SR&Z LLP DRAFT
05/14/07
================================================================================
INTERCREDITOR AGREEMENT
dated as of
May 15, 2007,
among
DUNE ENERGY, INC.,
as the Company,
certain Subsidiaries of the Company
from time to time party hereto,
▇▇▇▇▇ FARGO FOOTHILL, INC.,
as First Priority Agent,
and
THE BANK OF NEW YORK,
as Second Priority Agent
THIS IS THE INTERCREDITOR AGREEMENT REFERRED TO IN (A) THE INDENTURE, DATED AS
OF MAY 15, 2007, AMONG DUNE ENERGY, INC., CERTAIN OF ITS SUBSIDIARIES FROM TIME
TO TIME PARTY THERETO AND THE BANK OF NEW YORK, AS TRUSTEE AND COLLATERAL AGENT,
(B) THE CREDIT AGREEMENT, DATED AS OF MAY 15, 2007, AS AMENDED, SUPPLEMENTED OR
OTHERWISE MODIFIED FROM TIME TO TIME, AMONG DUNE ENERGY, INC., CERTAIN OF ITS
SUBSIDIARIES FROM TIME TO TIME PARTY THERETO, THE LENDERS FROM TIME TO TIME
PARTY THERETO AND ▇▇▇▇▇ FARGO FOOTHILL, INC., AS AGENT, (C) THE OTHER LOAN
DOCUMENTS REFERRED TO IN SUCH CREDIT AGREEMENT, AND (D) THE OTHER COLLATERAL
AGREEMENTS REFERRED TO IN SUCH INDENTURE.
================================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms..........................................2
SECTION 1.02. Other Defined Terms............................................2
SECTION 1.03. Terms Generally................................................9
ARTICLE II
LIEN PRIORITIES
SECTION 2.01. Relative Priorities...........................................10
SECTION 2.02. Prohibition on Contesting Liens...............................11
SECTION 2.03. No New Liens..................................................11
SECTION 2.04. Similar Collateral............................................11
ARTICLE III
ENFORCEMENT OF RIGHTS; MATTERS RELATING TO COLLATERAL
SECTION 3.01. Exercise of Rights and Remedies...............................12
SECTION 3.02. No Interference...............................................15
SECTION 3.03. Rights as Unsecured Creditors.................................19
SECTION 3.04. Automatic Release of Second Priority Liens....................19
SECTION 3.05. Automatic Release of First Priority Liens.....................20
SECTION 3.06. Insurance and Condemnation Awards.............................21
SECTION 3.07. Notification of Release of Collateral.........................21
ARTICLE IV
PAYMENTS
SECTION 4.01. Application of Proceeds.......................................22
SECTION 4.02. Payment Over..................................................22
SECTION 4.03. Certain Agreements with Respect to Unenforceable Liens........23
ARTICLE V
BAILMENT FOR PERFECTION OF CERTAIN SECURITY INTERESTS
ARTICLE VI
INSOLVENCY OR LIQUIDATION PROCEEDINGS
SECTION 6.01. Finance and Sale Matters......................................25
SECTION 6.02. Relief from the Automatic Stay................................27
SECTION 6.03. Reorganization Securities.....................................27
SECTION 6.04. Post-Petition Interest........................................28
SECTION 6.05. Certain Waivers by the Second Priority Secured Parties........28
SECTION 6.06. Certain Voting Matters........................................28
ARTICLE VII
OTHER AGREEMENTS
SECTION 7.01. Matters Relating to Debt Documents............................29
SECTION 7.02. Effect of Refinancing of Indebtedness under First Priority
Debt Documents..............................................29
SECTION 7.03. No Waiver by First Priority Secured Parties...................30
SECTION 7.04. Reinstatement.................................................30
SECTION 7.05. Authorization of Collateral Agents............................30
SECTION 7.06. Further Assurances............................................30
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
SECTION 8.01. Representations and Warranties of Each Party..................31
SECTION 8.02. Representations and Warranties of Each Collateral Agent.......31
ARTICLE IX
NO RELIANCE; NO LIABILITY; OBLIGATIONS ABSOLUTE
SECTION 9.01. No Reliance; Information......................................31
SECTION 9.02. No Warranties or Liability....................................32
SECTION 9.03. Obligations Absolute..........................................32
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Notices......................................................33
SECTION 10.02. Conflicts....................................................34
SECTION 10.03. Effectiveness; Survival; Termination.........................34
SECTION 10.04. Severability.................................................35
SECTION 10.05. Amendments; Waivers..........................................35
SECTION 10.06. Postponement of Subrogation..................................35
SECTION 10.07. Applicable Law; Jurisdiction; Consent to Service of Process..35
SECTION 10.08. Waiver of Jury Trial.........................................36
SECTION 10.09. Parties in Interest..........................................36
SECTION 10.10. Specific Performance.........................................37
SECTION 10.11. Headings.....................................................37
SECTION 10.12. Counterparts.................................................37
SECTION 10.13. Provisions Solely to Define Relative Rights..................37
ii
INTERCREDITOR AGREEMENT dated as of May 15, 2007 (this "Agreement"), among
DUNE ENERGY, INC., a Delaware corporation (the "Company"), the Subsidiaries of
the Company from time to time party hereto, ▇▇▇▇▇ FARGO FOOTHILL, INC., as agent
for the First Priority Secured Parties (as defined below) (in such capacity, the
"First Priority Agent"), and THE BANK OF NEW YORK, as collateral agent for the
Second Priority Secured Parties (as defined below) (in such capacity, the
"Second Priority Agent").
PRELIMINARY STATEMENT
Reference is made to (a) the Credit Agreement, dated as of May 15, 2007
(as amended, supplemented or otherwise modified from time to time in accordance
with the terms hereof, the "First Priority Debt Agreement"), among the Company,
certain of the Company's subsidiaries, the lenders from time to time party
thereto (the "First Priority Creditors") and the First Priority Agent, (b) the
Indenture, dated as of May 15, 2007 (as amended, supplemented or otherwise
modified from time to time in accordance with the terms hereof, the "Second
Priority Debt Agreement" and, together with the First Priority Debt Agreement,
the "Debt Agreements"), among the Company, the Subsidiaries of the Company from
time to time party thereto, THE BANK OF NEW YORK, as Trustee (in such capacity,
the "Second Priority Trustee") and the Second Priority Agent, (c) the Security
Agreement, dated as of May 15, 2007 (as amended, supplemented or otherwise
modified from time to time in accordance with the terms hereof, the "First
Priority Security Agreement"), among the Company, the Subsidiaries of the
Company from time to time party thereto and the First Priority Agent, (d) the
Security Agreement, dated as of May 15, 2007 (as amended, supplemented or
otherwise modified from time to time in accordance with the terms hereof, the
"Second Priority Security Agreement"), among the Company, the Subsidiaries of
the Company from time to time party thereto and the Second Priority Agent, (e)
the other Loan Documents as defined, and referred to, in the First Priority Debt
Agreement, and (f) the other Collateral Agreements as defined, and referred to,
in the Second Priority Debt Agreement.
RECITALS
A. The First Priority Creditors have agreed to make loans and other
extensions of credit to the Company and certain of its Subsidiaries pursuant to
the First Priority Debt Agreement on the condition, among others, that the First
Priority Claims (such term and each other capitalized term used but not defined
in the preliminary statement or these recitals having the meaning given it in
Article I) shall be secured by first priority Liens on, and security interests
in, the Collateral.
B. The Second Priority Creditors have agreed to purchase and/or hold the
Notes issued by the Company from time to time pursuant to the Second Priority
Debt Agreement on the condition, among others, that the Second Priority Claims
shall be secured by second priority Liens on, and security interests in, the
Collateral.
C. The Debt Agreements require, among other things, that the parties
thereto set forth in this Agreement, among other things, their respective
rights, obligations and remedies with respect to the Collateral.
Accordingly, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. ...Certain Defined Terms. Capitalized terms used in
this Agreement and not otherwise defined herein shall, except to the extent the
context otherwise requires, have the meanings set forth in the Second Priority
Debt Agreement (as in effect on the date hereof) or the Second Priority Security
Agreement (as in effect on the date hereof), as applicable.
SECTION 1.02. ...Other Defined Terms. As used in the Agreement, the
following terms shall have the meanings specified below:
"Bankruptcy Code" shall mean Title 11 of the United States Code entitled
"Bankruptcy," as now and hereinafter in effect, or any successor statute.
"Bankruptcy Law" shall mean the Bankruptcy Code and any other Federal,
state or foreign bankruptcy, insolvency, receivership or similar law.
"Base Maximum Principal Amount" means $20,000,000, or upon delivery to the
First Priority Agent of one or more certificates, each substantially in the form
of Exhibit A attached hereto, such greater amount not exceeding $50,000,000 as
is indicated in the certificate most recently received by the First Priority
Agent; provided, that, the First Priority Agent (i) shall be under no obligation
to ascertain or to inquire as to any calculations or any other information
contained in any such certificate, and (ii) shall be entitled to rely, and shall
be fully protected in relying, upon any such certificate believed by it to be
genuine and correct and to have been signed, sent, or made by the proper Person
or Persons, in each case without any further inquiry whatsoever.
"Cash Management Obligations" means, with respect to any Person, all
obligations, whether absolute or contingent, of such Person in respect of
overdrafts, returned items and other liabilities owed to any other Person that
arises from treasury, depository, foreign exchange (including without limitation
foreign currency hedging obligations) or cash management services, including
without limitation in connection with any automated clearing house transfers of
funds, wire transfer services, controlled disbursement accounts or similar
transactions, and all obligations in connection with any commercial credit cards
or stored value cards.
"Collateral" shall mean, collectively, all "Collateral", as defined in
each of the First Priority Debt Agreement or any other First Priority Debt
Document and the Second Priority Debt Agreement or any other Second Priority
Debt Document.
2
"Collateral Agents" shall mean the First Priority Agent and the Second
Priority Agent.
"Company" shall have the meaning assigned to such term in the preliminary
statement to this Agreement.
"Debt Agreements" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"Debt Documents" shall mean the First Priority Debt Documents and the
Second Priority Debt Documents.
"DIP Financing" shall have the meaning assigned to such term in Section
6.01(a).
"DIP Financing Liens" shall have the meaning assigned to such term in
Section 6.01(a).
"Discharge of First Priority Claims" shall mean, subject to Sections 7.02
and 7.04(a), (a) payment in full in cash of the principal of and interest
(including interest accruing during the pendency of any Insolvency or
Liquidation Proceeding, regardless of whether allowed or allowable in such
Insolvency or Liquidation Proceeding) and premium, if any, on all Indebtedness
outstanding under the First Priority Debt Documents to the extent constituting
First Priority Claims, (b) payment in full in cash of all other First Priority
Claims that are due and payable (including, without limitation, the First
Priority Cash Management Obligations and the First Priority Hedging Obligations)
or otherwise accrued and owing at or prior to the time such principal and
interest are paid, (c) cancellation of or the entry into arrangements
satisfactory to the First Priority Agent and the Issuing Bank with respect to
all Letters of Credit issued and outstanding under the First Priority Debt
Agreement and (d) termination or expiration of all commitments to lend and all
obligations to issue or extend Letters of Credit under the First Priority Debt
Agreement.
"Discharge of Second Priority Claims" shall mean, subject to Section
7.04(b), (a) payment in full in cash of the principal of and interest (including
interest accruing during the pendency of any Insolvency or Liquidation
Proceeding, regardless of whether allowed or allowable in such Insolvency or
Liquidation Proceeding) and premium, if any, on all Indebtedness outstanding
under the Second Priority Debt Documents to the extent constituting Second
Priority Claims, (b) payment in full of all First Priority Claims acquired by
the Second Priority Agent and/or any of the Second Priority Secured Parties as
contemplated by Section 10.06 hereof, and (c) payment in full in cash of all
other Second Priority Claims that are due and payable or otherwise accrued and
owing at or prior to the time such principal and interest are paid.
"Disposition" shall mean any sale, lease, exchange, transfer or other
disposition. "Dispose" shall have a correlative meaning.
3
"Excess Claims" shall have the meaning set forth in the last paragraph of
the definition of the term "First Priority Claims".
"First Priority Agent" shall have the meaning assigned to such term in the
preamble to this Agreement.
"First Priority Cash Management Obligations" shall mean any Cash
Management Obligations secured by any Collateral under the same First Priority
Debt Documents that secure Obligations under the First Priority Debt Agreement.
"First Priority Claims" shall mean, subject to the immediately succeeding
paragraph, (a) (i) the due and punctual payment of (A) the principal of and
interest (including interest accruing during the pendency of any Insolvency or
Liquidation Proceeding, regardless of whether allowed or allowable in such
proceeding) on the loans and other advances outstanding under the First Priority
Debt Agreement, whether at maturity, by acceleration, upon one or more dates set
for prepayment or otherwise, (B) each payment required to be made by the Company
under the First Priority Debt Agreement in respect of any Letter of Credit,
including payments in respect of reimbursement of disbursements, interest
thereon and obligations to provide cash collateral, and (C) all other monetary
obligations of the Company to any of the First Priority Secured Parties under
the First Priority Debt Agreement and each of the other First Priority Debt
Documents, including fees (including any early termination or prepayment fees),
costs, expenses (including fees and expenses of counsel) and indemnities,
whether primary, secondary, direct, contingent, fixed or otherwise (including
monetary obligations incurred during the pendency of any Insolvency or
Liquidation Proceeding, regardless of whether allowed or allowable in such
proceeding), (ii) the due and punctual performance of all other obligations of
the Company under or pursuant to the First Priority Debt Agreement and each of
the other First Priority Debt Documents, and (iii) the due and punctual payment
and performance of all the obligations of each other Grantor under or pursuant
to the First Priority Debt Agreement and each of the other First Priority Debt
Documents; (b) the due and punctual payment and performance of all First
Priority Hedging Obligations of each Grantor, and (c) First Priority Cash
Management Obligations.
Notwithstanding the foregoing, to the extent that the sum of (1) the
principal amount of any loans or other advances under the First Priority Debt
Documents (excluding any First Priority Hedging Obligations and First Priority
Cash Management Obligations of the type described in clause (b) or (c) of the
immediately preceding paragraph which shall be deemed to constitute First
Priority Claims irrespective of this paragraph) plus (2) the aggregate face
amount of any Letters of Credit issued and undrawn or drawn but not reimbursed
under the First Priority Debt Agreement exceeds the Maximum First Priority
Indebtedness Amount, then all such amounts in excess of the Maximum First
Priority Indebtedness Amount, together with interest on such excess amounts,
shall not constitute First Priority Claims (such excess amounts being referred
to herein as "Excess Claims"). This Agreement does not constitute the consent by
the Second Priority Agent and/or any Second Priority Secured Party to the
incurrence or existence of any Excess Claim, or to the provision of collateral
security for any Excess Claim, that would constitute a "Default" or "Event of
4
Default" under the Second Priority Debt Agreement, nor does this Agreement
constitute a waiver by the Second Priority Agent and/or any Second Priority
Secured Party of any such "Default" or "Event of Default", and nothing in this
Agreement shall be interpreted to effect such a consent or waiver.
"First Priority Collateral" shall mean all "Collateral", as defined in the
First Priority Debt Agreement or any other First Priority Debt Document, and any
other assets of any Grantor now or at any time hereafter subject to Liens
securing any First Priority Claims.
"First Priority Creditors" shall have the meaning assigned to such term in
the preliminary statement of this Agreement.
"First Priority Debt Agreement" shall have the meaning assigned to such
term in the preliminary statement of this Agreement.
"First Priority Debt Documents" shall mean the "Loan Documents", as
defined in the First Priority Debt Agreement.
"First Priority Hedging Obligations" shall mean any "Obligations" (as
defined in the Second Priority Debt Agreement as in effect on the date hereof)
under each interest rate hedging, cap, collar, swap or other similar agreement
or foreign exchange contract, currency swap agreement or other similar agreement
that is entered into by any Grantor with any counterparty that is the First
Priority Agent or a First Priority Creditor or an Affiliate of the First
Priority Agent or a First Priority Creditor at the time such interest rate
hedging, cap, collar, swap or other similar agreement or foreign exchange
contract, currency swap agreement or other similar agreement is entered into.
"First Priority Liens" shall mean all Liens on the First Priority
Collateral securing the First Priority Claims, whether created under the First
Priority Security Documents or acquired by possession, statute (including any
judgment lien), operation of law, subrogation or otherwise.
"First Priority Mortgages" shall mean, collectively, each mortgage, deed
of trust, leasehold mortgage, assignment of leases and rents, modifications and
any other agreement, document or instrument pursuant to which a Lien on real
property is granted by any Grantor to secure any First Priority Claims or under
which rights or remedies with respect to any such Lien are governed.
"First Priority Secured Parties" shall mean, at any time, (a) the First
Priority Creditors, (b) the First Priority Agent, (d) the Issuing Bank, (e) each
other Person to whom any of the First Priority Claims is owed (including any
Affiliate of a First Priority Creditor to whom any First Priority Claims of the
type described in clause (b) or (c) of the definition thereof is owed) and (f)
the successors and assigns of each of the foregoing.
"First Priority Security Agreement" shall have the meaning assigned to
such term in the preliminary statement of this Agreement.
5
"First Priority Security Documents" shall mean the First Priority Debt
Agreement, the First Priority Security Agreement and any other agreement,
document or instrument pursuant to which a Lien is granted by any Grantor to
secure any First Priority Claims or under which rights or remedies with respect
to any such Lien are governed.
"Grantors" shall mean the Company and each of its Subsidiaries that shall
have created or purported to create any First Priority Lien or Second Priority
Lien on all or any part of its assets to secure any First Priority Claims or any
Second Priority Claims.
"Guarantors" shall mean, collectively, each Grantor that has guaranteed,
or that may from time to time hereafter guarantee, the First Priority Claims or
the Second Priority Claims, whether by executing and delivering the applicable
Debt Agreement, a supplement thereto or otherwise.
"Indebtedness" shall mean and includes all obligations that constitute
"Indebtedness", as defined in the First Priority Debt Agreement or the Second
Priority Debt Agreement, as applicable.
"Insolvency or Liquidation Proceeding" shall mean (a) any voluntary or
involuntary proceeding under the Bankruptcy Code or any other Bankruptcy Law
with respect to any Grantor, (b) any voluntary or involuntary appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for
any Grantor or for a substantial part of the property or assets of any Grantor,
(c) any voluntary or involuntary winding-up or liquidation of any Grantor, or
(d) a general assignment for the benefit of creditors by any Grantor.
"Inventory" means, with respect to any Grantor, all of such Grantor's now
owned or hereafter acquired right, title, and interest with respect to
inventory, including goods held for sale or lease or to be furnished under a
contract of service, goods that are leased by such Grantor as lessor, goods that
are furnished by such Grantor under a contract of service, and raw materials,
work in process, or materials used or consumed in such Grantor's business.
"Issuing Bank" shall mean the "Issuing Lender" as defined in the First
Priority Debt Agreement.
"Letter of Credit" shall mean a "L/C" as defined in the First Priority
Debt Agreement.
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third Person with respect to such
securities.
6
"Liquidation Sale" shall mean a so-called bulk sale, liquidation sale or
"going out of business sale" conducted either by any Secured Party or a Grantor
in respect to all or a substantial portion of such Grantor's Collateral
following the occurrence and during the continuance of an Event of Default
under, and as defined in, either the First Priority Debt Documents or Second
Priority Debt Documents.
"Maximum First Priority Indebtedness Amount" shall mean the sum of (i) the
then applicable Base Maximum Principal Amount less the aggregate amount (other
than by virtue of any initial or subsequent refinancing of Indebtedness under
the First Priority Debt Documents in whole or in part) applied from time to time
to permanently reduce the principal of Indebtedness under the First Priority
Debt Documents, (ii) the amount by which the U.S. dollar equivalent of the
principal amount of the loans and Letters of Credit under the First Priority
Debt Documents exceeds the amount allowed under the foregoing clause (i) as a
result of currency fluctuations, and (iii) other Indebtedness in an aggregate
principal amount not to exceed the unused portion of the Indebtedness permitted
under clause (15) of the definition of "Permitted Indebtedness" contained in the
Second Priority Debt Agreement.
For the sake of clarity, (i) the Maximum First Priority Indebtedness
Amount is intended to be applicable only to the principal amount of any loans or
advances under the First Priority Debt Documents and the aggregate amount of any
undrawn or unreimbursed Letters of Credit issued thereunder; and (ii) all
interest (including interest accruing during the pendency of any Insolvency or
Liquidation Proceeding, regardless of whether allowed or allowable in such
proceeding), (other than interest on Excess Claims), fees, costs and indemnities
(whether or not charged to the Loan Account (as defined in the First Priority
Debt Agreement) under the First Priority Debt Agreement) and First Priority
Hedging Obligations and First Priority Cash Management Obligations which are
included under the definition of First Priority Claims shall not be subject to
the Maximum First Priority Indebtedness Amount, notwithstanding that such
interest, fees, costs and indemnities and First Priority Hedging Obligations and
First Priority Cash Management Obligation constitute First Priority Claims
hereunder and not Excess Claims.
"Maximum Second Priority Indebtedness Amount" shall mean $300,000,000.
"New First Priority Agent" shall have the meaning assigned to such term in
Section 7.02.
"New First Priority Claims" shall have the meaning assigned to such term
in Section 7.02.
"New First Priority Debt Documents" shall have the meaning assigned to
such term in Section 7.02.
"Pledged or Controlled Collateral" shall have the meaning assigned to such
term in Article V.
"Refinance" shall mean, in respect of any Indebtedness, to refinance,
extend, renew, restructure (including by the amendment and restatement of any
instrument or agreement evidencing such Indebtedness) or replace or to issue
7
other Indebtedness in exchange or replacement for, such Indebtedness, in whole
or in part. "Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Notice" shall have the meaning assigned to such term in
Section 7.02.
"Release" shall have the meaning assigned to such term in Section 3.04.
"Second Priority Agent" shall have the meaning assigned to such term in
the preamble to this Agreement.
"Second Priority Claims" shall mean all "Obligations", as defined in the
Second Priority Security Agreement of the Grantors under the Second Priority
Debt Documents.
Notwithstanding the foregoing, if the aggregate principal amount of any
notes (including the Notes), debentures, loans or other advances under the
Second Priority Debt Documents exceeds the Maximum Second Priority Indebtedness
Amount, then all such principal amounts in excess of the Maximum Second Priority
Indebtedness Amount shall not constitute Second Priority Claims.
"Second Priority Collateral" shall mean all "Collateral", as defined in
any Second Priority Debt Document, and any other assets of any Grantor now or at
any time hereafter subject to Liens securing any Second Priority Claims.
"Second Priority Creditors" shall mean the "Holders", as defined in the
Second Priority Debt Agreement.
"Second Priority Debt Agreement" shall have the meaning assigned to such
term in the preliminary statement of this Agreement.
"Second Priority Debt Documents" shall mean the "Indenture Documents", as
defined in the Second Priority Debt Agreement.
"Second Priority Liens" shall mean all Liens on the Second Priority
Collateral securing the Second Priority Claims, whether created under the Second
Priority Security Documents or acquired by possession, statute (including any
judgment lien), operation of law, subrogation or otherwise.
"Second Priority Mortgages" shall mean, collectively, each mortgage, deed
of trust, leasehold mortgage, assignment of leases and rents, modifications and
any other agreement, document or instrument pursuant to which any Lien on real
property is granted by any Grantor to secure any Second Priority Claims or under
which rights or remedies with respect to any such Lien are governed.
"Second Priority Permitted Actions" shall have the meaning assigned to
such term in Section 3.01(a).
8
"Second Priority Secured Parties" shall mean, at any time, (a) the Second
Priority Creditors, (b) the Second Priority Trustee, (c) the Second Priority
Agent, (d) each other Person to whom any of the Second Priority Claims
(including indemnification obligations) is owed and (e) the successors and
assigns of each of the foregoing.
"Second Priority Security Agreement" shall have the meaning assigned to
such term in the preliminary statement of this Agreement.
"Second Priority Security Documents" shall mean the "Collateral
Agreements", as defined in the Second Priority Debt Agreement, and any other
agreement, document or instrument pursuant to which a Lien is granted by any
Grantor to secure any Second Priority Claims or under which rights or remedies
with respect to any such Lien are governed.
"Secured Parties" shall mean, as the context may require, the First
Priority Secured Parties and/or the Second Priority Secured Parties.
"Security Documents" shall mean the First Priority Security Documents and
the Second Priority Security Documents.
"Standstill Period" shall have the meaning assigned to such term in
Section 3.02(a)(i).
"Uniform Commercial Code" or "UCC" shall mean the Uniform Commercial Code
(or any similar or equivalent legislation) as in effect from time to time in any
applicable jurisdiction.
SECTION 1.03. Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation." The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context 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 or otherwise modified, (b) any reference herein (i) to
any Person shall be construed to include such Person's successors and assigns
and (ii) to the Company or any other Grantor shall be construed to 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 or Liquidation Sale, (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 Articles or Sections shall be
construed to refer to Articles or Sections of this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
9
ARTICLE II
Lien Priorities
SECTION 2.01. Relative Priorities. Notwithstanding the date, manner
or order of grant, attachment or perfection of any Second Priority Lien, any
First Priority Lien or any Lien that would constitute a First Priority Lien but
for the fact that it purportedly secures any Excess Claims, and notwithstanding
any provision of the UCC or any other applicable law or the provisions of any
Security Document or any other Debt Document or any other circumstance
whatsoever, each Collateral Agent, for itself and on behalf of the Secured
Parties on whose behalf it acts in such capacity therefor, hereby agrees that,
(a) so long as the Discharge of First Priority Claims has not
occurred, (i) any First Priority Lien on any Collateral now or hereafter
held by or for the benefit of any First Priority Secured Party shall be
senior in right, priority, operation, effect and all other respects to any
and all Second Priority Liens on any Collateral and (ii) any Second
Priority Lien on any Collateral now or hereafter held by or for the
benefit of any Second Priority Secured Party shall be junior and
subordinate in right, priority, operation, effect and all other respects
to any and all First Priority Liens on any Collateral, and the First
Priority Liens on any Collateral shall be and remain senior in right,
priority, operation, effect and all other respects to any Second Priority
Liens on any Collateral for all purposes, whether or not any First
Priority Liens on any Collateral are subordinated in any respect to any
other Lien held by any Person (other than the Second Priority Secured
Parties) securing any other obligation of the Company, any other Grantor
or any other Person; and
(b) so long as the Discharge of Second Priority Claims has not
occurred, (i) any Second Priority Lien now or hereafter held by or for the
benefit of any Second Priority Secured Party that secure Second Priority
Claims up to the Maximum Second Priority Indebtedness Amount shall be
senior in right, priority, operation, effect and all other respects to any
and all Liens that would have constituted First Priority Liens but for the
fact that they secure Excess Claims and (ii) any such Lien now or
hereafter held by or for the benefit of any Persons that would otherwise
hold First Priority Secured Claims but for the operation of the second
paragraph of the definition of the term "First Priority Claims" shall be
junior and subordinate in right, priority, operation, effect and all other
respects to any and all Second Priority Liens that secure Second Priority
Claims up to the Maximum Second Priority Indebtedness Amount, and the
Second Priority Liens shall be and remain senior in right, priority,
operation, effect and all other respects to any such Liens for all
purposes, whether or not any Second Priority Liens are subordinated in any
respect to any other Lien held by any Person (other than the First
Priority Secured Parties in respect of the First Priority Claims) securing
any other obligation of the Company, any other Grantor or any other
Person.
10
SECTION 2.02. Prohibition on Contesting Liens. Each Collateral
Agent, for itself and on behalf of the other Secured Parties on whose behalf it
acts in such capacity therefor, 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), the priority, validity or
enforceability of any Second Priority Lien, any First Priority Lien or any Lien
that would constitute a First Priority Lien but for the fact that it purportedly
secures any Excess Claims, as the case may be; provided that nothing in this
Agreement shall be construed to prevent or impair the rights of any Collateral
Agent or any other Secured Party to enforce this Agreement to the extent
provided hereby.
SECTION 2.03. No New Liens. (a) The parties hereto agree that, so
long as the Discharge of First Priority Claims has not occurred, none of the
Grantors shall, nor shall any Grantor permit any of its subsidiaries to, (i)
grant or permit any additional Liens on any asset of a Grantor to secure any
Second Priority Claim unless it has granted, or substantially concurrently
therewith grants, a Lien on such asset of such Grantor to secure the First
Priority Claims or (ii) grant or permit any additional Liens on any asset of a
Grantor to secure any First Priority Claims unless it has granted, or
substantially concurrently therewith grants, a Lien on such asset of a Grantor
to secure the Second Priority Claims, with each such Lien to be subject to the
provisions of this Agreement. To the extent that the provisions of the
immediately preceding sentence are not complied with for any reason, without
limiting any other right or remedy available to the First Priority Agent or the
other First Priority Secured Parties, the Second Priority Agent agrees, for
itself and on behalf of the other Second Priority Secured Parties, that any
amounts received by or distributed to any Second Priority Secured Party pursuant
to or as a result of any Lien granted in contravention of this Section 2.03
shall be subject to Section 4.02(a).
(b) The parties hereto agree that, so long as the Discharge of Second
Priority Claims has not occurred, none of the Grantors shall, nor shall any
Grantor permit any of its subsidiaries to, grant or permit any additional Liens
on any asset to secure any Excess Claims other than Liens that would otherwise
constitute First Priority Liens but for the fact that such Liens secured Excess
Claims. To the extent that the provisions of the immediately preceding sentence
are not complied with for any reason, without limiting any other right or remedy
available to the Second Priority Agent or the other Second Priority Secured
Parties, each Person that holds Excess Claims agrees that any amounts received
by or distributed to any such Person pursuant to or as a result of any Lien
granted in contravention of this Section 2.03(b) shall be subject to Section
4.02(b).
SECTION 2.04. Similar Collateral. The parties hereto acknowledge and
agree that it is their intention that the First Priority Collateral and the
Second Priority Collateral be identical. In furtherance of the foregoing, the
parties hereto agree to cooperate in good faith in order to determine, upon any
reasonable request by the First Priority Agent or the Second Priority Agent, the
specific assets included in the First Priority Collateral and the Second
Priority Collateral, the steps taken to perfect the First Priority Liens and the
Second Priority Liens thereon and the identity of the respective parties
obligated under the First Priority Debt Documents and the Second Priority Debt
Documents in respect of the First Priority Claims and the Second Priority
Claims, respectively.
11
ARTICLE III
Enforcement of Rights; Matters Relating to Collateral
SECTION 3.01. Exercise of Rights and Remedies. (a) So long as the
Discharge of First Priority Claims has not occurred, whether or not any
Insolvency or Liquidation Proceeding or Liquidation Sale has been commenced, the
First Priority Agent and the other First Priority Secured Parties shall have the
exclusive right to enforce rights and exercise remedies (including any right of
setoff) with respect to the Collateral (including making determinations
regarding the release, Disposition or restrictions with respect to the
Collateral), or to commence or seek to commence any action or proceeding with
respect to such rights or remedies (including any foreclosure action or
proceeding or any Insolvency or Liquidation Proceeding or Liquidation Sale), in
each case, without any consultation with or the consent of the Second Priority
Agent or any other Second Priority Secured Party; provided that, notwithstanding
the foregoing, (i) in any Insolvency or Liquidation Proceeding, the Second
Priority Agent may file a proof of claim or statement of interest with respect
to the Second Priority Claims; (ii) the Second Priority Agent may take any
action to preserve or protect the validity and enforceability of the Second
Priority Liens, provided that no such action is, or could reasonably be expected
to be, (A) adverse to the First Priority Liens or the rights of the First
Priority Agent or any other First Priority Secured Party to exercise remedies in
respect thereof or (B) otherwise inconsistent with the terms of this Agreement,
including the automatic release of Second Priority Liens provided in Section
3.04; (iii) the Second Priority Secured Parties may file any responsive or
defensive pleadings in opposition to any motion, claim, adversary proceeding or
other pleading made by any Person objecting to or otherwise seeking the
disallowance of the claims of the Second Priority Secured Parties, including any
claims secured by the Collateral or otherwise make any agreements or file any
motions pertaining to the Second Priority Claims, in each case, to the extent
not inconsistent with the terms of this Agreement; (iv) the Second Priority
Secured Parties may exercise rights and remedies as unsecured creditors, as
provided in Section 3.03(a); and (v) subject to Section 3.02(a), the Second
Priority Agent and the other Second Priority Secured Parties may enforce any of
their rights and exercise any of their remedies with respect to the Collateral
after the termination of the Standstill Period (the actions described in this
proviso being referred to herein as the "Second Priority Permitted Actions").
Except for the Second Priority Permitted Actions, unless and until the Discharge
of First Priority Claims has occurred, the sole right of the Second Priority
Agent and the other Second Priority Secured Parties with respect to the
Collateral shall be to receive the proceeds of the Collateral, if any, remaining
after the Discharge of First Priority Claims has occurred and in accordance with
the Second Priority Debt Documents and applicable law.
(b) In exercising rights and remedies with respect to the
Collateral, the First Priority Agent and the other First Priority Secured
Parties may enforce the provisions of the First Priority Debt Documents and
exercise remedies thereunder, all in such order and in such manner as they may
determine in their
12
sole discretion. Such exercise and enforcement shall include the rights of an
agent appointed by them to Dispose of Collateral upon foreclosure, to incur
expenses in connection with any such Disposition and to exercise all the rights
and remedies of a secured creditor under the Uniform Commercial Code, the
Bankruptcy Code or any other Bankruptcy Law. The First Priority Agent agrees to
provide at least ten Business Days' prior written notice to the Second Priority
Agent of its intention to foreclose upon or Dispose of any Collateral; provided,
however, that the failure to give any such notice shall not in any way limit its
ability to foreclose upon or Dispose of any Collateral.
(c) The Second Priority Agent, for itself and on behalf of the other
Second Priority Secured Parties, hereby acknowledges and agrees that no
covenant, agreement or restriction contained in any Second Priority Security
Document or any other Second Priority Debt Document shall be deemed to restrict
in any way the rights and remedies of the First Priority Agent or the other
First Priority Secured Parties with respect to the Collateral as set forth in
this Agreement and the other First Priority Debt Documents.
(d) Notwithstanding anything in this Agreement to the contrary,
following the acceleration of the Indebtedness then outstanding under the First
Priority Debt Agreement, the Second Priority Secured Parties may, at their sole
expense and effort, upon notice to the Company and the First Priority Agent
(which notice shall be irrevocable), require the First Priority Secured Parties
to transfer and assign to the Second Priority Secured Parties, without warranty
or representation or recourse, all (but not less than all) of the First Priority
Claims; provided that (x) such assignment shall not conflict with any law, rule
or regulation or order of any court or other Governmental Authority having
jurisdiction, and (y) the Second Priority Secured Parties shall have paid to the
First Priority Agent, for the account of the First Priority Secured Parties, in
immediately available funds, an amount equal to 100% of the principal of such
Indebtedness plus all accrued and unpaid interest thereon plus all accrued and
unpaid fees (other than any fees that become due as a result of the prepayment
of the loans and other advances under, or early termination of, the First
Priority Debt Agreement (such fees are referred to hereinafter as "Termination
Fees")) plus all the other First Priority Claims then outstanding (which shall
include, with respect to (i) the aggregate face amount of the Letters of Credit
outstanding under the First Priority Debt Agreement, an amount in cash equal to
105% thereof, (ii) each interest rate hedging, cap, collar, swap or other
similar agreements that evidence any First Priority Hedging Obligations, 100% of
the aggregate amount of such First Priority Claims, after giving effect to any
netting arrangements, that the applicable Grantor would be required to pay if
such interest rate hedging, cap, collar, swap or other similar agreements were
terminated at such time, and (iii) each agreement that evidence any First
Priority Cash Management Obligations, 100% of the aggregate amount of such First
Priority Claims). In order to effectuate the foregoing, the First Priority Agent
shall calculate, upon the written request of the Second Priority Agent from time
to time, the amount in cash that would be necessary so to purchase the First
Priority Claims. If the right set forth in this Section 3.01(d) is exercised,
the parties shall endeavor to close promptly thereafter but in any event within
ten Business Days of the request set forth in the first sentence of this Section
3.01(d). If the Second Priority Secured Parties exercise the right set forth in
13
this Section 3.01(d), it shall be exercised pursuant to documentation mutually
acceptable to each of the First Priority Agent and the Second Priority Agent.
Notwithstanding anything to the contrary herein, if, at any time following the
consummation of such transfer and assignment and the occurrence of the Discharge
of First Priority Claims and the Discharge of Second Priority Claims (other
than, for the avoidance of doubt, the payment of any fees that become due as a
result of the prepayment or termination of the Second Priority Claims and the
payment of Second Priority Claims in excess of the Maximum Second Priority
Indebtedness Amount), the Second Priority Secured Parties recover any
Termination Fees prior to the first anniversary of the date of such transfer and
assignment is consummated, they shall turn over such fees to First Priority
Secured Parties in the form and to the extent received.
(e) So long as the Discharge of First Priority Claims has occurred
and the Discharge of Second Priority Claims has not occurred, whether or not any
Insolvency or Liquidation Proceeding has been commenced or Liquidation Sale, the
Second Priority Agent and the other Second Priority Secured Parties shall have
the exclusive right to enforce rights and exercise remedies (including any right
of setoff) with respect to the Collateral (including making determinations
regarding the release, Disposition or restrictions with respect to the
Collateral), or to commence or seek to commence any action or proceeding with
respect to such rights or remedies (including any foreclosure action or
proceeding or any Insolvency or Liquidation Proceeding or Liquidation Sale), in
each case, without any consultation with or the consent of any Person that holds
Excess Claims; provided that, notwithstanding the foregoing, (i) in any
Insolvency or Liquidation Proceeding, any such Person may file a proof of claim
or statement of interest with respect to the Excess Claims; (ii) any such Person
may take any action to preserve or protect the validity and enforceability of
the Liens that would have constituted First Priority Liens but for the fact that
such Liens secure Excess Claims, provided that no such action is, or could
reasonably be expected to be, (A) adverse to the Second Priority Liens or the
rights of the Second Priority Agent or any other Second Priority Secured Party
to exercise remedies in respect thereof or (B) otherwise inconsistent with the
terms of this Agreement, including the automatic release of such Liens provided
in Section 3.05; (iii) any such Person may file any responsive or defensive
pleadings in opposition to any motion, claim, adversary proceeding or other
pleading made by any Person objecting to or otherwise seeking the disallowance
of the claims of such Person, including any claims secured by the Collateral or
otherwise make any agreements or file any motions pertaining to the Excess
Claims, in each case, to the extent not inconsistent with the terms of this
Agreement; (iv) any such Person may exercise rights and remedies as unsecured
creditors, as provided in Section 3.03(b) (the actions described in this proviso
being referred to herein as the "Excess Claims Permitted Actions"). Except for
the Excess Claims Permitted Actions, unless and until the Discharge of Second
Priority Claims has occurred, the sole right of any Person holding Excess Claims
with respect to the Collateral shall be to receive the proceeds of the
Collateral, if any, remaining after the occurrence of the Discharge of First
Priority Claims and the Discharge of the Second Priority Claims up to the
Maximum Second Priority Indebtedness Amount and in accordance with the
agreements, instruments and other documents evidencing or governing the Excess
Claims and applicable law.
14
(f) In exercising rights and remedies with respect to the
Collateral, the Second Priority Agent and the other Second Priority Secured
Parties may enforce the provisions of the Second Priority Debt Documents and
exercise remedies thereunder, all in such order and in such manner as they may
determine in their sole discretion, in each case, to the extent that such
enforcement or exercise is not otherwise prohibited by clauses (a) through (d)
of this Section 3.01. Such exercise and enforcement shall, in each case, to the
extent that such enforcement or exercise is not otherwise prohibited by clauses
(a) through (d) of this Section 3.01, include the rights of an agent appointed
by them to Dispose of Collateral upon foreclosure, to incur expenses in
connection with any such Disposition and to exercise all the rights and remedies
of a secured creditor under the Uniform Commercial Code, the Bankruptcy Code or
any other Bankruptcy Law. The Second Priority Agent agrees to provide at least
ten Business Days' prior written notice to the First Priority Agent of its
intention to foreclose upon or Dispose of any Collateral; provided, however,
that the failure to give any such notice shall not in any way limit its ability
to foreclose upon or Dispose of any Collateral to the extent that such
foreclosure is not otherwise prohibited by clauses (a) through (d) of this
Section 3.01.
(g) Each such Person hereby acknowledges and agrees that no
covenant, agreement or restriction contained in any agreement, instrument or
other document that evidences or governs any Excess Claims (other than the
provisions of this Agreement that inure to the benefit of the First Priority
Secured Parties) shall be deemed to restrict in any way the rights and remedies
of the Second Priority Agent or the other Second Priority Secured Parties with
respect to the Collateral as set forth in this Agreement and the other Second
Priority Debt Documents.
SECTION 3.02. ...No Interference. (a) The Second Priority Agent, for
itself and on behalf of the other Second Priority Secured Parties, agrees that,
whether or not any Insolvency or Liquidation Proceeding or Liquidation Sale has
been commenced, the Second Priority Secured Parties:
(i) except for Second Priority Permitted Actions, will not, so
long as the Discharge of First Priority Claims has not occurred, (A)
enforce or exercise, or seek to enforce or exercise, any rights or
remedies (including any right of setoff) with respect to any
Collateral (including the enforcement of any right under any account
control agreement, landlord waiver or bailee's letter or any similar
agreement or arrangement to which the Second Priority Agent or any
other Second Priority Secured Party is a party) or (B) commence or
join with any Person (other than the First Priority Agent) in
commencing, or petition for or vote in favor of any resolution for,
any action or proceeding with respect to such rights or remedies
(including any foreclosure action); provided, however, that the
Second Priority Agent may enforce or exercise any or all such rights
and remedies, or commence, join with any Person in commencing, or
petition for or vote in favor of any resolution for, any such action
or proceeding, after a period of 90 days has elapsed (which period
shall be tolled during any period in which the First Priority Agent
shall not be entitled to enforce or exercise any rights or remedies
with respect to any Collateral as a result of (x) any injunction
15
issued by a court of competent jurisdiction or (y) the automatic
stay or any other stay in any Insolvency or Liquidation Proceeding)
since the date on which the Second Priority Agent has delivered to
the First Priority Agent written notice of the acceleration of the
Indebtedness then outstanding under the Second Priority Debt
Agreement (the "Standstill Period"); provided further, however, that
(1) notwithstanding the expiration of the Standstill Period or
anything herein to the contrary, in no event shall the Second
Priority Agent or any other Second Priority Secured Party enforce or
exercise any rights or remedies with respect to any Collateral, or
commence, join with any Person at any time in commencing, or
petition for or vote in favor of any resolution for, any such action
or proceeding, if the First Priority Agent or any other First
Priority Secured Party shall have commenced, and shall be diligently
pursuing (or shall have sought or requested relief from or
modification of the automatic stay or any other stay in any
Insolvency or Liquidation Proceeding to enable the commencement and
pursuit thereof), the enforcement or exercise of any rights or
remedies with respect to any Collateral or any such action or
proceeding (prompt written notice thereof to be given to the Second
Priority Agent by the First Priority Agent) and (2) after the
expiration of the Standstill Period, so long as neither the First
Priority Agent nor the First Priority Secured Parties have commenced
any action to enforce their Lien on any material portion of the
Collateral, in the event that and for so long as the Second Priority
Secured Parties (or the Second Priority Agent on their behalf) have
commenced any actions to enforce their Lien with respect to any
Collateral to the extent permitted hereunder and are diligently
pursuing such actions, neither the First Priority Secured Parties
nor the First Priority Agent shall take any action of a similar
nature with respect to such Collateral; provided that all other
provisions of this Intercreditor Agreement (including the turnover
provisions of Article IV) are complied with;
(ii) will not contest, protest or object to any foreclosure
action or proceeding brought by the First Priority Agent or any
other First Priority Secured Party, or any other enforcement or
exercise by any First Priority Secured Party of any rights or
remedies relating to the Collateral under the First Priority Debt
Documents or an Insolvency or Liquidation Proceeding or in
connection with a Liquidation Sale or otherwise, so long as Second
Priority Liens attach to the proceeds thereof subject to the
relative priorities set forth in Section 2.01(a);
(iii) subject to the rights of the Second Priority Secured
Parties under clause (i) above, will not object to the forbearance
by the First Priority Agent or any other First Priority Secured
Party from commencing or pursuing any foreclosure action or
proceeding or any other enforcement or exercise of any rights or
remedies with respect to the Collateral;
(iv) will not, so long as the Discharge of First Priority
Claims has not occurred and except for Second Priority Permitted
Actions, take or receive any Collateral, or any proceeds thereof or
payment with respect thereto, in connection with the exercise of any
16
right or enforcement of any remedy (including any right of setoff)
with respect to any Collateral or in connection with any insurance
policy award under a policy of insurance relating to any Collateral
or any condemnation award (or deed in lieu of condemnation) relating
to any Collateral;
(v) will not, except for Second Priority Permitted Actions,
take any action that would, or could reasonably be expected to,
hinder, in any manner, any exercise of remedies under the First
Priority Debt Documents, including any Disposition of any
Collateral, whether by foreclosure or otherwise;
(vi) will not, except for Second Priority Permitted Actions,
object to the manner in which the First Priority Agent or any other
First Priority Secured Party may seek to enforce or collect the
First Priority Claims or the First Priority Liens, regardless of
whether any action or failure to act by or on behalf of the First
Priority Agent or any other First Priority Secured Party is, or
could be, adverse to the interests of the Second Priority Secured
Parties, and will not assert, and hereby waive, to the fullest
extent permitted by law, any right to demand, request, plead or
otherwise assert or claim the benefit of any marshalling, appraisal,
valuation or other similar right that may be available under
applicable law with respect to the Collateral or any similar rights
a junior secured creditor may have under applicable law; and
(vii) will not attempt, directly or indirectly, whether by
judicial proceeding or otherwise, to challenge or question the
validity or enforceability of any First Priority Claim or any First
Priority Security Document, including this Agreement, or the
validity or enforceability of the priorities, rights or obligations
established by this Agreement.
(b) Each Person that holds Excess Claims agrees that, whether or not
any Insolvency or Liquidation Proceeding or Liquidation Sale has been commenced,
such Person:
(i) except for Excess Claims Permitted Actions, will not, so
long as the Discharge of Second Priority Claims has not occurred,
(A) enforce or exercise, or seek to enforce or exercise, any rights
or remedies (including any right of setoff) with respect to any
Collateral (including the enforcement of any right under any account
control agreement, landlord waiver or bailee's letter or any similar
agreement or arrangement to which such Person is a party) or (B)
commence or join with any Person (other than the Second Priority
Agent) in commencing, or petition for or vote in favor of any
resolution for, any action or proceeding with respect to such rights
or remedies (including any foreclosure action);
(ii) will not contest, protest or object to any foreclosure
action or proceeding brought by the Second Priority Agent or any
other Second Priority Secured Party, or any other enforcement or
exercise by any Second Priority Secured Party of any rights or
17
remedies relating to the Collateral under the Second Priority Debt
Documents or an Insolvency or Liquidation Proceeding or in
connection with a Liquidation Sale or otherwise, so long as Liens
securing the Excess Claims attach to the proceeds thereof subject to
the relative priorities set forth in Section 2.01(b);
(iii) subject to the rights of all such Persons under clause
(i) above, will not object to the forbearance by the Second Priority
Agent or any other Second Priority Secured Party from commencing or
pursuing any foreclosure action or proceeding or any other
enforcement or exercise of any rights or remedies with respect to
the Collateral;
(iv) will not, so long as the Discharge of Second Priority
Claims has not occurred and except for Excess Claims Permitted
Actions, take or receive any Collateral, or any proceeds thereof or
payment with respect thereto, in connection with the exercise of any
right or enforcement of any remedy (including any right of setoff)
with respect to any Collateral or in connection with any insurance
policy award under a policy of insurance relating to any Collateral
or any condemnation award (or deed in lieu of condemnation) relating
to any Collateral;
(v) will not, except for Excess Claims Permitted Actions, take
any action that would, or could reasonably be expected to, hinder,
in any manner, any exercise of remedies under the Second Priority
Debt Documents, including any Disposition of any Collateral, whether
by foreclosure or otherwise;
(vi) will not, except for Excess Claims Permitted Actions,
object to the manner in which the Second Priority Agent or any other
Second Priority Secured Party may seek to enforce or collect the
Second Priority Claims or the Second Priority Liens, regardless of
whether any action or failure to act by or on behalf of the Second
Priority Agent or any other Second Priority Secured Party is, or
could be, adverse to the interests of all such Persons, and will not
assert, and hereby waive, to the fullest extent permitted by law,
any right to demand, request, plead or otherwise assert or claim the
benefit of any marshalling, appraisal, valuation or other similar
right that may be available under applicable law with respect to the
Collateral or any similar rights a junior secured creditor may have
under applicable law; and
(vii) will not attempt, directly or indirectly, whether by
judicial proceeding or otherwise, to challenge or question the validity or
enforceability of any Second Priority Claim or any Second Priority Security
Document, including this Agreement, or the validity or enforceability of the
priorities, rights or obligations established by this Agreement.
For the sake of clarity, the foregoing provisions of this Section 3.02(b)
shall only apply to the exercise of rights and remedies by the holders of Excess
Claims in such capacity and shall not be applicable to the First Priority
Secured Parties in respect of their exercise of rights and remedies with respect
to their First Priority Claims.
18
SECTION 3.03. Rights as Unsecured Creditors. (a) The Second Priority
Agent and the other Second Priority Secured Parties may, in accordance with the
terms of the Second Priority Debt Documents and applicable law, enforce rights
and exercise remedies against any Grantor as unsecured creditors; provided that
no such action is otherwise inconsistent with the terms of this Agreement.
Without limiting the generality of the foregoing sentence, the Second Priority
Secured Parties shall be entitled to prosecute litigation against any Grantor or
any other Person liable in respect of the Second Priority Claims,
notwithstanding whether any Standstill Period is then in effect, but shall be
prohibited from taking any action to enforce any judgment until the lapse of any
applicable Standstill Period. Nothing in this Agreement shall prohibit the
receipt by the Second Priority Agent or any other Second Priority Secured Party
of the required payments of principal, premium, interest, fees and other amounts
due under the Second Priority Debt Documents so long as such receipt is not the
direct or indirect result of the enforcement or exercise by the Second Priority
Agent or any other Second Priority Secured Party of rights or remedies in
contravention of this Agreement as a secured creditor (including any right of
setoff) against Collateral or enforcement in contravention of this Agreement of
any Second Priority Lien against Collateral (including any judgment lien
resulting from the exercise of remedies available to an unsecured creditor).
(b) Each Person that holds Excess Claims may, in accordance with the terms
of the agreements, instruments and other documents evidencing or governing the
Excess Claims and applicable law, enforce rights and exercise remedies against
any Grantor as unsecured creditors; provided that no such action is otherwise
inconsistent with the terms of this Agreement. Nothing in this Agreement shall
prohibit the receipt by any such Person of the required payments of principal,
premium, interest, fees and other amounts due under such agreements, instruments
and other documents so long as such receipt is not the direct or indirect result
of the enforcement or exercise by any such Person of rights or remedies in
contravention of this Agreement as a secured creditor (including any right of
setoff) against Collateral or enforcement in contravention of this Agreement of
any Lien against Collateral that would constitute a First Priority Lien but for
the fact that it purportedly secures any Excess Claims (including any judgment
lien resulting from the exercise of remedies available to an unsecured
creditor).
SECTION 3.04. Automatic Release of Second Priority Liens. (a) If, in
connection with (i) any Disposition of any Collateral permitted under the terms
of the First Priority Debt Documents or (ii) the enforcement or exercise of any
rights or remedies with respect to the Collateral, including any Disposition of
Collateral, the First Priority Agent, for itself and on behalf of the other
First Priority Secured Parties, (x) releases any of the First Priority Liens, or
(y) releases any Guarantor from its obligations under its guarantee of the First
Priority Claims (in each case, a "Release"), other than any such Release granted
following (and not as a condition to) the Discharge of First Priority Claims,
then the Second Priority Liens on such Collateral, and the obligations of such
Guarantor under its guarantee of the Second Priority Claims, shall be
automatically, unconditionally and simultaneously released, and the Second
Priority Agent shall, for itself and on behalf of the other Second Priority
19
Secured Parties, promptly execute and deliver to the First Priority Agent, the
relevant Grantor or such Guarantor such termination statements, releases and
other documents as the First Priority Agent or the relevant Grantor or Guarantor
may reasonably request to effectively confirm such Release; provided that, in
the case of a Disposition of Collateral (other than any such Disposition in
connection with the enforcement or exercise of any rights or remedies with
respect to the Collateral) or a Release of a Guarantor from its Note Guarantee
(as defined in the Second Priority Debt Agreement as in effect on the date
hereof) (other than any such Release in connection with the enforcement or
exercise of any rights or remedies with respect to all of the Capital Stock of
such Guarantor or all or substantially all of its assets), the Second Priority
Liens or the applicable Note Guarantee(s) shall not be so released if such
Disposition or such Release is not permitted under the terms of the Second
Priority Debt Agreement .
(b) Until the Discharge of First Priority Claims occurs, the Second
Priority Agent, for itself and on behalf of each other Second Priority Secured
Party, hereby appoints the First Priority Agent, and any officer or agent of the
First Priority Agent, with full power of substitution, as the attorney-in-fact
of each Second Priority Secured Party for the purpose of carrying out the
provisions of this Section 3.04 and taking any action and executing any
instrument that the First Priority Agent may deem necessary or advisable to
accomplish the purposes of this Section 3.04 (including any endorsements or
other instruments of transfer or release), which appointment is irrevocable and
coupled with an interest.
SECTION 3.05. Automatic Release of First Priority Liens. If, in
connection with the enforcement or exercise of any rights or remedies with
respect to the Collateral after the expiration of the Standstill Period that is
permitted in accordance with clause (2) of the second proviso to Section
3.02(a)(i), including any Disposition of Collateral, the Second Priority Agent,
for itself and on behalf of the other Second Priority Secured Parties, (x)
releases any of the Second Priority Liens, or (y) releases any Guarantor from
its obligations under its guarantee of the Second Priority Claims (in each case,
a "Second Priority Release"), then the First Priority Liens on such Collateral,
and the obligations of such Guarantor under its guarantee of the First Priority
Claims, shall be automatically, unconditionally and simultaneously released, and
the First Priority Agent shall, for itself and on behalf of the other First
Priority Secured Parties, promptly execute and deliver to the Second Priority
Agent, the relevant Grantor or such Guarantor such termination statements,
releases and other documents as the Second Priority Agent or the relevant
Grantor or Guarantor may reasonably request to effectively confirm such release;
provided that so long as the Discharge of First Priority Claims has not
occurred, the proceeds of, or payments with respect to, any Second Priority
Release that are received by the Second Priority Agent or any other Second
Priority Secured Party, shall be segregated and held in trust and forthwith
transferred or paid over to the First Priority Agent for the benefit of the
First Priority Secured Parties in accordance with Section 4.02(a); provided
further, however, that the First Priority Lender shall not be obligated to
release the First Priority Liens on any Collateral in connection with any sale
or other Disposition of Collateral to a Second Priority Secured Party or an
affiliate thereof or any other transaction other than a sale of such Collateral
to a third Person with respect to which at least 75% of the consideration
therefor consists of cash and cash equivalents.
20
SECTION 3.06. Insurance and Condemnation Awards. So long as the
Discharge of First Priority Claims has not occurred, the First Priority Agent
and the other First Priority Secured Parties shall have the exclusive right,
subject to the rights of the Grantors under the First Priority Debt Documents,
to settle and adjust claims in respect of Collateral under policies of insurance
covering Collateral and to approve any award granted in any condemnation or
similar proceeding, or any deed in lieu of condemnation, in respect of the
Collateral. All proceeds of any such policy and any such award, or any payments
with respect to a deed in lieu of condemnation, shall (a) first, prior to the
Discharge of First Priority Claims and subject to the rights of the Grantors
under the First Priority Debt Documents, be paid to the First Priority Agent for
the benefit of First Priority Secured Parties pursuant to the terms of the First
Priority Debt Documents, (b) second, after the Discharge of First Priority
Claims and subject to the rights of the Grantors under the Second Priority Debt
Documents, be paid to the Second Priority Agent for the benefit of the Second
Priority Secured Parties pursuant to the terms of the Second Priority Debt
Documents, (c) third, after the Discharge of Second Priority Claims and subject
to the rights of the Grantors under the agreements, instruments and other
documents evidencing or governing the Excess Claims, be paid to the Persons that
hold Excess Claims pursuant to the terms of such agreements, instruments and
other documents, and (d) fourth, if no Excess Claims are outstanding, be paid to
the owner of the subject property or as a court of competent jurisdiction may
otherwise direct. Until the Discharge of First Priority Claims has occurred, if
the Second Priority Agent or any other Second Priority Secured Party shall, at
any time, receive any proceeds of any such insurance policy or any such award or
payment, it shall transfer and pay over such proceeds to the First Priority
Agent in accordance with Section 4.02(a). Following the occurrence of the
Discharge of First Priority Claims and prior to the Discharge of Second Priority
Claims, if any Person that holds Excess Claims, at any time, receives any
proceeds of any such insurance policy or any such award or payment, it shall
transfer and pay over such proceeds to the Second Priority Agent in accordance
with Section 4.02(b).
SECTION 3.07. Notification of Release of Collateral. Each of the
First Priority Agent and the Second Priority Agent shall give the other prompt
written notice of the Disposition by it of, and Release by it of the Lien on,
any Collateral. Such notice shall describe in reasonable detail the subject
Collateral, the parties involved in such Disposition or Release, the place, time
manner and method thereof, and the consideration, if any, received therefor;
provided, however, that the failure to give any such notice shall not in and of
itself in any way impair the effectiveness of any such Disposition or Release.
SECTION 3.08. Automatic Release of Liens with respect to Excess
Claims. If, after the Discharge of First Priority Claims has occurred, there is
a Second Priority Release, then the Liens securing the Excess Claims on such
Collateral, and the obligations of such Guarantor under its guarantee of the
Excess Claims, shall be automatically, unconditionally and simultaneously
released, and the First Priority Agent shall, for itself and on behalf of the
other First Priority Secured Parties, promptly execute and deliver to the Second
21
Priority Agent, the relevant Grantor or such Guarantor such termination
statements, releases and other documents as the Second Priority Agent or the
relevant Grantor or Guarantor may reasonably request to effectively confirm such
release.
ARTICLE IV
Payments
SECTION 4.01. Application of Proceeds. Any Collateral or proceeds
thereof received by any Secured Party or any Person that holds Excess Claims in
connection with any Disposition of, or collection on, such Collateral upon the
enforcement or exercise of any right or remedy (including any right of setoff)
shall be applied as follows:
first, to the payment of costs and expenses of the applicable
Secured Party in connection with such enforcement or exercise,
second, after all such costs and expenses have been paid in full, to
the payment of the First Priority Claims,
third, after all such costs and expenses have been paid in full and
the Discharge of First Priority Claims has occurred, to the payment of the
Second Priority Claims, and
fourth, after all such costs and expenses have been paid in full,
the Discharge of First Priority Claims has occurred and the Discharge of
Second Priority Claims has occurred, to the payment of any Excess Claims.
After all such costs and expenses have been paid in full, the Discharge of First
Priority Claims has occurred, the Discharge of Second Priority Claims has
occurred and all Excess Claims have been paid in full, any surplus Collateral or
proceeds then remaining shall be returned to the applicable Grantor or to
whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct.
SECTION 4.02. Payment Over. (a) So long as the Discharge of First
Priority Claims has not occurred, any Collateral or any proceeds thereof
(together with assets or proceeds subject to Liens referred to in the final
sentence of Section 2.03(a)) received by the Second Priority Agent or any other
Second Priority Secured Party in connection with any Disposition of, or
collection on, such Collateral upon the enforcement or the exercise of any right
or remedy (including any right of setoff) with respect to the Collateral, or in
connection with any insurance policy claim or any condemnation award (or deed in
lieu of condemnation), shall be segregated and held in trust and forthwith
transferred or paid over to the First Priority Agent for the benefit of the
First Priority Secured Parties in the same form as received, together with any
necessary endorsements, or as a court of competent jurisdiction may otherwise
direct. Until the Discharge of First Priority Claims occurs, the Second Priority
Agent, for itself and on behalf of each other Second Priority Secured Party,
hereby appoints the First Priority Agent, and any officer or agent of the First
Priority Agent, with full power of substitution, the attorney-in-fact of each
22
Second Priority Secured Party for the purpose of carrying out the provisions of
this Section 4.02(a) and taking any action and executing any instrument that the
First Priority Agent may deem necessary or advisable to accomplish the purposes
of this Section 4.02(a), which appointment is irrevocable and coupled with an
interest.
(b) So long as the Discharge of First Priority Claims has occurred and the
Discharge of Second Priority Claims has not occurred, any Collateral or any
proceeds thereof (together with assets or proceeds subject to Liens referred to
in the final sentence of Section 2.03(b)) received by any Person that holds
Excess Claims in connection with any Disposition of, or collection on, such
Collateral upon the enforcement or the exercise of any right or remedy
(including any right of setoff) with respect to the Collateral, or in connection
with any insurance policy claim or any condemnation award (or deed in lieu of
condemnation), shall be segregated and held in trust and forthwith transferred
or paid over to the Second Priority Agent for the benefit of the Second Priority
Secured Parties in the same form as received, together with any necessary
endorsements, or as a court of competent jurisdiction may otherwise direct.
After the Discharge of First Priority Claims and until the Discharge of Second
Priority Claims occurs, each Person that holds any Excess Claims hereby appoints
the Second Priority Agent, and any officer or agent of the Second Priority
Agent, with full power of substitution, the attorney-in-fact of each such Person
for the purpose of carrying out the provisions of this Section 4.02(b) and
taking any action and executing any instrument that the Second Priority Agent
may deem necessary or advisable to accomplish the purposes of this Section
4.02(b), which appointment is irrevocable and coupled with an interest.
SECTION 4.03. Certain Agreements with Respect to Unenforceable
Liens. (a) Notwithstanding anything to the contrary contained herein, if in any
Insolvency or Liquidation Proceeding a determination is made that any Lien
encumbering any Collateral is not enforceable for any reason, then the Second
Priority Agent and the Second Priority Secured Parties agree that, any
distribution or recovery they may receive with respect to, or allocable to, the
value of the assets constituting Collateral subject to an enforceable Lien in
favor of the Second Priority Secured Parties or any proceeds thereof shall (for
so long as the Discharge of First Priority Claims has not occurred) be
segregated and held in trust and forthwith paid over to the First Priority Agent
for the benefit of the First Priority Secured Parties in the same form as
received without recourse, representation or warranty (other than a
representation of the Second Priority Agent that it has not otherwise sold,
assigned, transferred or pledged any right, title or interest in and to such
distribution or recovery) but with any necessary endorsements or as a court of
competent jurisdiction may otherwise direct. Until the Discharge of First
Priority Claims occurs, the Second Priority Agent, for itself and on behalf of
each other Second Priority Secured Party, hereby appoints the First Priority
Agent, and any officer or agent of the First Priority Agent, with full power of
substitution, the attorney-in-fact of each Second Priority Secured Party for the
limited purpose of carrying out the provisions of this Section 4.03(a) and
taking any action and executing any instrument that the First Priority Agent may
deem necessary or advisable to accomplish the purposes of this Section 4.03(a),
which appointment is irrevocable and coupled with an interest.
23
(b) Notwithstanding anything to the contrary contained herein, if in any
Insolvency or Liquidation Proceeding a determination is made that any Lien
encumbering any Collateral is not enforceable for any reason, then Persons
holding any Excess Claims agree that, any distribution or recovery they may
receive with respect to, or allocable to, the value of the assets intended to
constitute such Collateral or any proceeds thereof shall (for so long as so long
as the Discharge of First Priority Claims has occurred and the Discharge of
Second Priority Claims has not occurred) be segregated and held in trust and
forthwith paid over to the Second Priority Agent for the benefit of the Second
Priority Secured Parties in the same form as received without recourse,
representation or warranty (other than a representation of any such Person that
it has not otherwise sold, assigned, transferred or pledged any right, title or
interest in and to such distribution or recovery) but with any necessary
endorsements or as a court of competent jurisdiction may otherwise direct. After
the Discharge of First Priority Claims has occurred and until the Discharge of
Second Priority Claims occurs, each Person holding Excess Claims, hereby
appoints the Second Priority Agent, and any officer or agent of the Second
Priority Agent, with full power of substitution, the attorney-in-fact of such
Person for the limited purpose of carrying out the provisions of this Section
4.03(b) and taking any action and executing any instrument that the First
Priority Agent may deem necessary or advisable to accomplish the purposes of
this Section 4.03(b), which appointment is irrevocable and coupled with an
interest.
ARTICLE V
Bailment for Perfection of Certain Security Interests
(a) The First Priority Agent agrees that if it shall at any time
hold a First Priority Lien on any Collateral that can be perfected or the
priority of which can be enhanced by the possession or control of such
Collateral or of any account in which such Collateral is held, and if such
Collateral or any such account is in fact in the possession or under the control
of the First Priority Agent, or of agents or bailees of the First Priority Agent
(such Collateral being referred to herein as the "Pledged or Controlled
Collateral"), the First Priority Agent shall, solely for the purpose of
perfecting the Second Priority Liens granted under the Second Priority Debt
Documents and subject to the terms and conditions of this Article V, also (i)
hold and/or maintain control of such Pledged or Controlled Collateral as
gratuitous bailee for and representative (as defined in Section 1-201(35) of the
Uniform Commercial Code as in effect in the State of New York) of, or as agent
for, the Second Priority Agent, (ii) with respect to any securities accounts
included in the Collateral, have "control" (within the meaning of Section
8-106(d)(3) of the UCC) of such securities accounts on behalf of the Second
Priority Agent and (iii) with respect to any deposit accounts included in the
Collateral, act as agent for the Second Priority Agent and any assignee.
(b) So long as the Discharge of First Priority Claims has not
occurred, the First Priority Agent shall be entitled to deal with the Pledged or
Controlled Collateral in accordance with the terms of this Agreement and the
other First Priority Debt Documents as if the Second Priority Liens did not
exist. The obligations and responsibilities of the First Priority Agent to the
Second Priority Agent and the other Second Priority Secured Parties under this
24
Article V shall be limited solely to holding or controlling the Pledged or
Controlled Collateral as gratuitous bailee and representative (as defined in
Section 1-201(35) of the Uniform Commercial Code as in effect in the State of
New York) in accordance with this Article V. Without limiting the foregoing, the
First Priority Agent shall have no obligation or responsibility to ensure that
any Pledged or Controlled Collateral is genuine or owned by any of the Grantors.
The First Priority Agent acting pursuant to this Article V shall not, by reason
of this Agreement, any other Security Document or any other document, have a
fiduciary relationship in respect of any other First Priority Secured Party, the
Second Priority Agent or any other Second Priority Secured Party.
(c) Upon the Discharge of First Priority Claims, the First Priority
Agent shall transfer the possession and control of the Pledged or Controlled
Collateral, together with any necessary endorsements but without recourse or
warranty, (i) if the Second Priority Claims are outstanding at such time, to the
Second Priority Agent, (ii) if no Second Priority Claims are outstanding at such
time and any Excess Claims are outstanding at such time, to the Persons holding
such Excess Claims, and (iii) if no Second Priority Claims and no Excess Claims
are outstanding at such time, to the applicable Grantor, in each case so as to
allow such Person to obtain possession and control of such Pledged or Controlled
Collateral. In connection with any transfer under clause (i) of the immediately
preceding sentence, the First Priority Agent agrees, at the expense of the
Grantors, to take all actions in its power as shall be reasonably requested by
the Second Priority Agent to permit the Second Priority Agent to obtain, for the
benefit of the Second Priority Secured Parties, a first priority security
interest in the Pledged or Controlled Collateral.
(d) After the Discharge of First Priority Claims and upon the
Discharge of Second Priority Claims, the Second Priority Agent shall transfer
the possession and control of the Pledged or Controlled Collateral, together
with any necessary endorsements but without recourse or warranty, (i) if any
Excess Claims are outstanding at such time, to Persons holding such Excess
Claims, and (ii) if no Excess Claims are outstanding at such time, to the
applicable Grantor, in each case so as to allow such Person to obtain possession
and control of such Pledged or Controlled Collateral. In connection with any
transfer under clause (i) of the immediately preceding sentence, the Second
Priority Agent agrees, at the expense of the Grantors, to take all actions in
its power as shall be reasonably requested by the Persons holding any Excess
Claims to permit such Persons to obtain a first priority security interest in
the Pledged or Controlled Collateral.
ARTICLE VI
Insolvency or Liquidation Proceedings
SECTION 6.01. Finance and Sale Matters. (a) Until the Discharge of
First Priority Claims has occurred, the Second Priority Agent, for itself and on
behalf of the other Second Priority Secured Parties, agrees that, in the event
of any Insolvency or Liquidation Proceeding, the Second Priority Secured
Parties:
25
(i) will not oppose or object to the use of any Collateral
constituting cash collateral under Section 363 of the Bankruptcy Code, or
any comparable provision of any other Bankruptcy Law, unless the First
Priority Secured Parties, or a representative authorized by the First
Priority Secured Parties, shall oppose or object to such use of cash
collateral;
(ii) (A) will not oppose or object to any post-petition financing
provided to any Grantor, whether provided by the First Priority Secured
Parties or any other Person, under Section 364 of the Bankruptcy Code, or
any comparable provision of any other Bankruptcy Law (a "DIP Financing"),
or the Liens securing any DIP Financing ("DIP Financing Liens"), unless
the First Priority Secured Parties, or a representative authorized by the
First Priority Secured Parties, shall then oppose or object to such DIP
Financing or such DIP Financing Liens, and, to the extent that such DIP
Financing Liens are senior to, or rank pari passu with, the First Priority
Liens on the Collateral, or the First Priority Claims are (x) included as
obligations under such DIP Financing or (y) are repaid with proceeds of
the DIP Financing, the Second Priority Agent will, for itself and on
behalf of the other Second Priority Secured Parties, subordinate the
Second Priority Liens on the Collateral to the First Priority Liens on the
Collateral, if applicable, and the DIP Financing Liens (including if the
First Priority Claims are (x) included as obligations under such DIP
Financing or (y) are repaid with proceeds of the DIP Financing) on the
terms of this Agreement (and each Person holding any Excess Claims will
subordinate its Liens securing such Excess Claims to the Second Priority
Claims, the First Priority Liens and the DIP Financing Liens on the terms
of this Agreement); and (B) will not propose any DIP Financing to any
Grantor. Notwithstanding anything to the contrary, the Second Priority
Secured Parties retain their rights under the Bankruptcy Code to make
post-petition financing proposals and such proposals shall not be deemed
to be an objection to any other DIP Financing proposals so long as (x) any
court order approving such post-petition financing requires that the First
Priority Claims be paid in full in cash as a condition to such
post-petition financing, and (y) the First Priority Claims are paid in
full in cash on the date of such post-petition financing, which date shall
be no later than 10 days after the date on which such post-petition
financing is approved by the court in which such Insolvency or Liquidation
Proceeding is pending;
(iii) except to the extent permitted by paragraph (b) of this
Section 6.01, in connection with the use of cash collateral as described
in clause (i) above or a DIP Financing, will not request adequate
protection with respect to any Collateral or any other relief in
connection with such use of cash collateral, DIP Financing or DIP
Financing Liens; and
(iv) will not oppose or object to any Disposition of any Collateral
free and clear of the Second Priority Liens or other claims under Section
363 of the Bankruptcy Code, or any comparable provision of any other
Bankruptcy Law, if the First Priority Secured Parties, or a representative
authorized by the First Priority Secured Parties, shall consent to such
Disposition.
26
(b) The Second Priority Agent, for itself and on behalf of the other
Second Priority Secured Parties, agrees that no Second Priority Secured Party
shall contest, or support any other Person in contesting, (i) any request by the
First Priority Agent or any other First Priority Secured Party for adequate
protection in respect of any First Priority Claims or (ii) any objection, based
on a claim of a lack of adequate protection with respect of any First Priority
Claims, by the First Priority Agent or any other First Priority Secured Party to
any motion, relief, action or proceeding. Notwithstanding the immediately
preceding sentence, if, in connection with any DIP Financing or use of cash
collateral, (A) any First Priority Secured Party is granted adequate protection
in the form of a Lien on additional collateral, the Second Priority Agent may,
for itself and on behalf of the other Second Priority Secured Parties, seek or
request adequate protection in the form of a Lien on such additional collateral,
which Lien will be subordinated to the First Priority Liens and DIP Financing
Liens on the same basis as the other Second Priority Liens are subordinated to
the First Priority Liens under this Agreement or (B) any Second Priority Secured
Party is granted adequate protection in the form of a Lien on additional
collateral, the First Priority Agent shall, for itself and on behalf of the
other First Priority Secured Parties, be granted adequate protection in the form
of a Lien on such additional collateral that is senior to such Second Priority
Lien as security for the First Priority Claims.
(c) Notwithstanding the foregoing, the applicable provisions of
Section 6.01(a) and (b) shall only be binding on the Second Priority Secured
Parties with respect to any DIP Financing to the extent the principal amount of
such DIP Financing, when taken together with the aggregate principal amount of
the First Priority Claims (which, in each case, for the avoidance of doubt shall
not include any First Priority Claims of the type described in clause (b) or (c)
of the first paragraph of the definition thereof), does not exceed the sum of
(i) the Maximum First Priority Indebtedness Amount, and (ii) $5,000,000.
SECTION 6.02. Relief from the Automatic Stay. The Second Priority
Agent, for itself and on behalf of the other Second Priority Secured Parties,
agrees that, so long as the Discharge of First Priority Claims has not occurred,
no Second Priority Secured Party shall, without the prior written consent of the
First Priority Agent, seek or request relief from or modification of the
automatic stay or any other stay in any Insolvency or Liquidation Proceeding in
respect of any part of the Collateral, any proceeds thereof or any Second
Priority Lien on the Collateral.
SECTION 6.03. 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, on account of
the First Priority Claims, the Second Priority Claims and any Excess Claims,
then, to the extent the debt obligations distributed on account of the First
Priority Claims, on account of the Second Priority Claims and on account of any
Excess Claims are secured by Liens upon the same assets or property, the
27
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.
SECTION 6.04. Post-Petition Interest. (a) The Second Priority Agent,
for itself and on behalf of the other Second Priority Secured Parties, agrees
that no Second Priority Secured Party shall oppose or seek to challenge any
claim by the First Priority Agent or any other First Priority Secured Party for
allowance in any Insolvency or Liquidation Proceeding of First Priority Claims
consisting of post-petition interest, fees or expenses to the extent of the
value of the First Priority Liens (it being understood and agreed that such
value shall be determined without regard to the existence of the Second Priority
Liens on the Collateral).
(b) The First Priority Agent, for itself and on behalf of the other
First Priority Secured Parties, agrees that the Second Priority Agent or any
other Second Priority Secured Party may make a claim for allowance in any
Insolvency or Liquidation Proceeding of Second Priority Claims consisting of
post-petition interest, fees or expenses to the extent of the value of the
Second Priority Liens; provided, however, that that (i) if the First Priority
Secured Parties shall have made any such claim, such claim (A) shall have also
have been approved or (B) shall have been approved prior to, or will be approved
contemporaneous with, the approval of any such claim by any Second Priority
Secured Party and (ii) each First Priority Secured Party may oppose or seek to
challenge any such claim.
SECTION 6.05. Certain Waivers by the Second Priority Secured
Parties. The Second Priority Agent, for itself and on behalf of the other Second
Priority Secured Parties, waives any claim any Second Priority Secured Party may
hereafter have against any First Priority Secured Party arising out of (a) the
election by any First Priority Secured Party of the application of Section
1111(b)(2) of the Bankruptcy Code, or any comparable provision of any other
Bankruptcy Law, or (b) any use of cash collateral or financing arrangement, or
any grant of a security interest in the Collateral, in any Insolvency or
Liquidation Proceeding.
SECTION 6.06. Certain Voting Matters. Each of the First Priority
Agent, on behalf of the First Priority Secured Parties and the Second Priority
Agent on behalf of the Second Priority Secured Parties, agrees that, without the
written consent of the other, it will not seek to vote with the other as a
single class in connection with any plan of reorganization in any Insolvency or
Liquidation Proceeding. Except as provided in this Section 6.06, nothing in this
Agreement is intended, or shall be construed, to limit the ability of the Second
Priority Agent or the Second Priority Secured Parties to vote on any plan of
reorganization that maintains the lien subordination provisions of this
Agreement or of either the First Priority Secured Parties or Second Priority
Secured Parties, to contest any plan of reorganization that does not maintain
the lien subordination provisions of this Agreement.
28
ARTICLE VII
Other Agreements
SECTION 7.01. Matters Relating to Debt Documents(a) . Each of the
Company and the Second Priority Agent agrees that the Second Priority Debt
Agreement and each Second Priority Security Document shall contain the
applicable provisions set forth on Annex I hereto, or similar provisions
approved by the First Priority Agent, which approval shall not be unreasonably
withheld or delayed. Each of the Company and the Second Priority Agent further
agrees that each Second Priority Mortgage covering any Collateral shall contain
such other language as the First Priority Agent may reasonably request to
reflect the subordination of such Second Priority Mortgage to the First Priority
Security Document covering such Collateral pursuant to this Agreement.
SECTION 7.02. Effect of Refinancing of Indebtedness under First
Priority Debt Documents. If, substantially contemporaneously with the Discharge
of First Priority Claims, the Grantors Refinance Indebtedness outstanding under
the First Priority Debt Documents and provided that (a) such Refinancing is
permitted hereby and (b) the Company gives to the Second Priority Agent written
notice (the "Refinancing Notice") electing the application of the provisions of
this Section 7.02 to such Refinancing Indebtedness, then (i) such Discharge of
First Priority Claims shall automatically be deemed not to have occurred for all
purposes of this Agreement, (ii) such Refinancing Indebtedness and all other
obligations under the documents evidencing such Indebtedness (the "New First
Priority Claims") shall automatically be treated as First Priority Claims for
all purposes of this Agreement, including for purposes of the Lien priorities
and rights in respect of Collateral set forth herein, (iii) the Debt Agreement
and the other documents evidencing such Refinancing Indebtedness (the "New First
Priority Debt Documents") shall automatically be treated as the First Priority
Debt Agreement and the First Priority Debt Documents and, in the case of New
First Priority Debt Documents that are security documents pursuant to which any
Grantor has granted a Lien to secure any New First Priority Claim, as the First
Priority Security Documents for all purposes of this Agreement, (iv) the
collateral agent under the New First Priority Debt Documents (the "New First
Priority Agent") shall be deemed to be the First Priority Agent for all purposes
of this Agreement and (v) the lenders under the New First Priority Debt
Documents shall be deemed to be the First Priority Creditors for all purposes of
this Agreement. Upon receipt of a Refinancing Notice, which notice shall include
the identity of the New First Priority Agent, the Second Priority Agent shall
promptly enter into such documents and agreements (including amendments or
supplements to this Agreement) as the Company or such New First Priority Agent
may reasonably request in order to provide to the New First Priority Agent the
rights and powers contemplated hereby, in each case consistent in all material
respects with the terms of this Agreement. The Company shall cause the
agreement, document or instrument pursuant to which the New First Priority Agent
is appointed to provide that the New First Priority Agent agrees to be bound by
the terms of this Agreement. In furtherance of Section 2.03, if the New First
Priority Claims are secured by assets of the Grantors that do not also secure
the Second Priority Claims, the applicable Grantors shall promptly grant a
Second Priority Lien on such assets to secure the Second Priority Claims.
29
SECTION 7.03. No Waiver by First Priority Secured Parties. Other
than with respect to the Second Priority Permitted Actions, nothing contained
herein shall prohibit or in any way limit the First Priority Agent or any other
First Priority Secured Party from opposing, challenging or objecting to, in any
Insolvency or Liquidation Proceeding or otherwise, any action taken, or any
claim made, by the Second Priority Agent or any other Second Priority Secured
Party, including any request by the Second Priority Agent or any other Second
Priority Secured Party for adequate protection or any exercise by the Second
Priority Agent or any other Second Priority Secured Party of any of its rights
and remedies under the Second Priority Debt Documents or otherwise.
SECTION 7.04. Reinstatement. If, in any Insolvency or Liquidation
Proceeding or otherwise, all or part of any payment with respect to (a) the
First Priority Claims previously made shall be rescinded for any reason
whatsoever, then the First Priority Claims shall be reinstated to the extent of
the amount so rescinded and, if theretofore terminated, this Agreement shall be
reinstated in full force and effect and such prior termination shall not
diminish, release, discharge, impair or otherwise affect the Lien priorities and
the relative rights and obligations of the First Priority Secured Parties and
the Second Priority Secured Parties provided for herein and (b) the Second
Priority Claims previously made shall be rescinded for any reason whatsoever and
the Discharge of First Priority Claims shall, subject to (for the avoidance of
doubt) the immediately preceding clause (a), have occurred, then the Second
Priority Claims shall be reinstated to the extent of the amount so rescinded
and, if theretofore terminated, this Agreement shall be reinstated in full force
and effect and such prior termination shall not diminish, release, discharge,
impair or otherwise affect the Lien priorities and the relative rights and
obligations of the Second Priority Secured Parties and any Person that holds
Excess Claims provided for herein solely with respect to any Excess Claims and
for the avoidance of doubt, not with respect to any First Priority Claims.
SECTION 7.05. Authorization of Collateral Agents. By accepting the
benefits of this Agreement and the other First Priority Security Documents, each
First Priority Secured Party hereby (a) authorizes the First Priority Agent to
enter into this Agreement and to act on its behalf as collateral agent hereunder
and in connection herewith and (b) agrees to be bound to the terms hereof to the
extent that it holds any Excess Claims. By accepting the benefits of this
Agreement and the other Second Priority Security Documents, each Second Priority
Secured Party hereby authorizes the Second Priority Agent to enter into this
Agreement and to act on its behalf as collateral agent hereunder and in
connection herewith.
SECTION 7.06. Further Assurances. Each of the First Priority Agent,
for itself and on behalf of the other First Priority Secured Parties, the Second
Priority Agent, for itself and on behalf of the other Second Priority Secured
Parties, each Person that holds any Excess Claims, and each Grantor party
hereto, for itself and on behalf of its subsidiaries, agrees that it will
execute, or will cause to be executed, any and all further documents, agreements
30
and instruments, and take all such further actions, as may be required under any
applicable law, or which the First Priority Agent or the Second Priority Agent
may reasonably request, to effectuate the terms of this Agreement, including the
relative Lien priorities provided for herein.
ARTICLE VIII
Representations and Warranties
SECTION 8.01. Representations and Warranties of Each Party. Each
party hereto represents and warrants to the other parties hereto as follows:
(a) Such party is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and has
all requisite power and authority to execute and deliver this Agreement
and perform its obligations hereunder.
(b) This Agreement has been duly executed and delivered by
such party and constitutes a legal, valid and binding obligation of such
party, enforceable in accordance with its terms.
(c) The execution, delivery and performance by such party of
this Agreement (i) do not require any consent or approval of, registration
or filing with or any other action by any governmental authority (except
as contemplated hereby) and (ii) will not violate any provision of law,
statute, rule or regulation, or of the certificate or articles of
incorporation or other constitutive documents or by-laws of such party or
any order of any governmental authority or any provision of any indenture,
agreement or other instrument applicable to or binding upon such party.
SECTION 8.02. Representations and Warranties of Each Collateral
Agent. Each Collateral Agent represents and warrants to the other parties hereto
that it has been authorized by the Secured Parties under and as defined in the
First Priority Debt Agreement or the Second Priority Security Agreement, as
applicable, to enter into this Agreement.
ARTICLE IX
No Reliance; No Liability; Obligations Absolute
SECTION 9.01. No Reliance; Information. The First Priority Secured
Parties and the Second Priority Secured Parties shall have no duty to disclose
to any Second Priority Secured Party or to any First Priority Secured Party,
respectively, any information relating to the Company or any of the Grantors, or
any other circumstance bearing upon the risk of nonpayment of any of the First
Priority Claims or the Second Priority Claims, as the case may be, that is known
or becomes known to any of them or any of their Affiliates. In the event any
First Priority Secured Party or any Second Priority Secured Party, in its sole
discretion, undertakes at any time or from time to time to provide any such
information to, respectively, any Second Priority Secured Party or any First
Priority Secured Party, it shall be under no obligation (i) to make, and shall
31
not make or be deemed to have made, any express or implied representation or
warranty, including with respect to the accuracy, completeness, truthfulness or
validity of the information so provided, (ii) to provide any additional
information or to provide any such information on any subsequent occasion or
(iii) to undertake any investigation.
SECTION 9.02. No Warranties or Liability. (a) The First Priority
Agent, for itself and on behalf of the other First Priority Secured Parties,
acknowledges and agrees that, except for the representations and warranties set
forth in Article VIII, neither the Second Priority Agent nor any other Second
Priority Secured Party has made any express or implied representation or
warranty, including with respect to the execution, validity, legality,
completeness, collectibility or enforceability of any of the Second Priority
Debt Documents, the ownership of any Collateral or the perfection or priority of
any Liens thereon. The Second Priority Agent, for itself and on behalf of the
other Second Priority Secured Parties, acknowledges and agrees that, except for
the representations and warranties set forth in Article VIII, neither the First
Priority Agent nor any other First Priority Secured Party has made any express
or implied representation or warranty, including with respect to the execution,
validity, legality, completeness, collectibility or enforceability of any of the
First Priority Debt Documents, the ownership of any Collateral or the perfection
or priority of any Liens thereon.
(b) The Second Priority Agent and the other Second Priority Secured
Parties shall have no express or implied duty to the First Priority Agent or any
other First Priority Secured Party, and the First Priority Agent and the other
First Priority Secured Parties shall have no express or implied duty to the
Second Priority Agent or any other Second Priority Secured Party, to act or
refrain from acting in a manner which allows, or results in, the occurrence or
continuance of a default or an event of default under any First Priority Debt
Document and any Second Priority Debt Document (other than, in each case, this
Agreement), regardless of any knowledge thereof which they may have or be
charged with.
(c) The Second Priority Agent, for itself and on behalf of the other
Second Priority Secured Parties, agrees no First Priority Secured Party shall
have any liability to the Second Priority Agent or any other Second Priority
Secured Party, and hereby waives any claim against any First Priority Secured
Party, arising out of any and all actions which the First Priority Agent or the
other First Priority Secured Parties may take or permit or omit to take with
respect to (i) the First Priority Debt Documents (other than this Agreement),
(ii) the collection of the First Priority Claims or (iii) the maintenance of,
the preservation of, the foreclosure upon or the Disposition of any Collateral.
SECTION 9.03. Obligations Absolute. The Lien priorities provided for
herein and the respective rights, interests, agreements and obligations
hereunder of the First Priority Agent and the other First Priority Secured
Parties and the Second Priority Agent and the other Second Priority Secured
Parties shall remain in full force and effect irrespective of:
(a) any lack of validity or enforceability of any Debt
Document;
32
(b) any change in the time, place or manner of payment of, or
in any other term of (including, subject to the limitations set forth in
Section 7.01(a), the Refinancing of), all or any portion of the First
Priority Claims, it being specifically acknowledged that a portion of the
First Priority Claims consists or may consist of Indebtedness that is
revolving in nature, and the amount thereof that may be outstanding at any
time or from time to time may be increased or reduced and subsequently
reborrowed;
(c) any change in the time, place or manner of payment of, or,
subject to the limitations set forth in Section 7.01(a), in any other term
of, all or any portion of the First Priority Claims;
(d) any amendment, waiver or other modification, whether by
course of conduct or otherwise, of any Debt Document;
(e) the securing of any First Priority Claims or Second
Priority Claims with any additional collateral or guarantees, or any
exchange, release, voiding, avoidance or non-perfection of any security
interest in any Collateral or any other collateral or any release of any
guarantee securing any First Priority Claims or Second Priority Claims;
(f) the commencement of any Insolvency or Liquidation
Proceeding or Liquidation Sale in respect of the Company or any other
Grantor; or
(g) any other circumstances that otherwise might constitute a
defense available to, or a discharge of, the Company or any other Grantor
in respect of the First Priority Claims or this Agreement, or any of the
Second Priority Secured Parties in respect of this Agreement.
ARTICLE X
Miscellaneous
SECTION 10.01. Notices. Notices and other communications provided
for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by fax, as
follows:
(a) if to the Company or any other Grantor, to it, at Dune
Energy, Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
Attention of Chief Financial Officer, (Fax No. (▇▇▇) ▇▇▇-▇▇▇▇);
(b) if to the First Priority Agent, to ▇▇▇▇▇ Fargo Foothill,
Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention
of Business Finance Division Manager (Fax No. (▇▇▇) ▇▇▇-▇▇▇▇); and
33
(c) if to the Second Priority Agent, to The Bank of New York,
N.A. ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Attention of
Corporate Trust Administration (Fax No. (▇▇▇) ▇▇▇-▇▇▇▇).
All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt if delivered by hand or overnight courier service
or sent by fax or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 10.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 10.01. As agreed to between the Company and any Collateral Agent from
time to time, notices and other communications may also be delivered by e-mail
to the e-mail address of a representative of the applicable Person provided from
time to time by such Person.
The First Priority Lender and the Second Priority Agent agree to use
diligent efforts to provide each other with copies of any notices of default or
acceleration or similar notices which they give to the Borrower under the First
Priority Debt Documents and Second Priority Debt Documents respectively;
provided, however, that in the event that either of such parties fails to
provide the other with such notice, such failure shall not affect their
respective obligations hereunder or the effectiveness of any such notice.
SECTION 10.02. Conflicts. IN THE EVENT OF ANY CONFLICT OR
INCONSISTENCY BETWEEN THE PROVISIONS OF THIS AGREEMENT AND THE PROVISIONS OF THE
OTHER DEBT DOCUMENTS, THE PROVISIONS OF THIS AGREEMENT SHALL CONTROL.
SECTION 10.03. Effectiveness; Survival; Termination. This Agreement
shall become effective when executed and delivered by the parties hereto. All
covenants, agreements, representations and warranties made by any party in this
Agreement shall be considered to have been relied upon by the other parties
hereto and shall survive the execution and delivery of this Agreement. The terms
of this Agreement shall survive, and shall continue in full force and effect, in
any Insolvency or Liquidation Proceeding. The Second Priority Agent, for itself
and on behalf of the other Second Priority Secured Parties, hereby waives any
and all rights the Second Priority Secured Parties may now or hereafter have
under applicable law to revoke this Agreement or any of the provisions of this
Agreement. This Agreement shall terminate and be of no further force and effect,
(i) subject to compliance with its obligations to take certain actions upon
Discharge of the Second Priority Claims pursuant to Article V and Section
3.01(d), with respect to the Second Priority Agent, the Second Priority Secured
Parties and the Second Priority Claims, upon the later of (1) the date upon
which the obligations under the Second Priority Debt Agreement terminate if
there are no other Second Priority Claims outstanding on such date and (2) if
there are other Second Priority Claims outstanding on such date, the date upon
which such Second Priority Claims terminate and (ii) subject to Section 7.02 and
34
compliance with its obligations to take certain actions upon Discharge of the
First Priority Claims pursuant to Article V, with respect to the First Priority
Agent, the First Priority Secured Parties and the First Priority Claims, the
date of Discharge of First Priority Claims, subject to the rights of the First
Priority Secured Parties under Section 7.04.
SECTION 10.04. Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 10.05. Amendments; Waivers. (a) No failure or delay on the
part of any party hereto in exercising any power or right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the parties
hereto are cumulative and are not exclusive of any rights or remedies that they
would otherwise have. No waiver of any provision of this Agreement or consent to
any departure by any party therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) of this Section 10.05, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the First Priority Agent and the Second Priority Agent; provided
that no such agreement shall amend, modify or otherwise affect the rights or
obligations of any Grantor without such Person's prior written consent.
SECTION 10.06. Postponement of Subrogation. The Second Priority
Agent agrees that no payment or distribution to any First Priority Secured Party
pursuant to the provisions of this Agreement shall entitle any Second Priority
Secured Party to exercise any rights of subrogation in respect thereof until the
Discharge of First Priority Claims shall have occurred. Following the Discharge
of First Priority Claims, each First Priority Secured Party agrees to execute
such documents, agreements, and instruments as any Second Priority Secured Party
may reasonably request to evidence the transfer by subrogation to any such
Person of an interest in the First Priority Claims resulting from payments or
distributions to such First Priority Secured Party by such Person, so long as
all costs and expenses (including all reasonable legal fees and disbursements)
incurred in connection therewith by such First Priority Secured Party are paid
by such Person upon request for payment thereof.
SECTION 10.07. Applicable Law; Jurisdiction; Consent to Service of
Process. (a) THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
35
BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW
PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION.
(b) Each party hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the non-exclusive jurisdiction of any
Supreme Court for New York County, New York or in The United States District
Court for the Southern District of New York, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined only in
such New York court or, to the extent permitted by law, in such Federal court.
Each party hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
(c) Each party hereto hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any New York court or
in any such Federal court. Each party hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 10.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 10.08. Waiver of Jury Trial. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 10.08.
SECTION 10.09. Parties in Interest. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, as well as the other First Priority Secured
Parties and Second Priority Secured Parties, all of whom are intended to be
bound by, and to be third party beneficiaries of, this Agreement. No other
Person shall have or be entitled to assert rights or benefits hereunder.
36
SECTION 10.10. Specific Performance. Each Collateral Agent may
demand specific performance of this Agreement and, on behalf of itself and the
respective other Secured Parties, hereby irrevocably waives any defense based on
the adequacy of a remedy at law and any other defense that might be asserted to
bar the remedy of specific performance in any action which may be brought by the
respective Secured Parties.
SECTION 10.11. Headings. Article and Section headings used herein
and the Table of Contents hereto are for convenience of reference only, are not
part of this Agreement and are not to affect the construction of, or to be taken
into consideration in interpreting, this Agreement.
SECTION 10.12. Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original but all of which when taken together shall
constitute a single contract, and shall become effective as provided in Section
10.03. Delivery of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement.
SECTION 10.13. 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 Priority Secured Parties, on the one
hand, and the Second Priority Secured Parties, on the other hand. None of the
Company, any other Grantor, any Guarantor or any other creditor thereof shall
have any rights or obligations, except as expressly provided in this Agreement
hereunder and none of the Company, any other Grantor or any Guarantor 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 or any Guarantor, which are
absolute and unconditional, to pay the First Priority Claims and the Second
Priority Claims as and when the same shall become due and payable in accordance
with their terms.
[Remainder of this page intentionally left blank]
37
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
DUNE ENERGY, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Senior Vice President and CFO
GOLDKING ENERGY CORPORATION,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Secretary and Treasurer
VAQUERO PARTNERS LLC,
a Texas limited liability company
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: President
DUNE OPERATING COMPANY,
a Texas corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: President
GOLDKING OPERATING COMPANY,
a Texas corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Secretary and Treasurer
Intercreditor Agreement signature page
FIRST PRIORITY AGENT
▇▇▇▇▇ FARGO FOOTHILL, INC., as First
Priority Agent,
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
SECOND PRIORITY AGENT
THE BANK OF NEW YORK, as Second
Priority Agent,
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
Intercreditor Agreement signature page
ANNEX I
Provision for the Second Priority Debt Agreement
"EACH SECURED PARTY HEREUNDER (A) ACKNOWLEDGES THAT IT HAS RECEIVED A COPY OF
THE INTERCREDITOR AGREEMENT, (B) CONSENTS TO THE SUBORDINATION OF LIENS PROVIDED
FOR IN THE INTERCREDITOR AGREEMENT, (C) AGREES THAT IT WILL BE BOUND BY AND WILL
TAKE NO ACTIONS CONTRARY TO THE PROVISIONS OF THE INTERCREDITOR AGREEMENT AND
(D) AUTHORIZES AND INSTRUCTS THE COLLATERAL AGENT TO ENTER INTO THE
INTERCREDITOR AGREEMENT AS COLLATERAL AGENT AND ON BEHALF OF SUCH SECURED PARTY.
THE FOREGOING PROVISIONS ARE INTENDED AS AN INDUCEMENT TO THE FIRST PRIORITY
SECURED PARTIES UNDER THE FIRST PRIORITY DEBT DOCUMENTS TO PERMIT THE INCURRENCE
OF INDEBTEDNESS UNDER THIS AGREEMENT AND TO EXTEND CREDIT TO THE COMPANY AND
CERTAIN OF ITS SUBSIDIARIES AND SUCH FIRST PRIORITY SECURED PARTIES ARE INTENDED
THIRD PARTY BENEFICIARIES OF SUCH PROVISIONS. IN THE EVENT OF ANY CONFLICT OR
INCONSISTENCY BETWEEN THE PROVISIONS OF THE INTERCREDITOR AGREEMENT AND THE
PROVISIONS OF THIS AGREEMENT OR THE OTHER INDENTURE DOCUMENTS, THE PROVISIONS OF
THE INTERCREDITOR AGREEMENT SHALL CONTROL."
Provision for the Second Priority Security Documents
"REFERENCE IS MADE TO THE INTERCREDITOR AGREEMENT DATED AS OF MAY 15, 2007 (AS
AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, THE
"INTERCREDITOR AGREEMENT"), AMONG THE COMPANY, THE SUBSIDIARIES OF THE COMPANY
FROM TIME TO TIME PARTY THERETO, ▇▇▇▇▇ FARGO FOOTHILL, INC., AS FIRST PRIORITY
AGENT (AS DEFINED THEREIN), AND THE BANK OF NEW YORK, AS SECOND PRIORITY AGENT
(AS DEFINED THEREIN). NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE LIEN
AND SECURITY INTEREST GRANTED TO THE COLLATERAL AGENT, FOR THE BENEFIT OF THE
SECURED PARTIES, PURSUANT TO THIS AGREEMENT AND THE EXERCISE OF ANY RIGHT OR
REMEDY BY THE COLLATERAL AGENT AND THE OTHER SECURED PARTIES HEREUNDER ARE
SUBJECT TO THE PROVISIONS OF THE INTERCREDITOR AGREEMENT. IN THE EVENT OF ANY
CONFLICT OR INCONSISTENCY BETWEEN THE PROVISIONS OF THE INTERCREDITOR AGREEMENT
AND THE PROVISIONS OF THIS AGREEMENT OR THE OTHER INDENTURE DOCUMENTS, THE
PROVISIONS OF THE INTERCREDITOR AGREEMENT SHALL CONTROL."