District Court,
in which any Insolvency or Liquidation Proceeding is
pending.
“ Bankruptcy
Law ” means the Bankruptcy Code and
any similar federal, state or foreign law for the relief of
debtors.
“ Borrower
” has the meaning assigned to that term in the
Preamble to this Agreement.
“ Business
Day ” means a day other than a
Saturday, Sunday or other day on which commercial banks in New York
City are authorized or required by law to close.
“ Collateral ” means all of the
assets and property of any Grantor, whether real, personal or
mixed, constituting (or required to constitute) both First Lien
Collateral and Second Lien Collateral other than the Second Lien
Priority Assets.
“ Corporate Facility
Mortgage ” means that Mortgage and
Deed of Trust dated as of the date hereof by
the Borrower in favor of the Second Lien Collateral Agent to be
filed in Bergen County, New Jersey, as amended, restated,
supplemented, replaced or modified from time to time in accordance
with the provisions of this Agreement (including without
limitation, in connection with a Refinancing of the Second Lien
Credit Agreement).
“ Corresponding
Amendment ” has the meaning set
forth in Section 5.3(b)
.
“ DIP
Financing ” has the meaning
assigned to that term in Section
6.1 .
“ Discharge of First
Lien Obligations ” means, except to
the extent otherwise expressly provided in Section 5.5 :
(a)
payment in full in cash of the principal of and
interest and fees (including interest and fees that constitute
Post-Petition Interest) on all Indebtedness outstanding under the
First Lien Loan Documents and constituting First Lien
Obligations;
(b)
payment in full in cash of all other First Lien
Obligations that are due and payable or otherwise accrued and owing
at or prior to the time such principal and interest are paid (other
than any indemnification or reimbursement obligations for which no
demand for payment or notice of the accrual of a claim subject to
indemnification, whether oral or written, has been made at such
time);
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(c)
termination or expiration of all commitments, if
any, to extend credit that would constitute First Lien Obligations;
and
(d)
termination or cash collateralization (in an amount
and manner reasonably satisfactory to the First Lien Collateral
Agent, but in no event greater than 105% of the aggregate undrawn
face amount) of all letters of credit and similar instruments
issued under the First Lien Loan Documents, the reimbursement or
similar obligation in respect of which constitutes a First Lien
Obligation.
“ Disposition ” has the meaning
assigned to that term in Section
5.1(a)(2) .
“ First Lien
Cap ” means the result of (a) the
Maximum Working Capital Amount plus (b) $2,500,000,
minus the aggregate
amount of all repayments and prepayments of the principal of the
term loan obligations under the First Lien Credit Agreement (other
than repayments or prepayments of such term loan obligations in
connection with a Refinancing thereof).
“ First Lien
Claimholders ” means, at any
relevant time, the holders of First Lien Obligations at that time,
including the First Lien Lenders and the agents under the First
Lien Loan Documents.
“ First Lien
Collateral Agent ” has the meaning
assigned to that term in the Recitals to this Agreement.
“ First Lien
Collateral ” means all of the
assets and property of any Grantor, whether real, personal or
mixed, with respect to which a Lien is granted as security for any
First Lien Obligations.
“ First Lien
Collateral Documents ” means the
Collateral Documents (as defined in the First Lien Credit
Agreement) and any other agreement, document or instrument 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.
“ First Lien Credit
Agreement ” has the meaning
assigned to that term in the Recitals to this Agreement.
“ First Lien
Lenders ” means the “
Lenders ” under
and as defined in the First Lien Credit Agreement.
“ First Lien Loan
Documents ” means the First Lien
Credit Agreement and the Loan Documents (as defined in the First
Lien Credit Agreement) and each of the other agreements, documents
and instruments providing for or evidencing any other First Lien
Obligation, and any other document or instrument executed or
delivered at any time in connection with any First Lien
Obligations, including any intercreditor or joinder agreement among
holders of First Lien Obligations, to the extent such are effective
at the relevant time, as each may be amended, restated,
supplemented, modified, renewed or extended from time to time in
accordance with the provisions of this Agreement.
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“ First Lien
Obligations ” means, subject to the
last paragraph hereof, (i) all principal of, and interest and fees
(including without limitation any Post-Petition Interest) and
premium (if any) on, all loans and commitments made pursuant to the
First Lien Credit Agreement, (ii) all reimbursement obligations (if
any) and interest and fees thereon (including without limitation
any Post-Petition Interest) with respect to any letter of credit or
similar instruments issued pursuant to the First Lien Credit
Agreement, and (iii) all guarantee obligations, fees, indemnities,
expenses and all other Obligations under the First Lien Credit
Agreement and the other First Lien Loan Documents, in each case
whether or not allowed or allowable in an Insolvency or Liquidation
Proceeding.
To the extent any payment with respect to any First
Lien Obligation (whether by or on behalf of any Grantor, as
proceeds of security, enforcement of any right of setoff or
otherwise) is declared to be a fraudulent conveyance or a
preference in any respect, set aside or required to be paid to a
debtor in possession, any Second Lien Claimholder, trustee,
receiver or similar Person, then the obligation or part thereof
originally intended to be satisfied shall, for the purposes of this
Agreement and the rights and obligations of the First Lien
Claimholders and the Second Lien Claimholders, be deemed to be
reinstated and outstanding as if such payment had not occurred. To
the extent that any interest, fees, indemnities, expenses or other
charges (including, without limitation, Post-Petition Interest) to
be paid pursuant to the First Lien Loan Documents are disallowed by
order of any court, including, without limitation, by order of a
Bankruptcy Court in any Insolvency or Liquidation Proceeding, such
interest, fees, expenses and charges (including, without
limitation, Post-Petition Interest) shall, as between the First
Lien Claimholders and the Second Lien Claimholders, be deemed to
continue to accrue and be added to the amount to be calculated as
the “ First Lien
Obligations ”.
Notwithstanding the foregoing, if (i) the sum of (x)
the Indebtedness constituting principal outstanding under the First
Lien Credit Agreement and the other First Lien Loan
Documents, plus (y) the aggregate face amount of any letters of credit or
similar instruments issued but not reimbursed under the First Lien
Credit Agreement is in excess of the First Lien Cap, then only that
portion of such Indebtedness and such aggregate face amount of
letters of credit or similar instruments not in excess of the First
Lien Cap shall be included in First Lien Obligations and interest,
fees and reimbursement obligations with respect to such
Indebtedness and letters of credit and similar instruments shall
only constitute First Lien Obligations to the extent related to
Indebtedness and face amounts of letters of credit and similar
instruments included in the First Lien Obligations.
“ First Lien
Subsidiary Guaranty ” has the
meaning assigned to that term in the Recitals to this
Agreement.
“ Governmental
Authority ” means any federal,
state, municipal, national or other government, governmental
department, commission, board, bureau, court, agency or
instrumentality or political subdivision thereof or any entity or
officer exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to any government or any
court, in each case whether associated with a state of the United
States of America, the United States of America, or a foreign
entity or government.
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“ Grantors
” means the Borrower, each of the Guarantors
and each other Person that has or may from time to time hereafter
execute and deliver a First Lien Collateral Document or a Second
Lien Collateral Document as a “grantor” or
“pledgor” (or the equivalent thereof).
“ Guarantors ” means Holdings and
each Subsidiary of the Borrower from time to time party to the
First Lien Subsidiary Guaranty and the Second Lien Subsidiary
Guaranty.
“ Holdings
” has the meaning assigned to that term in the
Recitals to this Agreement.
“ Indebtedness ” means and
includes all Obligations that constitute “
Indebtedness ”
within the meaning of the First Lien Credit Agreement or the Second
Lien Credit Agreement, as applicable.
“ Insolvency or
Liquidation Proceeding ”
means:
(a)
any voluntary or involuntary case or proceeding
under the Bankruptcy Code with respect to any Grantor;
(b)
any other voluntary or involuntary insolvency,
reorganization or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or
proceeding with respect to any Grantor or with respect to a
material portion of their respective assets;
(c)
any liquidation, dissolution, reorganization or
winding up of any Grantor whether voluntary or involuntary and
whether or not involving insolvency or bankruptcy; or
(d)
any assignment for the benefit of creditors or any
other marshalling of assets and liabilities of any
Grantor.
“ Lien
” means any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge,
claim, security interest, easement or encumbrance, or preference,
priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including any lease or title
retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, and the filing of, or
agreement to give, any financing statement perfecting a security
interest under the UCC or comparable law of any
jurisdiction).
“ Lien Enforcement
Action ” means (a) any action by
the First Lien Collateral Agent or any other First Lien Claimholder
to foreclose on any Lien of such Person in any Collateral, (b) any
action, as part of an exercise of rights or remedies, by either the
First Lien Collateral Agent or any other First Lien Claimholder to
take possession of, sell or otherwise realize (judicially or non
judicially) upon any Collateral (including by setoff or
notification of account debtors), and/or (c) the commencement by
the First Lien Collateral Agent or any other First Lien Claimholder
of any legal proceedings against any Grantor or with respect to any
Collateral to facilitate the actions described in (a) and (b)
above; provided , that for the avoidance of doubt, none of the following shall
constitute a Lien Enforcement Action: (i) making demand for payment
of any First Lien Obligations, (ii) the receipt of payments of
principal of or interest
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on the First Lien Obligations, or payments of other
obligations arising under the First Lien Loan Documents (including
the receipt and application by the First Lien Collateral Agent to
the First Lien Obligations of collections of Accounts or proceeds
of other Collateral received from account debtors or through any
lockbox or other cash management arrangement, whether or not any
Event of Default under the First Lien Credit Agreement exists at
the time of application), (iii) the implementation of Reserves
under the First Lien Credit Agreement, (iv) the reduction of
advance rates under the First Lien Credit Agreement, (v) the
termination of the Commitments or the cessation (whether temporary
or permanent) of lending under the Credit Agreement due to the
existence of a Default or Event of Default, (vi) sending any
“activation” notice under a deposit control agreement
to block access to any Deposit Account of a Credit Party, or (vii)
the exercise by any First Lien Claimholder of any right of setoff
or recoupment with respect to obligations not arising under the
First Lien Credit Agreement.
“ Maximum Revolving
Loan Commitment ” means, on any
date of determination thereof, an amount equal to (a) $45,000,000
minus (b) the sum of all permanent reductions of revolving credit
commitments under the First Lien Credit Agreement (other than in
connection with a Refinancing permitted hereunder).
“ Maximum Working
Capital Amount ” means, on any date
of determination thereof, the sum of (a) the lesser of (i) the
Maximum Revolving Loan Commitment on such date and (ii) the
Borrowing Base on such date plus (b) $2,500,000. The Borrowing Base
on any date shall be calculated by the First Lien Collateral Agent
based upon the most recent Borrowing Base Certificate received by
the First Lien Collateral Agent prior to such date, as the
calculation of the Borrowing Base in such Borrowing Base
Certificate may be adjusted by the First Lien Collateral Agent
pursuant to the provisions of the First Lien Credit Agreement, and
without regard to any events, transactions or occurrences
subsequent to the First Lien Collateral Agent’s receipt of
such Borrowing Base Certificate, including any decreases in the
Borrowing Base occurring as a result of (i) Accounts that are
deemed by the First Lien Collateral Agent to be eligible on any
date thereafter becoming or being deemed, with the passage of time
or otherwise, ineligible (whether as a result of aging,
obsolescence, disputes, or non-payment by Account Debtors or
otherwise); (ii) the return of uncollected checks or other items of
payment applied to the reduction of Revolving Credit Advances, or
other similar involuntary or unintentional actions; (iii) the First
Lien Collateral Agent’s exercising discretion under the First
Lien Credit Agreement (x) to declare Accounts previously deemed to
be Eligible Accounts as no longer constituting Eligible Accounts or
(y) to impose, release, increase or decrease the amount of any
Reserves under the First Lien Credit Agreement; (iv) any failure of
the Credit Parties to report accurately the amount of Eligible
Accounts on any Borrowing Base Certificate; or (v) any
re-evaluations or reappraisals of the Collateral.
“ New
Agent ” has the meaning assigned to
that term in Section 5.5
.
“ New First Lien Debt
Notice ” has the meaning assigned
to that term in Section 5.5
.
“ Obligations ” means all
obligations of every nature of each Grantor from time to time owed
to any agent or trustee, the First Lien Claimholders, the Second
Lien Claimholders or any of them or their respective Affiliates
under the First Lien Loan Documents the Second Lien
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Loan Documents, whether for principal, interest,
fees, expenses, indemnification or otherwise and all guarantees of
any of the foregoing.
“ Pay-Over
Amount ” has the meaning set forth
in Section 6.3 .
“ Permitted
Subordinations ” means agreements
entered into by the First Lien Collateral Agent with depositary
banks, securities or commodities intermediaries, landlords,
mortgagees, bailees and warehousemen pursuant to which the Liens of
the First Lien Collateral Agent are subordinated to claims or Liens
of such Persons.
“ Person
” means any natural person, corporation,
limited liability company, trust, joint venture, association,
company, partnership, governmental authority or other
entity.
“ Pledged
Collateral ” has the meaning set
forth in Section 5.4
.
“ Post-Petition
Interest ” means interest, fees,
indemnities, expenses and other charges that pursuant to the First
Lien Credit Agreement or the Second Lien Credit Agreement, continue
to accrue after the commencement of any Insolvency or Liquidation
Proceeding, whether or not such interest, fees, expenses and other
charges are allowed or allowable under the Bankruptcy Law or in any
such Insolvency or Liquidation Proceeding.
“ Purchase
Event ” means the occurrence of any
of the following events: (a) the acceleration of the First Lien
Obligations in accordance with the terms of the First Lien Credit
Agreement, (b) the commencement of an Insolvency or Liquidation
Proceeding, (c) the commencement of a Lien Enforcement Action by
the First Lien Collateral Agent or any other First Lien
Claimholder, or (d) the later of (i) 30th day following the date on
which an Event of Default under (and as defined in)
Section 8.1(a) , (b),
(e), (g), (j), (k) or (l) of the Second Lien Credit Agreement has
occurred and (ii) the date on which the Second Lien Collateral
Agent has delivered written notice of the occurrence of such Event
of Default to the First Lien Collateral Agent.
“ Purchase
Period ” has the meaning set forth
in Section 5.6 .
“ Recovery
” has the meaning set forth in
Section 6.5 .
“ Refinance ” means, in respect
of any Indebtedness (or any agreement creating or evidencing any
Indebtedness), to refinance, extend, renew, defease, restructure,
replace, refund or repay, or to issue other indebtedness, in
exchange or replacement for, such Indebtedness in whole or in part.
“ Refinanced ” and “ Refinancing ” shall have
correlative meanings.
“ Second Lien
Bankruptcy Payments ” has the
meaning set forth in Section
6.3 .
“ Second Lien
Cap ” means the result of (a)
$28,000,000, minus (b) the aggregate amount of all repayments and prepayments of
the principal of the term loan obligations under the Second Lien
Credit Agreement (other than repayments or prepayments of such term
loan obligations in connection with a Refinancing
thereof).
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“ Second Lien
Claimholders ” means, at any
relevant time, the holders of Second Lien Obligations at that time,
including the Second Lien Lenders and the agents under the Second
Lien Loan Documents.
“ Second Lien
Collateral ” means all of the
assets and property of any Grantor, whether real, personal or
mixed, with respect to which a Lien is granted as security for any
Second Lien Obligations.
“ Second Lien
Collateral Agent ” has the meaning
set assigned to that term in the Preamble of this
Agreement.
“ Second Lien
Collateral Documents ” means the
Collateral Documents (as defined in the Second Lien Credit
Agreement) and any other agreement, document or instrument 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 Credit
Agreement ” has the meaning
assigned to that term in the Recitals to this Agreement.
“ Second Lien
Lenders ” means the “
Lenders ” under
and as defined in the Second Lien Credit Agreement.
“ Second Lien Loan
Documents ” means the Second Lien
Credit Agreement and the Loan Documents (as defined in the Second
Lien Credit Agreement) and each of the other agreements, documents
and instruments providing for or evidencing any other Second Lien
Obligation, and any other document or instrument executed or
delivered at any time in connection with any Second Lien
Obligations, including any intercreditor or joinder agreement among
holders of Second Lien Obligations to the extent such are effective
at the relevant time, as each may be amended, restated,
supplemented, modified, renewed or extended from time to time in
accordance with the provisions of this Agreement.
“ Second Lien
Mortgages ” means a collective
reference to each mortgage, deed of trust and any other document or
instrument other than the Corporate Facility Mortgage under which
any Lien on real property owned or leased by any Grantor is granted
to secure any Second Lien Obligations or under which rights or
remedies with respect to any such Liens are governed.
“ Second Lien
Obligations ” means all Obligations
outstanding under the Second Lien Credit Agreement and the other
Second Lien Loan Documents. “ Second
Lien Obligations ” shall include
all interest accrued or accruing (or which would, absent
commencement of an Insolvency or Liquidation Proceeding, accrue)
after commencement of an Insolvency or Liquidation Proceeding in
accordance with the rate specified in the relevant Second Lien Loan
Document whether or not the claim for such interest is allowed as a
claim in such Insolvency or Liquidation Proceeding.
“ Second Lien
Priority Assets ” means the assets
subject to the Corporate Facility Mortgage.
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“ Second Lien
Subsidiary Guaranty ” has the
meaning assigned to that term in the Recitals to this
Agreement.
“ Short
Fall ” has the meaning set forth
in Section 6.3 .
“ Standstill
Period ” has the meaning set forth
in Section 3.1 .
“ Subsidiary ” means, with
respect to any Person, of which more than 50% of the total voting
power of shares of stock or other ownership interests entitled
(without regard to the occurrence of any contingency) to vote in
the election of the Person or Persons (whether directors, managers,
trustees or other Persons performing similar functions) having the
power to direct or cause the direction of the management and
policies thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof.
“ UCC
” means the Uniform Commercial Code (or any
similar or equivalent legislation) as in effect in any applicable
jurisdiction.
1.2
Terms Generally . The
definitions of terms in this Agreement shall apply equally to the
singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words
“include,” “includes” and
“including” shall be deemed to be followed by the
phrase “without limitation.” The word
“will” shall be construed to have the same meaning and
effect as the word “shall.” Unless the context requires
otherwise:
(a)
any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to
time amended, restated, supplemented, modified or Refinanced in
each case without contravention, where applicable, of this
Agreement;
(b)
any reference herein to any Person shall be
construed to include such Person’s permitted successors and
assigns;
(c)
the words “herein,” “hereof’
and “hereunder,” and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any
particular provision hereof;
(d)
all references herein to Sections shall be construed
to refer to Sections of this Agreement; and
(e)
the words “asset” and
“property” shall be construed to have the same meaning
and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and
general intangibles.
SECTION 2. Lien
Priorities .
2.1
Relative Priorities .
Notwithstanding the date, time, method, manner or order of grant,
attachment or perfection of any Liens securing the Second Lien
Obligations
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granted on the Collateral or of any Liens securing
the First Lien Obligations granted on the Collateral and
notwithstanding any provision of the UCC, or any other applicable
law or the Second Lien Loan Documents or any defect or deficiencies
in, or failure to perfect or lapse in perfection of, the Liens
securing the First Lien Obligations or any other circumstance
whatsoever, the Second Lien Collateral Agent, on behalf of itself
and the Second Lien Claimholders, hereby agrees that:
(a)
any Lien on the Collateral securing any First Lien
Obligations now or hereafter held by or on behalf of the First Lien
Collateral Agent or any First Lien Claimholders or any agent or
trustee therefor, regardless of how acquired, whether by grant,
possession, statute, operation of law, subrogation or otherwise,
shall be senior in all respects and prior to any Lien on the
Collateral securing any Second Lien Obligations;
(b)
any Lien on the Collateral securing any Second Lien
Obligations now or hereafter held by or on behalf of the Second
Lien Collateral Agent, any Second Lien Claimholders or any agent or
trustee therefor regardless of how acquired, whether by grant,
possession, statute, operation of law, subrogation or otherwise,
shall be junior and subordinate in all respects to all Liens on the
Collateral securing any First Lien Obligations;
(c)
all Liens on the Collateral securing any First Lien
Obligations shall be and remain senior in all respects and prior to
all Liens on the Collateral securing any Second Lien Obligations
for all purposes, whether or not such Liens securing any First Lien
Obligations are subordinated to any Lien securing any other
obligation of the Borrower, any other Grantor or any other
Person;
(d)
any Lien on the Second Lien Priority Assets securing
any Second Lien Obligations now or hereafter held by or on behalf
of the Second Lien Collateral Agent, any Second Lien Claimholders
or any agent or trustee therefor regardless of how acquired,
whether by grant, possession, statute, operation of law,
subrogation or otherwise, shall be senior in all respects to and
prior to any Liens on the Second Lien Priority Assets securing any
First Lien Obligations;
(e)
any Lien on the Second Lien Priority Assets securing
any First Lien Obligations now or hereafter held by or on behalf of
the First Lien Collateral Agent, any First Lien Claimholders or any
agent or trustee therefor regardless of how acquired, whether by
grant, possession, statute, operation of law, subrogation or
otherwise, shall be junior and subordinate in all respects to all
Liens on the Second Lien Priority Assets securing any Second Lien
Obligations;
(f)
all Liens on the Second Lien Priority Assets
securing any Second Lien Obligations shall be and remain senior in
all respects and prior to all Liens on the Second Lien Priority
Assets securing and First Lien Obligation for all purposes, whether
or not such Lien securing any Second Lien Obligations are
subordinated to any Lien securing any other obligation of the
Borrower, any other Grantor or any other Person; and
(g)
the Liens of the First Lien Collateral Agent on the
Collateral, to the extent that such Liens secure Obligations under
the First Lien Credit Agreement that are not First Lien
11
Obligations hereunder, are and shall be junior and
subordinate in all respects to the Liens of the Second Lien
Collateral Agent on the Collateral, to the extent that such Liens
secure Second Lien Obligations permitted hereunder.
Notwithstanding the foregoing clause (g), each First
Lien Claimholder agrees not to enter into any agreement with
another creditor of any Grantor to subordinate the Liens in any
Collateral securing any First Lien Obligations to the Liens of such
other creditor in the same Collateral, or to subordinate the right
of such First Lien Claimholder to the payment of any First Lien
Obligations to the payment of the indebtedness or claim of any
other creditor of any Grantor, in each case without the prior
written consent of the Second Lien Collateral Agent, except (i) as
specified herein, (ii) with respect to Permitted Subordinations or
(iii) with respect to Liens that would constitute a “
Permitted Encumbrance ” under the First Lien Loan Documents and obligations of
the applicable Grantor with respect to such Liens.
2.2
Prohibition on Contesting Liens
. Each of the Second Lien Collateral Agent, for
itself and on behalf of each Second Lien Claimholder, and the First
Lien Collateral Agent, for itself and on behalf of each First Lien
Claimholder, agrees that it will not (and hereby waives any right
to) contest or support any other Person in contesting, in any
proceeding (including any Insolvency or Liquidation Proceeding) or
otherwise, the priority, validity, perfection or enforceability of
a Lien held by or on behalf of any of the First Lien Claimholders
in the First Lien Collateral or by or on behalf of any of the
Second Lien Claimholders in the Second Lien Collateral, as the case
may be, or the provisions of this Agreement; provided , that nothing in this
Agreement shall be construed to prevent or impair the rights of the
First Lien Collateral Agent or any First Lien Claimholder or the
Second Lien Collateral Agent or any Second Lien Claimholder to
enforce this Agreement, including the provisions of this Agreement
relating to the priority of the Liens securing the First Lien
Obligations and Second Lien Obligations as provided in
Sections 2.1 and
3.1 .
2.3
No New Liens . So long
as the Discharge of First Lien Obligations has not occurred,
whether or not any Insolvency or Liquidation Proceeding has been
commenced by or against the Borrower or any other Grantor, the
parties hereto agree that the Borrower shall not, and shall not
permit any other Grantor to:
(a)
grant or permit any additional Liens on any asset or
property to secure any Second Lien Obligation unless it has granted
or concurrently grants a Lien on such asset or property to secure
the First Lien Obligations; or
(b)
grant or permit any additional Liens on any asset or
property to secure any First Lien Obligations unless it has granted
or concurrently grants a Lien on such asset or property to secure
the Second Lien Obligations.
To the extent that the foregoing provisions are not
complied with for any reason, without limiting any other rights and
remedies available to the First Lien Collateral Agent and/or the
First Lien Claimholders, the Second Lien Collateral Agent, on
behalf of Second Lien Claimholders, agrees that any amounts
received by or distributed to any of them pursuant to or as a
result of Liens granted in contravention of this
Section 2.3 shall be
subject to Section 4.3
.
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2.4
Similar Liens and Agreements
. The parties hereto agree that it is their
intention that the First Lien Collateral and the Second Lien
Collateral be identical. In furtherance of the foregoing and
of Section 8.9 ,
the parties hereto agree, subject to the other provisions of this
Agreement:
(a)
upon request by the First Lien Collateral Agent or
the Second Lien Collateral 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 Loan Documents
and the Second Lien Loan Documents; and
(b)
that the documents and agreements creating or
evidencing the First Lien Collateral and the Second Lien Collateral
and guarantees for the First Lien Obligations and the Second Lien
Obligations, subject to Section
5.3(d) , shall be in all material
respects the forms of documents utilized by the First Lien
Claimholders other than with respect to the first lien and the
second lien nature of the Obligations thereunder.
SECTION 3. Enforcement .
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3.1
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Exercise of Remedies .
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(a)
Until the Discharge of First Lien Obligations has
occurred, whether or not any Insolvency or Liquidation Proceeding
has been commenced by or against the Borrower or any other Grantor,
the Second Lien Collateral Agent and the Second Lien
Claimholders:
(1)
will not exercise or seek to exercise any rights or
remedies with respect to any Collateral (including the exercise of
any right of setoff or any right under any lockbox agreement,
deposit or securities account control agreement, landlord waiver or
bailee’s letter or similar agreement or arrangement to which
the Second Lien Collateral Agent or any Second Lien Claimholder is
a party) or institute any action or proceeding with respect to such
rights or remedies (including any action of foreclosure or any
Insolvency or Liquidation Proceeding); provided , however , that the Second Lien
Collateral Agent may exercise any or all such rights or remedies
(subject to any restrictions contained in the Second Lien Loan
Documents or any such control agreements, landlord waiver, bailee
letter or similar agreement or arrangement) after the passage of a
period of 120 days since the date on which the First Lien
Collateral Agent received written notice from the Second Lien
Collateral Agent of (i) the occurrence of an Actionable Second Lien
Event of Default or of the acceleration of the Second Lien
Obligations and (ii) the Second Lien Collateral Agent’s
decision to commence a standstill period under this Agreement (the
“ Standstill Period
”) (prompt written notice of the initial
commencement of such exercise to be given to the First Lien
Collateral Agent; provided
, however
, that notwithstanding anything herein to the
contrary, in no event shall the Second Lien Collateral Agent or any
Second Lien Claimholder exercise any rights or remedies with
respect to the Collateral if, notwithstanding the expiration of the
Standstill Period, the First Lien Collateral Agent or First Lien
Claimholders shall have commenced and be diligently pursuing the
exercise of any of their rights or remedies with respect
to
13
all or substantially all of the Collateral or shall
be diligently attempting to vacate any stay or prohibition against
such exercise (prompt written notice of the initial commencement of
such exercise to be given to the Second Lien Collateral
Agent; provided , that the First Lien Collateral Agent shall incur no liability
for, and the rights of the First Lien Collateral Agent hereunder or
in respect of the Collateral shall be unaffected by, the failure of
the First Lien Collateral Agent to give any such
notice);
(2)
will not contest, protest or object to any
foreclosure proceeding or action brought by the First Lien
Collateral Agent or any other First Lien Claimholder or any other
exercise by the First Lien Collateral Agent or any other First Lien
Claimholder of any rights and remedies relating to the Collateral
under the First Lien Loan Documents or otherwise so long as the
Liens in favor of the Second Lien Collateral Agent attach to the
proceeds thereof to the extent provided by applicable law, subject
to the relative priorities set forth in Section 2.1 ; and
(3)
subject to their rights under clause (a)(1) above,
will not object to the forbearance by the First Lien Collateral
Agent or the other First Lien Claimholders from bringing or
pursuing any foreclosure proceeding or action or any other exercise
of any rights or remedies relating to the Collateral.
(b)
Until the Discharge of First Lien Obligations has
occurred, whether or not any Insolvency or Liquidation Proceeding
has been commenced by or against the Borrower or any other Grantor,
subject to Section 3.1(a)(1)
, the First Lien Collateral Agent and the other
First Lien Claimholders shall have the exclusive right to enforce
rights with respect to the Collateral, exercise remedies with
respect to the Collateral (including set-off and the right to
credit bid their debt) and make determinations regarding the
release, disposition, or restrictions with respect to the
Collateral without any consultation with or the consent of the
Second Lien Collateral Agent or any Second Lien Claimholder. In
exercising rights and remedies with respect to the Collateral, the
First Lien Collateral Agent and the other First Lien Claimholders
may enforce the provisions of the First Lien Loan Documents and
exercise remedies thereunder, all in such order and in such manner
as they may determine in the exercise of their sole discretion and
without regard to the interests of the Second Lien Claimholders.
Such exercise and enforcement shall include the rights of an agent
appointed by them to sell or otherwise dispose of Collateral upon
foreclosure, to incur expenses in connection with such sale or
disposition, and to exercise all the rights and remedies of a
secured creditor under the UCC and of a secured creditor under
Bankruptcy Laws of any applicable jurisdiction.
(c)
Notwithstanding the foregoing, the Second Lien
Collateral Agent and any other Second Lien Claimholder
may:
(1) file a claim or statement of interest with respect to the
Second Lien Obligations; provided , that an Insolvency or
Liquidation Proceeding has been commenced by or against the
Borrower or any other Grantor;
(2)
take any action (not adverse to the priority status
of the Liens on the Collateral securing the First Lien Obligations,
or the rights of any First Lien
14
Collateral Agent or the First Lien Claimholders to
exercise remedies in respect thereof) in order to create, perfect,
preserve or protect its Lien on the Collateral;
(3) 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 of the claims of the Second Lien Claimholders,
including any claims secured by the Collateral, if any, in each
case in accordance with the terms of this Agreement;
(4) vote on any plan of reorganization (including, without
limitation, vote to accept or reject any plan of partial or
complete liquidation, reorganization, arrangement, composition or
extension), file any proof of claim, make other filings and make
any arguments and motions that are, in each case, in accordance
with the terms of this Agreement, with respect to the Second Lien
Obligations and the Collateral;
(5)
exercise any of its rights or remedies with respect
to the Collateral after the termination of the Standstill Period
if, and to the extent, permitted by Section 3.1(a)(1) ; and
(6)
at any time exercise any of its rights or remedies
with respect to the Second Lien Priority Assets.
The Second Lien Collateral Agent, on behalf of
itself and the other Second Lien Claimholders, agrees that it will
not take or receive any Collateral or any proceeds of Collateral in
connection with the exercise of any right or remedy (including
set-off) with respect to any Collateral in its capacity as a
creditor, unless and until the Discharge of First Lien Obligations
has occurred, except as expressly provided in Section 3.1(a)(1) . Without limiting
the generality of the foregoing, unless and until the Discharge of
First Lien Obligations has occurred, except as expressly provided
in Sections 3.1(a) , 6.3(b) and
this Section 3.1(c) , the sole right of the Second Lien Collateral Agent and the
other Second Lien Claimholders with respect to the Collateral is to
hold a Lien on the Collateral pursuant to the Second Lien
Collateral Documents for the period and to the extent granted
therein and to receive a share of the proceeds thereof, if any,
after the Discharge of First Lien Obligations has
occurred.
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(d)
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Subject to Sections 3.1
(a) and (c) and Section 6.3(b) :
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(1)
the Second Lien Collateral Agent, for itself and on
behalf of the other Second Lien Claimholders, agrees that the
Second Lien Collateral Agent and the other Second Lien Claimholders
will not take any action that could reasonably be expected to
hinder any exercise of remedies under the First Lien Loan Documents
or is otherwise prohibited hereunder, including any sale, lease,
exchange, transfer or other disposition of the Collateral, whether
by foreclosure or otherwise;
(2)
the Second Lien Collateral Agent, for itself and on
behalf of the other Second Lien Claimholders, hereby waives any and
all rights it or the other Second Lien Claimholders may have as a
junior lien creditor or otherwise to object to the manner in which
the First Lien Collateral Agent or the other First Lien
Claimholders seek to enforce or collect the First Lien Obligations
or the Liens securing the First Lien
15
Obligations granted in any of the Collateral
undertaken in accordance with this Agreement, regardless of whether
any action or failure to act by or on behalf of the First Lien
Collateral Agent or First Lien Claimholders is adverse to the
interest of the Second Lien Claimholders; and
(3)
the Second Lien Collateral Agent hereby acknowledges
and agrees that no covenant, agreement or restriction contained in
the Second Lien Collateral Documents or any other Second Lien Loan
Document (other than this Agreement) shall be deemed to restrict in
any way the rights and remedies of the First Lien Collateral Agent
or the other First Lien Claimholders with respect to the Collateral
as set forth in this Agreement and the First Lien Credit
Documents.
(e)
Except as specifically set forth in
Sections 3.1(a) and 3.1(d) ,
the Second Lien Collateral Agent and the Second Lien Claimholders
may exercise rights and remedies as unsecured creditors against the
Borrower or any other Grantor that has guaranteed or granted Liens
to secure the Second Lien Obligations in accordance with the terms
of the Second Lien Loan Documents and applicable law (including,
without limitation, declaring a default under the Second Lien Loan
Documents, accelerating the Second Lien Obligations, commencing a
suit thereon and pursuing a judgment (along with any ancillary
actions required to effectuate any of such actions)), in each case
subject to the other terms and conditions of this Agreement;
provided , that in the
event that any Second Lien Claimholder becomes a judgment Lien
creditor in respect of Collateral as a result of its enforcement of
its rights as an unsecured creditor with respect to the Second Lien
Obligations, such judgment Lien shall be subject to the terms of
this Agreement for all purposes (including in relation to the First
Lien Obligations) to the same extent as the other Liens securing
the Second Lien Obligations are subject to this
Agreement.
(f)
Nothing in this Agreement shall prohibit the receipt
by the Second Lien Collateral Agent or any Second Lien Claimholders
of (i) payment upon closing of the Second Lien Credit Agreement of
the fees, expenses and costs that are due and payable thereunder by
any Grantor on such date, (ii) regularly scheduled payments (but
not prepayments except as permitted under Section 4.1 ) of interest and
principal and payments of default interest that are due and payable
under the Second Lien Credit Documents, (iii) post-closing
expenses, costs, indemnification payments and any other amounts
that are due and payable under the Second Lien Loan Documents, (iv)
payments of interest accruing during an Insolvency or Liquidation
Proceeding, (v) subject to the terms of Section 6.3 , adequate protection
payments during an Insolvency or Liquidation Proceeding, (vi) any
debt or equity securities that are distributed to the Second Lien
Claimholders under a confirmed plan of reorganization in an
Insolvency or Liquidation Proceeding and (vii) and other amounts
owed in respect of the Second Lien Obligations, in each case as
long as such receipt is not the direct or indirect result of the
exercise by the Second Lien Collateral Agent or any Second Lien
Claimholders of rights or remedies as a secured creditor (including
set-off) or enforcement in contravention of this Agreement (or
where the proceeds are required to be turned over pursuant
to Section 4.3 )
of any Lien held by any of them. Nothing in this Agreement shall
impair or otherwise adversely affect any rights or remedies the
First Lien Collateral Agent or the First Lien Claimholders may have
with respect to the First Lien Collateral.
16
SECTION 4. Payments .
4.1
Prepayments of First Lien Obligations and Second
Lien Obligations . As long as the
Discharge of First Lien Obligations has not occurred, the Credit
Parties shall not make, and the Second Lien Lenders shall not
accept, any prepayment of the Second Lien Obligations except
pursuant to Section 1.3(b)(i)
, 1.3(b)(ii)
, 1.3(b)(iii)
, and 1.3(b)(iv)
.
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4.2
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Application of Proceeds .
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(a)
As long as the Discharge of First Lien Obligations
has not occurred, whether or not any Insolvency or Liquidation
Proceeding has been commenced by or against the Borrower or any
other Grantor, any Collateral or proceeds thereof received in
connection with the sale or other disposition of, or collection on,
such Collateral upon the exercise of remedies by the First Lien
Collateral Agent or First Lien Claimholders shall be applied by the
First Lien Collateral Agent to the First Lien Obligations in such
order as is specified in the relevant First Lien Loan Documents or
as otherwise determined by the First Lien Claimholders. Upon the
Discharge of First Lien Obligations, the First Lien Collateral
Agent shall deliver to the Second Lien Collateral Agent any
Collateral and proceeds of Collateral held by it in the same form
as received, with any necessary endorsements (but without
representation or warranty and wholly without recourse) or as a
court of competent jurisdiction may otherwise direct to be applied
by the Second Lien Collateral Agent to the Second Lien Obligations
in such order as is specified in the Second Lien Collateral
Documents
(b)
As long as the Discharge of Second Lien Obligations
has not occurred, whether or not any Insolvency or Liquidation
Proceeding has been commenced by or against the Borrower or any
other Grantor, the first $5,000,000 in any Second Lien Priority
Assets or proceeds thereof received in connection wi
