INTERCREDITOR AGREEMENT
Dated as of September 14, 2023
among
WHITMORE NATIONAL BANK, N.A., as Administrative Agent and Collateral Agent under the Senior Credit Agreement (the "Senior Agent")
and
RIDGELINE MEZZANINE CAPITAL FUND III, LP, as Mezzanine Lender
Acknowledged and Agreed by
STONEFIELD LOGISTICS GROUP INC., as Borrower
THIS INTERCREDITOR AGREEMENT IS GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
This INTERCREDITOR AGREEMENT (this "Agreement"), dated as of September 14, 2023, is entered into by and among WHITMORE NATIONAL BANK, N.A., a national banking association, as Administrative Agent and Collateral Agent under the Senior Credit Agreement (in such capacities, together with its successors and assigns, the "Senior Agent"), and RIDGELINE MEZZANINE CAPITAL FUND III, LP, a Delaware limited partnership (together with its successors and assigns, the "Mezzanine Lender"), and is acknowledged and agreed to by STONEFIELD LOGISTICS GROUP INC., a Delaware corporation (the "Borrower").
RECITALS
WHEREAS, Stonefield Logistics Group Inc., a Delaware corporation (the "Borrower"), is party to that certain Amended and Restated Credit Agreement, dated as of April 7, 2022 (which restated in its entirety that certain Credit Agreement, originally dated as of November 15, 2019), among the Borrower, Whitmore National Bank, N.A., as Administrative Agent and Collateral Agent, and the lenders from time to time party thereto (as amended by that certain Amendment No. 1 to Amended and Restated Credit Agreement, dated as of August 12, 2022, that certain Amendment No. 2 to Amended and Restated Credit Agreement, dated as of February 28, 2023, and that certain Amendment No. 3 to Amended and Restated Credit Agreement, dated as of September 14, 2023, and as may be further amended, restated, supplemented, or otherwise modified from time to time, the "Senior Credit Agreement"), providing for, among other things, a $275,000,000 senior secured term loan B facility and a $50,000,000 senior secured revolving credit facility;
WHEREAS, the Borrower is party to that certain Mezzanine Credit Agreement, dated as of September 14, 2023 (as may be amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms hereof, the "Mezzanine Credit Agreement"), among the Borrower, Ridgeline Mezzanine Capital Fund III, LP, as Mezzanine Lender, and the guarantors from time to time party thereto, providing for a $120,000,000 mezzanine term loan facility;
WHEREAS, the obligations of the Borrower and the Subsidiary Guarantors (as defined below) under the Senior Credit Agreement and the other Senior Documents (as defined below) are secured by first-priority perfected security interests and liens in and on substantially all of the assets of the Borrower and the Subsidiary Guarantors (such assets, in which both the Senior Agent and the Mezzanine Lender hold security interests, the "Shared Collateral," as more particularly described herein and on Schedule 2 attached hereto);
WHEREAS, the obligations of the Borrower and the guarantors under the Mezzanine Credit Agreement and the other Mezzanine Documents (as defined below) are secured by (a) second-priority perfected security interests and liens in and on the Shared Collateral and (b) a first-priority pledge of 100% of the issued and outstanding equity interests in the Borrower by Cascade Ridge SLG Holdings, LLC, a Delaware limited liability company (the "Parent Equity Pledge"), which Parent Equity Pledge is not Shared Collateral and is not subject to the lien subordination provisions of this Agreement;
WHEREAS, the Senior Agent and the Mezzanine Lender desire to set forth their relative rights, priorities, and interests with respect to the Shared Collateral, including, without limitation, provisions governing lien subordination, enforcement standstill, payment blockage, and purchase option rights, and to establish certain other agreements between the Senior Agent and the Mezzanine Lender regarding the interrelationship of their respective credit facilities and security interests; and
WHEREAS, the Borrower has agreed to acknowledge and be bound by the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I — DEFINITIONS AND INTERPRETATION
Section 1.1 — Definitions
As used in this Agreement, the following terms shall have the meanings set forth below:
"Agreement" means this Intercreditor Agreement, dated as of September 14, 2023, as it may be amended, restated, supplemented, or otherwise modified from time to time in accordance with Section 12.1.
"Borrower" means Stonefield Logistics Group Inc., a Delaware corporation, with its principal executive offices located at 4800 Commerce Parkway, Suite 1200, Fort Worth, Texas 76107, and its successors and permitted assigns.
"Business Day" means any day other than a Saturday, Sunday, or any other day on which commercial banks in the City of New York, New York are authorized or required by law or executive order to close.
"Cascade Ridge" means Cascade Ridge Capital Partners, LLC, a Delaware limited liability company, together with its affiliated investment vehicles, including Cascade Ridge Capital Fund V, LP, a Delaware limited partnership, and Cascade Ridge SLG Holdings, LLC, a Delaware limited liability company.
"Change of Control" means the occurrence of any of the following: (a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) (other than Cascade Ridge Capital Partners, LLC and its affiliates, including Cascade Ridge Capital Fund V, LP and Cascade Ridge SLG Holdings, LLC) acquiring, directly or indirectly, beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of more than 50% of the outstanding voting equity interests of the Borrower entitled to vote for members of the board of directors (or equivalent governing body) of the Borrower on a fully diluted basis; (b) the Borrower ceasing to be a direct wholly-owned subsidiary of Cascade Ridge SLG Holdings, LLC, a Delaware limited liability company; or (c) a sale, transfer, lease, or other disposition (whether in a single transaction or a series of related transactions) of all or substantially all of the assets of the Borrower and its subsidiaries, taken as a whole, to any person other than Cascade Ridge Capital Partners, LLC or its affiliates.
"DIP Financing" means any debtor-in-possession financing obtained by the Borrower or any guarantor in any proceeding commenced under Title 11 of the United States Code or any other applicable insolvency or bankruptcy law.
"Enforcement Notice" has the meaning set forth in Section 3.2.
"Mezzanine Credit Agreement" means that certain Mezzanine Credit Agreement, dated as of September 14, 2023, among Stonefield Logistics Group Inc., as borrower, Ridgeline Mezzanine Capital Fund III, LP, as mezzanine lender, and the guarantors from time to time party thereto, as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms of this Agreement.
"Mezzanine Documents" means, collectively, the Mezzanine Credit Agreement, the Mezzanine Guaranty Agreement (dated as of September 29, 2023), the Mezzanine Pledge and Security Agreement (dated as of September 29, 2023), the Warrant Agreement (dated as of September 29, 2023), the Parent Equity Pledge Agreement (dated as of September 29, 2023), and all other documents, instruments, certificates, and agreements executed and delivered in connection therewith or otherwise related thereto.
"Mezzanine Event of Default" means any "Event of Default" as defined in the Mezzanine Credit Agreement.
"Mezzanine Lender" means Ridgeline Mezzanine Capital Fund III, LP, a Delaware limited partnership, with its principal office at 767 Lexington Avenue, 22nd Floor, New York, New York 10065, acting by and through its general partner, Ridgeline Capital Management, LLC, a Delaware limited liability company, and its successors and assigns.
"Mezzanine Liens" means all liens, security interests, and encumbrances granted pursuant to the Mezzanine Pledge and Security Agreement and the other Mezzanine Documents securing the Mezzanine Obligations on the Shared Collateral, which liens, security interests, and encumbrances are second-priority liens subordinate and junior in all respects to all Senior Liens in accordance with the terms of this Agreement.
"Mezzanine Obligations" means all obligations, liabilities, and indebtedness of the Borrower and the guarantors under or in connection with the Mezzanine Documents, whether now existing or hereafter arising, whether contingent or absolute, whether liquidated or unliquidated, and whether or not from time to time reduced or extinguished and thereafter increased or re-incurred, including, without limitation: (a) the principal amount of the mezzanine term loan in the amount of $120,000,000; (b) all accrued and unpaid cash interest thereon (at the rate of 850 basis points per annum); (c) all accrued and capitalized pay-in-kind interest thereon (at the rate of 250 basis points per annum); (d) all fees payable under the Mezzanine Documents; (e) all expenses and costs of collection, including reasonable attorneys' fees; (f) all indemnification obligations; and (g) all other amounts owing under or in connection with the Mezzanine Documents.
"Parent Equity Pledge" means the first-priority pledge of 100% of the issued and outstanding equity interests (including all membership interests, economic interests, and voting rights) in the Borrower by Cascade Ridge SLG Holdings, LLC in favor of the Mezzanine Lender, pursuant to that certain Parent Equity Pledge Agreement, dated as of September 29, 2023, between Cascade Ridge SLG Holdings, LLC, as pledgor, and Ridgeline Mezzanine Capital Fund III, LP, as secured party. The Parent Equity Pledge is not Shared Collateral and is not subject to the lien subordination provisions of this Agreement.
"Parent Equity Pledge Agreement" means that certain Parent Equity Pledge Agreement, dated as of September 29, 2023, between Cascade Ridge SLG Holdings, LLC, as pledgor, and Ridgeline Mezzanine Capital Fund III, LP, as secured party, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Payment blockage Notice" means a written notice, substantially in the form of Exhibit A attached hereto, delivered by the Senior Agent to the Mezzanine Lender and the Borrower following the occurrence and during the continuance of a Senior Event of Default, commencing a Payment blockage Period.
"Payment blockage Period" means a period of up to 180 consecutive days commencing on the date of delivery of a Payment blockage Notice to the Mezzanine Lender in accordance with Section 4.2, subject to earlier termination as set forth in Section 4.3.
"Permitted Mezzanine Payments" has the meaning set forth in Section 4.1.
"Person" means any individual, corporation, limited liability company, partnership, joint venture, association, trust, unincorporated organization, governmental authority, or any other entity.
"PIK Interest" means pay-in-kind interest accruing on the outstanding principal amount of the mezzanine term loan under the Mezzanine Credit Agreement at the rate of 250 basis points per annum, which interest is capitalized and added to the principal amount of the mezzanine term loan on each applicable interest payment date.
"Purchase Election Notice" has the meaning set forth in Section 5.3.
"Senior Agent" means Whitmore National Bank, N.A., a national banking association, with a principal office at 350 Park Avenue, New York, New York 10022, acting in its capacity as Administrative Agent and Collateral Agent under the Senior Credit Agreement, and its successors and assigns in such capacities.
"Senior Credit Agreement" has the meaning set forth in the Recitals; provided, that the term "Senior Credit Agreement" shall refer to that certain Amended and Restated Credit Agreement, dated as of April 7, 2022 (which restated in its entirety that certain Credit Agreement, originally dated as of November 15, 2019), among the Borrower, Whitmore National Bank, N.A., as Administrative Agent and Collateral Agent, and the lenders from time to time party thereto, as amended by Amendment No. 1, dated as of August 12, 2022, Amendment No. 2, dated as of February 28, 2023, and Amendment No. 3, dated as of September 14, 2023, and as the same may be further amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms of this Agreement.
"Senior Documents" means, collectively, the Senior Credit Agreement and all other loan documents, security documents, guaranty agreements, pledge agreements, mortgages, and other documents, instruments, certificates, and agreements executed and delivered in connection therewith or otherwise related thereto.
"Senior Event of Default" means any "Event of Default" as defined in the Senior Credit Agreement.
"Senior Lenders" means, collectively, Whitmore National Bank, N.A. (holding $90,000,000 of Senior Obligations, in its capacity as lead arranger and lender), Greystone Commercial Lending Corp. (holding $75,000,000 of Senior Obligations), Heritage Pacific Bank (holding $60,000,000 of Senior Obligations), Clearfield Capital Finance, LLC (holding $50,000,000 of Senior Obligations), and any other financial institutions or other entities from time to time party to the Senior Credit Agreement as lenders, together with their respective successors and assigns.
"Senior Liens" means all liens, security interests, and encumbrances granted pursuant to the Senior Documents securing the Senior Obligations on the Shared Collateral, which liens, security interests, and encumbrances are first-priority liens.
"Senior Obligations" means all obligations, liabilities, and indebtedness of the Borrower and the guarantors under or in connection with the Senior Documents, whether now existing or hereafter arising, whether contingent or absolute, whether liquidated or unliquidated, and whether or not from time to time reduced or extinguished and thereafter increased or re-incurred, including, without limitation: (a) the principal amount of the term loan B facility in the aggregate outstanding amount of $275,000,000, bearing interest at a rate per annum equal to the Secured Overnight Financing Rate ("SOFR") plus 375 basis points; (b) the commitments under the revolving credit facility in the aggregate committed amount of $50,000,000 (of which $12,000,000 is drawn as of the date hereof), bearing interest at a rate per annum equal to SOFR plus 350 basis points; (c) all accrued and unpaid interest on the foregoing; (d) all fees payable under the Senior Documents, including commitment fees, letter of credit fees, and administrative agent fees; (e) all expenses and costs of collection, including reasonable attorneys' fees; (f) all indemnification obligations; (g) all obligations under any hedging agreements entered into with any Senior Lender or affiliate thereof; and (h) all other amounts owing under or in connection with the Senior Documents.
"Shared Collateral" means all assets, properties, and rights of the Borrower and the Subsidiary Guarantors in which both the Senior Agent (for the benefit of the Senior Lenders) and the Mezzanine Lender hold security interests, as more particularly described on Schedule 2 attached hereto, including, without limitation: (a) all equipment, vehicles, rolling stock, and fixtures; (b) all accounts receivable; (c) all inventory; (d) all intellectual property, including trademarks, trade names, service marks, and domain names; (e) all equity interests in Stonefield Intermodal Services, Inc., Stonefield Fleet Management, LLC, and Stonefield Freight Brokerage, Inc.; (f) all general intangibles, chattel paper, deposit accounts, letter of credit rights, investment property, and supporting obligations; and (g) all proceeds of the foregoing. For the avoidance of doubt, the Parent Equity Pledge (being the pledge of 100% of the equity interests in Stonefield Logistics Group Inc. by Cascade Ridge SLG Holdings, LLC in favor of the Mezzanine Lender) is excluded from Shared Collateral and is not subject to the lien subordination, enforcement standstill, or other provisions of this Agreement applicable to Shared Collateral.
"SOFR" means the Secured Overnight Financing Rate, as published by the Federal Reserve Bank of New York (or a successor administrator), as may be determined in accordance with the Senior Credit Agreement.
"Standstill Period" means a period of 180 consecutive days following delivery by the Mezzanine Lender to the Senior Agent of a written Enforcement Notice of the Mezzanine Lender's intention to exercise remedies against the Shared Collateral, as set forth in Section 3.2.
"Subsidiary Guarantors" means, collectively: (a) Stonefield Intermodal Services, Inc., a Texas corporation (EIN: 75-6849321); (b) Stonefield Fleet Management, LLC, a Texas limited liability company (EIN: 75-6912488); and (c) Stonefield Freight Brokerage, Inc., a Delaware corporation (EIN: 84-3306715), and any other subsidiary of the Borrower that hereafter becomes a guarantor under the Senior Documents or the Mezzanine Documents.
"UCC" means the Uniform Commercial Code as in effect from time to time in the applicable jurisdiction.
"Warrant Agreement" means that certain Warrant Agreement, dated as of September 29, 2023, by and between the Borrower and the Mezzanine Lender, pursuant to which the Borrower has issued to the Mezzanine Lender warrants to purchase equity interests in the Borrower on the terms and conditions set forth therein.
Section 1.2 — Rules of Construction
Unless otherwise defined herein, capitalized terms used in this Agreement that are defined in the Senior Credit Agreement or the Mezzanine Credit Agreement shall have the meanings ascribed to such terms in the Senior Credit Agreement or the Mezzanine Credit Agreement, as the context requires. In the event that a defined term is defined in both the Senior Credit Agreement and the Mezzanine Credit Agreement, and the definitions therein are inconsistent, the definition in the Senior Credit Agreement shall control for purposes of this Agreement unless expressly stated otherwise. References in this Agreement to any Section, Article, Exhibit, or Schedule are references to such Section, Article, Exhibit, or Schedule of or to this Agreement, unless otherwise expressly provided. The words "hereof," "herein," "hereto," and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation." The use of the singular shall include the plural, and the use of the plural shall include the singular, in each case as the context requires. References to statutes or regulations include all statutory and regulatory provisions consolidating, amending, replacing, supplementing, or interpreting the statute or regulation referred to. The principles of construction set forth in Sections 5-1401 and 5-1402 of the New York General Obligations Law shall apply to this Agreement.
Section 1.3 — Headings
The headings of Articles, Sections, and subsections used in this Agreement are for convenience of reference only, shall not be deemed a part of this Agreement, and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.
ARTICLE II — LIEN PRIORITIES AND SUBORDINATION
Section 2.1 — Subordination of Mezzanine Liens
(a) All Mezzanine Liens on the Shared Collateral are and shall at all times be subordinate and junior in all respects to all Senior Liens on the Shared Collateral. The Mezzanine Lender hereby acknowledges and agrees that the Senior Agent, for the benefit of the Senior Lenders, holds and shall at all times hold first-priority perfected security interests and liens in and on the Shared Collateral, and that the Mezzanine Lender holds and shall at all times hold only second-priority security interests and liens in and on the Shared Collateral, subject and subordinate in all respects to the Senior Liens.
(b) The subordination of the Mezzanine Liens to the Senior Liens as provided in this Section 2.1 shall apply regardless of:
(i) the order, time, or method of creation, attachment, perfection, recording, or filing of any lien, security interest, or financing statement;
(ii) the manner of perfection of any such lien or security interest, whether by filing, possession, control, or otherwise;
(iii) any provision of the UCC or any other applicable law relating to the priority of liens or security interests;
(iv) any deficiency in the creation, attachment, or perfection of any Senior Lien; or
(v) any other circumstance whatsoever, whether or not similar to the foregoing, that might otherwise cause the Mezzanine Liens to be senior to, or pari passu with, the Senior Liens.
(c) The Mezzanine Lender hereby acknowledges that the subordination of the Mezzanine Liens to the Senior Liens as set forth in this Section 2.1 is a material inducement to the Senior Agent and the Senior Lenders to enter into Amendment No. 3 to the Senior Credit Agreement and to consent to the incurrence of the Mezzanine Obligations.
Section 2.2 — Nature of Subordination
The lien subordination established by this Agreement is a subordination of liens and security interests, and not a subordination of indebtedness or of the right to receive payment. Nothing in this Agreement shall be construed to prohibit the Borrower from making, or the Mezzanine Lender from receiving, payments on account of the Mezzanine Obligations, except as expressly provided in Article IV (Payment blockage). The Mezzanine Obligations constitute independent obligations of the Borrower and are not subordinated in right of payment to the Senior Obligations, except during a Payment blockage Period as set forth in Article IV.
Section 2.3 — Parent Equity Pledge Exclusion
(a) Notwithstanding anything to the contrary contained in this Agreement, the Parent Equity Pledge (being the first-priority pledge of 100% of the issued and outstanding equity interests in the Borrower by Cascade Ridge SLG Holdings, LLC in favor of the Mezzanine Lender, pursuant to the Parent Equity Pledge Agreement) is not Shared Collateral and is not subject to the lien subordination provisions of this Article II or any other provision of this Agreement applicable to Shared Collateral.
(b) The Mezzanine Lender has a first-priority security interest in the Parent Equity Pledge, and the Senior Agent acknowledges that it has no interest in, and shall not assert any lien, claim, or encumbrance against, the Parent Equity Pledge.
(c) The Mezzanine Lender may exercise remedies with respect to the Parent Equity Pledge without regard to the standstill or enforcement restrictions of this Agreement applicable to Shared Collateral; provided, however, that the Mezzanine Lender's exercise of remedies with respect to the Parent Equity Pledge shall be subject to the limitations set forth in Section 5.6 of this Agreement.
Section 2.4 — Prohibition on Contesting Liens
(a) Neither the Senior Agent nor the Mezzanine Lender shall, in any judicial, administrative, or other proceeding (including any proceeding under Title 11 of the United States Code or any other applicable insolvency or bankruptcy law), contest, challenge, or otherwise dispute the validity, enforceability, attachment, perfection, or priority of the other party's liens on the Shared Collateral or, in the case of the Mezzanine Lender, the Parent Equity Pledge.
(b) Neither party shall seek to avoid, set aside, subordinate, recharacterize, or otherwise impair the liens of the other party in any insolvency, bankruptcy, or similar proceeding, whether by means of an adversary proceeding, contested matter, or otherwise.
(c) Each party agrees that neither the Senior Agent nor the Mezzanine Lender shall assert that any of the other party's liens are invalid, voidable, or avoidable under any applicable federal or state law, including Sections 544, 547, 548, 549, 550, or 552 of the United States Bankruptcy Code.
Section 2.5 — No New Liens
(a) The Mezzanine Lender shall not acquire or hold, and shall not accept the grant of, any lien on any property or asset constituting Shared Collateral that is not subordinated to the Senior Liens in accordance with the terms and provisions of this Agreement.
(b) The Senior Agent shall not seek to acquire, and shall not accept the grant of, any lien on the Parent Equity Pledge or on any other collateral that has been designated as exclusively securing the Mezzanine Obligations.
(c) If the Mezzanine Lender shall acquire or hold any lien on Shared Collateral that is not subordinated to the Senior Liens as provided herein, such lien shall be deemed to be and shall be subordinated to the Senior Liens in accordance with this Agreement as if it had been granted and existed on the date hereof.
Section 2.6 — Future Senior Obligations
(a) The lien subordination established by this Agreement shall extend to all Senior Obligations, whether arising before, on, or after the date hereof, including any Senior Obligations arising under any refinancing, refunding, replacement, renewal, or extension of the Senior Credit Agreement or the other Senior Documents.
(b) Notwithstanding the foregoing, the lien subordination set forth in this Article II shall not extend to any refinancing, refunding, replacement, or extension of the Senior Obligations if and to the extent that the aggregate principal amount of the Senior Obligations outstanding after giving effect to such refinancing, refunding, replacement, or extension would exceed 115% of the aggregate principal amount of the Senior Obligations outstanding as of the date hereof (currently $275,000,000 in respect of the term loan B facility and $50,000,000 in commitments under the revolving credit facility), unless the Mezzanine Lender shall have consented in writing to such increase. For the avoidance of doubt, PIK interest capitalized on the Mezzanine Obligations and capitalized interest on the Senior Obligations shall not be counted against the 115% cap.
ARTICLE III — ENFORCEMENT STANDSTILL AND REMEDIES
Section 3.1 — Sole Control of Shared Collateral
(a) During the Standstill Period, the Senior Agent shall have the sole and exclusive right and authority to control the disposition, release, and enforcement of the Shared Collateral, including, without limitation, the right to determine the manner, timing, and method of any such disposition, release, or enforcement. During the Standstill Period, the Mezzanine Lender shall not exercise or seek to exercise any right or remedy against the Shared Collateral, including, without limitation, any right of foreclosure (whether judicial or non-judicial), sale, collection of accounts receivable, possession of equipment or other tangible personal property, set-off, or recoupment.
(b) The Senior Agent may take any action with respect to the Shared Collateral that it would be entitled to take under the Senior Documents as if the Mezzanine Liens did not exist, including, without limitation, enforcement of Senior Liens, disposition of Shared Collateral by public or private sale, collection of accounts, acceptance of Shared Collateral in full or partial satisfaction of Senior Obligations, release of Shared Collateral in connection with any disposition permitted under the Senior Credit Agreement, and compromise or settlement of any claim or right relating to the Shared Collateral.
(c) The Mezzanine Lender acknowledges and agrees that nothing in this Agreement imposes any obligation on the Senior Agent to exercise any right or remedy with respect to the Shared Collateral at any time, and the Senior Agent may elect to exercise or refrain from exercising any such right or remedy in its sole and absolute discretion.
Section 3.2 — Enforcement Standstill — 180-Day Period
(a) Following the occurrence and during the continuance of a Mezzanine Event of Default, the Mezzanine Lender shall, prior to exercising any remedies against the Shared Collateral, deliver a written notice to the Senior Agent (an "Enforcement Notice"), substantially in the form of Exhibit B attached hereto, of the Mezzanine Lender's intention to exercise remedies with respect to the Shared Collateral. The Enforcement Notice shall specify in reasonable detail the nature of the Mezzanine Event of Default giving rise to the Mezzanine Lender's intended enforcement action.
(b) The Mezzanine Lender may not commence the exercise of any remedies against the Shared Collateral until the expiration of 180 consecutive days following the date of delivery of the Enforcement Notice to the Senior Agent (the "Standstill Period"). During the Standstill Period, the Mezzanine Lender shall refrain from taking any action to enforce, foreclose upon, collect, or realize upon any Shared Collateral, and shall not commence, join in, or otherwise participate in any legal proceeding seeking to enforce any Mezzanine Lien on the Shared Collateral.
(c) If the Senior Agent commences its own enforcement action against the Shared Collateral during the Standstill Period, the Mezzanine Lender shall not take any action to interfere with, delay, impede, or otherwise obstruct the Senior Agent's enforcement. The Senior Agent's commencement of enforcement during the Standstill Period shall not extend, toll, or restart the Standstill Period.
(d) Upon expiration of the 180-day Standstill Period, if the Senior Agent has not commenced enforcement against the Shared Collateral, or if the Senior Obligations remain outstanding notwithstanding any enforcement commenced by the Senior Agent, the Mezzanine Lender may exercise remedies against the Shared Collateral in accordance with applicable law and the terms of the Mezzanine Documents; provided, however, that all proceeds of any enforcement by the Mezzanine Lender against the Shared Collateral shall be subject to the priority provisions of Section 3.4 and shall be applied first to the payment in full of all Senior Obligations before any application to Mezzanine Obligations.
Section 3.3 — Waiver of Right to Prevent Sales
(a) The Mezzanine Lender hereby irrevocably waives any right it may now or hereafter have to object to, contest, delay, prevent, or otherwise interfere with any sale, transfer, lease, or other disposition of Shared Collateral by the Senior Agent in connection with the Senior Agent's enforcement of the Senior Liens, whether by public sale, private sale, UCC foreclosure, strict foreclosure, judicial foreclosure, or otherwise.
(b) The Mezzanine Liens shall be automatically and unconditionally released, without the need for any further action, consent, or documentation on the part of the Mezzanine Lender, on any Shared Collateral that is sold, transferred, or otherwise disposed of in connection with the Senior Agent's enforcement of the Senior Liens, and such Shared Collateral shall be sold or transferred free and clear of any Mezzanine Liens. The Mezzanine Lender agrees to execute and deliver, promptly upon request by the Senior Agent, such lien releases, UCC termination statements, or other instruments as may be necessary or desirable to evidence the release of Mezzanine Liens on such Shared Collateral.
(c) The Mezzanine Lender acknowledges and agrees that the Senior Agent shall not owe any fiduciary duty or other obligation to the Mezzanine Lender in connection with the Senior Agent's exercise of remedies against the Shared Collateral, except as may be required by applicable law with respect to commercial reasonableness.
Section 3.4 — Application of Shared Collateral Proceeds
(a) All proceeds of Shared Collateral (whether realized through enforcement by the Senior Agent, the Mezzanine Lender, or any other Person, and whether in the form of cash, securities, or other property), including, without limitation, proceeds of any foreclosure, sale, collection, or other realization upon the Shared Collateral, shall be applied in the following order of priority:
First, to the payment of all costs and expenses of the Senior Agent incurred in connection with the enforcement, collection, or realization, including reasonable attorneys' fees, appraisal costs, and other out-of-pocket expenses;
Second, to the payment in full in cash of all Senior Obligations, including all outstanding principal, all accrued and unpaid interest (at the default rate, if applicable), all fees, all expenses, all indemnification amounts, and all other amounts owing under the Senior Documents;
Third, after payment in full of all Senior Obligations and the termination or cash collateralization of all commitments under the Senior Credit Agreement, to the payment of all costs and expenses of the Mezzanine Lender incurred in connection with enforcement, collection, or realization, including reasonable attorneys' fees;
Fourth, to the payment of all Mezzanine Obligations, including all outstanding principal (including capitalized PIK interest), all accrued and unpaid interest, all fees, all expenses, all indemnification amounts, and all other amounts owing under the Mezzanine Documents; and
Fifth, to the Borrower or as otherwise required by applicable law.
(b) The priority of application set forth in this Section 3.4 shall apply regardless of whether the enforcement was initiated by the Senior Agent or the Mezzanine Lender, and regardless of whether the Senior Obligations are then in default.
Section 3.5 — Turnover of Proceeds
(a) If the Mezzanine Lender shall receive any proceeds of Shared Collateral (whether in the form of cash, securities, or other property) at any time when such proceeds should have been applied to Senior Obligations in accordance with Section 3.4, or if the Mezzanine Lender shall receive any proceeds of Shared Collateral in violation of the priority provisions of this Agreement, the Mezzanine Lender shall hold all such proceeds in trust for the benefit of the Senior Agent and shall promptly turn over and deliver such proceeds to the Senior Agent, in the same form received (with any necessary endorsements), for application to the Senior Obligations in accordance with the Senior Documents.
(b) Any proceeds so received and held in trust by the Mezzanine Lender shall not be commingled with any other assets or funds of the Mezzanine Lender and shall be segregated and identifiable as property held in trust for the Senior Agent.
(c) The obligation of the Mezzanine Lender to turn over proceeds pursuant to this Section 3.5 shall survive the termination of this Agreement to the extent that any such obligation arose or accrued prior to such termination.
Section 3.6 — Insurance and Condemnation Proceeds
(a) All insurance proceeds received by the Borrower, any Subsidiary Guarantor, the Senior Agent, or the Mezzanine Lender with respect to any loss, damage, or destruction of any Shared Collateral shall be applied in accordance with the priority provisions of Section 3.4. All condemnation awards or proceeds received in connection with any condemnation, taking, or similar proceeding affecting any Shared Collateral shall likewise be applied in accordance with the priority provisions of Section 3.4.
(b) During any period when Senior Obligations remain outstanding, the Senior Agent shall have the exclusive right to adjust, settle, compromise, and collect all insurance claims and condemnation awards with respect to the Shared Collateral. The Mezzanine Lender shall cooperate with the Senior Agent in connection with the prosecution and collection of any such insurance claims or condemnation awards and shall promptly deliver to the Senior Agent any insurance proceeds or condemnation awards received directly by the Mezzanine Lender in respect of Shared Collateral.
(c) Nothing in this Section 3.6 shall be construed to limit the Borrower's obligations to maintain insurance as required by the Senior Documents and the Mezzanine Documents.
ARTICLE IV — PAYMENT BLOCKAGE
Section 4.1 — Permitted Mezzanine Payments
Except during a Payment blockage Period as provided in this Article IV, the Borrower may make, and the Mezzanine Lender may receive and retain, the following payments on account of the Mezzanine Obligations ("Permitted Mezzanine Payments"):
(a) regularly scheduled cash interest payments under the Mezzanine Credit Agreement at the cash pay rate of 8.50% per annum (or such other rate as may be in effect under the Mezzanine Credit Agreement from time to time, subject to Section 8.3);
(b) any other payments on account of the Mezzanine Obligations that are expressly permitted to be made under the Senior Credit Agreement as amended;
(c) fees and expense reimbursements payable to the Mezzanine Lender under the Mezzanine Documents in the ordinary course; and
(d) any mandatory or optional prepayments of the Mezzanine Obligations that are expressly permitted under the Senior Credit Agreement.
For the avoidance of doubt, PIK interest at the rate of 2.50% per annum shall accrete to and be capitalized on the outstanding principal amount of the mezzanine term loan on each applicable interest payment date regardless of whether a Payment blockage Period is then in effect. The accrual and capitalization of PIK interest is not a "payment" for purposes of this Article IV and shall not be subject to payment blockage.
Section 4.2 — Payment blockage Notice
(a) Upon the occurrence and during the continuance of a Senior Event of Default, the Senior Agent may deliver a Payment blockage Notice, substantially in the form of Exhibit A attached hereto, to the Mezzanine Lender and the Borrower.
(b) The Payment blockage Notice shall identify in reasonable detail the Senior Event of Default upon which the Payment blockage Notice is based and shall state that a Payment blockage Period is commencing as of the date of delivery of such notice.
(c) Promptly upon receipt of a Payment blockage Notice, the Borrower shall cease making, and the Mezzanine Lender shall cease receiving and retaining, any payments on account of the Mezzanine Obligations (other than PIK interest accruals as provided in Section 4.1) for the duration of the Payment blockage Period.
Section 4.3 — Limitations on Payment blockage
The exercise by the Senior Agent of its right to deliver a Payment blockage Notice and to commence a Payment blockage Period shall be subject to the following limitations:
(a) Not more than one Payment blockage Period may be commenced during any consecutive 360-day period, regardless of the number of Senior Events of Default that may occur during such period.
(b) No Payment blockage Notice may be delivered with respect to any Senior Event of Default that was the basis for a prior Payment blockage Notice, unless such Senior Event of Default has been cured or waived in accordance with the Senior Documents and has subsequently re-occurred as a new Senior Event of Default.
(c) The Payment blockage Period shall terminate and the Borrower may resume payments on the Mezzanine Obligations upon the earliest to occur of the following:
(i) the expiration of 180 consecutive days from the date of delivery of the Payment blockage Notice;
(ii) the date on which the Senior Event of Default giving rise to the Payment blockage Notice is cured or waived in accordance with the Senior Documents; and
(iii) the date on which the Senior Agent delivers written notice to the Mezzanine Lender and the Borrower that the Payment blockage Period has been terminated.
Section 4.4 — Payments Received During blockage
(a) If the Mezzanine Lender receives any cash payment on account of the Mezzanine Obligations during a Payment blockage Period (other than PIK interest accruals), the Mezzanine Lender shall hold such payment in trust for the benefit of the Senior Agent and shall promptly turn over and deliver such payment to the Senior Agent for application to the Senior Obligations in accordance with the Senior Documents.
(b) PIK interest shall continue to accrue and compound on the outstanding principal amount of the mezzanine term loan during a Payment blockage Period without interruption. The capitalization of PIK interest during a Payment blockage Period shall not constitute a violation of this Article IV.
Section 4.5 — Resumption of Payments
Following the expiration or termination of a Payment blockage Period as provided in Section 4.3, the Borrower shall be permitted to make, and the Mezzanine Lender shall be permitted to receive and retain, all payments on account of the Mezzanine Obligations that were blocked and could not be made during the Payment blockage Period, including any accumulated and unpaid cash interest that accrued during the Payment blockage Period but was not paid. The resumption of payments shall commence on the first Business Day following the date on which the Payment blockage Period expires or is terminated, and the Borrower shall pay all accumulated and unpaid amounts to the Mezzanine Lender as promptly as practicable, subject to the terms and conditions of the Senior Credit Agreement.
ARTICLE V — PURCHASE OPTION
Section 5.1 — Right to Purchase Senior Obligations
Upon the occurrence of any of the following events, the Mezzanine Lender shall have the right (but not the obligation) to purchase all (but not less than all) of the Senior Obligations from the Senior Lenders:
(a) acceleration of the Senior Obligations in whole or in part (whether automatically or by declaration of the Senior Agent) following the occurrence of a Senior Event of Default; or
(b) delivery by the Senior Agent of a written notice to the Borrower and the Mezzanine Lender of the Senior Agent's intention to commence enforcement proceedings against the Shared Collateral.
The purchase option set forth in this Section 5.1 is personal to the Mezzanine Lender and may be exercised by the Mezzanine Lender or its designee (which designee shall be reasonably acceptable to the Senior Agent).
Section 5.2 — Purchase Price
The purchase price for all of the Senior Obligations shall be an amount equal to:
(a) 100% (par) of the outstanding principal amount of the Senior Obligations (including the term loan B, which has an aggregate outstanding principal amount of $275,000,000 as of the date hereof, and any drawn amounts under the revolving credit facility); plus
(b) all accrued and unpaid interest on the Senior Obligations through and including the date of closing of the purchase (at the applicable rate, including the default rate if then in effect); plus
(c) all fees, commissions, and other amounts owing under the Senior Documents as of the date of closing (including any breakage costs, prepayment premiums, if any, and administrative agent fees); plus
(d) all expenses (including reasonable attorneys' fees and disbursements) incurred by the Senior Agent and the Senior Lenders in connection with the purchase transaction and the assignment of the Senior Documents; plus
(e) all other amounts owing under the Senior Documents as of the date of closing, including indemnification obligations and amounts owing under any hedging agreements with the Senior Lenders or their affiliates that are included in the Senior Obligations.
Section 5.3 — Exercise Procedure
(a) To exercise the purchase option, the Mezzanine Lender shall deliver a written notice of its election to purchase (a "Purchase Election Notice"), substantially in the form of Exhibit C attached hereto, to the Senior Agent within ten (10) Business Days following the earlier of: (i) the date of acceleration of the Senior Obligations; or (ii) the date of delivery by the Senior Agent of a notice of intention to commence enforcement proceedings against the Shared Collateral. If the Mezzanine Lender fails to deliver a Purchase Election Notice within such ten (10) Business Day period, the purchase option with respect to such acceleration or enforcement notice shall expire and be of no further force or effect; provided, however, that the Mezzanine Lender shall be entitled to exercise the purchase option upon the occurrence of any subsequent triggering event described in Section 5.1.
(b) The closing of the purchase shall occur on a date specified by the Mezzanine Lender in the Purchase Election Notice, which date shall be no later than fifteen (15) Business Days following the date of delivery of the Purchase Election Notice, unless such date is extended by mutual written agreement of the Senior Agent and the Mezzanine Lender. Time shall be of the essence with respect to the closing of the purchase.
(c) At the closing, the Senior Agent shall (acting on behalf of the Senior Lenders), and the Senior Lenders shall, execute and deliver to the Mezzanine Lender (or its designee) an assignment and assumption agreement, in form and substance reasonably satisfactory to the Senior Agent and the Mezzanine Lender, pursuant to which the Senior Lenders shall assign, transfer, and convey to the Mezzanine Lender (or its designee), without recourse, representation, or warranty (other than as to each assigning Senior Lender's authority to enter into the assignment and its ownership of the assigned Senior Obligations, free and clear of any liens or encumbrances created by such Senior Lender), all of their respective rights, title, and interest in and to the Senior Documents, the Senior Liens, and the Senior Obligations.
Section 5.4 — Payment in Cash
The purchase price for the Senior Obligations, as determined in accordance with Section 5.2, shall be paid by the Mezzanine Lender (or its designee) to the Senior Agent (for distribution to the Senior Lenders in accordance with the Senior Credit Agreement) at the closing in immediately available funds by wire transfer in United States dollars to an account designated by the Senior Agent not less than two (2) Business Days prior to the closing date.
Section 5.5 — Effect of Purchase
(a) Upon consummation of the purchase of the Senior Obligations, the Mezzanine Lender (or its designee) shall succeed to all of the rights, title, and interest of the Senior Agent and the Senior Lenders under the Senior Documents, including all Senior Liens, and shall assume all obligations and duties of the Senior Agent and the Senior Lenders under the Senior Documents arising from and after the date of the closing.
(b) This Intercreditor Agreement shall terminate and be of no further force or effect upon the consummation of the purchase of all Senior Obligations pursuant to this Article V, and the provisions of Section 11.2 (Survival) shall apply.
(c) Following consummation of the purchase, the Mezzanine Lender (or its designee), in its capacity as the new holder of the Senior Obligations, shall be entitled to exercise all rights and remedies available to the Senior Agent and the Senior Lenders under the Senior Documents, subject to the terms and conditions thereof.
Section 5.6 — Exercise of Parent Equity Pledge
The Mezzanine Lender agrees that it shall not exercise any remedies with respect to the Parent Equity Pledge (including, without limitation, foreclosure on or disposition of the equity interests in the Borrower pledged thereunder) in a manner that would result in a Change of Control under the Senior Credit Agreement or the Mezzanine Credit Agreement unless:
(a) the Mezzanine Lender simultaneously delivers a Purchase Election Notice and offers to purchase all Senior Obligations in full at the purchase price set forth in Section 5.2, in each case pursuant to and in accordance with this Article V; or
(b) all Senior Obligations have been indefeasibly paid in full in cash and all commitments under the Senior Credit Agreement have been terminated or expired.
For the avoidance of doubt, the restriction set forth in this Section 5.6 applies solely to the exercise of remedies with respect to the Parent Equity Pledge that would result in a Change of Control, and does not otherwise limit the Mezzanine Lender's rights with respect to the Parent Equity Pledge as set forth in Section 2.3.
ARTICLE VI — BANKRUPTCY AND INSOLVENCY PROVISIONS
Section 6.1 — Relative Rights in Bankruptcy
(a) The lien priorities, subordination provisions, enforcement standstill provisions, payment blockage provisions, and all other terms and conditions of this Agreement shall continue in full force and effect and shall be applicable and enforceable in any case, proceeding, or action commenced by or against the Borrower or any guarantor under Title 11 of the United States Code (the "Bankruptcy Code"), or any other applicable federal, state, or foreign bankruptcy, insolvency, receivership, reorganization, liquidation, or similar law (collectively, "Insolvency Proceedings").
(b) The Mezzanine Lender shall not oppose, object to, challenge, or otherwise interfere with any DIP Financing proposed to be obtained by the Borrower or any guarantor with the support of the Senior Agent or the Required Lenders (as defined in the Senior Credit Agreement), including, without limitation, any DIP Financing that is to be provided by the Senior Agent, the Senior Lenders, or any of their affiliates, and including any motion seeking authority for the Borrower to obtain such DIP Financing or to grant priming liens or superpriority claims in connection therewith, so long as such DIP Financing does not require the Mezzanine Lender to release its Mezzanine Liens on Shared Collateral (other than in connection with a sale or disposition contemplated by this Agreement).
(c) The Mezzanine Lender shall not seek adequate protection or relief from the automatic stay (under Section 362 of the Bankruptcy Code or otherwise) with respect to the Shared Collateral without the prior written consent of the Senior Agent; provided, however, that the Mezzanine Lender may seek adequate protection or relief from the automatic stay with respect to the Shared Collateral after the expiration of the 180-day Standstill Period (as measured from the date of delivery of the Enforcement Notice to the Senior Agent, whether delivered before or during the Insolvency Proceeding, or if no Enforcement Notice was delivered prior to the commencement of the Insolvency Proceeding, from the date of the commencement of such proceeding).
(d) Notwithstanding anything to the contrary herein, the Mezzanine Lender shall be entitled to (i) file a proof of claim in any Insolvency Proceeding, (ii) vote (or abstain from voting) on any plan of reorganization in accordance with the provisions of this Agreement, and (iii) seek adequate protection with respect to the Parent Equity Pledge (which is not Shared Collateral) without regard to the standstill or other restrictions of this Agreement.
Section 6.2 — Post-Petition Interest and Expenses
(a) The Senior Agent shall be entitled to claim post-petition interest, fees, costs, and expenses with respect to the Senior Obligations to the fullest extent permitted by applicable law (including, without limitation, Section 506(b) of the Bankruptcy Code), and the Mezzanine Lender shall not contest, object to, or otherwise challenge any such claim by the Senior Agent.
(b) To the extent that the value of the Shared Collateral (as determined by the bankruptcy court or other court of competent jurisdiction) exceeds the total amount of the Senior Obligations (including all post-petition interest, fees, and expenses claimed by the Senior Agent), the Mezzanine Lender may seek to claim post-petition interest, fees, costs, and expenses with respect to the Mezzanine Obligations to the extent provided by applicable law, subject in all respects to the prior satisfaction in full of all Senior Obligations.
Section 6.3 — No Interference with Senior Claims
(a) The Mezzanine Lender shall not file, join, support, or vote in favor of any plan of reorganization, sale motion (under Section 363 of the Bankruptcy Code or otherwise), bid procedures motion, or other motion or pleading in any Insolvency Proceeding that is not supported or consented to by the Senior Agent (or, if applicable, the Required Lenders), if such plan, motion, or other relief does not provide for the payment in full in cash of all Senior Obligations on the effective date of such plan or the closing date of such sale.
(b) The Mezzanine Lender shall not propose, support, or vote in favor of any plan of reorganization or other arrangement that would impair, modify, or reduce the Senior Obligations or the Senior Liens without the prior written consent of the Senior Agent.
(c) The Mezzanine Lender shall not take any action in any Insolvency Proceeding that is inconsistent with the terms of this Agreement or that would have the effect of circumventing or undermining the lien subordination, enforcement standstill, payment blockage, or other provisions of this Agreement.
Section 6.4 — Avoidance Recoveries
If any payment on account of the Senior Obligations is avoided, set aside, invalidated, declared fraudulent, or required to be returned, repaid, or disgorged to the estate of the Borrower or any guarantor (or to any trustee, receiver, debtor-in-possession, or similar Person) under any applicable insolvency or bankruptcy law (including, without limitation, Sections 544, 547, 548, 549, 550, or 553 of the Bankruptcy Code), the Senior Obligations so restored shall be entitled to the benefits and protections of this Agreement as if such payment had not been made, and the subordination, priority, and other provisions of this Agreement shall be reinstated and continue in full force and effect with respect to such restored Senior Obligations.
Section 6.5 — Waiver of marshaling
The Mezzanine Lender hereby irrevocably waives any right it may have to require the marshaling of assets of the Borrower or any guarantor, and agrees that the Senior Agent shall not be required to marshal any assets of the Borrower or any guarantor in favor of the Mezzanine Lender or any other Person.
ARTICLE VII — CHANGE OF CONTROL PROVISIONS
Section 7.1 — Change of Control Consequences
(a) Upon the occurrence of a Change of Control (as defined in Section 1.1), the Mezzanine Lender acknowledges and agrees that:
(i) a mandatory prepayment of all outstanding Mezzanine Obligations shall be required under the Mezzanine Credit Agreement at a price equal to 103% of the then-outstanding principal amount of the mezzanine term loan (including all capitalized PIK interest), plus all accrued and unpaid cash interest, fees, and other amounts owing under the Mezzanine Documents; and
(ii) the warrants issued to the Mezzanine Lender under the Warrant Agreement, dated as of September 29, 2023, shall become immediately puttable by the Mezzanine Lender to the Borrower (or its successor) at fair market value, as determined in accordance with the procedures set forth in the Warrant Agreement.
(b) If a Change of Control also constitutes a Senior Event of Default under the Senior Credit Agreement or triggers a mandatory prepayment or repurchase obligation with respect to the Senior Obligations under the Senior Credit Agreement, the Senior Obligations shall be paid in full in cash (including all principal, accrued interest, fees, expenses, prepayment premiums, and other amounts) before any payment on account of the mandatory prepayment of the Mezzanine Obligations from the proceeds of Shared Collateral. For the avoidance of doubt, this Section 7.1(b) shall not prohibit the payment of the Mezzanine mandatory prepayment from sources other than proceeds of Shared Collateral, subject to the payment blockage provisions of Article IV.
Section 7.2 — Notice of Change of Control
The Borrower shall promptly (and in any event within five (5) Business Days of the occurrence thereof) notify both the Senior Agent and the Mezzanine Lender in writing of the occurrence of any Change of Control. Such notice shall set forth in reasonable detail the facts and circumstances constituting the Change of Control, the date on which it occurred, and the identity of the Person or group that acquired control or beneficial ownership.
ARTICLE VIII — AGREEMENTS WITH RESPECT TO ACTIONS OF THE BORROWER
Section 8.1 — Borrower's Obligations Unaffected
Nothing in this Agreement shall:
(a) relieve the Borrower of any of its obligations to the Senior Agent, the Senior Lenders, or the Mezzanine Lender under the Senior Documents, the Mezzanine Documents, or any other agreement, instrument, or document to which the Borrower is a party;
(b) limit, impair, or otherwise affect the rights of the Senior Agent or the Mezzanine Lender to enforce any of the terms or provisions of the Senior Documents or the Mezzanine Documents, respectively, against the Borrower (subject to the terms of this Agreement); or
(c) prevent the Borrower from complying with the terms of any order or decree of any court or governmental authority that is binding upon the Borrower.