Exhibit 10.5
INTERCREDITOR
AGREEMENT
among
PROSPECT MEDICAL HOLDINGS,
INC.
as the Company
and
CERTAIN SUBSIDIARIES OF THE
COMPANY
FROM TIME TO TIME PARTIES
HERETO
as Guarantors,
and
ROYAL BANK OF CANADA
,
as First Lien Collateral Agent
and
U.S. BANK NATIONAL
ASSOCIATION ,
as Second Lien Collateral Agent
and
ROYAL BANK OF CANADA
,
as Control Agent
Dated as of July 29, 2009
TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS
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2
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SECTION 1.01
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Defined Terms
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2
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SECTION 1.02
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Other Interpretive Provisions
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10
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ARTICLE II LIEN PRIORITIES
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11
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SECTION 2.01
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Relative Priorities
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11
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SECTION 2.02
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Failure to Perfect
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11
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SECTION 2.03
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Nature of First Lien Obligations
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11
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SECTION 2.04
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Prohibition on Contesting Liens
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12
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SECTION 2.05
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No New Liens
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12
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SECTION 2.06
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Similar Liens and Agreements
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13
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ARTICLE III ENFORCEMENT
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14
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SECTION 3.01
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Exercise of Remedies
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14
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SECTION 3.02
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Actions Upon Breach
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16
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ARTICLE IV PAYMENTS
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17
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SECTION 4.01
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Application of Proceeds
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17
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SECTION 4.02
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Payments Over
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17
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ARTICLE V OTHER AGREEMENTS
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18
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SECTION 5.01
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Releases
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18
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SECTION 5.02
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Insurance
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18
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SECTION 5.03
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Amendments to First Lien Documents and Second
Lien Documents
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19
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SECTION 5.04
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Rights As Unsecured Creditors
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20
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SECTION 5.05
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Control Agent for Perfection
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21
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SECTION 5.06
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When Discharge of First Lien Obligations Deemed
to Not Have Occurred
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23
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ARTICLE VI INSOLVENCY OR LIQUIDATION
PROCEEDINGS
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24
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SECTION 6.01
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Finance and Sale Issues
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24
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SECTION 6.02
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Relief from the Automatic Stay
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24
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SECTION 6.03
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Adequate Protection
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25
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SECTION 6.04
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No Waiver
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26
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SECTION 6.05
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Avoidance Issues
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26
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SECTION 6.06
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Separate Grants of Security and Separate
Classification
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26
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SECTION 6.07
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Reorganization Securities
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26
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SECTION 6.08
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Post-Petition Claims
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26
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SECTION 6.09
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Waiver
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27
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SECTION 6.10
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Expense Claims
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27
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SECTION 6.11
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Other Matters
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27
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SECTION 6.12
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Effectiveness in Insolvency or Liquidation
Proceedings
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27
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i
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SECTION 6.13
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Limitation of Applicability
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28
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ARTICLE VII RELIANCE; WAIVERS;
ETC.
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28
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SECTION 7.01
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Non-Reliance
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28
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SECTION 7.02
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No Warranties or Liability
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28
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SECTION 7.03
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Obligations Unconditional
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29
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SECTION 7.04
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Certain Notices
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30
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ARTICLE VIII MISCELLANEOUS
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30
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SECTION 8.01
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Inconsistencies with Other Documents
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30
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SECTION 8.02
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Effectiveness; Continuing Nature of this
Agreement; Severability
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30
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SECTION 8.03
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Amendments; Waivers
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31
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SECTION 8.04
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Information Concerning Financial Condition of
the Company and its Subsidiaries
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31
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SECTION 8.05
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Subrogation
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32
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SECTION 8.06
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Application of Payments
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32
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SECTION 8.07
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SUBMISSION TO JURISDICTION
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32
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SECTION 8.08
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Notices
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33
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SECTION 8.09
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Further Assurances
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33
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SECTION 8.10
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APPLICABLE LAW
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34
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SECTION 8.11
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Binding on Successors and Assigns
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34
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SECTION 8.12
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Specific Performance
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34
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SECTION 8.13
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Titles and Captions
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34
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SECTION 8.14
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Counterparts; Integration
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34
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SECTION 8.15
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Authorization
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34
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SECTION 8.16
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No Third Party Beneficiaries
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34
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SECTION 8.17
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Provisions Solely to Define Relative
Rights
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34
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ii
INTERCREDITOR
AGREEMENT
This INTERCREDITOR AGREEMENT, is
dated as of July 29, 2009, and entered into by and among
PROSPECT MEDICAL HOLDINGS, INC., a Delaware corporation (“
Holdings ” or the “ Company ”),
each of the Subsidiaries of Holdings identified on the signature
pages hereof as a Guarantor (such Subsidiaries, the “
Guarantors ”), ROYAL BANK OF CANADA, in its capacity
as administrative agent for the First Lien Obligations (as defined
below), including its successors and assigns from time to time (the
“ First Lien Collateral Agent ”), U.S. BANK
NATIONAL ASSOCIATION, in its capacity as collateral agent in
respect of the Second Lien Obligations (as defined below),
including its successors and assigns from time to time (the “
Second Lien Collateral Agent ”) and ROYAL BANK OF
CANADA, in its capacity as Control Agent (as defined below) for the
First Lien Collateral Agent and the Second Lien Collateral
Agent. Capitalized terms used herein but not otherwise
defined herein have the meanings set forth in Article I
below.
RECITALS
WHEREAS, the Company, the lenders
party thereto from time to time, and Royal Bank of Canada, as
administrative agent, have entered into that certain Credit
Agreement dated as of the date hereof providing for a revolving
credit facility to the Company (as amended, restated, supplemented,
modified or Refinanced from time to time, the “ Credit
Agreement ”);
WHEREAS, the Company, the Guarantors
and U.S. Bank National Association, as trustee, have entered into
that certain Indenture dated as of the date hereof in respect of
the Company’s 2014 Notes (as amended, restated, supplemented,
modified or Refinanced from time to time, the “
Indenture ”);
WHEREAS, (a) the obligations of
the Company and the Guarantors under the Credit Agreement and the
other First Lien Documents, (b) any Secured Hedge Agreement,
and (c) any Secured Cash Management Agreement will be secured,
in part, by the Controlled Accounts and the Accounts of the Company
and the Guarantors and the proceeds thereof (whether by sale or
collection) and the Controlled Accounts pursuant to the terms of
the First Lien Collateral Documents;
WHEREAS, the obligations of the
Company and the Guarantors under the Indenture and the other Second
Lien Documents will be secured, in part, the Accounts of the
Company and the Guarantors and the proceeds thereof (whether by
sale or collection) and the Controlled Accounts pursuant to the
terms of the Second Lien Collateral Documents;
WHEREAS, the First Lien Documents
and the Second Lien Documents provide, among other things, that the
parties thereto shall set forth in this Agreement their respective
rights and remedies with respect to the Collateral; and
WHEREAS, in order to induce the
First Lien Collateral Agent and the First Lien Claimholders to
consent to the incurrence by the Grantors (as defined below) of the
Second Lien Obligations and to induce the First Lien Claimholders
to extend credit and other financial accommodations 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 lien subordination, intercreditor
and other provisions set forth in this Agreement.
NOW, THEREFORE , in
consideration of the foregoing, the mutual covenants and
obligations herein set forth and for other good and valuable
consideration, the sufficiency and receipt of which are hereby
acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01
Defined Terms . As used in the Agreement, the
following terms shall have the following meanings:
“ 2014 Notes ”
means the Company’s senior secured notes due 2014 issued
under the Indenture.
“ Accounts ” has
the meaning ascribed to such term in the UCC, but shall not include
Designated Accounts (as defined in the Shared Collateral
Agreement).
“ Affiliate ”
means, with respect to any 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.
“ Agreement ”
means this Intercreditor Agreement, as amended, restated
supplemented or otherwise modified from time to time.
“ Attributable
Indebtedness ” means, on any date, (a) in respect of
any Capitalized Lease of any Person, the capitalized amount thereof
that would appear on a balance sheet of such Person prepared as of
such date in accordance with GAAP, (b) in respect of any
Synthetic Lease Obligation, the capitalized amount of the remaining
lease or similar payments under the relevant lease or other
applicable agreement or instrument that would appear on a balance
sheet of such Person prepared as of such date in accordance with
GAAP if such lease or other agreement or instrument were accounted
for as a Capitalized Lease and (c) all Synthetic Debt of such
Person.
“ Bankruptcy Code
” means title 11 of the United States Code entitled
“Bankruptcy,” as now and hereafter in effect, or any
successor statute.
“ Business Day ”
means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the laws of, or are
in fact closed in, New York, New York.
“ Capitalized Lease
” means all leases that have been or should be, in accordance
with GAAP, recorded as capitalized leases.
“ Cash Management
Agreement ” means any agreement to provide cash
management services, including treasury, depository, overdraft,
credit or debit card, electronic funds transfer and other cash
management arrangements.
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“ Cash Management Bank
” means any Person that, at the time it enters into a Cash
Management Agreement, is a Lender or an Affiliate of a Lender, in
its capacity as a party to such Cash Management
Agreement.
“ Collateral ”
means the assets and property of any Grantor, whether tangible or
intangible, constituting both First Lien Collateral and Second Lien
Collateral.
“ Company ” has
the meaning set forth in the preamble of this Agreement.
“ Control Agent ”
has the meaning set forth in Section 5.05(a)
.
“ Control Collateral
” means any Collateral consisting of any cash and any other
Collateral as to which a first priority Lien shall or may be
perfected through possession or control by the secured party or any
agent therefor.
“ Controlled Accounts
” means those certain Deposit Accounts of any Grantor subject
to Liens under the terms of the First Lien Collateral Documents and
the Second Lien Collateral Documents and subject to control or a
control agreement in favor of the Control Agent.
“ Credit Agreement
” has the meaning assigned thereto in the
recitals.
“ Debtor Relief Laws
” means the Bankruptcy Code, and all other liquidation,
conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief laws of the United States
or other applicable jurisdictions from time to time in effect and
affecting the rights of creditors generally.
“ Deposit Account
” has the meaning ascribed to such term in the
UCC.
“ DIP Financing ”
has the meaning set forth in Section 6.01 .
“ Discharge of First Lien
Obligations ” means, except to the extent otherwise
provided in Section 5.06 , (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 a claim for such interest is, or would
be, allowed in such Insolvency or Liquidation Proceeding, in which
case such interest shall be repaid from funds otherwise possibly
available to the Second Lien Claimholders) and premium, if any, on
all Indebtedness outstanding under the First Lien Documents and
termination of all commitments to lend or otherwise extend credit
under the First Lien Documents, (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 (including legal fees and other expenses,
costs or charges accruing on or after the commencement of any
Insolvency or Liquidation Proceeding, whether or not a claim for
such fees, expenses, costs or charges is, or would be, allowed in
such Insolvency or Liquidation Proceeding), (c) termination of
any Secured Hedge Agreement and the payment in full in cash of all
obligations thereunder, (d) termination of any Secured Cash
Management Agreement and the payment in full in cash of all
obligations thereunder, (e) termination or cash
collateralization (in an amount reasonably satisfactory to the
First Lien
3
Collateral Agent not to exceed 105%) of all
letters of credit issued under the First Lien Documents, and
(f) adequate provision has been made for any contingent or
unliquidated First Lien Obligations related to claims, causes of
action, or liabilities that have been asserted or threatened
against the Lenders or the First Lien Claimholders or that
otherwise can be reasonably identified based on the then known
facts and circumstances.
“ Disposition ”
has the meaning set forth in Section 5.01(a)(ii)
.
“ Equity Interests
” means, with respect to any Person, all of the shares of
capital stock of (or other ownership or profit interests in) such
Person, all of the warrants, options or other rights for the
purchase or acquisition from such Person of shares of capital stock
of (or other ownership or profit interests in) such Person, all of
the securities convertible into or exchangeable for shares of
capital stock of (or other ownership or profit interests in) such
Person or warrants, rights or options for the purchase or
acquisition from such Person of such shares (or such other
interests), and all of the other ownership or profit interests in
such Person (including partnership, member or trust interests
therein), whether voting or nonvoting.
“ Exercise of Remedies
” has the meaning set forth in Section 5.01(a)(i)
.
“ First Lien
Claimholders ” means, at any relevant time, the holders
of First Lien Obligations at such time, including, without
limitation, the Lenders and any agent under the Credit
Agreement.
“ First Lien Collateral
” means “Collateral” as defined in the First Lien
Security Agreement.
“ First Lien Collateral
Agent ” has the meaning set forth in the preamble
hereof.
“ First Lien Collateral
Documents ” means the First Lien Security Agreement and
any other agreement, document or instrument pursuant to which a
Lien is granted on assets intended to constitute First Lien
Collateral which secures any First Lien Obligations or under which
rights or remedies with respect to such Liens are
governed.
“ First Lien Documents
” means the Credit Agreement and the Loan Documents (as
defined in the Credit Agreement), First Lien Collateral Documents
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 modified from time to time in accordance with their
terms.
“ First Lien
Obligations ” means all (a) outstanding
“Obligations” as defined in and arising under the
Credit Agreement and the other First Lien Documents (it being
understood, for avoidance of doubt, that obligations owed to a
Hedge Bank and/or a Cash Management Bank that is both a First Lien
Claimholder and a Second Lien Claimholder at the time such Secured
Hedge Agreement and/or Secured Cash Management Agreement was
entered into by the Company shall be considered First Lien
Obligations) and (b) any DIP Financing. “First
Lien Obligations” shall include (i) all interest accrued
or accruing (or which would, absent
4
commencement of an Insolvency or Liquidation
Proceeding, accrue) in accordance with the rate specified in the
relevant First Lien Document and (ii) all fees, costs and
charges incurred in connection with the First Lien Documents and
provided for thereunder (including, without limitation, legal
fees), in the case of clause (i) and (ii) whether
before or after commencement of an Insolvency or Liquidation
Proceeding and irrespective of whether any claim for such interest,
fees, costs or charges is allowed as a claim in such Insolvency or
Liquidation Proceeding.
“ First Lien Security
Agreement ” means that certain First Lien Collateral
Agreement in respect of the First Lien Collateral dated the date
hereof from the Grantors in favor of the First Lien Collateral
Agent, as amended, restated, supplemented or otherwise modified
from time to time.
“ GAAP ” means
generally accepted accounting principles in the United States as in
effect as of the date hereof and as set forth in the opinions and
pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such
other principles as may be approved by a significant segment of the
accounting profession in the United States, that are applicable to
the circumstances as of the date of determination, consistently
applied.
“ Governmental
Authority ” means the government of the United States or
any other nation, or of any political subdivision thereof, whether
state or local, and any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government
(including any supra-national bodies such as the European Union or
the European Central Bank).
“ Grantors ”
means the Company and each of the Guarantors that have executed and
delivered, or may from time to time hereafter execute and deliver,
a First Lien Collateral Document or a Second Lien Collateral
Document.
“ Guarantee ”
means, as to any Person, any (a) obligation, contingent or
otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation payable
or performable by another Person (the “ primary
obligor ”) in any manner, whether directly or indirectly,
and including any obligation of such Person, direct or indirect,
(i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation,
(ii) to purchase or lease property, securities or services for
the purpose of assuring the obligee in respect of such Indebtedness
or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working
capital, equity capital or any other financial statement condition
or liquidity or level of income or cash flow of the primary obligor
so as to enable the primary obligor to pay such Indebtedness or
other obligation, or (iv) entered into for the purpose of
assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance
thereof or to protect such obligee against loss in respect thereof
(in whole or in part), or (b) any Lien on any assets of such
Person securing any Indebtedness or other obligation of any other
Person, whether or not such Indebtedness or other obligation is
assumed by such Person (or any right, contingent or otherwise, of
any holder of such Indebtedness to obtain any such Lien). The
amount of any
5
Guarantee shall be deemed to be an amount equal
to the stated or determinable amount of the related primary
obligation, or portion thereof, in respect of which such Guarantee
is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith. The term
“Guarantee” as a verb has a corresponding
meaning.
“ Guarantors ”
has the meaning set forth in the preamble of this
Agreement.
“ Hedge Bank ”
means any Person that, at the time it enters into a Secured Hedge
Agreement, is a Lender or an Affiliate of a Lender, in its capacity
as a party to such Secured Hedge Agreement.
“ Indebtedness ”
means, as to any Person at a particular time, without duplication,
all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:
(a)
all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes,
loan agreements or other similar instruments;
(b)
the maximum amount of all direct or contingent obligations of such
Person arising under letters of credit, including standby and
commercial, solely to the extent that such letters of credit are
not fully cash collateralized, bankers’ acceptances, bank
guaranties, surety bonds and similar instruments;
(c)
net obligations of such Person under any Swap Contract;
(d)
all obligations of such Person to pay the deferred purchase price
of property or services (other than trade accounts payable in the
ordinary course of business and not past due for more than 90 days
after the date on which such trade account was
created);
(e)
indebtedness (excluding prepaid interest thereon) secured by a Lien
on property owned or being purchased by such Person (including
indebtedness arising under conditional sales or other title
retention agreements), whether or not such indebtedness shall have
been assumed by such Person or is limited in recourse;
(f)
all Attributable Indebtedness in respect of Capitalized Leases and
Synthetic Lease Obligations of such Person and all Synthetic Debt
of such Person;
(g)
all obligations of such Person to purchase, redeem, retire, defease
or otherwise make any payment in respect of any Equity Interest in
such Person or any other Person or any warrant, right or option to
acquire such Equity Interest, valued, in the case of a redeemable
preferred interest, at the greater of its voluntary or involuntary
liquidation preference plus accrued and unpaid
dividends;
(h)
all Guarantees of such Person in respect of any of the foregoing;
and
6
(i)
all obligations of such Person owing in respect of Medicare and/or
Medicaid.
For all purposes hereof, the
Indebtedness of any Person shall include the Indebtedness of any
partnership or joint venture (other than a joint venture that is
itself a corporation or limited liability company) in which such
Person is a general partner or a joint venturer, unless such
Indebtedness is expressly made non-recourse to such Person.
The amount of any net obligation under any Swap Contract on any
date shall be deemed to be the Swap Termination Value thereof as of
such date.
“ Indenture ” has
the meaning set forth in the Recitals.
“ Insolvency or Liquidation
Proceeding ” means (a) any voluntary or involuntary
case or proceeding under the Bankruptcy Code or any other Debtor
Relief Law 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 its 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 generally or any other
marshalling of assets and liabilities of any Grantor.
“ Lenders ” means
the “Lenders” under and as defined in the Credit
Agreement.
“ Lien ” means
any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or
preference, priority or other security interest or preferential
arrangement in the nature of a security interest of any kind or
nature whatsoever (including any conditional sale or other title
retention agreement, any easement, right of way or other
encumbrance on title to real property, and any financing lease
having substantially the same economic effect as any of the
foregoing).
“ Operating Lease
” means, as to any Person as determined in accordance with
GAAP, any lease of property (whether real, personal or mixed) by
such Person as lessee which is not a Capital Lease.
“ Person ” means
any natural person, corporation, limited liability company, trust,
joint venture, association, company, partnership, governmental
authority or other entity.
“ PMG ” means
Prospect Medical Group, Inc., a California professional
corporation.
“ PMG Parties ”
means PMG, each direct or indirect Subsidiary of PMG and each
future direct or indirect subsidiary of PMG.
“ Recovery ” has
the meaning set forth in Section 6.05 .
7
“ Refinance ”
means, in respect of any indebtedness, to refinance, replace or
repay, or to issue other indebtedness, in exchange or replacement
for, such indebtedness. “ Refinanced ” and
“ Refinancing ” shall have correlative
meanings.
“ Requisite
Claimholders ” means those lenders under the Credit
Agreement or those Second Lien Claimholders in respect of the
Indenture, as applicable, that are necessary to approve the
contemplated action.
“ Second Lien
Claimholders ” means, at any relevant time, the holders
of Second Lien Obligations at such time, including, without
limitation, the Second Lien Collateral Agent and any other agent
under the Indenture.
“ Second Lien
Collateral ” means “Collateral” as defined in
the Second Lien Security Agreement.
“ Second Lien Collateral
Agent ” has the meaning set forth in the preamble
hereof.
“ Second Lien Collateral
Documents ” means the Second Lien Security Agreement and
any other agreement, document or instrument pursuant to which a
Lien is granted on assets intended to constitute Second Lien
Collateral which secures any Second Lien Obligations or under which
rights or remedies with respect to such Liens are
governed.
“ Second Lien Documents
” means the Indenture, the 2014 Notes and the Second
Lien Collateral Documents 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 modified from time
to time in accordance with their terms.
“ Second Lien Enforcement
Date ” means the date which is 120 days after the
occurrence of (a) an Event of Default (under and as defined in
the Indenture) and (b) the First Lien Collateral
Agent’s receipt of written notice from the Second Lien
Collateral Agent certifying that (i) an Event of Default
(under and as defined in the Indenture) has occurred and is
continuing and (ii) the Second Lien Obligations are currently
due and payable in full (whether as a result of acceleration
thereof or otherwise) in accordance with terms of the Indenture;
provided that the Second Lien Enforcement Date shall be
stayed and shall not occur and shall be deemed not to have occurred
(1) at any time the First Lien Collateral Agent or the First
Lien Claimholders have commenced and are diligently pursuing in
good faith any enforcement action with respect to all or a material
portion of the Collateral, (2) at any time any Grantor is then
a debtor under or with respect to (or otherwise subject to) any
Insolvency or Liquidation Proceeding or (3) if the
acceleration of the Second Lien Obligations (if any) is rescinded
in accordance with the terms of the Indenture or
otherwise.
“ Second Lien
Obligations ” means all (a) outstanding obligations
arising under the Indenture and the other Second Lien
Documents. “Second Lien Obligations” shall
include, without limitation, (i) all principal and interest
(including any Additional Interest (as defined in the Indenture))
accrued or accruing (or which would, absent commencement of an
Insolvency or
8
Liquidation Proceeding, accrue) in accordance
with the rate specified in the relevant Second Lien Document and
(ii) all fees, costs, premium and charges incurred in
connection with the Second Lien Documents and provided for
thereunder (including, without limitation, legal fees), in each
case after commencement of an Insolvency or Liquidation Proceeding
irrespective of whether any claim for such interest, fees, costs,
premium or charges is allowed as a claim in such Insolvency or
Liquidation Proceeding.
“ Second Lien Security
Agreement ” means that certain Second Lien Collateral
Agreement in respect of the Second Lien Collateral dated the date
hereof from the Grantors in favor of the Second Lien Collateral
Agent, as amended, restated, supplemented or otherwise modified
from time to time.
“ Secured Cash Management
Agreement ” means any Cash Management Agreement that is
entered into by and between the Company and any Cash Management
Bank.
“ Secured Hedge
Agreement ” means any interest rate Swap Contract
required or permitted under the Credit Agreement or the Indenture
that is entered into by and between the Company and any Hedge
Bank.
“ Shared Collateral
Agreement ” means that certain Collateral Agreement dated
as of the date hereof from the Grantors in favor of U.S. Bank
National Association, as collateral agent, for the equal and
ratable benefit of (x) Royal Bank of Canada and the lenders
referred to therein and (y) U.S. Bank National Association, as
note trustee and the holders of the 2014 Notes, as such
Collateral Agreement may be amended, supplemented or otherwise
modified from time to time.
“ Standstill Period
” has the meaning set forth in
Section 3.01(a)(i)(A) hereof.
“ Subsidiary ” of
a Person means a corporation, partnership, joint venture, limited
liability company or other business entity of which a majority of
the shares of securities or other interests having ordinary voting
power for the election of directors or other governing body (other
than securities or interests having such power only by reason of
the happening of a contingency) are at the time beneficially owned,
or the management of which is otherwise controlled, directly, or
indirectly through one or more intermediaries, or the right to
designate the individual or individuals who own such majority of
the shares of securities or other interests having ordinary voting
power is controlled, directly or indirectly, or both, by such
Person. Unless otherwise specified or the context otherwise
requires, all references herein to a “ Subsidiary
” or to “ Subsidiaries ” shall refer to a
Subsidiary or Subsidiaries of Holdings and shall include the PMG
Parties.
“ Swap Contract ”
means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions,
commodity swaps, commodity options, forward commodity contracts,
equity or equity index swaps or options, bond or bond price or bond
index swaps or options or forward bond or forward bond price or
forward bond index transactions, interest rate options, forward
foreign exchange transactions, cap transactions, floor
transactions, collar transactions, currency swap transactions,
cross-currency rate swap transactions, currency options, spot
contracts, or any other similar transactions or any
9
combination of any of the foregoing (including
any options to enter into any of the foregoing), whether or not any
such transaction is governed by or subject to any master agreement,
and (b) any and all transactions of any kind, and the related
confirmations, which are subject to the terms and conditions of, or
governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any
International Foreign Exchange Master Agreement, or any other
master agreement (any such master agreement, together with any
related schedules, a “ Master Agreement ”),
including any such obligations or liabilities under any Master
Agreement.
“ Swap Termination
Value ” means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally
enforceable netting agreement relating to such Swap Contracts,
(a) for any date on or after the date such Swap Contracts have
been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for
any date prior to the date referenced in clause (a), the
amount(s) determined as the mark-to-market value(s) for
such Swap Contracts, as determined based upon one or more
mid-market or other readily available quotations provided by any
recognized dealer in such Swap Contracts (which may include a
Lender or any Affiliate of a Lender).
“ Synthetic Debt
” means, with respect to any Person as of any date of
determination thereof, all obligations of such Person in respect of
transactions entered into by such Person that are intended to
function primarily as a borrowing of funds but are not otherwise
included in the definition of “Indebtedness” or as a
liability on the consolidated balance sheet of such Person and its
Subsidiaries in accordance with GAAP.
“ Synthetic Lease
Obligation ” means the monetary obligation of a Person
under (a) a so-called synthetic, off-balance sheet or tax
retention lease, or (b) an agreement for the use or possession
of property (including sale and leaseback transactions), in each
case, creating obligations that do not appear on the balance sheet
of such Person but which, upon the application of any Debtor Relief
Laws to such Person, would be characterized as the indebtedness of
such Person (without regard to accounting treatment).
“ UCC ” means the
Uniform Commercial Code as in effect in the State of New York;
provided that, if perfection or the effect of perfection or
non-perfection or the priority of any security interest in any
Collateral is governed by the Uniform Commercial Code as in effect
in a jurisdiction other than the State of New York,
“UCC” means the Uniform Commercial Code as in effect
from time to time in such other jurisdiction for purposes of the
provisions hereof relating to such perfection, effect of perfection
or non-perfection or priority.
“ United States ”
means the United States of America.
SECTION 1.02
Other Interpretive Provisions .
(a)
The definitions of terms herein shall apply equally to the singular
and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include”,
“includes” and “including” shall be deemed
to be followed by the phrase “without
limitation.” The word “will” shall be
construed to have the same meaning and effect as the word
“shall”. Unless the context
10
requires otherwise
(i) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to
time amended, supplemented or otherwise modified (subject to any
restriction on such amendments, supplements or modifications set
forth herein), (ii) any reference herein to any Person shall
be construed to include such Person’s successors and assigns,
(iii) 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, (iv) all references herein to
Recitals, Exhibits or Sections shall be construed to refer to
Recitals, Exhibits, Articles or Sections of this Agreement and
(v) 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.
(b)
In the computation of periods of time from a specified date to a
later specified date, the word “from” means “from
and including;” the words “to” and
“until” each mean “to but excluding;” and
the word “through” means “to and
including.”
(c)
Section headings herein are included for convenience of
reference only and shall not affect the interpretation of this
Agreement.
ARTICLE II
LIEN PRIORITIES
SECTION 2.01
Relative Priorities . Notwithstanding the date, 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 applicable law
or the Second Lien Documents, 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 of the Second Lien Obligations; and
(b) any Lien on the Collateral 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.
SECTION 2.02
Failure to Perfect . 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, notwithstanding any
failure of the First Lien Collateral Agent or the First Lien
Claimholders to adequately perfect its security interests in the
Collateral, the subordination of any Lien on the Collateral
securing any First Lien Obligations to any Lien securing any other
obligation of any Grantor, or the avoidance, invalidation or lapse
of any Lien on the Collateral securing any First Lien
Obligations.
SECTION 2.03
Nature of First Lien Obligations . The Second Lien
Collateral Agent (for itself and on behalf of the other Second Lien
Claimholders) acknowledges that (a) the
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First Lien Obligations are revolving in nature,
(b) the amount thereof that may be outstanding at any time or
from time to time may be increased or reduced and subsequently
reborrowed and (c) the terms of the First Lien Obligations may
be modified, extended or amended from time to time and the
aggregate amount of the First Lien Obligations may be increased or
Refinanced, in either event, without notice to or consent by the
Second Lien Claimholders and without affecting the provisions
hereof. The lien priorities provided in
Sections 2.01 and 2.02 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 Lien Obligations or
the Second Lien Obligations, or any portion thereof.
SECTION 2.04
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 shall not
(and hereby waives any right to) contest or support any other
Person in contesting, in any proceeding (including any Insolvency
or Liquidation Proceeding), the priority, validity or
enforceability of 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 priority of the Liens
securing the First Lien Obligations as provided in
Sections 2.01 and 3.01 .
SECTION 2.05
No New Liens .
(a)
Limitation on other Collateral for First Lien Claimholders.
So long as any Second Lien Obligations remain outstanding, and
subject to Article VI, (i) the First Lien Collateral
Agent agrees that, after the date hereof, neither the First Lien
Collateral Agent nor any First Lien Claimholder shall acquire or
hold any Lien on any assets of the type contemplated by the
definition of “First Lien Collateral” of any Grantor
securing any First Lien Obligations which assets are not also
subject to the second-priority Lien of the Second Lien Collateral
Agent under the Second Lien Collateral Documents, and
(ii) each Grantor agrees not to grant any Lien on any assets
of the type contemplated by the definition of “First Lien
Collateral”, or permit any of its Subsidiaries to grant a
Lien on any such assets, in favor of the First Lien Collateral
Agent or the First Lien Claimholders unless it, or such Subsidiary,
has granted a similar Lien on such assets in favor of the Second
Lien Collateral Agent or the Second Lien Claimholders. If the
First Lien Collateral Agent or any First Lien Claimholder shall
(nonetheless and in breach hereof) acquire any Lien on any assets
of the type contemplated by the definition of “First Lien
Collateral” of any Grantor or any of their respective
Subsidiaries securing any First Lien Obligations which assets are
not also subject to the second-priority Lien of the Second Lien
Collateral Agent under the Second Lien Collateral Documents, then
the First Lien Collateral Agent (or the relevant First Lien
Claimholder), shall, without the need for any further consent of
any other Person and notwithstanding anything to the contrary in
any other First Lien Document (x) in addition to holding such
Lien for the benefit of itself and the other First Lien
Claimholders as security for the First Lien Obligations, also hold
and be deemed to have held such Lien for the benefit of the Second
Lien Collateral Agent as security for the Second Lien Obligations
subject to the priorities set forth herein or (y) release such
Lien.
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(b)
Limitation on other Collateral for Second Lien Claimholders.
Until the date upon which the Discharge of First Lien Obligations
shall have occurred, (i) the Second Lien Collateral Agent
agrees that, after the date hereof, neither the Second Lien
Collateral Agent nor any Second Lien Claimholder shall acquire or
hold any Lien on any assets of the type contemplated by the
definition of “Second Lien Collateral” of any Grantor
securing any Second Lien Obligations which assets are not also
subject to the senior priority Lien of the First Lien Collateral
Agent under the First Lien Collateral Documents, and (ii) each
Grantor agrees not to grant any Lien on any assets of the type
contemplated by the definition of “Second Lien
Collateral”, or permit any of its Subsidiaries to grant a
Lien on any such assets, in favor of the Second Lien Collateral
Agent or the Second Lien Claimholders unless it, or such
Subsidiary, has granted a similar Lien on such assets in favor of
the First Lien Collateral Agent or the First Lien
Claimholders. If the Second Lien Collateral Agent or any
Second Lien Claimholder shall (nonetheless and in breach hereof)
acquire any Lien on any assets of the type contemplated by the
definition of “Second Lien Collateral” of any Grantor
or any of their respective Subsidiaries securing any Second Lien
Obligations which assets are not also subject to the first-priority
Lien of the First Lien Collateral Agent under the First Lien
Collateral Documents, then the Second Lien Collateral Agent (or the
relevant Second Lien Claimholder), shall, without the need for any
further consent of any other Person and notwithstanding anything to
the contrary in any other Second Lien Document (x) in addition
to holding such Lien for the benefit of itself and the other Second
Lien Claimholders as security for the Second Lien Obligations, also
hold and be deemed to have held such Lien for the benefit of the
First Lien Collateral Agent as security for the First Lien
Obligations or (y) release such Lien.
SECTION 2.06
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 8.09 , 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 Documents and the Second Lien
Documents; and
(b)
that the documents and agreements creating or evidencing the Liens
on the First Lien Collateral and the Second Lien Collateral shall
be in all material respects the same forms of documents other than
with respect to the senior and subordinate nature of the security
interests in the Collateral securing the respective First Lien
Obligations and Second Lien Obligations thereunder.
In addition, to the extent any guaranty is
entered into by any Grantor in respect of the Second Lien
Obligations (whether or not the First Lien Collateral Agent or
First Lien Claimholders have consented thereto), a guaranty by such
Person shall be entered into in respect of the First Lien
Obligations, and for all purposes hereunder such Person shall be
deemed a guarantor of the First Lien Obligations and the Second
Lien Obligations. Furthermore, to the extent any guaranty is
entered into by any Grantor in respect of the First Lien
Obligations (whether or not the Second
13
Lien Agent or the Second Lien Claimholders have
consented thereto), a guaranty by such Person shall be entered into
in respect of the Second Lien Obligations and, for all purposes
hereunder, such Person shall be deemed a guarantor of the Second
Lien Obligations and the First Lien Obligations.
ARTICLE III
ENFORCEMENT
SECTION 3.01
Exercise of Remedies .
(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:
(i)
the Second Lien Collateral Agent and the Second Lien
Claimholders:
(A)
from the date hereof until the occurrence of the Second Lien
Enforcement Date (such period, the “ Standstill Period
”), will not exercise or seek to exercise any rights or
remedies (including any right of set-off or recoupment) with
respect to any Collateral (including, without limitation, the
exercise of any right under any lockbox agreement, account control
or collection agreement or similar agreement or arrangement to
which the Second Lien Collateral Agent or any Second Lien
Claimholder is a party) or institute or commence (or join with any
other Person in commencing) any enforcement, collection, execution,
levy or foreclosure action or proceeding (including, without
limitation, any Insolvency or Liquidation Proceeding) with respect
to any Lien held by it under the Second Lien Collateral
Documents;
(B)
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 Collateral
Documents, including, but not limited to, any motion by the First
lien Collateral agent to sell the Collateral pursuant to
Section 363 of the Bankruptcy Code, provided that the
respective interests of the Second Lien Claimholders attach to the
proceeds thereof, subject to the relative priorities described in
Article II; provided , however , that this
Section 3.01(B) shall constitute consent by the
Second Lien Collateral Agent and the Second Lien Claimholders
pursuant to Section 363(f) of the Bankruptcy Code to the
Section 363 sale of any or all of the Collateral;
and
(C)
subject to the rights of the Second Lien Collateral Agent under
clause (i)(A) above, will not object to the forbearance
by the First Lien Collateral Agent or the First Lien Claimholders
from bringing or
14
pursuing any foreclosure proceeding
or action or any other exercise of any rights or remedies relating
to the Collateral; and
(ii)
subject to Section 5.01 , until the Discharge of the
First Lien Obligations, the First Lien Collateral Agent and the
First Lien Claimholders shall have the exclusive right to enforce
rig
