EXHIBIT NO. 10.11
INTERCREDITOR
AGREEMENT
Intercreditor Agreement (this
“ Agreement ”), dated as of May 1, 2009,
among JPMORGAN CHASE BANK, N.A., as Administrative Agent (in such
capacity, with its successors and assigns, and as more specifically
defined below, the “ First Priority Representative
”) for the First Priority Secured Parties (as defined below),
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Collateral Agent (in
such capacity, with its successors and assigns, and as more
specifically defined below, the “ Second Priority
Representative ”) for the Second Priority Secured Parties
(as defined below), SEAGATE TECHNOLOGY HDD HOLDINGS, an exempted
limited liability company incorporated under the laws of the Cayman
Islands (the “ Borrower ”), SEAGATE TECHNOLOGY
INTERNATIONAL, an exempted limited liability company incorporated
under the laws of the Cayman Islands (the “ Second Lien
Issuer ”), and each of the other Loan Parties (such term,
and other capitalized terms used herein but not otherwise defined,
having the meaning set forth in Section 1.1 below) party
hereto.
WHEREAS, the Borrower, the First
Priority Representative and certain financial institutions and
other entities are parties to the Second Amended and Restated
Credit Agreement dated as of April 3, 2009, among Seagate
Technology, an exempted limited liability company incorporated
under the laws of the Cayman Islands (“ Intermediate
Holdings ”), the Borrower, the lenders party thereto, the
First Priority Representative, Morgan Stanley Senior Funding, Inc.,
as syndication agent, and BNP Paribas, Keybank National
Association, Wachovia Bank, National Association and The Bank of
Nova Scotia, as co-documentation agents (the “ Existing
First Priority Agreement ”), pursuant to which such
financial institutions and other entities have agreed to make loans
and extend other financial accommodations to the Borrower;
and
WHEREAS, the Second Lien Issuer and
the Second Priority Representative, as trustee (the “
Trustee ”), are parties to the Indenture dated as of
May 1, 2009 (the “ Existing Second Priority
Agreement ”), pursuant to which the Second Lien Issuer
has issued certain notes (the “ Notes ”)
guaranteed by the Borrower and each other Loan Party;
and
WHEREAS, the Borrower and the other
Loan Parties have granted to the First Priority Representative
security interests in the Common Collateral as security for payment
and performance of the First Priority Obligations; and
WHEREAS, pursuant to the terms of
the Existing First Priority Agreement the Borrower and the other
Loan Parties may not grant additional security interests in the
Common Collateral unless such security interests are subordinated
to the security interests securing the First Priority Obligations,
on terms and conditions reasonably satisfactory to the First
Priority Representative; and
WHEREAS, the Borrower and the other
Loan Parties propose to grant to the Second Priority Representative
junior security interests in the Common Collateral as security for
payment and performance of the Second Priority Obligations;
and
WHEREAS, the First Priority
Representative has agreed to permit the grant of such junior
security interests on the terms and conditions of this
Agreement;
NOW THEREFORE, in consideration of
the foregoing and the mutual covenants herein contained and other
good and valuable consideration, the existence and sufficiency of
which is expressly recognized by all of the parties hereto, the
parties agree as follows:
SECTION 1. Definitions
.
1.1. Defined Terms . The
following terms, as used herein, have the following
meanings:
“ Additional First Priority
Agreement ” means any agreement approved for designation
as such by the First Priority Representative and the Second
Priority Representative.
“ Additional Second
Priority Agreement ” means any agreement approved for
designation as such by the First Priority Representative and the
Second Priority Representative.
“ Bankruptcy Code
” means the United States Bankruptcy Code (11 U.S.C.
§101 et seq.), as amended from time to time.
“ Borrower ” has
the meaning set forth in the introductory paragraph
hereof.
“ Business Day ”
means a day other than a Saturday, a Sunday or any other day on
which commercial banks in New York City are authorized or required
by law to close.
“ Cash Management
Obligations ” means, with respect to any Loan Party, the
due and punctual payment and performance of all obligations of such
Loan Party in respect of overdrafts and related liabilities owed to
any First Priority Secured Party (or any of its affiliates) and
arising from treasury, depositary and cash management services or
in connection with any automated clearing house transfers of
funds.
“ Common Collateral
” means all assets that are both First Priority Collateral
and Second Priority Collateral.
“ Comparable Second
Priority Security Document ” means, in relation to any
Common Collateral subject to any First Priority Security Document,
that Second Priority Security Document that creates a security
interest in the same Common Collateral, granted by the same Loan
Party, as applicable.
“ DIP Financing ”
has the meaning set forth in Section 5.2.
“ Enforcement Action
” means, with respect to the First Priority Obligations or
the Second Priority Obligations, the exercise of any rights and
remedies with respect to any Common Collateral securing such
obligations or the commencement or prosecution of enforcement of
any of the rights and remedies under, as applicable, the First
Priority Documents or the Second Priority Documents, or applicable
law, including without limitation the exercise of any rights of
set-off or recoupment, and the exercise of any rights or remedies
of a secured creditor under the Uniform Commercial Code of any
applicable jurisdiction or under the Bankruptcy Code.
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“ Existing First Priority
Agreement ” has the meaning set forth in the first
WHEREAS clause of this Agreement.
“ Existing Second Priority
Agreement ” has the meaning set forth in the second
WHEREAS clause of this Agreement.
“ First Priority
Agreement ” means the collective reference to
(a) the Existing First Priority Agreement, (b) any
Additional First Priority Agreement and (c) any other credit
agreement, loan agreement, note agreement, promissory note,
indenture or other agreement or instrument evidencing or governing
the terms of any indebtedness or other financial accommodation that
has been incurred to extend, replace, refinance or refund in whole
or in part the indebtedness and other obligations outstanding under
the Existing First Priority Agreement, any Additional First
Priority Agreement or any other agreement or instrument referred to
in this clause (c) unless such agreement or instrument
expressly provides that it is not intended to be and is not a First
Priority Agreement hereunder (a “ Replacement First
Priority Agreement ”). Any reference to the First
Priority Agreement hereunder shall be deemed a reference to any
First Priority Agreement then extant. It is understood and agreed
by the parties hereto that the aggregate principal amount of
indebtedness under the First Priority Agreement may not, at any
time, exceed $550,000,000.
“ First Priority
Collateral ” means all assets, whether now owned or
hereafter acquired by the Borrower or any other Loan Party, in
which a Lien is granted or purported to be granted to any First
Priority Secured Party as security for any First Priority
Obligation.
“ First Priority
Creditors ” means the “Lenders” as defined in
the First Priority Agreement, or any Persons that are designated
under the First Priority Agreement as creditors entitled to benefit
from the First Priority Collateral under the First Priority
Agreement.
“ First Priority
Documents ” means the First Priority Agreement, each
First Priority Security Document and each First Priority
Guarantee.
“ First Priority
Guarantee ” means any guarantee by any Loan Party of any
or all of the First Priority Obligations.
“ First Priority Lien
” means any Lien created by the First Priority Security
Documents.
“ First Priority
Obligations ” means (a) the due and punctual payment
of (i) the principal and premium, if any, and interest
(including without limitation any Post-Petition Interest) on the
loans made under the First Priority Agreement, (ii) each
payment required to be made by the Borrower in respect of any
letter of credit or similar instrument issued under the First
Priority Agreement, when and as due, including payments in respect
of reimbursement of disbursements made by any “Issuing
Bank” (as defined in the First Priority Agreement) with
respect thereto, interest thereon and obligations to provide, under
certain circumstances, cash collateral in
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connection therewith and (iii) all other
monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed
or otherwise (including monetary obligations incurred during the
pendency of any Insolvency Proceeding, regardless of whether
allowed or allowable in such proceeding), of the Loan Parties to
the First Priority Secured Parties under the First Priority
Documents, (b) all Hedging Obligations, (c) all Cash
Management Obligations and (d) all Platinum Lease Obligations,
provided that the aggregate amount of all Platinum Lease
Obligations that shall constitute First Priority Obligations may
not exceed $130,000,000 at any time outstanding. To the extent any
payment with respect to any First Priority Obligation (whether by
or on behalf of any Loan Party, 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
Priority Secured Party, 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 Priority Secured Parties and the Second
Priority Secured Parties, be deemed to be reinstated and
outstanding as if such payment had not occurred.
“ First Priority
Obligations Payment Date ” means the first date on which
(a) the First Priority Obligations (other than those that
constitute Unasserted Contingent Obligations) have been
indefeasibly paid in cash in full (or cash collateralized or
defeased in accordance with the terms of the First Priority
Documents), (b) all commitments to extend credit under the
First Priority Documents have been terminated, (c) there are
no outstanding letters of credit or similar instruments issued
under the First Priority Documents (other than such as have been
cash collateralized or defeased in accordance with the terms of the
First Priority Security Documents), and (d) the First Priority
Representative has delivered a written notice to the Second
Priority Representative stating that the events described in
clauses (a), (b) and (c) have occurred to the
satisfaction of the First Priority Secured Parties (it being
understood that the First Priority Representative hereby agrees to
deliver such notice to the Second Priority Representative promptly
following the occurrence of the events described in such clauses
(a), (b) and (c)).
“ First Priority
Representative ” has the meaning set forth in the
introductory paragraph hereof. In the case of any Replacement First
Priority Agreement, the First Priority Representative shall be the
Person identified as such in such Replacement First Priority
Agreement.
“ First Priority Secured
Party ” means (a) each First Priority Creditor (and
any affiliate of such First Priority Creditor to which any Cash
Management Obligation is owed), (b) each “Issuing
Bank” (as defined in the First Priority Documents),
(c) the First Priority Representative, (d) each
counterparty to any Swap Agreement with a Loan Party the obligation
under which constitute Hedging Obligations, (e) the
beneficiaries of each indemnification obligation undertaken by any
Loan Party under any First Priority Document, (f) each
counterparty to any Platinum Lease with a Loan Party the
obligations under which constitute Platinum Lease Obligations and
(g) the successors and assigns of each of the
foregoing.
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“ First Priority Security
Documents ” means the “Security Documents” as
defined in the First Priority Agreement, and any other documents
that are designated under the First Priority Agreement as
“First Priority Security Documents” for purposes of
this Agreement.
“ Governmental
Authority ” means the government of the United States of
America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to
government.
“ Hedging Obligations
” means, with respect to any Loan Party, the due and punctual
payment and performance of all obligations of such Loan Party,
monetary or otherwise, under each Swap Agreement that (a) is
in effect on the effective date of the First Priority Agreement
with a counterparty that is a First Priority Creditor (or an
affiliate of a First Priority Creditor) as of such date or
(b) is entered into after the effective date of the First
Priority Agreement with any counterparty that is a First Priority
Creditor (or an affiliate of a First Priority Creditor) at the time
such Swap Agreement is entered into.
“ Insolvency Proceeding
” means any proceeding in respect of bankruptcy, insolvency,
winding up, receivership, dissolution or assignment for the benefit
of creditors, in each of the foregoing events whether under the
Bankruptcy Code or any similar federal, state or foreign
bankruptcy, insolvency, reorganization, receivership or similar
law.
“ Lien ” means,
with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, hypothecation, encumbrance, charge or security
interest in, on or of such asset and (b) the interest of a
vendor or a lessor under any conditional sale agreement, capital
lease or title retention agreement (or any financing lease having
substantially the same economic effect as any of the foregoing)
relating to such asset.
“ Loan Party ”
means Intermediate Holdings, the Borrower, the Second Lien Issuer
and each direct or indirect affiliate or shareholder (or
equivalent) of the Borrower or any of its affiliates that is now or
hereafter becomes a party to any First Priority Security Document
or Second Priority Security Document. All references in this
Agreement to any Loan Party shall include such Loan Party as a
debtor-in-possession and any receiver or trustee for such Loan
Party in any Insolvency Proceeding.
“ Person ” means
any natural person, corporation, limited liability company, trust,
joint venture, association, company, partnership, Governmental
Authority or other entity.
“ Platinum Lease
Obligations ” means the due and punctual payment of all
obligations (other than any such obligations that would constitute
Indebtedness (as such term is defined in the Existing First
Priority Agreement)) of the Borrower or any other Loan Party under
each Platinum Lease that (a) is in effect on the effective
date of the First Priority Agreement with a lessor that is a First
Priority Creditor (or an affiliate of a First Priority Creditor) as
of such date or
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(b) is entered into after the effective date of
the First Priority Agreement with any lessor that is a First
Priority Creditor (or an affiliate of a First Priority Creditor) at
the time such Platinum Lease is entered into.
“ Platinum Leases
” means, collectively, leasing arrangements with respect to
platinum and other precious metals that are entered into from time
to time by the Borrower or any of its subsidiaries in the ordinary
course of their business, including that certain Master Lease and
Hedging Contracts Agreement for Precious Metals dated as of
April 25, 2008, between The Bank of Nova Scotia and Seagate
Technology International (“ STI ”), and the
associated Guarantee dated April 25, 2008, by the Borrower of
STI’s obligations thereunder. For the avoidance of doubt,
“Platinum Leases” shall include any Swap Agreement that
is (x) entered into with the lessor (or any affiliate thereof)
under any leasing arrangement described in the immediately
preceding sentence and (y) involves, or is settled by
reference to, platinum or any other precious metal that is the
subject of such leasing arrangement.
“ Post-Petition
Interest ” means any interest or entitlement to fees or
expenses or other charges that accrues after the commencement of
any Insolvency Proceeding, whether or not allowed or allowable in
any such Insolvency Proceeding.
“ Purchase Date ”
has the meaning set forth in Section 5.12.
“ Purchase Event
” has the meaning set forth in Section 5.12.
“ Replacement First
Priority Agreement ” has the meaning set forth in the
definition of “First Priority Agreement”.
“ Second Priority
Agreement ” means the collective reference to
(a) the Existing Second Priority Agreement, (b) any
Additional Second Priority Agreement and (c) any other credit
agreement, loan agreement, note agreement, promissory note,
indenture, or other agreement or instrument evidencing or governing
the terms of any indebtedness or other financial accommodation that
has been incurred to extend, replace, refinance or refund in whole
or in part the indebtedness and other obligations outstanding under
the Existing Second Priority Agreement, any Additional Second
Priority Agreement or any other agreement or instrument referred to
in this clause (c). Any reference to the Second Priority Agreement
hereunder shall be deemed a reference to any Second Priority
Agreement then extant.
“ Second Priority
Collateral ” means all assets, whether now owned or
hereafter acquired by the Borrower or any other Loan Party, in
which a Lien is granted or purported to be granted to any Second
Priority Secured Party as security for any Second Priority
Obligation.
“ Second Priority
Creditors ” means the Trustee and the Noteholders (as
defined in the Second Priority Agreement), or any Persons that are
designated under the Second Priority Agreement as the “Second
Priority Creditors” for purposes of this
Agreement.
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“ Second Priority
Documents ” means each Second Priority Agreement, each
Second Priority Security Document and each Second Priority
Guarantee.
“ Second Priority
Guarantee ” means any guarantee by any Loan Party of any
or all of the Second Priority Obligations.
“ Second Priority Lien
” means any Lien created by the Second Priority Security
Documents.
“ Second Priority
Obligations ” means the due and punctual payment of
(a) all principal of and interest (including without
limitation any Post-Petition Interest) and premium (if any) on all
indebtedness under the Second Priority Agreement, and (b) all
other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed
or otherwise (including monetary obligations incurred during the
pendency of any Insolvency Proceeding, regardless of whether
allowed or allowable in such proceeding), of the Loan Parties to
the Second Priority Secured Parties under the Second Priority
Documents, and other amounts payable from time to time pursuant to
the Second Priority Documents, in each case whether or not allowed
or allowable in an Insolvency Proceeding. To the extent any payment
with respect to any Second Priority Obligation (whether by or on
behalf of any Loan Party, 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 First Priority Secured
Party, 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
Priority Secured Parties and the Second Priority Secured Parties,
be deemed to be reinstated and outstanding as if such payment had
not occurred.
“ Second Priority
Representative ” has the meaning set forth in the
introductory paragraph hereof, but shall also include any Person
identified as a “Second Priority Representative” in any
Second Priority Agreement other than the Existing Second Priority
Agreement.
“ Second Priority Secured
Party ” means the Second Priority Representative, the
Second Priority Creditors and any other holders of the Second
Priority Obligations.
“ Second Priority Security
Documents ” means the “Security Documents” as
defined in the Second Priority Agreement and any documents that are
designated under the Second Priority Agreement as “Second
Priority Security Documents” for purposes of this
Agreement.
“ Secured Parties
” means the First Priority Secured Parties and the Second
Priority Secured Parties.
“ Swap Agreement
” means any agreement with respect to any swap, forward,
future or derivative transaction or option or similar agreement
involving, or settled by reference to, one or more rates,
currencies, commodities, equity or debt instruments or securities,
or economic, financial or pricing indices or measures of economic,
financial or pricing risk or value or any similar transaction or
any combination of these transactions, provided that no
phantom stock or
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similar plan providing for payments only on
account of services provided by current or former directors,
officers, employees or consultants of the Borrower or any
subsidiary of the Borrower shall be a Swap Agreement.
“ Unasserted Contingent
Obligations ” shall mean, at any time, First Priority
Obligations for taxes, costs, indemnifications, reimbursements,
damages and other liabilities (excluding (a) the principal of,
and interest and premium (if any) on, and fees and expenses
relating to, any First Priority Obligation and (b) contingent
reimbursement obligations in respect of amounts that may be drawn
under outstanding letters of credit) in respect of which no
assertion of liability (whether oral or written) and no claim or
demand for payment (whether oral or written) has been made (and, in
the case of First Priority Obligations for indemnification, no
notice for indemnification has been issued by the indemnitee) at
such time.
“ Uniform Commercial
Code ” shall mean the Uniform Commercial Code as in
effect from time to time in the applicable jurisdiction.
1.2 Amended Agreements . All
references in this Agreement to agreements or other contractual
obligations shall, unless otherwise specified, be deemed to refer
to such agreements or contractual obligations as amended,
supplemented, restated or otherwise modified from time to
time.
SECTION 2. Lien Priorities
.
2.1 Subordination of Liens .
(a) Any and all Liens now existing or hereafter created or
arising in favor of any Second Priority Secured Party securing the
Second Priority Obligations, regardless of how acquired, whether by
grant, statute, operation of law, subrogation or otherwise, are
expressly junior in priority, operation and effect to any and all
Liens now existing or hereafter created or arising in favor of the
First Priority Secured Parties securing the First Priority
Obligations, notwithstanding (i) anything to the contrary
contained in any agreement or filing to which any Second Priority
Secured Party may now or hereafter be a party, and regardless of
the time, order or method of grant, attachment, recording or
perfection of any financing statements or other security interests,
assignments, pledges, deeds, mortgages and other liens, charges or
encumbrances or any defect or deficiency or alleged defect or
deficiency in any of the foregoing, (ii) any provision of the
Uniform Commercial Code or any applicable law or any First Priority
Document or Second Priority Document or any other circumstance
whatsoever and (iii) the fact that any such Liens in favor of
any First Priority Secured Party securing any of the First Priority
Obligations are (x) subordinated to any Lien securing any
obligation of any Loan Party other than the Second Priority
Obligations or (y) otherwise subordinated, voided, avoided,
invalidated or lapsed.
(b) No First Priority Secured Party
or Second Priority Secured Party shall object to or contest, or
support any other Person in contesting or objecting to, in any
proceeding (including without limitation, any Insolvency
Proceeding), the validity, extent, perfection, priority or
enforceability of any security interest in the Common Collateral
granted to the other, provided
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that nothing herein shall be construed to
prevent or impair the rights of such parties to enforce this
Agreement. Notwithstanding any failure by any First Priority
Secured Party or Second Priority Secured Party to perfect its
security interests in the Common Collateral or any avoidance,
invalidation or subordination by any third party or court of
competent jurisdiction of the security interests in the Common
Collateral granted to the First Priority Secured Parties or the
Second Priority Secured Parties, the priority and rights as between
the First Priority Secured Parties and the Second Priority Secured
Parties with respect to the Common Collateral shall be as set forth
herein.
2.2 Nature of First Priority
Obligations . The Second Priority Representative on behalf of
itself and the other Second Priority Secured Parties acknowledges
that a portion of the First Priority Obligations represents debt
that is revolving in nature and that the amount thereof that may be
outstanding at any time or from time to time may be increased or
reduced and subsequently reborrowed, and that the terms of the
First Priority Obligations may be modified, extended or amended
from time to time, and that the aggregate amount of the First
Priority Obligations may be increased, replaced or refinanced, in
each event, without notice to or consent by the Second Priority
Secured Parties and without affecting the provisions hereof, but in
all cases subject to the limit set forth in the last sentence of
the definition of “First Priority Agreement”. The lien
priorities provided in Section 2.1 shall not be altered or
otherwise affected by any such amendment, modification, supplement,
extension, repayment, reborrowing, increase, replacement, renewal,
restatement or refinancing of either the First Priority Obligations
or the Second Priority Obligations, or any portion
thereof.
2.3 Agreements Regarding Actions
to Perfect Liens . (a) The Second Priority Representative
agrees on behalf of itself and the other Second Priority Secured
Parties that all Second Priority Security Documents shall contain
the following notation: “The lien created by [this Agreement]
on the property described herein is junior and subordinate to the
lien on such property created by any similar instrument now or
hereafter granted to JPMorgan Chase Bank, N.A., as Administrative
Agent, and its successors and assigns, in such property, in
accordance with the provisions of the Intercreditor Agreement dated
as of May 1, 2009, among JPMorgan Chase Bank, N.A., as First
Priority Representative, Wells Fargo Bank, National Association, as
Second Priority Representative, Seagate Technology HDD Holdings,
Seagate Technology International and the other Loan Parties
referred to therein, as amended from time to
time.”
(b) The First Priority
Representative hereby agrees that, to the extent that it holds, or
a third party holds on its behalf, physical possession of or
“control” (as defined in the Uniform Commercial Code)
(or any similar concept under foreign law) over Common Collateral
pursuant to the First Priority Security Documents, such possession
or control is also for the benefit of the Second Priority
Representative and the other Second Priority Secured Parties solely
to the extent required to perfect their security interest in such
Common Collateral. Nothing in the preceding sentence shall be
construed to impose any duty on the First Priority Representative
(or any third party acting on its behalf) with respect to such
Common Collateral or provide the Second Priority Representative or
any other Second Priority Secured Party with any rights with
respect to such Common Collateral beyond those specified in this
Agreement and the Second Priority
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Security Documents, provided that as
promptly as practicable following the occurrence of the First
Priority Obligations Payment Date, the First Priority
Representative shall (i) deliver to the Second Priority
Representative, at the Borrower’s sole cost and expense, the
Common Collateral in its possession or control together with any
necessary endorsements to the extent required by the Second
Priority Documents or (ii) direct and deliver such Common
Collateral as a court of competent jurisdiction otherwise directs;
provided , however , that the provisions of this
Agreement are intended solely to govern the respective Lien
priorities as between the First Priority Secured Parties and the
Second Priority Secured Parties and shall not impose on the First
Priority Secured Parties any obligations in respect of the
disposition of any Common Collateral (or any proceeds thereof) that
would conflict with prior perfected Liens or any claims thereon in
favor of any other Person that is not a Secured Party. The Loan
Parties shall take such further actions as may be reasonably
requested by the Second Priority Representative to effectuate the
transfer of the Common Collateral upon the occurrence of the First
Priority Obligations Payment Date to the Second Priority
Representative contemplated hereby.
2.4 No New Liens . So long as
the First Priority Obligations Payment Date has not occurred, the
parties hereto agree that (a) unless otherwise agreed by the
First Priority Representative, there shall be no Lien, and no Loan
Party shall have any right to create any Lien, on any assets of any
Loan Party securing any Second Priority Obligation if these same
assets are not subject to, and do not become subject to, a Lien
securing the First Priority Obligations and (b) if any Second
Priority Secured Party shall acquire or hold any Lien on any assets
of any Loan Party securing any Second Priority Obligation which
assets are not also subject to the first-priority Lien of the First
Priority Representative under the First Priority Documents, then
the Second Priority Representative, upon demand by the First
Priority Representative, will without the need for any further
consent of any other Second Priority Secured Party, notwithstanding
anything to the contrary in any other Second Priority Document,
either (i) release such Lien (to the extent permitted by the
Existing Second Priority Agreement) or (ii) assign it to the
First Priority Representative as security for the First Priority
Obligations (in which case the Second Priority Representative may
retain a junior lien on such assets subject to the terms hereof).
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 Priority Secured Parties, the Second
Priority Representative and the other Second Priority Secured
Parties agree 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 2.4 shall be subject to
Section 4.1.
SECTION 3 . Enforcement
Rights .
3.1 Exclusive Enforcement .
Until the First Priority Obligations Payment Date has occurred,
whether or not an Insolvency Proceeding has been commenced by or
against any Loan Party, the First Priority Secured Parties shall
have the exclusive right to take and continue any Enforcement
Action with respect to the Common Collateral, without any
consultation with or consent of any Second Priority Secured Party,
but subject to the proviso set forth in Section 5.1. Upon the
occurrence and during the continuance of a default or an event of
default under the First Priority Documents, the First Priority
Representative and the other First Priority Secured
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Parties may take and continue any Enforcement
Action with respect to the First Priority Obligations and the
Common Collateral in such order and manner as they may determine in
their sole discretion.
3.2 Standstill and Waivers .
The Second Priority Representative, on behalf of itself and the
other Second Priority Secured Parties, agrees that, until the First
Priority Obligations Payment Date has occurred, subject to the
proviso set forth in Section 5.1:
(a) they will not take or cause to
be taken any action, the purpose or effect of which is to make any
Lien in respect of any Second Priority Obligation pari passu with
or senior to, or to give any Second Priority Secured Party any
preference or priority relative to, the Liens with respect to the
First Priority Obligations or the First Priority Secured Parties
with respect to any of the Common Collateral;
(b) they will not contest, oppose,
object to, interfere with, hinder or delay, in any manner, whether
by judicial proceedings (including, without limitation, the filing
of an Insolvency Proceeding) or otherwise, any foreclosure, sale,
lease, exchange, transfer or other disposition of the Common
Collateral by any First Priority Secured Party or any other
Enforcement Action taken (or any forbearance from taking any
Enforcement Action) by or on behalf of any First Priority Secured
Party;
(c) they have no right to
(i) direct either the First Priority Representative or any
other First Priority Secured Party to exercise any right, remedy or
power with respect to the Common Collateral or pursuant to the
First Priority Security Documents or (ii) consent or object to
the exercise by the First Priority Representative or any other
First Priority Secured Party of any right, remedy or power with
respect to the Common Collateral or pursuant to the First Priority
Security Documents or to the timing or manner in which any such
right is exercised or not exercised (or, to the extent they may
have any such right described in this clause (c), whether as a
junior lien creditor or otherwise, they hereby irrevocably waive
such right);
(d) they will not institute any suit
or other proceeding or assert in any suit, Insolvency Proceeding or
other proceeding any claim against any First Priority Secured Party
seeking damages from or other relief by way of specific
performance, instructions or otherwise, with respect to, and no
First Priority Secured Party shall be liable for, any action taken
or omitted to be taken by any First Priority Secured Party with
respect to the Common Collateral or pursuant to the First Priority
Documents;
(e) they will not make any judicial
or nonjudicial claim or demand or commence any judicial or
non-judicial proceedings against any Loan Party or any of its
subsidiaries or affiliates under or with respect to any Second
Priority Security Document seeking payment or damages from or other
relief by way of specific performance, instructions or otherwise
under or with respect to any Second Priority Security Document
(other than filing a proof of claim) or exercise any right, remedy
or power under or with respect to,
11
or otherwise take any action to
enforce, other than filing a proof of claim, any Second Priority
Security Document; provided , however , that the
Second Priority Representative or any Second Priority Secured Party
may, to the extent it would not prevent, restrict or otherwise
limit any rights granted or created hereunder or under any First
Priority Documents or under applicable law, in favor of the First
Priority Representative or any other First Priority Creditor in
respect of the Common Collateral, take any action not adverse to
the Liens on the Common Collateral and not otherwise inconsistent
with the terms of this Agreement, securing the First Priority
Obligations in order to preserve, perfect or protect its rights in
the Common Collateral;
(f) they will not commence judicial
or nonjudicial foreclosure proceedings with respect to, seek to
have a trustee, receiver, liquidator or similar official appointed
for or over, attempt any action to take possession of any Common
Collateral, exercise any right, remedy or power with respect to, or
otherwise take any action to enforce their interest in or realize
upon, the Common Collateral or pursuant to the Second Priority
Security Documents in their capacity as secured creditors;
and
(g) they will not seek, and hereby
waive any right, to have the Common Collateral or any part thereof
marshaled upon any foreclosure or other disposition of the Common
Collateral.
3.3 Judgment Creditors . In
the event that any Second Priority Secured Party becomes a judgment
lien creditor in respect of Common Collateral as a result of its
enforcement of its rights as an unsecured creditor, such judgment
lien shall be subject to the terms of this Agreement for all
purposes (including in relation to the First Priority Liens and the
First Priority Obligations) to the same extent as all other Liens
securing the Second Priority Obligations are subject to the terms
of this Agreement.
3.4 Cooperation . The Second
Priority Representative, on behalf of itself and the other Second
Priority Secured Parties, agrees that each of them shall take such
actions as the First Priority Representative shall request in
connection with the exercise by the First Priority Secured Parties
of their rights set forth herein to the extent not inconsistent
with the terms hereof.
3.5 No Additional Rights For the
Loan Parties Hereunder . Except as provided in
Section 3.6, if any First Priority Secured Party or Second
Priority Secured Pa
