INTERCREDITOR AGREEMENT

Exhibit 4.6

 

INTERCREDITOR AGREEMENT

 

This INTERCREDITOR AGREEMENT (“Agreement”), is dated as of December 31, 2004, and entered into by and among MODTECH HOLDINGS, INC. (the “Company”), WELLS FARGO BANK, NATIONAL ASSOCIATION (“Wells Fargo”), in its capacity as collateral agent and representative for the First Lien Obligations (as defined below) (in such capacity, together with any replacement or successor collateral agent and representative the “First Lien Collateral Agent”), and AMULET LIMITED, an exempt company organized under the laws of the Cayman Islands (“Amulet”), in its capacity as collateral agent and representative for the Second Lien Obligations (as defined below), (in such capacity, together with any replacement or successor collateral agent and representative the “Second Lien Collateral Agent”). Capitalized terms used in this Agreement have the meanings assigned to them in Section 1 below.

 

RECITALS

 

The Company, the lenders and agents party thereto, and Wells Fargo, as Administrative Agent, have entered into that Credit Agreement dated as of December 26, 2001 providing for a revolving credit facility and term loan (as amended, restated, supplemented, modified, extended, renewed, replaced or Refinanced from time to time (including as of the date hereof), the “First Lien Credit Agreement”);

 

The Company and the lenders party thereto entered into that Securities Purchase Agreement dated as of the date hereof providing for the issuance of convertible senior subordinated notes (as amended, restated, supplemented, modified, extended, renewed, replaced or Refinanced from time to time in accordance with the terms of this Agreement, the “Second Lien Credit Agreement”);

 

Pursuant to (i) the First Lien Credit Agreement, certain current Subsidiaries of the Company have agreed to guaranty the First Lien Obligations and Holdings has agreed to cause certain future Subsidiaries of the Company to guaranty the First Lien Obligations (as amended, restated, supplemented, modified, extended, renewed, replaced or Refinanced from time to time the “First Lien Subsidiary Guaranty”); and (ii) the Second Lien Credit Agreement, certain current Subsidiaries of the Company have agreed to guaranty the Second Lien Obligations and the Company has agreed to cause certain future Subsidiaries of the Company to guaranty the Second Lien Obligations (as amended, restated, supplemented, modified, extended, renewed, replaced or Refinanced from time to time in accordance with the terms of this Agreement, the “Second Lien Subsidiary Guaranty”);

 

The obligations of the Company under the First Lien Credit Agreement and any Hedge Agreements with the First Lien Lenders (or any of their Affiliates) and the obligations of the Subsidiaries under the First Lien Subsidiary Guaranty will be secured on a first priority basis by liens on all the assets of the Company and certain Subsidiaries (such current and future Subsidiaries of the Company providing a guaranty thereof, the “Guarantor Subsidiaries”), respectively, pursuant to the terms of the First Lien Collateral Documents;

The obligations of the Company under the Second Lien Credit Agreement and the obligations of the Subsidiaries under the Second Lien Subsidiary Guaranty will be secured on a second priority basis by liens on substantially all the assets of the Company and the Guarantor Subsidiaries, respectively, pursuant to the terms of the Second Lien Collateral Documents;

 

The First Lien Loan Documents and the Second Lien Loan Documents provide, among other things, that the parties thereto shall set forth in this Agreement their respective rights and remedies with respect to the Collateral; and

 

In order to induce the First Lien Collateral Agent and the First Lien Claimholders to consent to the Grantors incurring the Second Lien Obligations and to induce the First Lien Claimholders to extend and maintain credit and other financial accommodations and lend monies to or for the benefit of the Company, or any other Grantor, the Second Lien Collateral Agent on behalf of the Second Lien Claimholders has agreed to the intercreditor and other provisions set forth in this Agreement.

 

AGREEMENT

 

In consideration of the foregoing, the mutual covenants and obligations herein set forth and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

 

SECTION 1. Definitions.

 

1.1 Defined Terms. As used in the Agreement, the following terms shall have the following meanings:

 

“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the Person specified. For purposes of this definition, a Person shall be deemed to “control” or be “controlled by” a Person if such Person possesses, directly or indirectly, power to direct or cause the direction of the management or policies of such Person whether through ownership of equity interests, by contract or otherwise.

 

“Agreement” means this Intercreditor Agreement, as amended, restated, renewed, extended, supplemented or otherwise modified from time to time.

 

“Asset Sale” has the meaning assigned to that term in the First Lien Credit Agreement.

 

“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy,” as now and hereafter in effect, or any successor statute.

 

“Bankruptcy Law” means the Bankruptcy Code and any similar federal, state or foreign law for the relief of debtors.

 

“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close.

 

-2-

“Collateral” means all of the assets and property of any Grantor, whether real, personal or mixed, constituting both First Lien Collateral and Second Lien Collateral; provided, however, that in no event shall Collateral include the irrevocable standby letter of credit no.             , dated, December 31, 2004, issued by U.S. Bank National Association for the Company’s account for benefit of Amphora Limited, in the maximum amount of $10,000,000 to secure certain of the Second Lien Obligations (the “Second Lien Letter of Credit”), or drawings thereunder but shall include any collateral pledged to support such letter of credit.

 

“Collateral Documents” means this Agreement, the First Lien Collateral Documents and the Second Lien Collateral Documents.

 

“Company” has the meaning assigned to that term in the Preamble to this Agreement.

 

“Comparable Second Lien Collateral Document” means, in relation to any Collateral subject to any Lien created under any First Lien Collateral Document, that Second Lien Loan Document which creates a Lien on the same Collateral, granted by the same Grantor.

 

“Currency Agreement” means any foreign exchange contract, currency swap agreement, futures contract, option contract, synthetic cap or other similar agreement or arrangement, each of which is for the purpose of hedging the foreign currency risk associated with the Company’s and its Subsidiaries’ operations and not for speculative purposes.

 

“DIP Financing” has the meaning assigned to that term in Section 6.1.

 

“Discharge of First Lien Obligations” means, except to the extent otherwise expressly provided in Section 5.5 and subject to Section 6.5:

 

(a) payment in full in cash of the principal of and interest (including interest accruing on or after the commencement of any Insolvency or Liquidation Proceeding, whether or not such interest would be allowed in such Insolvency or Liquidation Proceeding), and premium, if any, on all Indebtedness outstanding under the First Lien Loan Documents;

 

(b) payment in full in cash under any Hedging Obligations entered into with a First Lien Claimholder (or any of their Affiliates);

 

(c) payment in full in cash of all other First Lien Obligations that are due and payable or otherwise accrued and owing at or prior to the time such principal and interest are paid;

 

(d) termination or expiration of all commitments, if any, to extend credit that would constitute First Lien Obligations; and

 

(e) termination (without any prior demand for payment thereunder having been made or, if made, with such demand having been fully reimbursed in cash) or cash collateralization (in an amount and manner, and on terms, satisfactory to the First Lien Collateral Agent) of all letters of credit issued under the First Lien Loan Documents.

 

-3-

“Disposition” has the meaning assigned to that term in Section 5.1(b).

 

“First Lien Claimholders” means, at any relevant time, the holders of First Lien Obligations at that time, including without limitation the First Lien Lenders (or any Lender Counterparty) and the agents under the First Lien Loan Documents.

 

“First Lien Collateral Agent” has the meaning assigned to that term in the Recitals to this Agreement.

 

“First Lien Collateral” means all of the assets and property of any Grantor, whether real, personal or mixed, in which a Lien is purported to be granted as security for any First Lien Obligations.

 

“First Lien Collateral Documents” means the Collateral Documents (as defined in the First Lien Credit Agreement), First Lien Mortgages, and any other agreement, document or instrument which is intended to grant to the First Lien Collateral Agent or any of the First Lien Claimholders a Lien securing any First Lien Obligations or under which rights or remedies with respect to such Liens are governed, as each may be amended, restated, supplemented, modified, renewed, extended or Refinanced from time to time in accordance with the terms hereof and thereof.

 

“First Lien Credit Agreement” has the meaning assigned to that term in the Recitals to this Agreement.

 

“First Lien Lenders” means the “Lenders” under and as defined in the First Lien Loan Documents, and any successor to, or replacements of, such Lenders.

 

“First Lien Loan Documents” means the First Lien Credit Agreement and the Loan Documents (as defined in the First Lien Credit Agreement) and each of the other agreements, documents and instruments providing for or evidencing or relating to any other First Lien Obligation, and any other agreement, writing, document or instrument executed or delivered at any time in connection with any First Lien Obligations, including any intercreditor or joinder agreement among holders of First Lien Obligations, to the extent such are effective at the relevant time, as each may be amended, restated, supplemented, modified, renewed, extended or Refinanced from time to time in accordance with the terms hereof and thereof.

 

“First Lien Mortgages” means a collective reference to each mortgage, deed of trust and other document or instrument under which any Lien on real property owned or leased by any Grantor is purported to be granted to secure any First Lien Obligations or under which rights or remedies with respect to any such Liens are governed.

 

“First Lien Obligations” means, subject to the next sentence, all Obligations, whether outstanding or contingent, evidenced by or arising under: (i) the First Lien Credit Agreement and/or (ii) any of the other First Lien Loan Documents and/or (iii) Hedge Agreements entered into with any First Lien Lender (or any Lender Counterparty). “First Lien Obligations” shall include: (a) all interest accrued or accruing (or which would, absent commencement of an Insolvency or Liquidation Proceeding (and the effect of provisions such as Section 502(b)(2) of the Bankruptcy Code), accrue) after commencement of an Insolvency or

 

-4-

Liquidation Proceeding in accordance with the rate specified in the relevant First Lien Credit Document whether or not the claim for such interest is allowed as a claim in such Insolvency or Liquidation Proceeding; and (b) any and all fees and expenses (including attorneys’ and/or financial consultants’ fees and expenses) incurred by the First Lien Collateral Agent or the other First Lien Claimholders after the commencement of an Insolvency or Liquidation Proceeding, whether or not the claim for fees and expenses is allowed under Section 506(b) of the Bankruptcy Code or any other provision of the Bankruptcy Code or Bankruptcy Law as a claim in such Insolvency or Liquidation Proceeding.

 

Notwithstanding the foregoing, if the sum of: (1) Indebtedness constituting principal outstanding under the First Lien Credit Agreement and the other First Lien Documents plus (2) the aggregate face amount of any letters of credit issued under the First Lien Credit Agreement, is in excess of $57,000,000 in the aggregate (the “Cap Amount”), then only that portion of such Indebtedness and such aggregate face amount of letters of credit equal to the Cap Amount shall be included in Priority First Lien Obligations (any such principal and reimbursement obligations with respect to such letters of credit in excess of the Cap Amount, collectively, the “Excluded First Lien Obligations”).

 

“First Lien Subsidiary Guaranty” has the meaning assigned to that term in the Recitals to this Agreement.

 

“Governmental Authority” means any federal, state, municipal, national or other government, governmental department, commission, board, bureau, court, agency or instrumentality or political subdivision thereof or any entity or officer exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case whether associated with a state of the United States, the United States, or a foreign entity or government.

 

“Grantors” means the Company, each of the Guarantor Subsidiaries and each other Person that may from time to time hereafter execute and deliver a First Lien Collateral Document or a Second Lien Collateral Document as a “Grantor” (or the equivalent thereof).

 

“Guarantor Subsidiaries” has the meaning set forth in the Recitals to this Agreement.

 

“Hedge Agreements” means an Interest Rate Agreement or a Currency Agreement entered into with a Lender Counterparty and a Grantor.

 

“Hedging Obligation” of any Person means any obligation of such Person pursuant to any Hedge Agreements.

 

“Indebtedness” means and includes all Obligations that constitute “Indebtedness” within the meaning of the First Lien Credit Agreement or the Second Lien Credit Agreement, as applicable.

 

“Insolvency or Liquidation Proceeding” means:

 

(a) any voluntary or involuntary case or proceeding under the Bankruptcy Code with respect to any Grantor;

 

-5-

(b) any other voluntary or involuntary insolvency, reorganization or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding with respect to any Grantor or with respect to a material portion of their respective assets;

 

(c) any liquidation, dissolution, reorganization or winding up of any Grantor whether voluntary or involuntary and whether or not involving insolvency or bankruptcy other than any liquidation, dissolution, reorganized or winding up permitted by the terms of the First Lien Credit Agreement; or

 

(d) any general assignment for the benefit of creditors or any other marshalling of assets and liabilities of any Grantor.

 

“Interest Rate Agreement” means any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedging agreement or other similar agreement or arrangement each of which is for the purposes of hedging the interest rate exposure associated with the Company’s and its Subsidiaries’ operations and not for speculative purposes.

 

“Lender Counterparty” means each First Lien Lender or any Affiliate of a First Lien Lender counterparty to a Hedge Agreement (including any Person who is a First Lien Lender (and any Affiliate thereof) as of the date hereof but subsequently, whether before or after entering into a Hedge Agreement, ceases to be a First Lien Lender) including, without limitation, each such Affiliate that enders into a joinder agreement with the First Lien Collateral Agent.

 

“Lien” means any lien, mortgage, pledge, assignment, security interest, charge or encumbrance of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, and any lease in the nature thereof) and any option, trust, UCC financing statement or other preferential arrangement having the practical effect of any of the foregoing.

 

“Lien Enforcement Action” means: (a) the taking of any action to enforce or realize upon any Lien, (b) the exercise of any right or remedy provided to a secured creditor on account of a Lien under any of the Collateral Documents or under applicable law, including the election to retain any collateral in satisfaction of a Lien, (c) the taking of any action or the exercise of any right or remedy in respect of the collection on, set off against, marshaling of, or foreclosure on the Collateral (including, without limitation, the notification of account debtors), (d) the sale, lease, license, or other disposition of all or any portion of the Collateral by private or public sale or any other means permissible under applicable law, (e) the exercise of any other right of a secured creditor under Article 9 of the UCC, (f) the adjustment of any insurance claim, and (g) the commencement of any legal proceedings against the Company or any other Grantor or with respect to any Collateral for any relief described in clauses (a) though (f) above.

 

“New Agent” has the meaning assigned to that term in Section 5.5.

 

-6-

“Obligations” means all obligations of every nature of each Grantor from time to time owed to any agent or trustee, the First Lien Claimholders, the Second Lien Claimholders or any of them or their respective Affiliates under the First Lien Loan Documents, the Second Lien Loan Documents or Hedge Agreements, including, without limitation, (a) any principal of or interest or premium on any indebtedness, including any reimbursement obligation in respect of any letter of credit, or any other liability, including interest accruing after the filing of a petition initiating any proceeding under the Bankruptcy Code, (b) any fees, indemnification obligations, charges, costs, expense reimbursement obligations or other liabilities payable under the documentation governing any indebtedness, (c) any obligation to post cash collateral in respect of letters of credit or any other obligations, (d) in the case of the First Lien Obligations, any Hedging Obligations (including payments for early termination), and (e) all performance obligations under the documentation governing any indebtedness, in each case, whether direct or indirect, absolute or contingent, joint or several, in each case, whether or not the claim for such amounts is allowed under Section 506(b) of the Bankruptcy Code or any other provision of the Bankruptcy Code or Bankruptcy Law as a claim in such Insolvency or Liquidation Proceeding.

 

“Person” means any natural person, corporation, limited liability company, limited liability partnerships, trust, joint venture, association, company, bank, general or limited partnership, Governmental Authority or other entity or organization, whether or not legal entities.

 

“Pledged Collateral” has the meaning set forth in Section 5.4(a).

 

“Priority First Lien Obligations” means all First Lien Obligations other than Excluded First Lien Obligations.

 

“Recovery” has the meaning set forth in Section 6.5.

 

“Refinance” means, in respect of any Indebtedness, to refinance, extend, renew, defease, amend, modify, supplement, restructure, replace, refund or repay, or to issue other indebtedness, in exchange or replacement for, such Indebtedness in whole or in part, whether pursuant to one or more agreements, with the same and/or different lenders and/or agents. “Refinanced” and “Refinancing” shall have correlative meanings.

 

“Second Lien Claimholders” means, at any relevant time, the holders of Second Lien Obligations at that time, including without limitation the Second Lien Lenders and the agents under the Second Lien Loan Documents.

 

“Second Lien Collateral” means all of the assets and property of any Grantor, whether real, personal or mixed, with respect to which a Lien is purported to be granted as security for any Second Lien Obligations.

 

“Second Lien Collateral Agent” has the meaning set assigned to that term in the Preamble of this Agreement.

 

“Second Lien Collateral Documents” means the Pledge and Security Agreement (as defined in the Second Lien Credit Agreement), the Second Lien Mortgages, and any other agreement, document or instrument which is intended to grant to the Second Lien Collateral

 

-7-

Agent or any of the Second Lien Claimholders a Lien securing any Second Lien Obligations or under which rights or remedies with respect to such Liens are governed as each may be amended, restated, supplemented, modified, renewed, extended or Refinanced from time to time in accordance with the terms hereof and thereof.

 

“Second Lien Credit Agreement” has the meaning assigned to that term in the Recitals to this Agreement.

 

“Second Lien Lenders” means the “Lenders” under and as defined in the Second Lien Credit Agreement, and any successors to, or replacements of, such Lenders.

 

“Second Lien Letter of Credit” has the meaning set forth in the definition of “Collateral” herein.

 

“Second Lien Loan Documents” means the Second Lien Credit Agreement, the Second Lien Notes and the Transaction Documents (as defined in the Second Lien Credit Agreement) and each of the other agreements, documents and instruments providing for or evidencing or relating to any other Second Lien Obligation, and any other agreement, writing, document or instrument executed or delivered at any time in connection with any Second Lien Obligations, including any intercreditor or joinder agreement among holders of Second Lien Obligations to the extent such are effective at the relevant time, as each may be amended, restated, supplemented, modified, renewed, extended or Refinanced from time to time in accordance with the provisions of this Agreement.

 

“Second Lien Mortgages” means a collective reference to each mortgage, deed of trust and any other document or instrument under which any Lien on real property owned or leased by any Grantor is purported to be granted to secure any Second Lien Obligations or under which rights or remedies with respect to any such Liens are governed.

 

“Second Lien Notes” means the Senior Subordinated Secured Convertible Notes, dated the date hereof, issued by the Company in favor of the Second Lien Lenders, in the original aggregate principal amount of $25,000,000, as amended, restated, supplemented, modified, renewed, extended or Refinanced from time to time in accordance with the terms hereof and thereof.

 

“Second Lien Obligations” means all Obligations, whether outstanding or contingent, evidenced by or arising under: (i) the Second Lien Credit Agreement and/or (ii) any of the other Second Lien Loan Documents. “Second Lien Obligations” shall include: (a) all interest accrued or accruing (or which would, absent commencement of an Insolvency or Liquidation Proceeding (and the effect of provisions such as Section 502(b)(2) of the Bankruptcy Code), accrue) after commencement of an Insolvency or Liquidation Proceeding in accordance with the rate specified in the relevant Second Lien Credit Document whether or not the claim for such interest is allowed as a claim in such Insolvency or Liquidation Proceeding; and (b) any and all fees and expenses (including attorneys’ and/or financial consultants’ fees and expenses) incurred by the Second Lien Collateral Agent or the other Second Lien Claimholders after the commencement of an Insolvency or Liquidation Proceeding, whether or not the claim for fees and expenses is allowed under Section 506(b) of the Bankruptcy Code or any other provision of the Bankruptcy Code or Bankruptcy Law as a claim in such Insolvency or Liquidation Proceeding..

 

-8-

“Second Lien Subsidiary Guaranty” has the meaning assigned to that term in the Recitals to this Agreement.

 

“Standstill Period” has the meaning set forth in Section 3.1(a)(5).

 

“Subsidiary” means, with respect to any Person, any corporation, partnership, limited liability company, association, joint venture or other business entity of which more than 50% of the total voting power of shares of stock or other ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Person or Persons (whether directors, managers, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof.

 

“UCC” means the Uniform Commercial Code (or any similar or equivalent legislation) as in effect in any applicable jurisdiction.

 

1.2 Terms Generally. The definitions of terms in this Agreement shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise:

 

(a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, supplemented, modified, renewed or extended subject to the limitations set forth herein;

 

(b) any reference herein to any Person shall be construed to include such Person’s permitted successors and assigns;

 

(c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof;

 

(d) all references herein to Sections shall be construed to refer to Sections of this Agreement; and

 

(e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

 

-9-

SECTION 2. Lien Priorities.

 

2.1 Relative Priorities. Notwithstanding the date, time, method, manner or order of grant, attachment or perfection of any Liens securing the Second Lien Obligations granted on the Collateral or of any Liens securing the First Lien Obligations granted on the Collateral and notwithstanding any provision of the UCC, or any statutory, decisional or other applicable law that would provide for a contrary ordering of priorities, or the Second Lien Loan Documents or any defect or deficiencies in, or failure to perfect, the Liens securing the First Lien Obligations or any other circumstance whatsoever, each of the Grantors, the First Lien Collateral Agent, and the Second Lien Collateral Agent, on behalf of itself and the Second Lien Claimholders, hereby acknowledges and agrees that:

 

(a) any Lien purported to be granted on the Collateral securing any First Lien Obligations now or hereafter held by or on behalf of the First Lien Collateral Agent or any First Lien Claimholders or any agent or trustee therefor, regardless of how or when acquired, whether by grant, possession, statute, operation of law, subrogation or otherwise, shall be “first” priority and senior in all respects and prior to any Lien on the Collateral securing any Second Lien Obligations; and

 

(b) any Lien purported to be granted on the Collateral securing any Second Lien Obligations now or hereafter held by or on behalf of the Second Lien Collateral Agent, any Second Lien Claimholders or any agent or trustee therefor regardless of how acquired, whether by grant, possession, statute, operation of law, subrogation or otherwise, shall be “second” priority and junior and subordinate and subject in all respects to all Liens on the Collateral securing any First Lien Obligations. All Liens on the Collateral securing any First Lien Obligations shall be and remain senior in all respects and prior to all Liens on the Collateral securing any Second Lien Obligations for all purposes, whether or not such Liens securing any First Lien Obligations are subordinated to any Lien securing any other obligation of the Company, any other Grantor or any other Person.

 

2.2 Prohibition on Contesting Liens. Each of the Second Lien Collateral Agent, for itself and on behalf of each Second Lien Claimholder, and the First Lien Collateral Agent, for itself and on behalf of each First Lien Claimholder, agrees that it will not (and hereby waives any right to) contest or support any other Person in contesting, in any proceeding (including any Insolvency or Liquidation Proceeding), (i) the priority, validity or enforceability of a Lien held by or on behalf of any of the First Lien Claimholders in the First Lien Collateral or by or on behalf of any of the Second Lien Claimholders in the Second Lien Collateral, as the case may be; provided that nothing in this Agreement shall be construed to prevent or impair the rights of the First Lien Collateral Agent or any First Lien Claimholder to enforce this Agreement, including the provisions of this Agreement relating to the priority of the Liens securing the First Lien Obligations as provided in Sections 2.1 and 3.1, (ii) the validity or enforceability of any Collateral Documents (including this Agreement) or any Obligation or other obligation thereunder, or (iii) except as expressly set forth herein, the relative rights and duties of the First Lien Claimholders and the Second Lien Claimholders granted and/or established pursuant to this Agreement or any other Collateral Document.

 

2.3 No New Liens. So long as the Discharge of First Lien Obligations has not occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or

 

-10-

against the Company or any other Grantor, the parties hereto agree that the Company shall not, and shall not permit any other Grantor to (and the Second Lien Claimholders agree that they shall not receive) grant or permit any additional Liens, or take any action to perfect a Lien, on any asset or property to secure any Second Lien Obligation unless a first priority Lien is granted to the First Lien Collateral Agent on such asset or property to secure the First Lien Obligations. To the extent that the foregoing provisions are not complied with for any reason, without limiting any other rights and remedies available to the First Lien Collateral Agent and/or the First Lien Claimholders, the Second Lien Collateral Agent, on behalf of Second Lien Claimholders, agrees that any amounts received by or distributed to any of them pursuant to or as a result of Liens granted in contravention of this Section 2.3 shall be subject to Section 4.2.

 

SECTION 3. Enforcement.

 

3.1 Exercise of Remedies.

 

(a) Until the Discharge of First Lien Obligations has occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against the Company or any other Grantor, the Second Lien Collateral Agent and the Second Lien Claimholders:

 

(1) will not exercise or seek to exercise any rights or remedies with respect to any Collateral (including, without limitation, the exercise of any right of setoff or any right under any lockbox agreement, account control agreement, landlord waiver or bailee’s letter or similar agreement or arrangement to which the Second Lien Collateral Agent or any Second Lien Claimholder is a party) or institute any action or proceeding with respect to such rights or remedies (including any action of foreclosure) or take any other Lien Enforcement Action;

 

(2) will not contest, protest or object to any foreclosure proceeding or action brought by the First Lien Collateral Agent or any First Lien Claimholder or any other exercise by the First Lien Collateral Agent or any First Lien Claimholder of any rights and remedies relating to the Collateral under the First Lien Loan Documents or otherwise;

 

(3) will not object to the forbearance by the First Lien Collateral Agent or the First Lien Claimholders from bringing or pursuing any foreclosure proceeding or action or any other exercise of any rights or remedies relating to the Collateral, in each case so long as the Liens granted to secure the Second Lien Obligations of the Second Lien Claimholders attach to the proceeds thereof subject to the relative priorities described in Section 2;

 

(4) will not initiate or join in or petition for or vote in favor of any resolution for or instigate or support, any Insolvency or Liquidation Proceeding; and

 

(5) will not:

 

(i) accelerate any payment of all or any of the Second Lien Obligations;

 

-11-

(ii) collect the Second Lien Obligations or any part thereof;

 

(iii) enforce any right of repayment of any Second Lien Obligations; or

 

(iv) initiate (or join in) or file or prosecute any proceeding or judicial action with respect to the Second Lien Obligations;

 

provided that, upon 5 Business Days prior written notice to the First Lien Collateral Agent after the Standstill Period, to the extent permitted by the terms of the Second Lien Loan Documents, the Second Lien Collateral Agent may accelerate the Second Lien Obligations and may, subject to the terms of clause (4) above and the other provisions of this Agreement, file and prosecute a lawsuit to collect the Second Lien Obligations.

 

As used in this Section 3.1(a)(5), the term “Standstill Period” means the period beginning on the occurrence of an Event of Default under and as defined in the Second Lien Loan Documents and ending on the date that is 540 days following the latest date after both (1) any Second Lien Collateral Agent shall have given notice (making specific reference to this Section 3.1(a)(5) and describing such Event of Default that is subject to such notice) to the First Lien Collateral Agent that any such Event of Default under the Second Lien Loan Documents shall have occurred and be continuing and of such Second Lien Collateral Agent’s intent to exercise rights and remedies and (2) the commencement of material work under all of the contracts that any of the Grantors then have entered into as of the time of the delivery of the notice in the preceding clause (1).

 

(b) Until the Discharge of First Lien Obligations has occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against the Company or any other Grantor, the First Lien Collateral Agent and the First Lien Claimholders shall have the exclusive right to manage, perform and enforce the terms of the First Lien Loan Documents in respect of the Collateral, to exercise and enforce rights, exercise remedies (including set-off and the right to credit bid their debt) and make determinations in its sole discretion regarding the release, disposition, or restrictions with respect to the Collateral, including, without limitation, the exclusive right to take or retake control or possession of the Collateral and to hold, prepare for sale, process, lease, sell, dispose of or liquidate the Collateral, all without any consultation with or the consent of the Second Lien Collateral Agent or any Second Lien Claimholder. In exercising rights and remedies with respect to the Collateral, the First Lien Collateral Agent and the First Lien Claimholders may enforce the provisions of the First Lien Loan Documents and exercise remedies thereunder, all in such order and in such manner as they may determine in the exercise of their sole discretion. Such exercise and enforcement shall include the rights of an agent appointed by them to sell or otherwise dispose of Collateral upon foreclosure, to incur expenses in connection with such sale or disposition, and to exercise all the rights and remedies of a secured creditor under the UCC and of a secured creditor under Bankruptcy Laws of any applicable jurisdiction.

 

-12-

(c) Notwithstanding the foregoing, the Second Lien Collateral Agent and any Second Lien Claimholder may:

 

(1) file a claim or statement of interest with respect to the Second Lien Obligations; provided that an Insolvency or Liquidation Proceeding has been commenced by or against the Company or any other Grantor;

 

(2) take any action (not adverse to the priority status of the Liens on the Collateral securing the First Lien Obligations, or the rights of any First Lien Collateral Agent or the First Lien Claimholders to exercise remedies in respect thereof) in order to create, perfect or maintain its Lien on the Collateral, subject to the terms of this Agreement;

 

(3) ask the Company for scheduled payments with respect to Second Lien Obligations required to be made in accordance with the terms of the Second Lien Loan Documents then due and owing but no acceleration of such obligations;

 

(4) exercise any and all of their rights and remedies in respect of conversion to common equity of any Second Lien Obligations; and

 

(5) sell, assign or otherwise transfer any and all of the Second Lien Obligations and their rights relating thereto, subject to and in compliance with the provisions of this Agreement, so long as any such subsequent holder agrees in writing to be bound by the terms of this Agreement.

 

The Second Lien Collateral Agent, on behalf of itself and the Second Lien Claimholders, agrees that it will not take or receive any Collateral or any proceeds of Collateral in connection with the exercise of any right or remedy (including set-off) with respect to any Collateral, unless and until the Discharge of First Lien Obligations has occurred. Without limiting the generality of the foregoing, unless and until the Discharge of First Lien Obligations has occurred, except as expressly provided in Section 3.1(c), the sole right of the Second Lien Collateral Agent and the Second Lien Claimholders with respect to the Collateral is to hold a Lien on the Collateral pursuant to the Second Lien Collateral Documents for the period and to the extent granted therein and to receive a share of the proceeds thereof, if any, after the Discharge of First Lien Obligations has occurred.

 

(d) (1) The Second Lien Collateral Agent, for itself and on behalf of the Second Lien Claimholders, agrees that the Second Lien Collateral Agent and the Second Lien Claimholders will not take any action that would hinder, delay, limit or prohibit any exercise of remedies under the First Lien Loan Documents or is otherwise prohibited hereunder, including any sale, lease, exchange, transfer or other disposition of the Collateral, whether by foreclosure or otherwise or that would limit, invalidate, avoid or set aside any Lien or Collateral Document or subordinate the priority of the First Lien Obligations to the Second Lien Obligations or afford the Liens securing the Second Lien Obligations equal ranking to the Liens securing the First Lien Obligations;

 

-13-

(2) the Second Lien Collateral Agent, for itself and on behalf of the Second Lien Claimholders, hereby waives any and all rights it or the Second Lien Claimholders may have as a junior lien creditor or otherwise (whether arising under the UCC or any other law) to object to the manner in which the First Lien Collateral Agent or the First Lien Claimholders seek to enforce or collect the First Lien Obligations or the Liens securing the First Lien Obligations granted in any of the First Lien Collateral, regardless of whether any action or failure to act by or on behalf of the First Lien Collateral Agent or First Lien Claimholders is adverse to the interest of the Second Lien Claimholders; and

 

(3) the Second Lien Collateral Agent hereby acknowledges and agrees that no covenant, agreement or restriction contained in the Second Lien Collateral Documents or any other Second Lien Loan Document shall be deemed to restrict in any way the rights and remedies of the First Lien Collateral Agent or the First Lien Claimholders with respect to the Collateral as set forth in this Agreement and the First Lien Credit Documents.

 

(e) Except as specifically set forth in Sections 3.1(a) and (d) and subject to Section 3.1(f), the Second Lien Collateral Agent and the Second Lien Claimholders may exercise rights and remedies as unsecured creditors against the Company or any other Grantor that has guaranteed or granted Liens to secure the Second Lien Obligations in accordance with the terms of this Agreement, the Second Lien Loan Documents and applicable law; provided that in the event that any Second Lien Claimholder becomes a judgment Lien creditor in respect of Collateral as a result of its enforcement of its rights as an unsecured creditor with respect to the Second Lien Obligations, such judgment Lien shall be subject to the terms of this Agreement for all purposes (including in relation to the First Lien Obligations and being subordinate thereto) as the other Liens securing the Second Lien Obligations subject to this Agreement.

 

(f) Except as specifically set forth in Sections 3.1(a) and (d) and Section 4.3, nothing in this Agreement shall prohibit the receipt by the Second Lien Collateral Agent or any Second Lien Claimholders of the required payments of interest, principal and other amounts owed in respect of the Second Lien Obligations so long as both such payment does not constitute proceeds of Collateral and such receipt is not the direct or indirect result of the exercise by the Second Lien Collateral Agent or any Second Lien Claimholders of rights or remedies as a secured creditor (including set-off) or enforcement in contravention of this Agreement of any Lien held by any of them. Nothing in this Agreement impairs or otherwise adversely affects any rights or remedies the First Lien Collateral Agent or the First Lien Claimholders may have with respect to the First Lien Collateral.

 

-14-

SECTION 4. Payments.

 

4.1 Application of Proceeds.

 

(a) So long as the Discharge of First Lien Obligations has not occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against the Company or any other Grantor, all Collateral or proceeds thereof received or collected in connection with the sale or other disposition of, or collection on, all such Collateral (whether made or affected by a Grantor, a Creditor or any other Person) (i) pursuant to the enforcement of any Collateral Document or the exercise of any remedial provision thereunder or under or pursuant to any applicable law, and all proceeds of Collateral that are recovered pursuant to an avoidance action or (ii) that otherwise are to be paid over to or for the account of the First Lien Collateral Agent or any other First Lien Claimholder or the Second Lien Collateral Agent or any other Second Lien Claimholder in accordance with or pursuant to any of the First Lien Credit Documents or any of the Second Lien Credit Documents, together with all other proceeds received by the First Lien Collateral Agent or the Second Lien Collateral Agent hereunder (including all funds received in respect of post-petition interest or fees and expenses) as a result of any such enforcement or the exercise of any such remedial provision or as a result of any distribution of or in respect of any Collateral (whether or not expressly characterized as such, including amounts representing proceeds turned over to any such Granter or the estate of any such Grantor by First Lien Collateral Agent or any other First Lien Claimholder or the Second Lien Collateral Agent or any other Second Lien Claimholder as a result of any avoidance action) upon or in any Insolvency or Liquidation Proceeding with respect to any Grantor, or the application of any Collateral (or proceeds thereof) to the payment of any of the First Lien Obligations or Second Lien Obligations or any distribution of Collateral (or proceeds thereof) upon the liquidation or dissolution of any Grantor, or the winding up of the assets or business of any Grantor, shall be applied first, to payment of the First Lien Obligations and the provision of cash collateral in respect of issued and outstanding Letters of Credit in accordance with the First Lien Loan Documents and in respect of Hedge Agreements in accordance with the First Lien Loan Documents, and second, to payment of the Second Lien Obligations then due and payable, and third, to payment of Excluded First Lien Obligations and, with respect to Excluded First Lien Obligations consisting of issued and outstanding Letters of Credit and Hedge Agreements, the provision of cash collateral in respect of such Letters of Credit and such Hedge Agreements in accordance with the First Lien Loan Documents.

 

(b) It is understood and agreed that the Grantors remain jointly and severally liable to the relevant creditors for any deficiency between (x) the amount of the proceeds of the Collateral received by such creditors hereunder and (y) the aggregate amount of the Obligations owing to such creditors.

 

4.2 Payments Over. So long as the Discharge of First Lien Obligations has not occurred but subject to Section 6.5 in any event, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against the Company or any other Grantor, any Collateral or proceeds thereof (or any distribution in respect of Collateral) (whether or not characterized as such) (including assets or proceeds subject to Liens referred to in the final sentence of Section 2.3) received by the Second Lien Collateral Agent or any Second Lien Claimholders, whether received from any Grantor or any other Person, in connection with the exercise of any right or remedy (including set-off) relating to the Collateral or otherwise that is inconsistent or in

 

-15-