INTERCREDITOR AGREEMENT
Exhibit
10.33
This
INTERCREDITOR AGREEMENT (“Agreement”),
is
dated as of March __, 2006, and entered into by and among MODTECH HOLDINGS,
INC.
(the “Company”),
BANK
OF AMERICA, N.A. (“Bank
of America”),
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
AMPHORA LIMITED, an exempt company organized under the laws of the Cayman
Islands (“Amphora”),
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 Bank of America, as Agent,
have entered into that Loan and Security Agreement dated as of even date
herewith, providing for a revolving credit facility (as Refinanced from time
to
time, the “First
Lien Credit Agreement”);
The
Company and the lenders party thereto entered into that Securities Purchase
Agreement dated as of December 31, 2004, providing for the issuance of
convertible senior subordinated notes (as 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 the Company
has agreed to cause certain future Subsidiaries of the Company to guaranty
the
First Lien Obligations (as Refinanced from time to time the “First
Lien Subsidiary Guaranty”);
and
(ii) the Second Lien Credit Agreement, certain current Subsidiaries of the
Company have guarantied the Second Lien Obligations and the Company has agreed
to cause certain future Subsidiaries of the Company to guaranty the Second
Lien
Obligations (as 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 Bank
Products 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;
1
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
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.
“Asset
Sale”
has
the
meaning assigned to that term in the First Lien Credit Agreement.
“Bank
Products”
means
any of the following products, services or facilities extended to the Company
or
any of its Subsidiaries by Bank of America or any of its Affiliates: (a) Cash
Management Services (as defined in the First Lien Credit Agreement); (b)
products under Hedge Agreements; (c) commercial credit card and merchant card
services; and (d) other banking products or services as may be requested by
the
Company or any of its Subsidiaries.
“Bank
Product Obligation”
of
any
Person means any obligation of such Person pursuant to any Bank Products,
including, but not limited to Hedging Obligations.
“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.
2
“Business
Day”
means
a
day other than a Saturday, Sunday or other day on which commercial banks in
New
York City or Los Angeles, California are authorized or required by law to
close.
“Collateral”
means
all of the assets and property of any Grantor, whether real, personal or mixed,
constituting either First Lien Collateral or Second Lien Collateral; provided,
however, that in no event shall Collateral include the irrevocable standby
letter of credit no. SLCLSTL01562, 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 (as renewed or extended from time to time, the “Second
Lien Letter of Credit”),
or
drawings thereunder or proceeds thereof, but shall include any collateral
pledged to the issuer thereof 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 constituting First Lien Obligations;
(b) payment
in full in cash under any Bank Product Obligations entered into with a First
Lien Claimholder (or any of their Affiliates) constituting First Lien
Obligations;
(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;
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(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 constituting First Lien
Obligations under the First Lien Loan Documents.
“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 First Lien Credit Agreement (but only the security agreement provisions
of
such loan and security agreement), the 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 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 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.
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“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, (ii) any of the other First Lien Loan Documents, and/or
(iii) agreements relating to Bank Products 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 Liquidation Proceeding in accordance with the rate specified
in
the relevant First Lien Loan 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
Loan
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 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”) shall not be included in
First Lien Obligations solely for purposes of this Agreement.
“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.
5
“Hedging
Obligation”
of
any
Person means any obligation of such Person pursuant to any Hedge
Agreements.
“Indebtedness”
means
and includes all Obligations that constitute “Debt” within the meaning of the
First Lien Credit Agreement or “Indebtedness” within the meaning of the Second
Lien Credit Agreement, as applicable.
“Insolvency
or Liquidation Proceeding”
means:
(a) any
voluntary or involuntary case or proceeding under the Bankruptcy Code with
respect to any Grantor;
(b) any
other
voluntary or involuntary insolvency, reorganization or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding with respect to any Grantor or with respect to a material
portion of their respective assets;
(c) any
liquidation, dissolution, reorganization or winding up of any Grantor whether
voluntary or involuntary and whether or not involving insolvency or bankruptcy
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 marshaling 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 or other agreement relating to Bank Products (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
or such other agreement relating to Bank Products, ceases to be a First Lien
Lender) including, without limitation, each such Affiliate that xxxxxx 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.
6
“New
Agent”
has
the
meaning assigned to that term in Section 5.5.
“Obligations”
means
all obligations of every nature of each Grantor from time to time owed to any
agent or trustee, the First Lien Claimholders, the Second Lien Claimholders
or
any of them or their respective Affiliates under the First Lien Loan Documents,
the Second Lien Loan Documents or agreements relating to Bank Products,
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 Bank Product 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 an 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).
“Recovery”
has
the
meaning set forth in Section 6.5.
“Refinance”
means,
in respect of any Indebtedness or any First Lien Loan Documents or Second Lien
Loan Documents with respect to 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
or
any First Lien Loan Documents or Second Lien Loan Documents 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.
7
“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 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, as in effect on the date hereof), the Second Lien Mortgages, and
any
other agreement, document or instrument which is intended to grant to the Second
Lien Collateral 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 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 hereof and
thereof.
“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.
8
“Second
Lien Notes”
means
the Amended and Restated Senior Subordinated Secured Convertible Notes, dated
as
of August 5, 2005, issued by the Company in favor of the Second Lien Lenders,
in
the original aggregate principal amount of $25,900,000, as amended by the
Amendment Agreement, dated as of even date herewith, between the Company and
the
Second Lien Lenders, and as otherwise 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 Loan 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.
“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;
9
(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.
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.
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2.3 No
New
Liens.
So long
as the Discharge of First Lien Obligations has not occurred, whether or not
any
Insolvency or Liquidation Proceeding has been commenced by or against the
Company or any other Grantor, the parties hereto agree that the Company shall
not, and shall not permit any other Grantor to grant or permit (and the Second
Lien Claimholders agree that they shall not receive) 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) Except
as
otherwise permitted by Section 3.1(c), 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;
11
(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;
(5) will
not:
(i) accelerate
any payment of all or any of the Second Lien Obligations;
(ii) collect
the Second Lien Obligations or any part thereof other than in common equity
of
the Company;
(iii) enforce
any right of repayment of any Second Lien Obligations other than in common
equity of the Company; 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), except for any contracts, which individually or
in the aggregate, as of such date would not entitle the Company to aggregate
payments in excess of $1,000,000.
(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
anything in this Agreement to the contrary (except as specifically provided
below), the Second Lien Collateral Agent and any Second Lien Claimholder may,
at
any time and from time to time:
(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 by or on behalf of someone other than
a
Second Lien Claimholder;
(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 and/or, subject to Section 4.3 hereof, 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 without
acceleration of the maturity of such obligations;
(4) exercise
any and all of their rights and remedies in respect of any conversion or
redemption of, or any other payment of, any Second Lien Obligations solely
into
common equity of the Company; 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.
13
(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;
(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 Loan 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 effected by a Grantor, a First Lien
Claimholder, a Second Lien Claimholder 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 Loan Documents or any of the Second Lien
Loan
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 Grantor 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 Bank Products 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 Bank Products, the provision of cash collateral in respect
of such Letters of Credit and such Bank Product 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.
15
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 contravention of this Agreement shall
be
segregated and held in trust and forthwith paid over to the First Lien
Collateral Agent for the benefit of the First Lien Claimholders in the same
form
as received, with any necessary endorsements. The First Lien Collateral Agent
is
hereby authorized to make any such endorsements as agent for the Second Lien
Collateral Agent or any such Second Lien Claimholders. This authorization is
coupled with an interest and is irrevocable until the Discharge of First Lien
Obligations.
4.3 No
Payment.
None of
the Second Lien Claimholders (including the Second Lien Collateral Agent) shall
accept or receive, call or demand, and none of the Grantors shall make,
(x) any payment in respect of the Second Lien Obligations (other than in
common equity of the Company) at a time when a “Default” or “Event of Default”
exists, or would result from any such payment, under (and as defined in) the
First Lien Loan Documents, (y) any voluntary prepayment of any portion of
the principal amount (or interest thereon) or other amounts in respect of the
Second Lien Obligations (other than in common equity of the Company) or
(z) any other payment, mandatory prepayment or redemption (other than in
common equity of the Company) of any portion of the principal amount (or
interest thereon) or other amounts in respect of the Second Lien Obligations
other than in compliance with the terms of First Lien Loan Documents and the
Second Lien Loan Documents; provided,
however,
that
(1) the Second Lien Lenders may, at any time, exercise any and all rights under
the Second Lien Loan Documents to convert or redeem any of the Second Lien
Obligations into common equity of the Company; and (2) so long as both (A)
no
“Default” or “Event of Default” exists, or would result from any such payment,
under (and as defined in) the First Lien Loan Documents, and (B) there will
exist at least $3,000,000 of “Availability” as determined on a commercially
reasonable basis, in good faith, under (and as defined in) the First Lien Loan
Documents, after taking any such payment or redemption into account, the Second
Lien Lenders may receive payment of principal in cash at the final scheduled
maturity date of the Second Lien Notes, and the Second Lien Lenders may exercise
and receive payment of principal in cash from permitted mandatory redemptions
of
the Second Lien Notes as follows:
(a) subject
to the following terms, the Second Lien Lenders shall have the right to cause
the Company to redeem up to the following principal amount(s) of the Second
Lien
Notes on each of the following redemption dates by delivering written notice
of
the exercise of such right to the Company 30 Trading Days (as defined in the
Second Lien Notes) prior to the redemption dates: (i) up to $8.33 million,
on
August 31, 2006 (“First
Redemption Date”);
(ii) up to $9.23 million, on August 31, 2007 (“Second
Redemption Date”);
and
(iii) up to $8.33 million, on September 2, 2008 (“Third
Redemption Date”
and,
together with the First Redemption Date and the Second Redemption Date,
collectively, the “Redemption
Dates”);
16
(b) if
the
Second Lien Lenders elect to redeem any of the Second Lien Notes on the
applicable Redemption Dates, the Second Lien Lenders will be required to first
use at least $5 million of cash collateral supporting the Second Lien Letter
of
Credit as repayment proceeds for the First Redemption Date and Second Redemption
Date, respectively, to consummate the redemption; provided that such Second
Lien
Letter of Credit is automatically reduced by the amount of any cash collateral
which is released;
(c) in
the
event the Company is required to redeem any portion of the Second Lien Notes
on
one of the applicable Redemption Dates, which redemption, under the terms of
the
Second Lien Loan Documents, (i) triggers the release of cash collateral for
the Second Lien Letter of Credit and (ii) thereby reduces the Second Lien
Letter of Credit by a corresponding amount of such released cash collateral,
the
Second Lien Lenders shall be permitted a right of redemption for an amount
up to
the additional $3.33 million then called for redemption on the applicable
Redemption Date, so long as (A) no greater than (1) $3.33 million of
redemption proceeds, on the First Redemption Date, and (2) $4.23 million of
redemption proceeds, on the Second Redemption Date, are derived from borrowings
under the First Lien Loan Documents, (B) the Company has met the conditions
referenced in Section 4.3(d) below, (C) with respect to the applicable
Redemption Date, the Second Lien Lenders have used at least $5 million of cash
collateral securing the Second Lien Letter of Credit towards redemption of
the
Second Lien Notes on such specific Redemption Date (with the corresponding
reduction to the Second Lien Letter of Credit), and (D) no default or event
of default then exists, or would result from such payment, under the First
Lien
Loan Documents;
(d) the
redemption conditions referenced above shall be: (i) with respect to the
First Redemption Date, the Company meeting one hundred percent (100%) of its
budgeted EBITDA (as defined in the First Lien Credit Agreement) as disclosed
to
the First Lien Collateral Agent on the date hereof for the trailing six-month
period ending on June 30, 2006, as evidenced by the delivery of financial
statements in compliance with the requirements of the First Lien Credit
Agreement together with a certificate signed by the chief financial officer
of
the Company certifying as to such evidence, and (ii) with respect to the
Second Redemption Date, the Company meeting the requirements set out in clause
(i) above and meeting at least ninety percent (90%) of its budgeted EBITDA
as
disclosed to the First Lien Collateral Agent on the date hereof for the trailing
twelve-month period ending on June 30, 2007, as evidenced by the delivery of
financial statements in compliance with the requirements of the First Lien
Credit Agreement together with a certificate signed by the chief financial
officer of the Company certifying as to such evidence.
SECTION
5. Other
Agreements.
5.1 Releases.
(a) If,
in
connection with the exercise of the First Lien Collateral Agent’s remedies in
respect of the Collateral provided for in Section 3.1, the First Lien
Collateral Agent, for itself or on behalf of any of the First Lien Claimholders,
releases any of its Liens on any part of the Collateral or releases any Grantor
from its obligations under its guaranty of the First Lien Obligations, then
the
Liens, if any, of the Second Lien Collateral Agent, for itself or for the
benefit of the Second Lien Claimholders, on such Collateral, and the obligations
of such Grantor under its guaranty of the Second Lien Obligations, shall be
automatically, unconditionally and simultaneously released. The Second Lien
Collateral Agent, for itself or on behalf of any such Second Lien Claimholders,
promptly shall execute and deliver to the First Lien Collateral Agent or such
Grantor such termination statements, releases and other documents as the First
Lien Collateral Agent or such Grantor may request to effectively confirm such
release.
17
(b) If
in
connection with any sale, lease, exchange, transfer or other disposition of
any
Collateral (collectively, a “Disposition”) permitted under the terms of the
First Lien Loan Documents or consented to by the First Lien Claimholders (other
than the exercise of the First Lien Collateral Agent’s remedies in respect of
the Collateral provided for in Section 3.1), the First Lien Collateral
Agent, for itself or on behalf of any of the First Lien Claimholders, releases
any of its Liens on any part of the Collateral, or releases any Grantor from
its
obligations under its guaranty of the First Lien Obligations, then the Liens,
if
any, of the Second Lien Collateral Agent, for itself or for the benefit of
the
Second Lien Claimholders, on such Collateral, and the obligations of such
Grantor under its guaranty of the Second Lien Obligations, shall be
automatically, unconditionally and simultaneously released. The Second Lien
Collateral Agent, for itself or on behalf of any such Second Lien Claimholders,
promptly shall execute and deliver to the First Lien Collateral Agent or such
Grantor such termination statements, releases and other documents as the First
Lien Collateral Agent or such Grantor may request to effectively confirm such
release.
(c) Until
the
Discharge of First Lien Obligations occurs, the Second Lien Collateral Agent,
for itself and on behalf of the Second Lien Claimholders, hereby irrevocably
constitutes and appoints the First Lien Collateral Agent and any officer or
agent of the First Lien Collateral Agent, with full power of substitution,
as
its true and lawful attorney-in-fact with full irrevocable power and authority
in the place and stead of the Second Lien Collateral Agent or such holder or
in
the First Lien Collateral Agent’s own name, from time to time in the First Lien
Collateral Agent’s discretion, for the purpose of carrying out the terms of this
Section 5.1, to take any and all appropriate action and to execute any and
all documents and instruments which may be necessary to accomplish the purposes
of this Section 5.1, including any endorsements or other instruments of
transfer or release.
5.2 Insurance.
Unless
and until the Discharge of First Lien Obligations has occurred, the First Lien
Collateral Agent and the First Lien Claimholders shall have the sole and
exclusive right, subject to the rights of the Grantors under the First Lien
Loan
Documents, to adjust settlement for any insurance policy covering the Collateral
in the event of any loss thereunder and to approve any award granted in any
condemnation or similar proceeding (or any deed in lieu of condemnation)
affecting the Collateral. Unless and until the Discharge of First Lien
Obligations has occurred, and subject to the rights of the Grantors under the
First Lien Collateral Documents, all proceeds of any such policy and any such
award (or any payments with respect to a deed in lieu of condemnation) if in
respect to the Collateral shall be paid to the First Lien Collateral Agent
for
the benefit of the First Lien Claimholders pursuant to the terms of the First
Lien Loan Documents (including, without limitation, for purposes of cash
collateralization of commitments, letters of credit and Bank Products) and
thereafter, to the extent no First Lien Obligations are outstanding, and subject
to the rights of the Grantors under the Second Lien Collateral Documents, to
the
Second Lien Collateral Agent for the benefit of the Second Lien Claimholders
to
the extent required under the Second Lien Collateral Documents and then, to
the
extent no Second Lien Obligations are outstanding, to the owner of the subject
property, such other Person as may be entitled thereto or as a court of
competent jurisdiction may otherwise direct. Until the Discharge of First Lien
Obligations has occurred, if the Second Lien Collateral Agent or any Second
Lien
Claimholders shall, at any time, receive any proceeds of any such insurance
policy or any such award or payment in contravention of this Agreement, it
shall
pay such proceeds over to the First Lien Collateral Agent in accordance with
the
terms of Section 4.2 of this Agreement.
18
5.3 Amendments
to First Lien Loan Documents and Second Lien Loan Documents.
(a) Subject
to the terms of this Agreement, each of the Second Lien Claimholders and the
Second Lien Collateral Agent agrees the First Lien Loan Documents and any and
all collateral therefor and guarantees thereof, may be amended, supplemented,
restated, extended, renewed, replaced or otherwise modified in accordance with
their terms and the First Lien Credit Agreement and other First Lien Loan
Documents may be Refinanced, and the First Lien Claimholders and the First
Lien
Collateral Agent may grant waivers or extensions of time or performance to
and
make compromises, including releases of collateral or guarantees, and
settlements with any of the Grantors and all other persons, in each case,
without notice to, or the consent of the Second Lien Collateral Agent or any
of
the Second Lien Claimholders, but otherwise subject to the terms of this
Agreement all without affecting the lien subordination or other provisions
of
this Agreement.
(b) Without
the prior written consent of the First Lien Collateral Agent, no Second Lien
Loan Document may be amended, supplemented, restated, extended, renewed,
replaced or otherwise modified or entered into to the extent such amendment,
supplement, restatement, extension, renewal, replacement or modification, or
the
terms of any new Second Lien Loan Document, would:
(1) increase
the principal or the interest rate or yield provisions or otherwise change
or
add fees or premiums applicable to the Second Lien Obligations (excluding
increases resulting from the accrual of interest at the default rate as provided
in the Second Lien Loan Documents on the date hereof);
(2) (x) add
any representations, warranties, covenants (financial or otherwise), default
or
Event of Default thereunder (other than additional reporting or information
requirements) or (y) change any representation, warranty, covenant, default
or Event of Default thereunder (other than to eliminate any such representation,
covenant, warranty, default or Event of Default or to increase any grace period
related thereto or otherwise to make such representation, warranty, covenant,
default or Event of Default or condition less restrictive or burdensome on
the
Grantors; it being understood that in no event shall any such change reduce
the
amount of permitted First Lien Obligations or priority liens
thereon);
19
(3) change
(to earlier dates) any dates upon which payments of principal or interest are
due thereon or change amounts due on any date or change the maturity date (other
than to extend the maturity date or reduce amounts due on any
date);
(4) change
the prepayment provisions thereof (other than to reduce any required amount
thereof or to extend time for payment thereof), or change any collateral
therefor (other than to release such collateral);
(5) increase
the obligations of the obligor thereunder or confer any additional rights on
the
lenders under the Second Lien Credit Agreement (or a representative on their
behalf) which would be adverse to any Grantor or First Lien Lenders;
or
(6) contravene
the provisions of this Agreement.
(c) The
Second Lien Credit Agreement may be Refinanced in whole but not in part (but
not
with cash proceeds from any equity issuance or capital contribution) to the
extent the terms and conditions of such Refinancing debt are not less favorable
to the Grantors and to the First Lien Lenders or the other First Lien
Obligations than the Second Lien Loan Documents (as permitted to be amended,
supplemented or otherwise modified pursuant to Section 5.3(b)), as
determined in the reasonable opinion of the First Lien Collateral Agent, acting
on behalf of the First Lien Lenders, the then outstanding aggregate principal
amount of the Second Lien Obligations is not increased, the average life to
maturity thereof is greater than or equal to that of the Second Lien Credit
Agreement and all other terms and provisions of such refinancing debt are
acceptable to the First Lien Collateral Agent and the holders of such
Refinancing debt bind themselves in writing to the terms of this
Agreement.
(d) No
Second
Lien Lender or Second Lien Collateral Agent shall sell, assign, dispose of
or
otherwise transfer all or any portion of its Second Lien Obligations or resign
as agent unless the transferee thereof shall have executed and delivered an
Acknowledgement and Consent, in a form acceptable to the First Lien Collateral
Agent, providing for the agreement of such transferee to be bound by the
provisions of this Agreement as a “Second Lien Lender” or “Second Lien
Collateral Agent” hereunder. Notwithstanding any failure of any such transferee
to execute and deliver such an Acknowledgement and Consent, this Agreement
shall
survive any sale, assignment, disposal or other transfer of all or any portion
of the Second Lien Obligations to such transferee or replacement of the Second
Lien Collateral Agent and the terms of this Agreement shall be binding upon
the
successors and assigns of the Second Lien Lenders and Second Lien Collateral
Agent, as provided herein.
(e) Each
of
the Company and the Second Lien Collateral Agent agrees that each Second Lien
Collateral Document shall include the following language (or language to similar
effect approved by the First Lien Collateral Agent):
“Notwithstanding
anything herein to the contrary, the lien and security interest granted to
the
Second Lien Collateral Agent pursuant to this Agreement and the exercise of
any
right or remedy by the Second Lien Collateral Agent hereunder are subject to
the
provisions of the Intercreditor Agreement, dated as of March __, 2006 (as
amended, restated, supplemented or otherwise modified from time to time, the
“Intercreditor Agreement”), among Modtech Holdings, Inc., Bank of America, N.A.,
as First Lien Collateral Agent and Amphora Limited, as Second Lien Collateral
Agent and certain other persons party or that may become party thereto from
time
to time. In the event of any conflict between the terms of the Intercreditor
Agreement and this Agreement, the terms of the Intercreditor Agreement shall
govern and control.”
20
In
addition, the Company agrees that each Second Lien Mortgage covering any
Collateral shall contain such other language as the First Lien Collateral Agent
may reasonably request to reflect the subordination of such Second Lien Mortgage
to the First Lien Collateral Document covering such Collateral.
(f) In
the
event any First Lien Collateral Agent or the First Lien Claimholders and the
relevant Grantor enter into any amendment, waiver or consent in respect of
any
of the First Lien Collateral Documents for the purpose of adding to, or deleting
from, or waiving or consenting to any departures from any provisions of, any
First Lien Collateral Document or changing in any manner the rights of the
First
Lien Collateral Agent, such First Lien Claimholders, the Company or any other
Grantor thereunder, then such amendment, waiver or consent shall apply
automatically to any comparable provision of the Comparable Second Lien
Collateral Document without the consent of the Second Lien Collateral Agent
or
the Second Lien Claimholders and without any action by the Second Lien
Collateral Agent, the Company or any other Grantor, provided, that no such
amendment, waiver or consent shall have the effect of: (1) removing assets
subject to the Lien of the Second Lien Collateral Documents, except to the
extent that a release of such Lien is permitted or required by Section 5.1
of this Agreement; or (2) imposing duties on the Second Lien Collateral
Agent without its consent.
5.4 Bailee
for Perfection.
(a) The
First
Lien Collateral Agent agrees to hold (subject always to the rights of the First
Lien Collateral Agent as a prior Lien holder) that part of the Collateral that
is in its possession or control (or in the possession or control of its agents
or bailees) to the extent that possession or control thereof is taken to perfect
a Lien thereon under the UCC (such Collateral being the “Pledged Collateral”) as
collateral agent for the First Lien Claimholders and as bailee for the Second
Lien Collateral Agent (such bailment being intended, among other things, to
satisfy the requirements of Section 8-301(a)(2) and 9-313(c) of the UCC)
and any assignee solely for the purpose of perfecting the security interest
granted under the First Lien Loan Documents and the Second Lien Loan Documents,
respectively, subject to the terms and conditions of this
Section 5.4.
(b) The
First
Lien Collateral Agent shall have no duties or obligation whatsoever to the
First
Lien Claimholders, the Second Lien Collateral Agent or any Second Lien
Claimholder to ensure that the Pledged Collateral is genuine or owned by any
of
the Grantors or to preserve rights or benefits of any Person except as expressly
set forth in this Section 5.4. The duties or responsibilities of the First
Lien Collateral Agent under this Section 5.4 shall be limited solely to
holding the Pledged Collateral as bailee in accordance with this
Section 5.4.
21
(c) The
First
Lien Collateral Agent acting pursuant to this Section 5.4 shall not have by
reason of the First Lien Collateral Documents, the Second Lien Collateral
Documents, this Agreement or any other document a fiduciary relationship in
respect of the First Lien Claimholders, the Second Lien Collateral Agent or
any
Second Lien Claimholder.
(d) Upon
the
Discharge of First Lien Obligations under the First Lien Loan Documents to
which
the First Lien Collateral Agent is a party, the First Lien Collateral Agent
shall deliver the remaining Pledged Collateral (if any) together with any
necessary endorsements, first, to the Second Lien Collateral Agent to the extent
Second Lien Obligations remain outstanding, and second, to the Company to the
extent no First Lien Obligations or Second Lien Obligations remain outstanding
(in each case, so as to allow such Person to obtain control of such Pledged
Collateral). The First Lien Collateral Agent further agrees to take all other
action reasonably requested by the Second Lien Collateral Agent in connection
with the Second Lien Collateral Agent obtaining a first-priority interest in
the
Collateral or as a court of competent jurisdiction may otherwise
direct.
5.5 When
Discharge of First Lien Obligations Deemed to Not Have Occurred.
If, at
any time after the Discharge of First Lien Obligations has occurred, the Company
thereafter enters into any Refinancing of any First Lien Loan Document
evidencing a First Lien Obligation which Refinancing is permitted by this
Agreement, then such Discharge of First Lien Obligations shall automatically
be
deemed not to have occurred for all purposes of this Agreement (other than
with
respect to any actions taken as a result of the occurrence of such first
Discharge of First Lien Obligations), and, from and after the date on which
the
New First Lien Debt Notice is delivered to the Second Lien Collateral Agent
in
accordance with the next sentence, the obligations under such Refinancing of
the
First Lien Loan Document shall automatically be treated as First Lien
Obligations for all purposes of this Agreement, including for purposes of the
Lien priorities and rights in respect of Collateral set forth herein, and the
First Lien Collateral Agent under such First Lien Loan Documents shall be the
First Lien Collateral Agent for all purposes of this Agreement. Upon receipt
of
a notice (the “New First Lien Debt Notice”) stating that the Company has entered
into a new First Lien Loan Document (which notice shall include the identity
of
the new First Lien Collateral Agent, such agent, the “New Agent”), the Second
Lien Collateral Agent shall promptly (a) enter into such documents and
agreements (including amendments or supplements to this Agreement) as the
Company or such New Agent shall reasonably request in order to provide to the
New Agent the rights contemplated hereby, in each case consistent in all
material respects with the terms of this Agreement and (b) deliver to the
New Agent any Pledged Collateral held by it together with any necessary
endorsements (or otherwise allow the New Agent to obtain control of such Pledged
Collateral). The New Agent shall agree to be bound by the terms of this
Agreement.
SECTION
6. Insolvency
or Liquidation Proceedings.
6.1 Finance
and Sale Issues.
Until
the Discharge of First Lien Obligations has occurred, if the Company or any
other Grantor shall be subject to any Insolvency or Liquidation Proceeding
and
the First Lien Collateral Agent shall desire to permit the use of “Cash
Collateral” (as such term is defined in Section 363(a) of the Bankruptcy
Code), on which the First Lien Collateral Agent or any other creditor has a
Lien
or to permit the Company or any other Grantor to obtain financing, whether
from
the First Lien Claimholders or any other entity under Section 363 or 364 of
the Bankruptcy Code or any similar Bankruptcy Law (“DIP Financing”), then the
Second Lien Collateral Agent, on behalf of itself and the Second Lien
Claimholders, agrees that it will raise no objection to such Cash Collateral
use
or DIP Financing and will not request adequate protection or any other relief
in
connection therewith (except, as expressly agreed by the First Lien Collateral
Agent) and, to the extent the Liens securing the First Lien Obligations are
subordinated to or pari passu with such DIP Financing, the Second Lien
Collateral Agent will subordinate its Liens in the Collateral to the Liens
securing such DIP Financing (and all Obligations relating thereto). Without
limiting the generality of any other provision of this Agreement, where the
First Lien Collateral Agent has agreed to the use of cash collateral in such
an
instance, only such cash collateral that is actually distributed to (or
permitted to be retained by) the First Lien Collateral Agent for final
application against the First Lien Obligations or the Second Lien Obligations
shall be subject to the application provisions of Section 4.1. Otherwise,
in such an instance, any cash collateral permitted to be used by the Company
or
any Grantor shall not be subject to such application provisions. Without
limiting the generality of any other provision of this Agreement, where the
First Lien Collateral Agent shall desire to permit the Company or any other
Grantor to obtain DIP Financing and such DIP Financing has been authorized
by an
unstayed order or judgment of the court with jurisdiction over such proceeding
in form and substance acceptable to the First Lien Collateral Agent,
Section 4.1 automatically shall be deemed to have been rewritten in a
manner that reflects the priority of payment to which the First Lien Collateral
Agent has agreed in approving such DIP Financing, including in the event that
the First Lien Collateral Agent has agreed that the obligations owing under
such
DIP Financing may or shall be paid from Collateral proceeds as first priority
in
the “waterfall” set forth in Section 4.1 (with each class in the current
order of application in such Section then being lowered one notch), and any
reference herein to Section 4.1 shall be to Section 4.1 as so
rewritten. Notwithstanding any other provision contained in this Agreement
to
the contrary, the provisions of the immediately preceding sentence shall apply
only where the First Lien Collateral Agent affirmatively has consented in
writing to such DIP Financing. Where the First Lien Collateral Agent has not
so
consented in writing to any such DIP Financing, including where any DIP
Financing has been approved by such court over the First Lien Collateral Agent’s
express objection, there shall be no deemed change to the provisions of
Section 4.1, and such provisions (as well as the other provisions of this
Agreement) shall continue to apply to the relative rights of the First Lien
Claimholders, on the one hand, and the Second Lien Claimholders, on the other
hand. The Second Lien Collateral Agent on behalf of the Second Lien
Claimholders, agrees that it will raise no objection or oppose a motion to
sell
or otherwise dispose of any Collateral free and clear of its Liens or other
claims under Section 363 of the Bankruptcy Code if the requisite First Lien
Claimholders have consented to such sale or disposition of such
assets.
22
6.2 Relief
from the Automatic Stay.
Until
the Discharge of First Lien Obligations has occurred, the Second Lien Collateral
Agent, on behalf of itself and the Second Lien Claimholders, agrees that none
of
them shall seek (or support any other Person seeking) relief from the automatic
stay or any other stay in any Insolvency or Liquidation Proceeding in respect
of
the Collateral, without the prior written consent of the First Lien Collateral
Agent.
6.3 Adequate
Protection.
(a) The
Second Lien Collateral Agent, on behalf of itself and each of the Second Lien
Claimholders, agrees that none of them shall object or contest (or support
any
other Person contesting):
(1) any
request by the First Lien Collateral Agent or the First Lien Claimholders for
adequate protection;
(2) any
objection by the First Lien Collateral Agent or the First Lien Claimholders
to
any motion, relief, action or proceeding based on the First Lien Collateral
Agent or the First Lien Claimholders claiming a lack of adequate protection;
or
(3) the
payment of interest, fees, expenses or other amounts to the First Lien
Claimholders under Section 506(b) or 506(c) of the Bankruptcy Code or
otherwise.
(b) Notwithstanding
the foregoing provisions in this Section 6.3, in any Insolvency or
Liquidation Proceeding in the event the Second Lien Collateral Agent, on behalf
of itself and the Second Lien Claimholders, seeks or requests adequate
protection in respect of Second Lien Obligations and such adequate protection
is
granted in the form of additional collateral (irrespective of the terms of
this
Agreement), then the Second Lien Collateral Agent, on behalf of itself or any
of
the Second Lien Claimholders, agrees that the First Lien Collateral Agent shall
also be granted a senior Lien on such additional collateral as security for
the
First Lien Obligations and for any Cash Collateral use or DIP Financing provided
by the First Lien Claimholders and that any Lien on such additional collateral
securing the Second Lien Obligations shall be subordinated to the Liens on
such
collateral securing the First Lien Obligations and any such DIP Financing
provided by the First Lien Claimholders (and all Obligations relating thereto)
and to any other Liens granted to the First Lien Claimholders as adequate
protection on the same basis as the other Liens securing the Second Lien
Obligations are so subordinated to such First Lien Obligations under this
Agreement.
6.4 No
Waiver; Voting.
Nothing
contained herein shall prohibit or in any way limit the First Lien Collateral
Agent or any First Lien Claimholder from objecting in any Insolvency or
Liquidation Proceeding or otherwise to any action taken by the Second Lien
Collateral Agent or any of the Second Lien Claimholders, including the seeking
by the Second Lien Collateral Agent or any Second Lien Claimholders of adequate
protection or the asserting by the Second Lien Collateral Agent or any Second
Lien Claimholders of any of its rights and remedies under the Second Lien Loan
Documents or otherwise. In any Insolvency or Liquidation Proceeding, neither
the
Second Lien Collateral Agent nor any other Second Lien Claimholder shall
(i) oppose, object to, or vote against any plan of reorganization or
disclosure statement to the extent the terms of such plan or disclosure
statement are consistent with the priorities and enforcement rights of the
First
Lien Claimholders under this Agreement or (ii) vote any claim in respect of
Second Lien Obligations for any plan of reorganization of any Grantor unless
(x) such plan provides for the payment in full in cash of all First Lien
Obligations on the effective date of such plan of reorganization or
(y) such plan provides for treatment of the First Lien Obligations in a
manner that would result in such First Lien Obligations having relative lien
(or, if the obligations, property or assets to be distributed in respect of
the
First Lien Obligations under such plan are unsecured, other) priority over
the
Second Lien Obligations to at least the same extent as if such obligations,
property or assets were secured by Liens, whether or not such obligations,
property or assets are, in fact, secured by any such Liens, and further requires
(or does not purport to otherwise alter the provisions of this Agreement
requiring) that all distributions on account of the Second Lien Obligations
under such plan be delivered to the First Lien Collateral Agent and distributed
as provided in Section 4.1.
23
6.5 Avoidance
Issues.
If any
First Lien Claimholder is required in any Insolvency or Liquidation Proceeding
or otherwise to turn over or otherwise pay to the estate of the Company or
any
other Grantor any amount paid in respect of First Lien Obligations (a
“Recovery”), then such First Lien Claimholders shall be entitled to a
reinstatement of First Lien Obligations with respect to all such recovered
amounts and a reinstatement of liens securing the First Lien Obligations with
the priorities set forth herein, all as if any Discharge of First Lien
Obligations had not occurred. If this Agreement shall have been terminated
prior
to such Recovery, this Agreement shall be reinstated in full force and effect
as
if no Discharge of First Lien Obligations had occurred, and such prior
termination shall not diminish, release, discharge, impair or otherwise affect
the obligations of the parties hereto, including without limitation, any
turnover provisions hereof, which may then require the payment to the First
Lien
Claimholders by the Second Lien Claimholders.
6.6 Reorganization
Securities.
If, in
any Insolvency or Liquidation Proceeding, debt obligations of the reorganized
debtor secured by Liens upon any property of the reorganized debtor are
distributed pursuant to a plan of reorganization or similar dispositive
restructuring plan, both on account of First Lien Obligations and on account
of
Second Lien Obligations, then, to the extent the debt obligations distributed
on
account of the First Lien Obligations and on account of the Second Lien
Obligations are secured by Liens upon the same property, the provisions of
this
Agreement will survive the distribution of such debt obligations pursuant to
such plan and will apply with like effect to the Liens securing such debt
obligations.
6.7 Post-Petition
Interest.
(a) Neither
the Second Lien Collateral Agent nor any Second Lien Claimholder shall oppose
or
seek to challenge any claim by the First Lien Collateral Agent or any First
Lien
Claimholder for allowance in any Insolvency or Liquidation Proceeding of First
Lien Obligations consisting of post-petition interest, fees or expenses.
Regardless of whether any such claim is allowed, and without limiting the
generality of the other provisions of this Agreement, this Agreement expressly
is intended to include and does include the “rule of explicitness” in that this
Agreement expressly entitles the First Lien Claimholders to receive payment
from
the Collateral of any post-petition interest, fees or expenses through
distributions made pursuant to the provisions of this Agreement even though
such
interest, fees, expenses are not allowed or allowable against the bankruptcy
estate of the Company or any other Grantor under Section 502(b)(2) or
Section 506(b) of the Bankruptcy Code or under any other provision of the
Bankruptcy Code or any other Bankruptcy Law.
24
(b) Neither
the First Lien Collateral Agent nor any other First Lien Claimholder shall
oppose or seek to challenge any claim by the Second Lien Collateral Agent or
any
Second Lien Claimholder for allowance in any Insolvency or Liquidation
Proceeding of Second Lien Obligations consisting of post-petition interest,
fees
or expenses to the extent of the value of the Lien of the Second Lien Collateral
Agent on behalf of the Second Lien Claimholders on the Collateral (after taking
into account the Lien on the First Lien Collateral in favor of the First Lien
Collateral Agent for the benefit of the First Lien Claimholders).
6.8 Waiver.
The
Second Lien Collateral Agent, for itself and on behalf of the Second Lien
Claimholders, waives any claim it may hereafter have against any First Lien
Claimholder arising out of the election of any First Lien Claimholder of the
application of Section 1111(b)(2) of the Bankruptcy Code, and/or out of any
cash collateral or financing arrangement or out of any grant of a security
interest in connection with the Collateral in any Insolvency or Liquidation
Proceeding.
6.9 Limitations.
So long
as the Discharge of First Lien Obligations has not occurred, without the express
written consent of the First Lien Collateral Agent, none of the Second Lien
Claimholders shall, in any Insolvency or Liquidation Proceeding involving any
Grantor, (i) make an election pursuant to Section 1111(b) of the
Bankruptcy Code, (ii) oppose or object to the determination of the extent
of any Liens held by any of the First Lien Claimholders or the value of any
claims of First Lien Claimholders under Section 506(a) of the Bankruptcy
Code or (iii) oppose or object to the payment of interest and expenses
under Sections 506(b) and (c) of the Bankruptcy Code.
6.10 Separate
Grants of Security and Separate Classification.
The
Second Lien Collateral Agent, for itself and on behalf of the Second Lien
Claimholders, and the First Lien Collateral Agent for itself and on behalf
of
the First Lien Claimholders, acknowledges and agrees that:
(a) the
grants of Liens pursuant to the First Lien Collateral Documents and the Second
Lien Collateral Documents constitute two separate and distinct grants of Liens;
and
(b) because
of, among other things, their differing rights in the Collateral, the Second
Lien Obligations are fundamentally different from the First Lien Obligations
and
must be separately classified in any plan of reorganization proposed or adopted
in an Insolvency or Liquidation Proceeding.
To
further effectuate the intent of the parties as provided in the immediately
preceding sentence, if it is held that the claims of the First Lien Claimholders
and the Second Lien Claimholders in respect of the Collateral constitute only
one secured claim (rather than separate classes of senior and junior secured
claims), then each of the parties hereto hereby acknowledges and agrees that,
subject to Sections 2.1 and 4.1, all distributions shall be made as if
there were separate classes of senior and junior secured claims against the
Grantors in respect of the Collateral (with the effect being that, to the extent
that the aggregate value of the Collateral is sufficient (for this purpose
ignoring all claims held by the Second Lien Claimholders), the First Lien
Claimholders shall be entitled to receive, in addition to amounts distributed
to
them in respect of principal, pre-petition interest and other claims, all
amounts owing in respect of post-petition interest, including any additional
interest payable pursuant to the First Lien Credit Agreement, arising from
or
related to a default, which is disallowed as a claim in any Insolvency or
Liquidation Proceeding) before any distribution is made in respect of the claims
held by the Second Lien Claimholders, with the Second Lien Collateral Agent,
for
itself and on behalf of the Second Lien Claimholders, hereby acknowledging
and
agreeing to turn over to the First Lien Collateral Agent, for itself and on
behalf of the First Lien Claimholders, amounts otherwise received or receivable
by them to the extent necessary to effectuate the intent of this sentence,
even
if such turnover has the effect of reducing the claim or recovery of the Second
Lien Claimholders).
25
SECTION
7. Reliance;
Waivers; Etc.
7.1 Reliance.
Other
than any reliance on the terms of this Agreement, the First Lien Collateral
Agent, on behalf of itself and the First Lien Claimholders under its First
Lien
Loan Documents, acknowledges that it and such First Lien Claimholders have,
independently and without reliance on the Second Lien Collateral Agent or any
Second Lien Claimholders, and based on documents and information deemed by
them
appropriate, made their own credit analysis and decision to enter into such
First Lien Loan Documents and be bound by the terms of this Agreement and they
will continue to make their own credit decision in taking or not taking any
action under the First Lien Credit Agreement or this Agreement. The Second
Lien
Collateral Agent, on behalf of itself and the Second Lien Claimholders,
acknowledges that it and the Second Lien Claimholders have, independently and
without reliance on the First Lien Collateral Agent or any First Lien
Claimholder, and based on documents and information deemed by them appropriate,
made their own credit analysis and decision to enter into each of the Second
Lien Loan Documents and be bound by the terms of this Agreement and they will
continue to make their own credit decision in taking or not taking any action
under the Second Lien Loan Documents or this Agreement.
7.2 No
Warranties or Liability.
The
First Lien Collateral Agent, on behalf of itself and the First Lien Claimholders
under the First Lien Loan Documents, acknowledges and agrees that each of the
Second Lien Collateral Agent and the Second Lien Claimholders have made no
express or implied representation or warranty, including with respect to the
execution, validity, legality, completeness, collectability or enforceability
of
any of the Second Lien Loan Documents, the ownership of any Collateral or the
perfection or priority of any Liens thereon. Except as otherwise provided
herein, the Second Lien Claimholders will be entitled to manage and supervise
their respective loans and extensions of credit under the Second Lien Loan
Documents in accordance with law and as they may otherwise, in their sole
discretion, deem appropriate. The Second Lien Collateral Agent, on behalf of
itself and the Second Lien Obligations, acknowledges and agrees that the First
Lien Collateral Agent and the First Lien Claimholders have made no express
or
implied representation or warranty, including with respect to the execution,
validity, legality, completeness, collectability or enforceability of any of
the
First Lien Loan Documents, the ownership of any Collateral or the perfection
or
priority of any Liens thereon. Except as otherwise provided herein, the First
Lien Claimholders will be entitled to manage and supervise their respective
loans and extensions of credit under their respective First Lien Loan Documents
in accordance with law and as they may otherwise, in their sole discretion,
deem
appropriate. The Second Lien Collateral Agent and the Second Lien Claimholders
shall have no duty to the First Lien Collateral Agent or any of the First Lien
Claimholders, and the First Lien Collateral Agent and the First Lien
Claimholders shall have no duty to the Second Lien Collateral Agent or any
of
the Second Lien Claimholders, to act or refrain from acting in a manner which
allows, or results in, the occurrence or continuance of an event of default
or
default under any agreements with the Company or any other Grantor (including
the First Lien Loan Documents and the Second Lien Loan Documents), regardless
of
any knowledge thereof which they may have or be charged with.
26
7.3 No
Waiver of Lien Priorities.
(a) No
right
of the First Lien Claimholders, the First Lien Collateral Agent or any of them
to enforce any provision of this Agreement or any First Lien Loan Document
shall
at any time in any way be prejudiced or impaired by any act or failure to act
on
the part of the Company or any other Grantor or by any act or failure to act
by
any First Lien Claimholder or the First Lien Collateral Agent, or by any
noncompliance by any Person with the terms, provisions and covenants of this
Agreement, any of the First Lien Loan Documents or any of the Second Lien Loan
Documents, regardless of any knowledge thereof which the First Lien Collateral
Agent or the First Lien Claimholders, or any of them, may have or be otherwise
charged with.
(b) Without
in any way limiting the generality of the foregoing paragraph (but subject
to
the rights of the Company and the other Grantors under the First Lien Loan
Documents), the First Lien Claimholders, the First Lien Collateral Agent and
any
of them may, at any time and from time to time in accordance with the First
Lien
Loan Documents and/or applicable law, without the consent of, or notice to,
the
Second Lien Collateral Agent or any Second Lien Claimholders, without incurring
any liabilities to the Second Lien Collateral Agent or any Second Lien
Claimholders and without impairing or releasing the Lien priorities and other
benefits provided in this Agreement (even if any right of subrogation,
reimbursement or contribution or other right or remedy of the Second Lien
Collateral Agent or any Second Lien Claimholders is affected, impaired or
extinguished thereby) do any one or more of the following:
(1) make
loans and advances to any Grantor or issue, guarantee or obtain letters of
credit for account of any Grantor or otherwise extend credit to any Grantor,
in
any amount and on any terms, whether pursuant to a commitment or as a
discretionary advance and whether or not any default or event of default or
failure of condition is then continuing;
(2) change
the manner, place or terms of payment or change or extend the time of payment
of, or amend, renew, exchange, increase or alter, the terms of any of the First
Lien Obligations or any Lien on any First Lien Collateral or guaranty thereof
or
any liability of the Company or any other Grantor, or any liability incurred
directly or indirectly in respect thereof (including any increase in or
extension of the First Lien Obligations, without any restriction as to the
tenor
or terms of any such increase or extension) or otherwise amend, renew, exchange,
extend, modify or supplement in any manner any Liens held by the First Lien
Collateral Agent or any of the First Lien Claimholders, the First Lien
Obligations or any of the First Lien Loan Documents;
(3) sell,
exchange, release, surrender, realize upon, enforce or otherwise deal with
in
any manner and in any order any part of the First Lien Collateral or any
liability of the Company or any other Grantor to the First Lien Claimholders
or
the First Lien Collateral Agent, or any liability incurred directly or
indirectly in respect thereof;
(4) settle
or
compromise any First Lien Obligation or any other liability of the Company
or
any other Grantor or any security therefor or any liability incurred directly
or
indirectly in respect thereof and apply any sums by whomsoever paid and however
realized to any liability (including the First Lien Obligations) in any manner
or order;
27
(5) exercise
or delay in or refrain from exercising any right or remedy against the Company
or any security or any other Grantor or any other Person, elect any remedy
and
otherwise deal freely with the Company, any other Grantor or any First Lien
Collateral and any security and any guarantor or any liability of the Company
or
any other Grantor to the First Lien Claimholders or any liability incurred
directly or indirectly in respect thereof; and
(6) release
or discharge any First Lien Obligation or any guaranty thereof or any agreement
or obligation of any Grantor or any other person or entity with respect
thereto.
(c) Except
as
otherwise provided herein, the Second Lien Collateral Agent, on behalf of itself
and the Second Lien Claimholders, also agrees that the First Lien Claimholders
and the First Lien Collateral Agent shall have no liability to the Second Lien
Collateral Agent or any Second Lien Claimholders, and the Second Lien Collateral
Agent, on behalf of itself and the Second Lien Claimholders, hereby waives
any
claim against any First Lien Claimholder or the First Lien Collateral Agent,
arising out of any and all actions which the First Lien Claimholders or the
First Lien Collateral Agent may take or permit or omit to take with respect
to:
(1) the
First
Lien Loan Documents;
(2) the
collection of the First Lien Obligations; or
(3) the
foreclosure upon, or sale, liquidation or other disposition of, any First Lien
Collateral. The Second Lien Collateral Agent, on behalf of itself and the Second
Lien Claimholders, agrees that the First Lien Claimholders and the First Lien
Collateral Agent have no duty, express or implied, fiduciary or otherwise,
to
them in respect of the maintenance or preservation of the First Lien Collateral,
the First Lien Obligations or otherwise. Neither the First Lien Collateral
Agent
nor any other First Lien Claimholder nor any of their respective directors,
officers, employees or agents will be liable for failure to demand, collect
or
realize upon any of the Collateral or for any delay in doing so, or will be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of the Company or any other Grantor or upon the request of the Second
Lien Collateral Agent, any other holder of Second Lien Obligations or any other
Person or to take any other action whatsoever with regard to the Collateral
or
any part thereof.
(d) The
Second Lien Collateral Agent, on behalf of itself and the Second Lien
Claimholders, agrees not to assert and hereby waives, to the fullest extent
permitted by law, any right to demand, request, plead or otherwise assert or
otherwise claim the benefit of, any marshalling, appraisal, valuation or other
similar right that may otherwise be available under applicable law with respect
to the Collateral or any other similar rights a junior secured creditor may
have
under applicable law.
28
(e) Each
creditor by accepting the benefits of the Collateral Documents agrees that
the
First Lien Collateral Agent shall not have any duty or obligation to realize
first upon any type of Collateral or to sell, dispose of or otherwise liquidate
all or any portion of the Collateral in any manner, including as a result of
the
application of the principles of marshaling or otherwise, that would maximize
the return to any class of creditors holding Obligations of any type (whether
First Lien Obligations or Second Lien Obligations), notwithstanding that the
order and timing of any such realization, sale, disposition or liquidation
may
affect the amount of proceeds actually received by such class of creditors
from
such realization, sale, disposition or liquidation.
7.4 Obligations
Unconditional.
All
rights, interests, agreements and obligations of the First Lien Collateral
Agent
and the First Lien Claimholders and the Second Lien Collateral Agent and the
Second Lien Claimholders, respectively, hereunder shall remain in full force
and
effect irrespective of:
(a) any
lack
of validity or enforceability of any First Lien Loan Documents or any Second
Lien Loan Documents;
(b) any
change in the time, manner or place of payment of, or in any other terms of,
all
or any of the First Lien Obligations or Second Lien Obligations, or any
amendment or waiver or other modification, including any increase in the amount
thereof, whether by course of conduct or otherwise, of the terms of any First
Lien Loan Document or any Second Lien Loan Document;
(c) any
exchange of any security interest in any Collateral or any other collateral,
or
any amendment, waiver or other modification, whether in writing or by course
of
conduct or otherwise, of all or any of the First Lien Obligations or Second
Lien
Obligations or any guaranty thereof;
(d) the
commencement of any Insolvency or Liquidation Proceeding in respect of the
Company or any other Grantor; or
(e) any
other
circumstances which otherwise might constitute a defense available to, or a
discharge of, the Company or any other Grantor in respect of the First Lien
Collateral Agent, the First Lien Obligations, or any First Lien Claimholder,
the
Second Lien Collateral Agent, the Second Lien Obligations or any Second Lien
Claimholder in respect of this Agreement.
29
SECTION
8. Miscellaneous.
8.1 Conflicts.
In the
event of any conflict between the provisions of this Agreement and the
provisions of the First Lien Loan Documents or the Second Lien Loan Documents,
the provisions of this Agreement shall govern and control.
8.2 Effectiveness;
Continuing Nature of this Agreement; Severability.
This
Agreement shall become effective when executed and delivered by the parties
hereto. This is a continuing agreement of lien subordination and the First
Lien
Claimholders may continue, at any time and without notice to the Second Lien
Collateral Agent or any Second Lien Claimholder to extend credit and other
financial accommodations and lend monies to or for the benefit of the Company
or
any Grantor constituting First Lien Obligations in reliance hereof. The Second
Lien Collateral Agent, on behalf of itself and the Second Lien Claimholders,
hereby waives any right it may have under applicable law to revoke this
Agreement or any of the provisions of this Agreement. The terms of this
Agreement shall survive, and shall continue in full force and effect, in any
Insolvency or Liquidation Proceeding. Without limiting the generality of the
foregoing, this Agreement is intended to constitute and shall be deemed to
constitute a “subordination agreement” within the meaning of Section 510(a)
of the Bankruptcy Code and is intended to be and shall be interpreted to be
enforceable to the maximum extent permitted pursuant to applicable nonbankruptcy
law. Any provision of this Agreement which is prohibited or unenforceable in
any
jurisdiction shall not invalidate the remaining provisions hereof, and any
such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. All references
to
the Company or any other Grantor shall include the Company or such Grantor
as
debtor and debtor-in-possession and any receiver or trustee for the Company
or
any other Grantor (as the case may be) in any Insolvency or Liquidation
Proceeding. This Agreement shall terminate and be of no further force and
effect:
(a) with
respect to the First Lien Collateral Agent, the First Lien Claimholders and
the
First Lien Obligations, upon the date of Discharge of First Lien Obligations
and
payment in full in cash of all Excluded First Lien Obligations, subject to
the
rights of the First Lien Claimholders under Sections 6.5 and 7;
and
(b) with
respect to the Second Lien Collateral Agent, the Second Lien Claimholders and
the Second Lien Obligations, upon the later of (1) the date upon which the
obligations under the Second Lien Credit Agreement terminate if there are no
other Second Lien Obligations outstanding on such date and (2) if there are
other Second Lien Obligations outstanding on such date, the date upon which
such
Second Lien Obligations terminate, subject to their obligations under Section
4.1.
8.3 Amendments;
Waivers.
No
amendment, modification or waiver of any of the provisions of this Agreement
by
the Second Lien Collateral Agent or the First Lien Collateral Agent shall be
deemed to be made unless the same shall be in writing signed on behalf of each
party hereto or its authorized agent and each waiver, if any, shall be a waiver
only with respect to the specific instance involved and shall in no way impair
the rights of the parties making such waiver or the obligations of the other
parties to such party in any other respect or at any other time. Notwithstanding
the foregoing, the Company shall not have any right to consent to or approve
any
amendment, modification or waiver of any provision of this Agreement except
to
the extent to cause additional obligations to the Company.
30
8.4 Information
Concerning Financial Condition of the Company and its
Subsidiaries.
The
First Lien Collateral Agent and the First Lien Claimholders, on the one hand,
and the Second Lien Claimholders and the Second Lien Collateral Agent, on the
other hand, shall each be responsible for keeping themselves informed of
(a) the financial condition of the Company and its Subsidiaries and all
endorsers and/or guarantors of the First Lien Obligations or the Second Lien
Obligations and (b) all other circumstances bearing upon the risk of
nonpayment of the First Lien Obligations or the Second Lien Obligations. The
First Lien Collateral Agent and the First Lien Claimholders shall have no duty
to advise the Second Lien Collateral Agent or any Second Lien Claimholder of
information known to it or them regarding such condition or any such
circumstances or otherwise. In the event the First Lien Collateral Agent or
any
of the First Lien Claimholders, in its or their sole discretion, undertakes
at
any time or from time to time to provide any such information to the Second
Lien
Collateral Agent or any Second Lien Claimholder, it or they shall be under
no
obligation:
(a) to
make,
and the First Lien Collateral Agent and the First Lien Claimholders shall not
make, any express or implied representation or warranty, including with respect
to the accuracy, completeness, truthfulness or validity of any such information
so provided;
(b) to
provide any additional information or to provide any such information on any
subsequent occasion;
(c) to
undertake any investigation; or
(d) to
disclose any information which, pursuant to accepted or reasonable commercial
finance practices, such party wishes to maintain confidential or is otherwise
required to maintain confidential.
8.5 Subrogation.
With
respect to the value of any payments or distributions in cash, property or
other
assets that any of the Second Lien Claimholders or the Second Lien Collateral
Agent pays over to the First Lien Collateral Agent or the First Lien
Claimholders under the terms of this Agreement, the Second Lien Claimholders
and
the Second Lien Collateral Agent shall be subrogated to the rights of the First
Lien Collateral Agent and the First Lien Claimholders; provided that, the Second
Lien Collateral Agent, on behalf of itself and the Second Lien Claimholders,
hereby waives and agrees not to assert or enforce all rights of subrogation,
reimbursement or contribution it may acquire as a result of any payment
hereunder until the Discharge of First Lien Obligations has occurred. The
Company acknowledges and agrees that the value of any payments or distributions
in cash, property or other assets received by the Second Lien Collateral Agent
or the Second Lien Claimholders that are paid over to the First Lien Collateral
Agent or the First Lien Claimholders pursuant to this Agreement shall not reduce
any of the Second Lien Obligations.
31
8.6 Application
of Payments.
All
payments received by the First Lien Collateral Agent or the First Lien
Claimholders may be applied, reversed and reapplied, in whole or in part, to
such part of the First Lien Obligations as the First Lien Claimholders, in
their
sole discretion deem appropriate. The Second Lien Collateral Agent, on behalf
of
itself and the Second Lien Claimholders, assents to any extension or
postponement of the time of payment of the First Lien Obligations or any part
thereof and to any other indulgence with respect thereto, to any substitution,
exchange or release of any security which may at any time secure any part of
the
First Lien Obligations and to the addition or release of any other Person
primarily or secondarily liable therefor.
8.7 SUBMISSION
TO JURISDICTION; WAIVERS.
(a) ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PARTY ARISING OUT OF OR RELATING HERETO
MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN LOS
ANGELES, CALIFORNIA. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH PARTY,
FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY:
(1) ACCEPTS
GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH
COURTS;
(2) WAIVES
ANY DEFENSE OF FORUM NON CONVENIENS;
(3) AGREES
THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE
MADE
BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE
PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 8.8;
AND
(4) AGREES
THAT SERVICE AS PROVIDED IN CLAUSE (3) ABOVE IS SUFFICIENT TO CONFER
PERSONAL JURISDICTION OVER THE APPLICABLE PARTY IN ANY SUCH PROCEEDING IN ANY
SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT.
(b) EACH
OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER. THE
SCOPE
OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT
MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER HEREOF,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER
COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER
IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS
ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH
WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY
HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH
ITS
LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING
THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL
WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 8.7(b) AND EXECUTED
BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY
THE
COURT.
32
(c) EACH
OF THE PARTIES HERETO WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS
AGREEMENT OR ANY OTHER FIRST LIEN LOAN DOCUMENT OR SECOND LIEN LOAN DOCUMENT,
OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR ACTION
OF ANY PARTY HERETO.
(d) EXCEPT
AS PROHIBITED BY LAW, EACH OF THE PARTIES HEREBY WAIVES ANY RIGHT WHICH IT
MAY
HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THE PRECEDING
PARAGRAPH ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.
8.8 Notices.
All
notices to the Second Lien Claimholders and the First Lien Claimholders
permitted or required under this Agreement shall also be sent to the Second
Lien
Collateral Agent and the First Lien Collateral Agent, respectively. Unless
otherwise specifically provided herein, any notice hereunder shall be in writing
and may be personally served, telexed or sent by telefacsimile or United States
mail or courier service and shall be deemed to have been given when delivered
in
person or by courier service and signed for against receipt thereof, upon
receipt of telefacsimile or telex, or three Business Days after depositing
it in
the United States mail with postage prepaid and properly addressed. For the
purposes hereof, the addresses of the parties hereto shall be as set forth
below
each party’s name on the signature pages hereto, or, as to each party, at such
other address as may be designated by such party in a written notice to all
of
the other parties.
8.9 Further
Assurances.
The
First Lien Collateral Agent, on behalf of itself and the First Lien Claimholders
under the First Lien Loan Documents, and the Second Lien Collateral Agent,
on
behalf of itself and the Second Lien Claimholders under the Second Lien Loan
Documents, and the Company, agree that each of them shall take such further
action and shall execute and deliver such additional documents and instruments
(in recordable form, if requested) as the First Lien Collateral Agent or the
Second Lien Collateral Agent may reasonably request to effectuate the terms
of
and the Lien priorities contemplated by this Agreement.
33
8.10 APPLICABLE
LAW.
THIS
AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
8.11 Binding
on Successors and Assigns.
This
Agreement shall be binding upon the Company, the Grantors, the First Lien
Collateral Agent, the First Lien Claimholders, the Second Lien Collateral Agent,
the Second Lien Claimholders and their respective successors and
assigns.
8.12 Specific
Performance.
Each of
the First Lien Collateral Agent and the Second Lien Collateral Agent may demand
specific performance of this Agreement. The First Lien Collateral Agent, on
behalf of itself and the First Lien Claimholders under the First Lien Loan
Documents, and the Second Lien Collateral Agent, on behalf of itself and the
Second Lien Claimholders, hereby irrevocably waive any defense based on the
adequacy of a remedy at law and any other defense which might be asserted to
bar
the remedy of specific performance in any action which may be brought by the
First Lien Collateral Agent or the First Lien Claimholders or the Second Lien
Collateral Agent or the Second Lien Claimholders, as the case may
be.
8.13 Headings.
Section
headings in this Agreement are included herein for convenience of reference
only
and shall not constitute a part of this Agreement for any other purpose or
be
given any substantive effect.
8.14 Counterparts.
This
Agreement may be executed in counterparts (and by different parties hereto
in
different counterparts), each of which shall constitute an original, but all
of
which when taken together shall constitute a single contract. Delivery of an
executed counterpart of a signature page of this Agreement or any document
or
instrument delivered in connection herewith by telecopy shall be effective
as
delivery of a manually executed counterpart of this Agreement or such other
document or instrument, as applicable.
8.15 Authorization.
By its
signature, each Person executing this Agreement on behalf of a party hereto
represents and warrants to the other parties hereto that it is duly authorized
to execute this Agreement.
8.16 No
Third Party Beneficiaries.
This
Agreement and the rights and benefits hereof shall inure to the benefit of
each
of the parties hereto and its respective successors and assigns and shall inure
to the benefit of each of the First Lien Claimholders and the Second Lien
Claimholders. No other Person shall have or be entitled to assert rights or
benefits hereunder.
8.17 Provisions
Solely to Define Relative Rights.
The
provisions of this Agreement are and are intended solely for the purpose of
defining the relative rights of the First Lien Claimholders on the one hand
and
the Second Lien Claimholders on the other hand. None of the Company, any other
Grantor or any other creditor thereof shall have any rights hereunder and
neither the Company nor any Grantor may rely on the terms hereof. Nothing in
this Agreement is intended to or shall impair the obligations of the Company
or
any other Grantor, which are absolute and unconditional, to pay the First Lien
Obligations and the Second Lien Obligations as and when the same shall become
due and payable in accordance with their terms.
34
8.18 Interpretation.
This
Agreement and the other documents relating to this Agreement are the result
of
negotiations among and have been reviewed by counsel to the First Lien
Collateral Agent, the First Lien Claimholders, the Second Lien Collateral Agent
and the Second Lien Claimholders, and certain of the other parties, and are
the
products of all parties. Accordingly, they shall not be construed against any
party merely because of such party’s involvement in their
preparation.
8.19 Option
to Purchase First Lien Obligations.
(a) Upon
the
delivery by the First Lien Collateral Agent to the Second Lien Collateral Agent
of written notice in accordance with this Section 8.19(a) (a “Trigger
Notice”)
of the
First Lien Collateral Agent and the First Lien Lenders (x) accelerating the
First Lien Obligations or (y) their intent to commence any foreclosure or other
action to sell or otherwise realize upon all or substantially all of the
Collateral, the Second Lien Collateral Agent or any or all of the Second Lien
Lenders, as a single group, shall have an option, exercised by delivery of
written notice by the Second Lien Collateral Agent to the First Lien Collateral
Agent (a “Purchase
Notice”)
given
by a same-day facsimile or personal delivery, to purchase all (but not less
than
all) of the First Lien Obligations (at the “Purchase Price” referred to in
Section 8.19(d) below) from the First Lien Collateral Agent and the First
Lien Lenders. The Purchase Notice shall specify which Second Lien Lenders (the
“Purchasing
Second Lien Lenders”)
will
purchase the First Lien Obligations. The Purchase Notice shall be irrevocable.
If the Second Lien Collateral Agent does not deliver such Purchase Notice within
ten (10) Business Days of the delivery of the Trigger Notice, the purchase
right
of the Second Lien Collateral Agent and the other Second Lien Lenders hereunder
with respect to such Trigger Notice shall expire and be of no force and
effect.
(b) The
First
Lien Collateral Agent shall deliver to the Second Lien Collateral Agent the
Trigger Notice referred to in Section 8.19(a) above (i) in the absence
of an Exigent Circumstance (defined below), not more than five (5) Business
Days
prior to the taking of the earliest of the actions described in
Section 8.19(a)(y), or (ii) if Exigent Circumstances exist, as soon as
practicable and in any event not more than five (5) Business Days after the
taking of action described in Section 8.19(a)(y) or (iii) in the case of
acceleration of the First Lien Obligations, as soon as practicable and in any
event not more than five (5) Business Days after such acceleration. The Second
Lien Collateral Agent may send to the First Lien Collateral Agent the Purchase
Notice referred to in Section 8.19(a) above within five (5) Business Days
of receipt of such Trigger Notice, in which event, in the absence of Exigent
Circumstances, the First Lien Collateral Agent and the other First Lien Lenders
shall not commence any foreclosure or other action to sell or otherwise realize
upon such Collateral, as the case may be, provided,
that,
the
purchase and sale with respect to the First Lien Obligations provided for in
this Section 8.19 shall have closed within ten (10) Business Days after
receipt by the First Lien Collateral Agent of the Purchase Notice and the First
Lien Collateral Agent shall have received payment in full in cash of the
Purchase Price for the First Lien Obligations as provided for herein within
such
five (5) Business Day period. As used herein, “Exigent
Circumstance”
shall
mean (i) an Insolvency or Liquidation Proceeding by or against any Grantor,
(ii) an exercise by another lender of enforcement rights or remedies with
respect to particular Collateral having an aggregate fair market value in excess
of $1,000,000, or (iii) an event or circumstance that materially and
imminently threatens the ability of the First Lien Collateral Agent to realize
upon all or a material part of the Collateral, such as, without limitation,
fraudulent removal or concealment thereof, destruction (other than to the extent
covered by insurance) or material waste thereof.
35
(c) On
the
date specified by the Second Lien Collateral Agent in the Purchase Notice (which
shall not be more than ten (10) Business Days after the receipt by the First
Lien Collateral Agent of the Purchase Notice), the First Lien Collateral Agent
and the other First Lien Lenders shall sell to the Second Lien Collateral Agent
and the other Second Lien Lenders, without recourse or warranty (except as
specified in Section 8.19(e)) of any kind, and the Second Lien Collateral
Agent and the other Second Lien Lenders shall purchase from the First Lien
Collateral Agent and the other First Lien Lenders all (but not less than all)
of
the First Lien Obligations. From and after such sale and purchase of the First
Lien Obligations, subject to the provisions of Section 8.19(d) hereof, the
Second Lien Collateral Agent and the other Second Lien Lenders shall be parties
to the First Lien Credit Agreement and the other First Lien Loan Documents,
and
shall have the rights and remedies and obligations and responsibilities of
the
First Lien Collateral Agent and other First Lien Lenders thereunder, and the
First Lien Collateral Agent and the other First Lien Lenders shall have assigned
their rights and remedies and shall have been released from their obligations
and responsibilities under the First Lien Credit Agreement and the other First
Lien Loan Documents and shall cease to be parties thereto. The First Lien
Claimholders and the Second Lien Claimholders will execute an assignment and
acceptance agreement, in a form acceptable to the First Lien Collateral Agent
to
assign the entire First Lien Obligations (as opposed to a percentage share
thereof), to assign the agency to the Second Lien Collateral Agent, to otherwise
reflect the terms of this Section 8.19, and to evidence the purchase and
sale of the First Lien Obligations.
(d) Upon
the
date of such purchase and sale, the Purchasing Second Lien Lenders shall
(i) pay to the First Lien Collateral Agent as the purchase price therefor
(the “Purchase
Price”)
the
full amount of all the First Lien Obligations then outstanding and unpaid,
(ii) without duplication of (i), furnish cash collateral to the First Lien
Collateral Agent to secure the First Lien Lenders with respect to
(a) obligations under letters of credit in an amount equal to 105% of the
aggregate undrawn face amount of any issued and outstanding letters of credit
provided by the issuing bank (or any issued and outstanding letters of credit
that the First Lien Collateral Agent has arranged to be provided by third
parties pursuant to the financing arrangements of the First Lien Lenders with
any Grantor) to the Company and, in any event, use reasonable efforts to replace
all of such letters of credit with letters of credit issued by or for the
account of the Purchasing Second Lien Lenders and (b) Bank Product
Obligations in an amount equal to 100% of any Grantor’s obligations (as
determined by the First Lien Collateral Agent), (iii) without duplication
of (i), agree to reimburse the First Lien Collateral Agent and the other First
Lien Lenders for any loss, cost, damage or expense (including attorneys’ fees
and expenses) in connection with any commissions, fees, costs or expenses
related to any issued and outstanding letters of credit and any checks or other
payments provisionally credited to the First Lien Obligations, and/or as to
which the First Lien Collateral Agent or any First Lien Claimholder has not
yet
received final payment, reasonably documented in writing,(iv) permit the
First Lien Collateral Agent and the First Lien Lenders to retain Liens on the
Collateral to secure any indemnification obligations of the Grantors that
survive the termination of the First Lien Loan Documents, (v) without
duplication of (i), agree to reimburse, within five (5) Business Days of written
demand by the First Lien Collateral Agent therefore and reasonably documented
in
writing, the First Lien Collateral Agent and the other First Lien Lenders in
respect of indemnification obligations of the Grantors under the First Lien
Loan
Documents as to matters or circumstances reasonably identified by the First
Lien
Collateral Agent in writing prior to such sale which would reasonably be
expected to result in any loss, cost, damage or expense (including reasonable
attorneys’ fees and legal expenses) to any First Lien Claimholder reasonably
documented in writing, and (vi) agree to pay to the First Lien Collateral
Agent and the other First Lien Lenders any of the other obligations in respect
of the First Lien Obligations, within three (3) Business Days after receipt
by
the Second Lien Lenders of amounts sufficient to pay all or a portion of such
other obligations. Such purchase price and cash collateral shall be remitted
by
wire transfer of immediately available federal funds to such bank account of
the
First Lien Collateral Agent as the First Lien Collateral Agent may designate
in
writing to the Second Lien Collateral Agent for such purpose. Interest shall
be
calculated to but excluding the Business Day on which such purchase and sale
shall occur if the amounts so paid by the Purchasing Second Lien Lenders to
the
bank account designated by the First Lien Collateral Agent are received in
such
bank account prior to 1:00 p.m., New York time and interest shall be calculated
to and including such Business Day if the amounts so paid by the Purchasing
Second Lien Lenders to the bank account designated by the First Lien Collateral
Agent are received in such bank account later than 1:00 p.m., New York
time.
36
(e) Such
purchase shall be expressly made without representation or warranty of any
kind
by any of the First Lien Lenders as to the First Lien Obligations or otherwise
and without recourse to any of the First Lien Lenders, except that each of
the
First Lien Lenders shall represent and warrant: (i) the amount of the First
Lien Obligations being purchased from such First Lien Lender; (ii) that
such First Lien Lender owns such First Lien Obligations free and clear of any
Liens or encumbrances; and (iii) such First Lien Lenders has the right to
assign such First Lien Obligations and the assignment is duly
authorized.
37
IN
WITNESS WHEREOF, the parties hereto have executed this Intercreditor Agreement
as of the date first written above.
First Lien Collateral Agent | ||
|
|
BANK OF AMERICA, N.A., |
as First Lien Collateral Agent, | ||
By: | ||
|
||
00 Xxxxx Xxxx | ||
Xxxxxxxx, Xxxxxxxxxx 00000 |
Second Lien Collateral Agent | ||
AMPHORA LIMITED, | ||
as Second Lien Collateral Agent | ||
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By: |
Amaranth
Advisors L.L.C., Its Trading Advisor
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By: | ||
Name: |
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Title: | ||
c/o Amaranth Advisors L.L.C. | ||
Xxx Xxxxxxxx Xxxx | ||
Xxxxxxxxx, XX 00000 | ||
Attention: General Counsel | ||
Facsimile: (000) 000-0000 | ||
Telephone: (000) 000-0000 |
MODTECH HOLDINGS, INC | |||
By: | |||
Name: |
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Title: | |||
[NOTICE ADDRESS] |