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