Document:

Exhibit 10.34

 

Execution Version

 

FIRST AND SUBORDINATED LIEN INTERCREDITOR AGREEMENT

 

This FIRST AND SUBORDINATED LIEN  INTERCREDITOR AGREEMENT, is dated as of April 06, 2010 and entered into by and among COFFEYVILLE RESOURCES, LLC, a Delaware limited liability company (the “Company”), WELLS FARGO BANK, NATIONAL ASSOCIATION, a national association (“Wells Fargo”), in its capacity as collateral agent for the First Lien Claimholders (as defined below), including its successors and assigns from time to time (the “First Lien Collateral Agent”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national association, in its capacity as collateral trustee for itself and the Subordinated Lien Claimholders, in each case, referenced below, including its successors and assigns from time to time (the “Subordinated Collateral Trustee”).  Capitalized terms used in this Agreement have the meanings set forth in Section 1 below.

 

RECITALS

 

WHEREAS, the Company, certain Affiliates of the Company as guarantors party thereto, the various lenders party thereto, Goldman Sachs Credit Partners L.P. (“GSCP”) and CREDIT SUISSE AG, Cayman Islands (formerly known as Credit Suisse, Cayman Islands Branch, “Credit Suisse”), as joint lead arrangers and joint bookrunners (the “Arrangers”), Credit Suisse, as administrative agent and the other agents party thereto have entered into that certain Second Amended and Restated Credit and Guaranty Agreement, dated as of December 28, 2006, as amended by the First Amendment to the Second Amended and Restated Credit and Guaranty Agreement, dated as of August 23, 2007, the Second Amendment to the Second Amended and Restated Credit and Guaranty Agreement, dated as of December 22, 2008, the Third Amendment to the Second Amended and Restated Credit and Guaranty Agreement, dated as of October 2, 2009, and the Fourth Amendment to the Second Amended and Restated Credit and Guaranty Agreement dated as of March 12, 2010 (the “Fourth Amendment”), initially providing for credit facilities in the aggregate amount of $1,075,000,000 (as further amended, restated, supplemented, modified, replaced or Refinanced from time to time, the “First Lien Credit Agreement”);

 

WHEREAS, the Company, certain Affiliates of the Company as guarantors party thereto, and certain hedge counterparties have entered into certain Hedge Agreements;

 

WHEREAS, the Company, certain Affiliates of the Company as guarantors party thereto, Wells Fargo, as trustee, and the First Lien Collateral Agent are party to that certain Indenture dated as of the date hereof (as amended, restated, supplemented, modified, replaced or Refinanced from time to time, the “First Lien Notes Indenture”);

 

 

WHEREAS, the Company, certain Affiliates of the Company as guarantors party thereto, Wells Fargo, as trustee, and Wells Fargo, as “Subordinated Collateral  Trustee”, are party to that certain Indenture dated as of the date hereof (as amended, restated, supplemented, modified, replaced or Refinanced from time to time, the “Second Lien Notes Indenture”);

 

WHEREAS, the First Lien Obligations are secured on a first priority basis by Liens on substantially all of the assets of the Company, Holdings and certain Subsidiaries (such Subsidiaries and any future Subsidiaries of the Company providing a guaranty thereof, the “Guarantor Subsidiaries” and together with Holdings, the “Guarantors”), pursuant to the terms of the First Lien Collateral Documents;

 

WHEREAS, pursuant to the Fourth Amendment, the Requisite Lenders (as defined in the First Lien Credit Agreement) and the Required First Lien Creditors (as defined in the First Lien Intercreditor Agreement) have agreed to permit the incurrence of Subordinated Lien Debt, including the Second Lien Notes (as defined below);

 

WHEREAS, the Second Lien Notes will be secured on a second priority basis by Liens on substantially all of the assets of the Company, Holdings and the Guarantor Subsidiaries, pursuant to the terms of the Second Lien Collateral Documents (as defined below);

 

WHEREAS, the Company has requested the ability to incur additional Indebtedness secured by Liens subordinate to the Liens securing the First Lien Obligations, including Liens subordinate to the Liens securing the Second Lien Notes;

 

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

 

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

 

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

 

SECTION 1.  Definitions.

 

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

 

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

 

“Affiliate Securities” means all “securities” of any “affiliates” (as the terms “securities” and “affiliates” are used in Rule 3-16 of Regulation S-X under the Securities Act of 1933, as amended from time to time, and any successor statute) of the Company, as issuer of the Second Lien Notes.

 

“Agreement” means this Intercreditor Agreement.

 

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

 

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

 

“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close.

 

“Cap Amount” has the meaning assigned to that term in the definition of “First Lien Obligations.”

 

“Collateral” means all of the assets and property of any Grantor, whether real, personal or mixed, constituting First Lien Collateral and/or Subordinated Lien Collateral.

 

“Collateral Documents” means the First Lien Collateral Documents and the Subordinated Lien Collateral Documents.

 

“Commodity Hedge Agreements” means any commodity exchange, swap, forward, cap, floor collar or other similar agreement or arrangement, each of which is for the purpose of hedging the exposure of the Company and its Affiliates to fluctuations in the price of nitrogen fertilizers, hydrocarbons and refined products in their operations and not for speculative purposes.

 

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

 

“Currency Agreement” means any foreign exchange contract, currency swap agreement, futures contract, option contract, synthetic cap or other similar

 

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agreement or arrangement, each of which is for the purpose of hedging the foreign currency risk associated with the operations of the Company and/or its Affiliates and not for speculative purposes.

 

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

 

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

 

(b)           payment in full in cash of all Hedging Obligations constituting First Lien Obligations and the expiration or termination of all Hedge Agreements included in the First Lien Obligations or the cash collateralization of all such Hedging Obligations on terms satisfactory to each applicable counterparty;

 

(c)           payment in full in cash of all other First Lien Obligations that are due and payable or otherwise accrued and owing at or prior to the time such principal and interest are paid (other than any indemnification obligations for which no claim or demand for payment, whether oral or written, has been made at such time);

 

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

 

(e)           termination or cash collateralization (in an amount and manner reasonably satisfactory to the First Lien Collateral Agent, but in no event greater than 105% of the aggregate undrawn face amount) of all letters of credit issued under the First Lien Documents and constituting First Lien Obligations.

 

“Existing Hedge Agreements” means (i) that certain ISDA Master Agreement, dated as of June 24, 2005, between the Company and J. Aron & Company, as amended, including the schedule thereto and each confirmation and other document executed in connection therewith, and (ii) each existing confirmation and any other related document, in each case, as amended, governing the interest-rate hedging transactions between the Company and Credit Suisse International (formerly known as Credit Suisse First Boston International).

 

“First Lien” means a Lien granted by a Secured Debt Document to the trustee, agent or other representative at any time, that is stated to be on a first priority basis, upon any Collateral of either Company or any other Grantor to secure First Lien Obligations.

 

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

 

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

 

“First Lien Collateral Documents” means the Collateral Documents (as defined in the First Lien Credit Agreement) and all agreements, documents and instruments pursuant to which a Lien is granted securing any First Lien Obligations or under which rights or remedies with respect to such Liens are governed.

 

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

 

“First Lien Debt” means Indebtedness under the First Lien Credit Agreement, the First Lien Notes Indenture, the First Lien Notes, Hedging Obligations under the Existing Hedge Agreements and, to the extent issued or outstanding, any Indebtedness of the Company or Guarantors designated as such by the Company in writing to the First Lien Collateral Agent and the Subordinated Collateral Trustee; provided that:

 

(a)           on or before the date on which such Indebtedness is incurred, an Officer’s Certificate is delivered to the First Lien Collateral Agent and the Subordinated Collateral Trustee, designating such Indebtedness as “First Lien Debt” for the purposes of the First Lien Documents and the Subordinated Lien Documents;

 

(b)           such Indebtedness is evidenced or governed by an indenture, credit agreement, loan agreement, note agreement, promissory note or other agreement or instrument that includes a Lien Priority Confirmation;

 

(c)           is designated as First Lien Debt in accordance with the requirements of Section 5.6 and the other requirements of Section 5.6 with respect thereto are satisfied; and

 

(d)           at the time of the incurrence thereof, the applicable First Lien Debt may be incurred (and secured as contemplated herein) without violating the terms of any Secured Debt Document or causing any default thereunder.

 

“First Lien Documents” means, collectively, the First Lien Credit Agreement, the First Lien Notes Indenture, the First Lien Notes and the Credit Documents (as defined in the First Lien Credit Agreement or any similar term in any replacement or Refinanced First Lien Credit Agreement), the First Lien Collateral Documents and each of the other agreements, documents and instruments (including, without limitation, any Hedge Agreement) providing for or evidencing any other First Lien Obligation, and any other document or instrument executed or delivered at any time in connection with any First Lien Obligations, including any intercreditor or joinder agreement among holders of First Lien Obligations, to the extent such are effective at the relevant time, in each case as each may be amended, restated, supplemented, modified, renewed, extended or Refinanced from time to time in accordance with the provisions of this Agreement (in each case, whether pursuant to one or more agreements, with the same

 

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and/or new lenders and/or agents) and any other credit agreement, indenture or other agreement, document or instrument evidencing, governing, relating to or securing any First Lien Debt (including First Lien Debt incurred after the date hereof).

 

“First Lien Intercreditor Agreement” means that certain First Lien Intercreditor Agreement, dated as of December 28, 2006, by and among the Company, Credit Suisse, and J. Aron & Company.

 

“First Lien Lenders” means the “Lenders” under and as defined in the First Lien Documents.

 

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

 

“First Lien Notes” means the notes (including any additional notes) issued pursuant to the First Lien Notes Indenture.

 

“First Lien Notes Indenture” has the meaning assigned to that term in the recitals to this Agreement.

 

“First Lien Obligations” means, subject to clause (c) hereof, the following:

 

(a)           (i) All principal of and interest (including without limitation any Post Petition Interest) and premium (if any) on all loans made pursuant to the First Lien Credit Agreement, as amended, restated, supplemented, modified, replaced or Refinanced (in whole or in part) from time to time, (ii) all reimbursement obligations (if any) and interest thereon (including without limitation any Post Petition Interest) with respect to any letter of credit or similar instruments issued pursuant to the First Lien Documents, (iii) all Hedge Agreements and all other Hedging Obligations, (iv) all guarantee obligations, fees, expenses and other all other Obligations under the First Lien Credit Agreement and the other First Lien Documents, in each case whether or not allowed or allowable in an Insolvency or Liquidation Proceeding, (v) all obligations under the First Lien Notes Indenture and the First Lien Notes, and (vi) all obligations arising with respect to any First Lien Debt.

 

(b)           To the extent any payment with respect to any First Lien Obligation (whether by or on behalf of any Grantor, as proceeds of security, enforcement of any right of setoff or otherwise) is declared to be a fraudulent conveyance or a preference in any respect, set aside or required to be paid to a debtor in possession, any Subordinated Lien Claimholders, receiver or similar Person, then the obligation or part thereof originally intended to be satisfied shall, for the purposes of this Agreement and the rights and obligations of the First Lien Claimholders and the Subordinated Lien Claimholders, be deemed to be reinstated and outstanding as if such payment had not occurred.  To the extent that any interest, fees, expenses or other charges (including, without limitation, Post Petition Interest) to be paid pursuant to the First Lien Documents

 

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are disallowed by order of any court, including, without limitation, by order of a Bankruptcy Court in any Insolvency or Liquidation Proceeding, such interest, fees, expenses and charges (including, without limitation, Post Petition Interest) shall, as between the First Lien Claimholders and the Subordinated Lien Claimholders, be deemed to continue to accrue and be added to the amount to be calculated as the “First Lien Obligations.”

 

(c)           Notwithstanding the foregoing, if the Company incurs:  (1) Indebtedness for borrowed money constituting principal outstanding under the First Lien Credit Agreement and the other First Lien Documents (excluding, for the avoidance of doubt, the amount of any Hedging Obligations that are not supported by a letter of a credit); plus (2) the aggregate face amount of any letters of credit issued but not reimbursed under the First Lien Credit Agreement (including any letters of credit, whether drawn or undrawn, provided or pledged on a first priority basis in support of Hedging Obligations) in an aggregate amount in excess of the greater of (i) $500,000,000 and (ii) 250% of Consolidated Adjusted EBITDA (as defined in the First Lien Credit Agreement) for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date of determination (the “Cap Amount”), then only that portion of such Indebtedness for borrowed money and such aggregate face amount of letters of credit equal to the Cap Amount shall be included in First Lien Obligations and interest and reimbursement obligations with respect to such Indebtedness and letters of credit shall only constitute First Lien Obligations to the extent related to Indebtedness and face amounts of letters of credit included in the First Lien Obligations.

 

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

 

“Grantors” means the Company and each of the Guarantors that have executed and delivered, or may from time to time hereafter execute and deliver, a First Lien Collateral Document or a Subordinated Lien Document as a “grantor” or “pledgor” (or the equivalent thereof).

 

“Hedge Agreements” means an Interest Rate Agreement, a Currency Agreement or a Commodity Hedge Agreement entered into with (i) a Lender Counterparty in order to satisfy the requirements of the First Lien Credit Agreement, or otherwise in the ordinary course of business of the Company and/or its Affiliates, or (ii) any financial institution other than a Lender Counterparty with respect to which the Company has notified the Administrative Agent (as defined in the First Lien Credit Agreement) thereof, including, without limitation, the Existing Hedge Agreements, and provided that in each case such counterparty or other financial institution agrees to be or is otherwise bound by the First Lien Intercreditor Agreement.

 

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

 

“Holdings” means, collectively, Coffeyville Pipeline, Inc., a Delaware corporation, Coffeyville Refining & Marketing, Inc., a Delaware corporation, Coffeyville Nitrogen Fertilizers, Inc., a Delaware corporation, Coffeyville Crude Transportation, Inc., a Delaware corporation, Coffeyville Terminal, Inc, a Delaware corporation, and CL JV Holdings, LLC, a Delaware limited liability company.

 

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

 

“Insolvency or Liquidation Proceeding” means (a) any voluntary or involuntary case or proceeding under the Bankruptcy Code with respect to any Grantor, (b) any other voluntary or involuntary insolvency, reorganization or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding with respect to any Grantor or with respect to a material portion of their respective assets, (c) any liquidation, dissolution, reorganization or winding up of any Grantor whether voluntary or involuntary and whether or not involving insolvency or bankruptcy or (d) any assignment for the benefit of creditors or any other marshalling of assets and liabilities of any Grantor.

 

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

 

“Lender Counterparty” means a Person who at the time such Hedge Agreement was entered into was, under the First Lien Credit Agreement, the administrative agent, an arranger, a First Lien Lender, or an Affiliate of any of the foregoing Persons.

 

“Lien” means any lien (including, without limitation judgment liens and liens arising by operation of law), mortgage, pledge, assignment, security interest, charge or encumbrance of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, and any lease in the nature thereof) and any option, call, trust, UCC financing statement or other preferential arrangement having the practical effect of any of the foregoing.

 

“Lien Priority Confirmation” means:

 

(1)           as to any additional First Lien Debt, the written agreement of the holders of such additional First Lien Debt, or their applicable Representative on their behalf, in each case as set forth in the indenture, credit agreement, loan agreement, note agreement, promissory note, Hedge Agreement or other agreement or instrument evidencing or governing such First Lien Debt (or in a separate writing binding upon

 

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holders of such First Lien Debt), for the enforceable benefit of the First Lien Collateral Agent, the Subordinated Collateral Trustee, all holders of each existing and future First Lien Debt, each existing and future Representative with respect to such First Lien Debt, all holders of existing and future Subordinated  Lien Debt and each existing and future Representative with respect to such Subordinated Lien Debt:

 

(a)           that such Representative and all other holders of Obligations in respect of such First Lien Debt are bound by the provisions of this Agreement, including without limitation, the provisions relating to the ranking of First Liens and the order of application of proceeds from enforcement of First Liens;

 

(b)           consenting to and directing the First Lien Collateral Agent to act as agent for such additional First Lien Debt or such Representative, as applicable, and perform its obligations under this Agreement and the other Collateral Documents; and

 

(c)           that the holders of such Obligations in respect of such additional First Lien Debt are bound by the First Lien Intercreditor Agreement;

 

(2)           as to any additional Subordinated Lien Debt, the written agreement of the holders of such Subordinated Lien Debt, or their applicable Representative on their behalf, in each case as set forth in the indenture, credit agreement, loan agreement, note agreement, promissory note, Hedge Agreement or other agreement or instrument evidencing or governing such Subordinated Lien Debt, for the enforceable benefit of the First Lien Collateral Agent, the Subordinated Collateral Trustee, all holders of existing and future Subordinated Lien Debt, each existing and future Representative with respect to Subordinated Lien Debt, all holders of existing and future First Lien Debt and each existing and future Representative with respect to First Lien Debt:

 

(a)           that such Representative and all the other holders of Obligations in respect of such additional Subordinated  Lien Debt are bound by the provisions of this Agreement, including without limitation, the provisions relating to the ranking of Subordinated  Liens and the order of application of proceeds from the enforcement of Subordinated  Liens;

 

(b)           consenting to and directing the Subordinated Collateral Trustee to act as agent for such additional Subordinated Lien Debt or such Representative, as applicable, and perform its obligations under this Agreement and the other Collateral Documents; and

 

(c)           that the holders of such Obligations in respect of such additional Subordinated Lien Debt are bound by the Subordinated Lien Collateral Trust Agreement.

 

“Obligations” means all obligations of every nature of each Grantor from time to time owed to any agent or trustee, the First Lien Claimholders, the Subordinated Lien Claimholders or any of them or their respective Affiliates under the First Lien

 

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Documents, the Subordinated Lien Documents or Hedge Agreements, whether for principal, interest or payments for early termination of Interest Rate Agreements, fees, expenses, indemnification or otherwise and all guarantees of any of the foregoing.

 

“Officer’s Certificate” means a certificate with respect to compliance with a condition or covenant provided for in this Agreement, signed on behalf of the Company by two officers of the Company, one of whom must be the principal executive officer, the principal financial officer, or the treasurer of the Company, including:

 

(a)           a statement that the Person making such certificate has read such covenant or condition and understands the provisions and the definitions relating thereto;

 

(b)           a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate are based;

 

(c)           a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been satisfied; and

 

(d)           a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied.

 

“Person” or “Persons” means and includes natural persons, corporations, limited partnerships, general partnerships, limited liability companies, limited liability partnerships, joint stock companies, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and Governmental Authorities.

 

“Pledged Collateral” has the meaning set forth in Section 5.4 hereof.

 

“Post Petition Interest” means interest, fees, expenses and other charges that pursuant to any First Lien Document or any Subordinated Lien Document, continue to accrue after the commencement of any Insolvency or Liquidation Proceeding, whether or not such interest, fees, expenses and other charges are allowed or allowable under the Bankruptcy Law or in any such Insolvency or Liquidation Proceeding.

 

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

 

“Refinance” means, in respect of any Indebtedness, to refinance, extend, increase, renew, defease, amend, modify, supplement, restructure, replace, refund or repay, or to issue other indebtedness, in exchange or replacement for (including by means of sales of debt securities to institutional investors) such Indebtedness, in any manner (whether upon or after termination or otherwise) and in whole or in part.  “Refinanced” and “Refinancing” shall have correlative meanings.

 

“Representative” means, with respect to any Indebtedness, the trustee, agent or representative of the holders of such Indebtedness who maintains the transfer

 

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register for such Indebtedness and is appointed as such pursuant to the indenture, credit agreement, purchase agreement note or other agreement or instrument governing such Indebtedness.

 

“Second Lien Collateral Documents” means the Collateral Documents (as defined in the Second Lien Notes Indenture) and any other agreement, document or instrument pursuant to which a Lien is purported to be granted securing any Second Lien Obligations or under which rights or remedies with respect to such Liens are governed.

 

“Second Lien Notes Indenture” has the meaning assigned to that term in the recitals to this Agreement.

 

“Second Lien Notes” means the US$ 225 10 7/8% Senior Secured Notes due 2017 issued under the Second Lien Notes Indenture on the date hereof, and any registered notes issued by Company in exchange for, and as contemplated by, such notes with substantially identical terms as such notes, as any such notes may be amended, restated, supplemented, replaced, increased, refinanced or otherwise modified from time to time in accordance herewith.

 

“Secured Debt Documents” means the First Lien Documents and the Subordinated Lien Documents.

 

“Specified Hedge Collateral” means any letter of credit or cash collateral which is permitted by the terms of each Secured Debt Document to be provided or pledged on a first priority basis in support of Hedging Obligations.

 

“Subordinated Collateral Trustee” has the meaning assigned to that term in the recitals to this Agreement, but shall also include where the context so indicates, any agent or representative of the Subordinated Collateral Trustee acting on behalf of the Subordinated Collateral Trustee.

 

“Subordinated Lien” means a Lien granted by a Secured Debt Document to the trustee, agent or other representative at any time, on a junior priority basis, upon any Collateral of either Company or any other Grantor to secure Subordinated Lien Obligations.

 

“Subordinated Lien Claimholders” means, at any relevant time, the holders of Subordinated Lien Obligations at that time under the Subordinated Lien Documents, including the Subordinated Collateral Trustee, the holders of the Second Lien Notes and the Trustee.

 

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

 

“Subordinated Lien Collateral Documents” means the Second Lien Collateral Documents and any other agreement, document or instrument pursuant to

 

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which a Lien is purported to be granted securing any Subordinated Lien Obligations or under which rights or remedies with respect to such Liens are governed.

 

“Subordinated Lien  Collateral Trust Agreement” means the collateral trust agreement dated on or about the date hereof among the Subordinated Collateral Trustee as the same may be joined from time to time by the trustee, agent or other representative under any additional Subordinated Lien Debt, specifying the relative lien priorities and other matters as among the holders of Subordinated Lien Obligations, which, for the avoidance of doubt, may provide for further subordination of certain holders of such Subordinated Lien Obligations, including a Third Lien in respect of such Subordinated Lien Obligations.

 

“Subordinated Lien Debt” means the Second Lien Notes and, to the extent issued or outstanding, any other Indebtedness of the Company or the Guarantors designated as such by the Company in writing to the First Lien Collateral Agent and Subordinated Collateral Trustee; provided that:

 

(a)           on or before the date on which such Indebtedness is incurred, an Officer’s Certificate is delivered to the First Lien Collateral Agent and the Subordinated Collateral Trustee, designating such Indebtedness as “Subordinated Lien Debt” for the purposes of the First Lien Documents and the Subordinated Lien Documents, and specifying whether such Indebtedness is second or third lien Indebtedness;

 

(b)           such Indebtedness is evidenced or governed by an indenture, credit agreement, loan agreement, note agreement, promissory note or other agreement or instrument that includes a Lien Priority Confirmation;

 

(c)           is designated as Subordinated Lien Debt in accordance with the requirements of Section 5.6 and the other requirements of Section 5.6 with respect thereto are satisfied; and

 

(d)           at the time of the incurrence thereof, the applicable Subordinated Lien Debt may be incurred (and secured as contemplated herein) without violating the terms of any Secured Debt Document or causing any default thereunder.

 

“Subordinated Lien Documents” means, collectively, the Second Lien Notes Indenture and any other indenture, credit agreement or other agreement, document or instrument evidencing, governing, relating to or securing any Subordinated Lien Debt (including Subordinated Lien Debt incurred after the date hereof), including, without limitation, the Second Lien Collateral Documents.

 

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

 

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“Subordinated Lien Obligations” means all principal of and interest on (including without limitation any Post Petition Interest) and premium (if any) on all Second Lien Notes, and all other obligations, including reimbursement obligations with respect to letters of credit whether or not drawn), interest (including without limitation Post Petition Interest), premium (if any), fees, indemnifications, reimbursements, expenses, damages and other liabilities payable under the documentation governing any Subordinated Lien Debt.

 

“Subsidiary” means, with respect to any Person, any corporation, partnership, limited liability company, association, joint venture or other business entity of which more than 50% of the total voting power of shares of stock or other ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Person or Persons (whether directors, managers, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof; provided that, in determining the percentage of ownership interests of any Person controlled by another Person, no ownership interest in the nature of a “qualifying share” of the former Person shall be deemed to be outstanding.  For purposes hereof, except where otherwise expressly set forth herein, Company shall be deemed a Subsidiary of Holdings.  It is agreed and understood that the CVR Partners, LP and CVR Special GP, LLC shall each be deemed to be wholly-owned Subsidiaries of the Company.

 

“Third Lien” means a Lien granted by a Secured Debt Document to any trustee, agent or other representative, at any time, on a third priority basis, upon any Collateral of either Company or any other Grantor to secure Subordinated Lien Obligations.

 

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

 

1.2          Terms Generally.  The definitions of terms 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, renewed, extended, supplemented or otherwise modified from time to time in accordance with its terms, (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Exhibits or Sections shall be construed to refer to Exhibits or Sections of this Agreement and (e) the words “asset” and “property” shall be construed to have the same

 

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meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

 

SECTION 2.  Lien Priorities.

 

2.1          Relative Priorities.  Notwithstanding the date, time, method, manner or order of grant, attachment or perfection of (i) any Liens securing the Subordinated Lien Obligations granted on the Collateral or (ii) any Liens securing the First Lien Obligations granted on the Collateral and notwithstanding any provision of the UCC, or any other applicable law or any Subordinated Lien Document or any defect or deficiencies in, or failure to perfect or lapse in perfection of, or avoidance as a fraudulent conveyance or otherwise of, the Liens securing the First Lien Obligations or any other circumstance whatsoever, the Subordinated Collateral Trustee, on behalf of itself and all Subordinated Lien Claimholders, hereby agrees that:

 

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

 

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

 

2.2          Prohibition on Contesting Liens.  Each of the Subordinated Collateral Trustee, for itself and on behalf of each Subordinated Lien Claimholder, and the First Lien Collateral Agent, for itself and on behalf of each First Lien Claimholder, agrees that it will not (and hereby waives any right to) contest or support any other Person in contesting, in any proceeding (including any Insolvency or Liquidation Proceeding), the priority, validity, perfection or enforceability of a Lien held by or on behalf of any of the First Lien Claimholders in the First Lien Collateral or by or on behalf of any of the Subordinated Lien Claimholders in the Subordinated Lien Collateral, as the case may be, or the provisions of this Agreement; provided that, nothing in this Agreement shall be construed to prevent or impair the rights of the First Lien Collateral Agent or any First Lien Claimholder to enforce this Agreement, including the provisions of this Agreement relating to the priority of the Liens securing the First Lien Obligations as provided in Sections 2.1 and 3.1.

 

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2.3          No New Liens.  So long as the Discharge of First Lien Obligations has not occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against the Company or any other Grantor, the parties hereto agree that the Company shall not, and shall not permit any other Grantor to:

 

(a)           grant or permit any additional Liens on any asset or property to secure any Subordinated Lien Obligation unless it has granted or concurrently grants a Lien on such asset or property to secure the First Lien Obligations, the parties hereto agreeing that any such Lien shall be subject to Section 2.1 hereof; or

 

(b)           grant or permit any additional Liens on any asset or property to secure any First Lien Obligations unless it has granted or concurrently grants a Lien on such asset or property to secure the Subordinated Lien Obligations.  To the extent that the foregoing provisions are not complied with for any reason, without limiting any other rights and remedies available to the First Lien Collateral Agent and/or the First Lien Claimholders, the Subordinated Collateral Trustee, on behalf of each of the Subordinated Lien Claimholders, agrees that any amounts received by or distributed to any of them pursuant to or as a result of Liens granted in contravention of this Section 2.3 shall be subject to Section 4.2.

 

2.4          Similar Liens and Agreements.  The parties hereto agree that it is their intention that the First Lien Collateral and the Subordinated Lien Collateral (other than with respect to Affiliate Securities, if any, and any Specified Hedge Collateral, if any) be identical.  In furtherance of the foregoing and of Section 8.9, the parties hereto agree, subject to the other provisions of this Agreement:

 

(a)           upon request by the First Lien Collateral Agent or the Subordinated Collateral Trustee, to cooperate in good faith (and to direct their counsel to cooperate in good faith) from time to time in order to determine the specific items included in the First Lien Collateral and the Subordinated Lien Collateral and the steps taken to perfect their respective Liens thereon and the identity of the respective parties obligated under the First Lien Documents and the Subordinated Lien Documents; and

 

(b)           that the documents and agreements creating or evidencing the First Lien Collateral and the Subordinated Lien Collateral and guarantees for the First Lien Obligations and the Subordinated Lien Obligations, subject to Section 5.3(d), shall be in all material respects the same forms of documents other than with respect to the first or subordinated nature of the Obligations thereunder and the exclusion or inclusion, if applicable, of any Affiliate Securities or any Specified Hedge Collateral.

 

Notwithstanding the foregoing, it shall not be a violation of this Section if any assets and/or property of any Grantor are not yet included in Subordinated Lien Collateral but are subject to closing agreements to provide that such assets and/or property shall become Subordinated Lien Collateral.

 

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SECTION 3.  Enforcement.

 

3.1          Exercise of Remedies.

 

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

 

(1)           will not exercise or seek to exercise any rights or remedies with respect to any Collateral (including the exercise of any right of setoff or any right under any lockbox agreement, account control agreement, landlord waiver or bailee’s letter or similar agreement or arrangement to which the Subordinated Collateral Trustee or any Subordinated Lien Claimholder is a party) or institute any action or proceeding with respect to such rights or remedies (including any action of foreclosure);

 

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

 

(3)           subject to their rights under clause (a)(1) above, will not object to the forbearance by the First Lien Collateral Agent or the First Lien Claimholders from bringing or pursuing any foreclosure proceeding or action or any other exercise of any rights or remedies relating to the Collateral, in each case so long as the Liens granted to secure the Subordinated Lien Obligations of the Subordinated Lien Claimholders attach to the proceeds thereof subject to the relative priorities described in Section 2.

 

(b)           Until the Discharge of First Lien Obligations has occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against the Company or any other Grantor, the First Lien Collateral Agent and the First Lien Claimholders shall have the exclusive right to enforce rights, exercise remedies (including set-off, recoupment and the right to credit bid their debt) and, subject to Section 5.1, to make determinations regarding the release, disposition, or restrictions with respect to the Collateral without any consultation with or the consent of the Subordinated Collateral Trustee or any Subordinated Lien Claimholder; provided that, the Lien securing the Subordinated Lien Obligations shall remain on the proceeds of such Collateral released or disposed of subject to the relative priorities described in Section 2.  In exercising rights and remedies with respect to the Collateral, the First Lien Collateral Agent and the First Lien Claimholders may enforce the provisions of the First Lien Documents and exercise remedies thereunder, all in such order and in such manner as they may determine in the exercise of their sole discretion.  Such exercise and enforcement shall include the rights of an agent appointed by them to sell or otherwise dispose of Collateral upon foreclosure, to incur expenses in connection with such sale or disposition, and to exercise all the rights and remedies of a secured creditor under the UCC and of a secured creditor under Bankruptcy Laws of any applicable jurisdiction.

 

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(c)           Notwithstanding the foregoing, the Subordinated Collateral Trustee and any Subordinated Lien Claimholder may:

 

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

 

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

 

(3)           file any necessary 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 Subordinated Lien Claimholders, including any claims secured by the Collateral, if any, in each case in accordance with the terms of this Agreement; and

 

(4)           vote on any plan of reorganization, file any proof of claim, make other filings and make any arguments and motions that are, in each case, in accordance with the terms of this Agreement, with respect to the Subordinated Lien Obligations and the Collateral.

 

The Subordinated Collateral Trustee, on behalf of itself and each Subordinated Lien Claimholder, agrees that it will not take or receive any Collateral or any proceeds of Collateral in connection with the exercise of any right or remedy (including set-off and recoupment) with respect to any Collateral in its capacity as a creditor, unless and until the Discharge of First Lien Obligations has occurred.  Without limiting the generality of the foregoing, unless and until the Discharge of First Lien Obligations has occurred, except as expressly provided in Sections 3.1(a), 6.3(b) and this Section 3.1(c), the sole right of the Subordinated Collateral Trustee and the Subordinated Lien Claimholders with respect to the Collateral is to hold a Lien on the Collateral pursuant to the Subordinated Lien Collateral Documents for the period and to the extent granted therein and to receive a share of the proceeds thereof, if any, after the Discharge of First Lien Obligations has occurred.

 

(d)           Subject to Sections 3.1(c) and Section 6.3(b):

 

(1)           the Subordinated Collateral Trustee, for itself and on behalf of the Subordinated Lien Claimholders, agrees that the Subordinated Collateral Trustee and the Subordinated Lien Claimholders will not take any action that would hinder any exercise of remedies under the First Lien Documents or is otherwise prohibited hereunder, including any sale, lease, exchange, transfer or other disposition of the Collateral, whether by foreclosure or otherwise;

 

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

 

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

 

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

 

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

 

SECTION 4.  Payments.

 

4.1          Application of Proceeds.  So long as the Discharge of First Lien Obligations has not occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against the Company or any other Grantor, Collateral or

 

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proceeds thereof, received in connection with the sale or other disposition of, or collection on, such Collateral upon the exercise of remedies, shall be applied by the First Lien Collateral Agent to the First Lien Obligations in such order as specified in the relevant First Lien Documents (including fees of the First Lien Collateral Agent and the Subordinated Collateral Trustee).  Upon the Discharge of First Lien Obligations, the First Lien Collateral Agent shall deliver to the Subordinated Collateral Trustee any proceeds of Collateral held by it in the same form as received, with any necessary endorsements or as a court of competent jurisdiction may otherwise direct to be applied by the Subordinated Collateral Trustee in such order as specified in the Subordinated Lien Documents.

 

4.2          Payments Over.

 

(a)           So long as the Discharge of First Lien Obligations has not occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against the Company or any other Grantor, any Collateral or proceeds thereof (together with assets or proceeds subject to Liens referred to in the final sentence of Section 2.3) received by the Subordinated Collateral Trustee, any Subordinated Lien Claimholders in connection with the exercise of any right or remedy (including set-off or recoupment) relating to the Collateral in contravention of this Agreement in all cases, shall be segregated and held in trust and forthwith paid over to the First Lien Collateral Agent for the benefit of the First Lien Claimholders (after the payment of fees of the First Lien Collateral Agent and the Subordinated Collateral Trustee) in the same form as received, with any necessary endorsements or as a court of competent jurisdiction may otherwise direct.  The First Lien Collateral Agent is hereby authorized to make any such endorsements as agent for the Subordinated Collateral Trustee or any such Subordinated Lien Claimholders.  This authorization is coupled with an interest and is irrevocable until the Discharge of First Lien Obligations.

 

(b)           So long as the Discharge of First Lien Obligations has not occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against the Company or any other Grantor, any Collateral or proceeds thereof (including assets or proceeds subject to Liens referred to in the final sentence of Section 2.3) received by the Subordinated Collateral Trustee or any Subordinated Lien Claimholders in connection with the exercise of any right or remedy (including set-off or recoupment) relating to the Collateral not in contravention of this Agreement shall be segregated and held in trust and forthwith paid over to the First Lien Collateral Agent for the benefit of the First Lien Claimholders (after the payment of fees of the First Lien Collateral Agent and the Subordinated Collateral Trustee) in the same form as received, with any necessary endorsements or as a court of competent jurisdiction may otherwise direct; provided, however that, this Section 4.2(b) shall only be applicable if the exercise of such right or remedy by the Subordinated Collateral Agent or any Subordinated Lien Claimholder has the effect of discharging the Lien of the First Lien Collateral Agent on such Collateral.  The First Lien Collateral Agent is hereby authorized to make any such endorsement as agent for the Subordinated Collateral Trustee or any such Subordinated Lien Claimholders.  This authorized is coupled with an interest and is irrevocable until he Discharge of First Lien Obligations.

 

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(c)           So long as the Discharge of First Lien Obligations has not occurred, if in any Insolvency or Liquidation Proceeding the Subordinated Collateral Trustee or any Subordinated Lien Claimholders shall receive any distribution of money or other property in respect of the Collateral, such money or other property shall be segregated and held in trust and forthwith paid over to the First Lien Collateral Agent for the benefit of the First Lien Claimholders in the same form as received, with any necessary endorsement.  Any Lien received by the Subordinated Collateral Trustee or by Subordinated Lien Claimholders in any Insolvency or Liquidation Proceeding shall be subject to the terms of this Agreement

 

SECTION 5.  Other Agreements.

 

5.1          Releases.

 

(a)           If in connection with the exercise of the First Lien Collateral Agent’s remedies in respect of the Collateral, the First Lien Collateral Agent, for itself or on behalf of any of the First Lien Claimholders, releases any of its Liens on any part of the Collateral or releases any Guarantor from its obligations under its guaranty of the First Lien Obligations, then the Liens, if any, of the Subordinated Collateral Trustee, for itself or for the benefit of the Subordinated Lien Claimholders, on such Collateral, and the obligations of such Guarantor under its guaranty of the Subordinated Lien Obligations, shall be automatically, unconditionally and simultaneously released.  The Subordinated Collateral Trustee, for itself or on behalf of any such Subordinated Lien Claimholders, promptly shall execute and deliver to the First Lien Collateral Agent or such Guarantor such termination statements, releases and other documents as the First Lien Collateral Agent or such Guarantor may request to effectively confirm such release.

 

(b)           If in connection with any sale, lease, exchange, transfer or other disposition of any Collateral by any Grantor (collectively, a “Disposition”) permitted under the terms of the First Lien Documents and not expressly prohibited under the terms of the Subordinated Lien Documents (other than in connection with the exercise of the First Lien Collateral Agent’s remedies in respect of the Collateral which shall be governed by Section 5.1(a) above), the First Lien Collateral Agent, for itself or on behalf of any of the First Lien Claimholders, releases any of its Liens on any part of the Collateral, or releases any Guarantor from its obligations under its guaranty of the First Lien Obligations, in each case other than (A) in connection with the Discharge of First Lien Obligations and (B) after the occurrence and during the continuance of any “Event of Default” under a Subordinated Lien Document, then the Liens, if any, of the Subordinated Collateral Trustee, for itself or for the benefit of the Subordinated Lien Claimholders, on such Collateral, and the obligations of such Guarantor under its guaranty of the Subordinated Lien Obligations, shall be automatically, unconditionally and simultaneously released.  The Subordinated Collateral Trustee, for itself or on behalf of any such Subordinated Lien Claimholders, promptly shall execute and deliver to the First Lien Collateral Agent or such Guarantor such termination statements, releases and other documents as the First Lien Collateral Agent or such Guarantor may request to effectively confirm such release.

 

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(c)                                  Until the Discharge of First Lien Obligations occurs, the Subordinated Collateral Trustee, for itself and on behalf of the Subordinated Lien Claimholders, hereby irrevocably constitutes and appoints the First Lien Collateral Agent and any officer or agent of the First Lien Collateral Agent, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of the Subordinated Collateral Trustee or such holder or in the First Lien Collateral Agent’s own name, from time to time in the First Lien Collateral Agent’s discretion, for the purpose of carrying out the terms of this Section 5.1, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary to accomplish the purposes of this Section 5.1, including any endorsements or other instruments of transfer or release.

 

(d)                                 Until the Discharge of First Lien Obligations occurs, to the extent that the First Lien Collateral Agent or the First Lien Claimholders (i) have released any Lien on Collateral or any Guarantor from its obligation under its guaranty and any such Liens or guaranty are later reinstated or (ii) obtain any new liens or additional guarantees from any Guarantor, then the Subordinated Collateral Trustee, for itself and for the Subordinated Lien Claimholders, shall be granted a Lien on any such Collateral, subject to the lien subordination provisions of this Agreement, and an additional guaranty, as the case may be.

 

5.2                               Insurance.  Unless and until the Discharge of First Lien Obligations has occurred, the First Lien Collateral Agent and the First Lien Claimholders shall have the sole and exclusive right, subject to the rights of the Grantors under the First Lien Documents, to adjust settlement for any insurance policy covering the Collateral in the event of any loss thereunder and to approve any award granted in any condemnation or similar proceeding (or any deed in lieu of condemnation) affecting the Collateral.  Unless and until the Discharge of First Lien Obligations has occurred, and subject to the rights of the Grantors under the First Lien Documents, all proceeds of any such policy and any such award (or any payments with respect to a deed in lieu of condemnation) if in respect to the Collateral shall be paid to the First Lien Collateral Agent for the benefit of the First Lien Claimholders pursuant to the terms of the First Lien Documents (including for purposes of cash collateralization of letters of credit) and thereafter, to the extent no First Lien Obligations are outstanding, and subject to the rights of the Grantors under the Subordinated Lien Documents to the Subordinated Collateral Trustee for the benefit of the Subordinated Lien Claimholders to the extent required under the Subordinated Lien Documents, and then, to the extent no Subordinated Lien Obligations are outstanding, to the owner of the subject property, such other Person as may be entitled thereto or as a court of competent jurisdiction may otherwise direct.  Until the Discharge of First Lien Obligations has occurred, if the Subordinated Collateral Trustee, any Subordinated Lien Claimholders shall, at any time, receive any proceeds of any such insurance policy or any such award or payment in contravention of this Agreement, it shall segregate and hold in trust and forthwith pay such proceeds over to the First Lien Collateral Agent in accordance with the terms of Section 4.2.

 

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5.3                               Amendments to First Lien Documents and Subordinated Lien Documents.

 

(a)                                 The First Lien Documents may be amended, supplemented or otherwise modified in accordance with their terms and the First Lien Credit Agreement may be Refinanced in whole or in part, in each case, without notice to, or the consent of the Subordinated Collateral Trustee or the Subordinated Lien Claimholders, all without affecting the lien subordination or other provisions of this Agreement; provided, however, that the holders of such Refinancing debt (or their Representative on their behalf) shall bind themselves in a writing for the benefit of the Subordinated Collateral Trustee and the Subordinated Lien Claimholders to the terms of this Agreement including by executing a Lien Priority Confirmation;

 

(b)                                 Without the prior written consent of the First Lien Collateral Agent, no Subordinated Lien Document may be Refinanced, amended, supplemented or otherwise modified or entered into to the extent such Refinancing, amendment, supplement or modification, or the terms of any new Subordinated Lien Document, would:

 

(1)                                 increase the principal amount of the Subordinated Lien Debt in excess of the amount permitted under any First Lien Document;

 

(2)                                 increase the fees, the interest rate or yield provisions or otherwise effectuate an increase in yield applicable to the Indebtedness incurred under such Subordinated Lien Documents (including by way of any side letters, agreements or arrangements under which any of the Subordinated Lien Claimholders are paid a fee whether in the form of cash or interest) by more than 3% per annum (including increases in yield or rate arising from any changes from a floating interest rate obligation to a fixed rate obligation but excluding increases resulting from the accrual of interest at the default rate);

 

(3)                                 except as permitted by Section 5.3(b)(2), increase materially the obligations of the obligor thereunder or to confer any additional material rights on any Subordinated Lien Claimholders, or a representative on their behalf, which would be adverse to the Company, any Grantor or any First Lien Claimholder, it being understood that amendments or Refinancings providing for increases in the principal amount of Subordinated Lien Debt to provide for new money Indebtedness shall not be restricted by this clause (3);

 

(4)                                 affect the Lien subordination, Lien priorities or other provisions of this Agreement; or

 

(5)                                 contravene the provisions of this Agreement or of the First Lien Documents.

 

The Subordinated Lien Debt may be Refinanced to the extent the terms and conditions of such Refinancing debt meet the requirements of this Section 5.3(b) and clauses (a), (b) and (c) of, and the provisos to, the definition of “Subordinated Lien Debt” set forth in the First Lien Credit Agreement, and the holders of such Refinancing debt bind themselves in a writing for the benefit of the First Lien Collateral Agent and the

 

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First Lien Claimholders to the terms of this Agreement, by executing a Lien Priority Confirmation.

 

(c)                                  Company agrees that each Subordinated Lien Document shall include the following language (or language to similar effect approved by the First Lien Collateral Agent):

 

“Notwithstanding anything herein to the contrary, the lien and security interest granted to the Subordinated Collateral Trustee pursuant to this Agreement and the exercise of any right or remedy by the Subordinated Collateral Trustee hereunder are subject to the provisions of the First and Subordinated Lien Intercreditor Agreement, dated as of April 06, 2010 (as amended, restated, supplemented or otherwise modified from time to time, the “Intercreditor Agreement”), among Coffeyville Resources, LLC, a Delaware limited liability company, Wells Fargo Bank, National Association, as First Lien Collateral Agent, and Wells Fargo Bank, National Association, as Subordinated Collateral Trustee, and certain other persons party, or that may become party, thereto from time to time.  In the event of any conflict between the terms of the Intercreditor Agreement and this Agreement, the terms of the Intercreditor Agreement shall govern and control.”

 

In addition, the Company agrees that such Subordinated Lien Mortgage covering any Collateral shall contain such other language as the First Lien Collateral Agent may reasonably request to reflect the subordination of such Subordinated Lien Mortgage to the First Lien Collateral Document covering such Collateral.

 

(d)                                 In the event any First Lien Collateral Agent or the First Lien Claimholders and the relevant Grantor enter into any amendment, waiver or consent in respect of any of the First Lien Collateral Documents for the purpose of adding to, or deleting from, or waiving or consenting to any departures from any provisions of, any First Lien Collateral Document or changing in any manner the rights of the First Lien Collateral Agent, such First Lien Claimholders, Company or any other Grantor thereunder, then such amendment, waiver or consent shall apply automatically to any comparable provision of the Comparable Subordinated Lien Collateral Document without the consent of the Subordinated Collateral Trustee or the Subordinated Lien Claimholders and without any action by the Subordinated Collateral Trustee, Company or any other Grantor, provided that:

 

(i)                                     no such amendment, waiver or consent shall have the effect of:  (A) removing or releasing assets subject to the Lien of the Subordinated Lien Documents, except to the extent that a release of such Lien is permitted or required by Section 5.1; provided that, there is a corresponding release of such Lien securing the First Lien Obligations;

 

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(B) imposing duties on the Subordinated Collateral Trustee without its consent; (C) permitting other Liens on Subordinated Lien Collateral not permitted under the terms of the Subordinated Lien Documents or Section 6; or (D) being prejudicial to the interests of the Subordinated Lien Claimholders to a greater extent than the First Lien Claimholders; and

 

(ii)                                  notice of such amendment, waiver or consent shall have been given to the Subordinated Collateral Trustee within ten (10) Business Days after the effective date of such amendment, waiver or consent.

 

5.4                               Gratuitous Bailee for Perfection.

 

(a)                                 The First Lien Collateral Agent agrees to hold that part of the Collateral that is in its possession or control (or in the possession or control of its agents or bailees) to the extent that possession or control thereof is taken to perfect a Lien thereon under the UCC (such Collateral being the “Pledged Collateral”) as collateral agent for the First Lien Claimholders and as gratuitous bailee for the Subordinated Collateral Trustee (such bailment being intended, among other things, to satisfy the requirements of Sections 8-106(d)(3), 8-301(a)(2) and 9-313(c) of the UCC) and any assignee solely for the purpose of perfecting the security interest granted under the First Lien Documents and the Subordinated Lien Documents, respectively, subject to the terms and conditions of this Section 5.4.  Solely with respect to any deposit accounts under the control (within the meaning of Section 9-104 of the UCC) of the First Lien Collateral Agent, the First Lien Collateral Agent agrees to also hold control over such deposit accounts as gratuitous agent for the Subordinated Collateral Trustee, subject to the terms and conditions of this Section 5.4.  For the avoidance of doubt, the Subordinated Collateral Trustee hereby appoints the First Lien Collateral Agent as its agent solely for perfection of the Subordinated Collateral Agent’s Lien in such deposit accounts, and the First Lien Collateral Agent accepts such appointment.

 

(b)                                 The First Lien Collateral Agent shall have no obligation whatsoever to the First Lien Claimholders, the Subordinated Collateral Trustee or any Subordinated Lien Claimholder to ensure that the Pledged Collateral is genuine or owned by any of the Grantors or to preserve rights or benefits of any Person except as expressly set forth in this Section 5.4.  The duties or responsibilities of the First Lien Collateral Agent under this Section 5.4 shall be limited solely to holding the Pledged Collateral as bailee (and with respect to deposit accounts, agent) in accordance with this Section 5.4 and delivering the Pledged Collateral upon a Discharge of First Lien Obligations as provided in paragraph (d) below.

 

(c)                                  The First Lien Collateral Agent shall not have by reason of the First Lien Collateral Documents, the Subordinated Lien Collateral Documents, this Agreement or any other document a fiduciary relationship in respect of the First Lien Claimholders, the Subordinated Collateral Trustee or any Subordinated Lien Claimholder and the Subordinated Collateral Trustee and the Subordinated Lien Claimholders hereby waive and release the First Lien Collateral Agent from all claims and liabilities arising

 

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pursuant to the First Lien Collateral Agent’s role under this Section 5.4 as gratuitous bailee and gratuitous agent with respect to the Collateral.  It is understood and agreed that the interests of the First Lien Collateral Agent and the Subordinated Collateral Trustee may differ and the First Lien Collateral Agent shall be fully entitled to act in its own interest without taking into account the interests of the Subordinated Collateral Trustee or Subordinated Lien Claimholders.

 

(d)                                 Upon the Discharge of First Lien Obligations under the First Lien Documents to which the First Lien Collateral Agent is a party, the First Lien Collateral Agent shall deliver the remaining Pledged Collateral in its possession (if any) together with any necessary endorsements (such endorsement shall be without recourse and without any representation or warranty), first, to the Subordinated Collateral Trustee to the extent Subordinated Lien Obligations remain outstanding, and second, to the Company to the extent no First Lien Obligations or Subordinated Lien Obligations remain outstanding (in each case, so as to allow such Person to obtain possession or control of such Pledged Collateral).  The First Lien Collateral Agent further agrees to take all other action reasonably requested by the Subordinated Collateral Trustee at the expense of the Subordinated Collateral Trustee or the Company in connection with the Subordinated Collateral Trustee obtaining a first-priority interest in the Collateral or as a court of competent jurisdiction may otherwise direct.

 

5.5                               Discharge of First Lien Obligations Deemed to Not Have Occurred.  If, at any time after the Discharge of First Lien Obligations has occurred, the Company thereafter enters into any Refinancing of any First Lien Document evidencing a First Lien Obligation which Refinancing is permitted by the Subordinated Lien Documents, then such Discharge of First Lien Obligations shall automatically be deemed not to have occurred for all purposes of this Agreement (other than with respect to any actions taken as a result of the occurrence of such first Discharge of First Lien Obligations), and, from and after the date on which the New First Lien Debt Notice is delivered to the Subordinated Collateral Trustee in accordance with the next sentence, the obligations under such Refinancing of the First Lien Documents shall automatically be treated as First Lien Obligations for all purposes of this Agreement, including for purposes of the Lien priorities and rights in respect of Collateral set forth herein, and the First Lien Collateral Agent under such First Lien Documents shall be the First Lien Collateral Agent for all purposes of this Agreement.  Upon receipt of a notice (the “New First Lien Debt Notice”) stating that the Company has entered into a new First Lien Document (and incurred additional First Lien Debt) (which notice shall include the identity of the new first lien collateral agent, such agent, the “New Agent”), the Subordinated Collateral Trustee shall promptly (a) enter into such documents and agreements (including amendments or supplements to this Agreement) as the Company or such New Agent shall reasonably request in order to provide to the New Agent the rights contemplated hereby, in each case consistent in all material respects with the terms of this Agreement and (b) deliver to the New Agent any Pledged Collateral held by it together with any necessary endorsements (or otherwise allow the New Agent to obtain control of such Pledged Collateral).  The New Agent shall agree in a writing addressed to the Subordinated Collateral Trustee and the Subordinated Lien Claimholders to be bound by the terms of this Agreement.  If the new First Lien Obligations under the new First

 

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Lien Documents are secured by assets of the Grantors constituting Collateral that do not also secure the Subordinated Lien Obligations, then the Subordinated Lien Obligations shall be secured at such time by a second priority Lien on such assets to the same extent provided in the Subordinated Lien Collateral Documents and this Agreement.

 

5.6                               Additional Secured Debt.

 

(a)                                 The Company will be permitted to designate as an additional holder of First Lien Obligations or Subordinated Lien Obligations, as applicable, hereunder each Person who is, or who becomes, the holder of First Lien Debt or the holder of Subordinated Lien Debt, as applicable, incurred by the Company or such other Grantor in accordance with the respective definitions of First Lien Debt or Subordinated Lien Debt, as the case may be, contained herein as additional First Lien Debt or Subordinated Lien Debt hereunder, respectively.  The Company may effect such designation by delivering to the First Lien Collateral Agent and the Subordinated Collateral Trustee each of the following:

 

(i)                                     an Officer’s Certificate describing in reasonable detail the respective First Lien Debt or Subordinated Lien Debt (“Additional Secured Debt”)  and stating that the Company or such other Grantor has incurred or intends to incur such obligations as additional Secured Debt which will either be (i) First Lien Debt permitted by each applicable Secured Debt Document to be secured by a First Lien or (ii) Subordinated Lien Debt permitted by each applicable Secured Debt Document to be secured with a second or third priority lien, as applicable; and

 

(ii)                                  a written notice specifying the name and address of the Representative for such First Lien Debt or Subordinated Lien Debt, as applicable, for purposes of Section 8.8.

 

Notwithstanding the foregoing, but in no way limiting Section 2.3, nothing in this Agreement will be construed to allow the Company or any other Grantor to incur additional Indebtedness or grant additional Liens unless in each case otherwise permitted by the terms of all applicable Secured Debt Documents.

 

(b)                                 With respect to any First Lien Debt or Subordinated Lien Debt incurred after the date of this Agreement, each of the parties hereto agrees to take such actions (if any) (including, without limitation, any acknowledgements by the Company or any of the other Guarantors of guarantees or security that are applicable to First Lien Debt or Subordinated Lien Debt, as the case may be) as may from time to time reasonably be requested by the First Lien Collateral Agent or the Subordinated Collateral Trustee, and enter into such technical amendments, modifications and/or supplements to the then existing guarantees, First Lien Collateral Documents and Subordinated Lien Collateral Documents (or execute and deliver such additional guarantees, First Lien Collateral Documents and Subordinated Lien Collateral Documents) as may from time to time be reasonably requested by the First Lien Collateral Agent or the Subordinated

 

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Collateral Trustee, to ensure that the relevant additional First Lien Obligations or Subordinated Lien Obligations, as the case may be, are secured by, and entitled to the benefits of, the relevant guarantees, First Lien Collateral Documents and Subordinated Lien Collateral Documents, as applicable, and each additional holder of First Lien Obligations and each additional holder of Subordinated Lien Obligations (by its acceptance of the benefits hereof) hereby agrees to, and authorizes the First Lien Collateral Agent and the Subordinated Collateral Trustee to enter into, any such technical amendments, modifications and/or supplements (and additional guarantees, First Lien Collateral Documents and Subordinated Lien Collateral Documents, as applicable).  The Company and each Grantor hereby further agree that, if there are any recording, filing or other similar fees payable in connection with any of the actions to be taken pursuant to this Section 5.6(b), all such amounts shall be paid by, and shall be for the account of, the Company and the respective Grantors, on a joint and several basis.

 

SECTION 6.  Insolvency or Liquidation Proceedings.

 

6.1                               Finance and Sale Issues.  Until the Discharge of First Lien Obligations has occurred, if the Company or any other Grantor shall be subject to any Insolvency or Liquidation Proceeding and the First Lien Collateral Agent shall desire to permit the use of “Cash Collateral” (as such term is defined in Section 363(a) of the Bankruptcy Code), on which the First Lien Collateral Agent or any other creditor has a Lien or to permit the Company or any other Grantor to obtain financing, whether from the First Lien Claimholders or any other Person under Section 364 of the Bankruptcy Code or any similar Bankruptcy Law (“DIP Financing”), then the Subordinated Collateral Trustee, on behalf of itself and the Subordinated Lien Claimholders, agrees that it will raise no objection to such Cash Collateral use or DIP Financing and to the extent the Liens securing the First Lien Obligations are subordinated to or pari passu with such DIP Financing, the Subordinated Collateral Trustee will subordinate its Liens in the Collateral to the Liens securing such DIP Financing (and all Obligations relating thereto) and will not request adequate protection or any other relief in connection therewith (except, as expressly agreed by the First Lien Collateral Agent or to the extent permitted by Section 6.3); provided  that, the aggregate principal amount of the DIP Financing plus the aggregate outstanding principal amount of First Lien Obligations consisting of Indebtedness for borrowed money (and expressly excluding Hedging Obligations) plus the aggregate face amount of any letters of credit issued and not reimbursed under the First Lien Credit Agreement does not exceed the Cap Amount plus $150,000,000 in the aggregate.

 

6.2                               Relief from the Automatic Stay.  Until the Discharge of First Lien Obligations has occurred, the Subordinated Collateral Trustee, on behalf of itself and the Subordinated Lien Claimholders, agrees that none of them shall seek (or support any other Person seeking) relief from the automatic stay or any other stay in any Insolvency or Liquidation Proceeding in respect of the Collateral, without the prior written consent of the First Lien Collateral Agent, unless a motion for adequate protection permitted under Section 6.3 has been denied by the Bankruptcy Court.

 

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6.3                               Adequate Protection.

 

(a)                                 The Subordinated Collateral Trustee, on behalf of itself and the Subordinated Lien Claimholders, agrees that none of them shall contest (or support any other Person contesting):

 

(1)                                 any request by the First Lien Collateral Agent or the First Lien Claimholders for adequate protection; or

 

(2)                                 any objection by the First Lien Collateral Agent or the First Lien Claimholders to any motion, relief, action or proceeding based on the First Lien Collateral Agent or the First Lien Claimholders claiming a lack of adequate protection.

 

(b)                                 Notwithstanding the foregoing provisions in this Section 6.3, in any Insolvency or Liquidation Proceeding:

 

(1)                                 if the First Lien Claimholders (or any subset thereof) are granted adequate protection in the form of additional collateral in connection with any Cash Collateral use or DIP Financing, then the Subordinated Collateral Trustee, on behalf of itself or any of the Subordinated Lien Claimholders, may seek or request adequate protection in the form of a Lien on such additional collateral, which Lien will be subordinated to the Liens securing the First Lien Obligations and such Cash Collateral use or DIP Financing (and all Obligations relating thereto) on the same basis as the other Liens securing the Subordinated Lien Obligations are so subordinated to the First Lien Obligations under this Agreement; and

 

(2)                                 the Subordinated Collateral Trustee and Subordinated Lien Claimholders shall only be permitted to seek adequate protection with respect to their rights in the Collateral in any Insolvency or Liquidation Proceeding in the form of (A) additional collateral; provided that, as adequate protection for the First Lien Obligations, the First Lien Collateral Agent, on behalf of the First Lien Claimholders, is also granted a senior Lien on such additional collateral; (B) replacement Liens on the Collateral; provided that, as adequate protection for the First Lien Obligations, the First Lien Collateral Agent, on behalf of the First Lien Claimholders, is also granted senior replacement Liens on the Collateral; (C) an administrative expense claim; provided that, as adequate protection for the First Lien Obligations, the First Lien Collateral Agent, on behalf of the First Lien Claimholders, is also granted an administrative expense claim which is senior and prior to the administrative expense claim of the Subordinated Collateral Trustee and the Subordinated Lien Claimholders; and (D) cash payments with respect to interest on the Subordinated Lien Obligations; provided either (1) as adequate protection for the First Lien Obligations, the First Lien Collateral Agent, on behalf of the First Lien Claimholders, is also granted cash payments with respect to interest on the First Lien Obligations, or (2) such cash payments do not exceed an amount equal to the interest accruing on the principal amount of applicable Subordinated Lien Obligations outstanding on the date such relief is granted at the interest rate under the applicable Subordinated Lien Documents and accruing

 

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from the date the Subordinated Collateral Trustee is granted such relief.  If any Subordinated Lien Secured Party receives Post Petition Interest and/or adequate protection payments in an Insolvency or Liquidation Proceeding (“Subordinated Lien Adequate Protection Payments”), and the First Lien Claimholders do not receive payment in full in cash of all First Lien Obligations upon the effectiveness of the plan of reorganization for, or conclusion of, that Insolvency or Liquidation Proceeding, then, each Subordinated Lien Claimholders shall pay over to the First Lien Claimholders an amount (the “Pay-Over Amount”) equal to the lesser of (i) the Subordinated Lien Adequate Protection Payments received by such Subordinated Lien Claimholders and (ii) the amount of the short-fall (the “Short Fall”) in payment in full of the First Lien Obligations; provided that, to the extent any portion of the Short Fall represents payments received by the First Lien Claimholders in the form of promissory notes, equity or other property, equal in value to the cash paid in respect of the Pay-Over Amount, the First Lien Claimholders shall, upon receipt of the Pay-Over Amount, transfer those promissory notes, equity or other property, pro rata, equal in value to the cash paid in respect of the Pay-Over Amount to the Subordinated Collateral Trustee for the benefit of the applicable Subordinated Lien Claimholders in exchange for the Pay-Over Amount.  Notwithstanding anything herein to the contrary, the First Lien Claimholders shall not be deemed to have consented to, and expressly retain their rights to object to the grant of adequate protection in the form of cash payments to the Subordinated Lien Claimholders made pursuant to this Section 6.3(b).

 

(c)                                  The Subordinated Collateral Trustee, for itself and on behalf of the other Subordinated Lien Claimholders, agrees that notice of a hearing to approve DIP Financing or use of Cash Collateral on an interim basis shall be adequate if delivered to the Subordinated Collateral Trustee at least three (3) Business Days in advance of such hearing and that notice of a hearing to approve DIP Financing or use of Cash Collateral on a final basis shall be adequate if delivered to the Subordinated Collateral Trustee at least fifteen (15) days in advance of such hearing.

 

6.4                               No Waiver.  Subject to Sections 3.1(a) and (d), nothing contained herein shall prohibit or in any way limit the First Lien Collateral Agent or any First Lien Claimholder from objecting in any Insolvency or Liquidation Proceeding or otherwise to any action taken by the Subordinated Collateral Trustee or any of the Subordinated Lien Claimholders, including the seeking by the Subordinated Collateral Trustee or any Subordinated Lien Claimholders of adequate protection or the asserting by the Subordinated Collateral Trustee or any Subordinated Lien Claimholders of any of its rights and remedies under the Subordinated Lien Documents or otherwise.

 

6.5                               Avoidance Issues.  If any First Lien Claimholder is required in any Insolvency or Liquidation Proceeding or otherwise to turn over or otherwise pay to the estate of the Company or any other Grantor any amount paid in respect of First Lien Obligations (a “Recovery”), then such First Lien Claimholders shall be entitled to a reinstatement of First Lien Obligations with respect to all such recovered amounts, and from and after the date of such reinstatement the Discharge of First Lien Obligations shall

 

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be deemed not the have occurred for all purposes hereunder.  If this Agreement shall have been terminated prior to such Recovery, this Agreement shall be reinstated in full force and effect, and such prior termination shall not diminish, release, discharge, impair or otherwise affect the obligations of the parties hereto from such date of reinstatement.

 

6.6                               Reorganization Securities.  If, in any Insolvency or Liquidation Proceeding, debt obligations of the reorganized debtor secured by Liens upon any property of the reorganized debtor are distributed pursuant to a plan of reorganization or similar dispositive restructuring plan, both on account of First Lien Obligations and on account of Subordinated Lien Obligations, then, to the extent the debt obligations distributed on account of the First Lien Obligations and on account of the Subordinated Lien Obligations are secured by Liens upon the same property, the provisions of this Agreement will survive the distribution of such debt obligations pursuant to such plan and will apply with like effect to the Liens securing such debt obligations.

 

6.7                               Post Petition Interest

 

(a)                                 Neither the Subordinated Collateral Trustee nor any Subordinated Lien Claimholder shall oppose or seek to challenge any claim by the First Lien Collateral Agent or any First Lien Claimholder for allowance in any Insolvency or Liquidation Proceeding of First Lien Obligations consisting of Post Petition Interest to the extent of the value of any First Lien Claimholder’s Lien, without regard to the existence of the Lien of the Subordinated Collateral Trustee on behalf of the Subordinated Lien Claimholders on the Collateral.

 

(b)                                 Neither the First Lien Collateral Agent nor any other First Lien Claimholder shall oppose or seek to challenge any claim by the Subordinated Collateral Trustee or any Subordinated Lien Claimholder for allowance in any Insolvency or Liquidation Proceeding of Subordinated Lien Obligations consisting of Post Petition Interest to the extent of the value of the Lien of the Subordinated Collateral Trustee on behalf of the Subordinated Lien Claimholders on the Collateral (after taking into account the value of the First Lien Obligations).

 

6.8                               Waiver.  The Subordinated Collateral Trustee, for itself and on behalf of the Subordinated Lien Claimholders, waives any claim it may hereafter have against any First Lien Claimholder arising out of the election of any First Lien Claimholder of the application of Section 1111(b)(2) of the Bankruptcy Code, and/or out of any cash collateral or financing arrangement or out of any grant of a security interest in connection with the Collateral in any Insolvency or Liquidation Proceeding.

 

6.9                               Separate Grants of Security and Separate Classification.  The Subordinated Collateral Trustee, for itself and on behalf of each Subordinated Lien Claimholder, and the First Lien Collateral Agent for itself and on behalf of each First Lien Claimholder, acknowledge and agree that

 

(a)                                 the grants of Liens pursuant to the First Lien Collateral Documents, the Subordinated Lien Collateral Documents and any Secured Debt

 

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Documents which grant a Third Lien on the Collateral constitute three separate and distinct grants of Liens; and

 

(b)           because of, among other things, their differing rights in the Collateral, the Subordinated Lien Obligations are fundamentally different from the First Lien Obligations and must be separately classified in any plan of reorganization proposed or adopted in an Insolvency or Liquidation Proceeding.

 

To further effectuate the intent of the parties as provided in the immediately preceding sentence, if it is held that the claims of the First Lien Claimholders and the Subordinated Lien Claimholders in respect of the Collateral constitute only one secured claim (rather than separate classes of senior and junior secured claims), then each of the parties hereto hereby acknowledges and agrees that, subject to Sections 2.1 and 4.1, all distributions shall be made as if there were separate classes of senior and junior secured claims against the Grantors in respect of the Collateral (with the effect being that, to the extent that the aggregate value of the Collateral is sufficient (for this purpose ignoring all claims held by the Subordinated Lien Claimholders), the First Lien Claimholders shall be entitled to receive, in addition to amounts distributed to them in respect of principal, pre-petition interest and other claims, all amounts owing (or that would be owing if there were such separate classes of senior and junior secured claims) in respect of Post Petition Interest, including any additional interest payable pursuant to the First Lien Credit Agreement, arising from or related to a default, which is disallowed as a claim in any Insolvency or Liquidation Proceeding) before any distribution is made in respect of the claims held by any Subordinated Lien Claimholders with respect to the Collateral, with the Subordinated Collateral Trustee, for itself and on behalf of the Subordinated Lien Claimholders, hereby acknowledging and agreeing to turn over to the First Lien Collateral Agent, for itself and on behalf of the First Lien Claimholders, Collateral or proceeds of Collateral otherwise received or receivable by them to the extent necessary to effectuate the intent of this sentence, even if such turnover has the effect of reducing the claim or recovery of the Subordinated Lien Claimholders).

 

SECTION 7.  Reliance; Waivers; Etc.

 

7.1          Reliance.  Other than any reliance on the terms of this Agreement, the First Lien Collateral Agent, on behalf of itself and the First Lien Claimholders under its First Lien Documents, acknowledges that it and such First Lien Claimholders have, independently and without reliance on the Subordinated Collateral Trustee or any Subordinated Lien Claimholders, and based on documents and information deemed by them appropriate, made their own analysis and decision to enter into such First Lien Documents and be bound by the terms of this Agreement and they will continue to make their own decision in taking or not taking any action under the First Lien Documents or this Agreement.  The Subordinated Collateral Trustee, on behalf of itself and the Subordinated Lien Claimholders, acknowledges that it and the Subordinated Lien Claimholders have, independently and without reliance on the First Lien Collateral Agent or any First Lien Claimholder, and based on documents and information deemed by them appropriate, made their own analysis and decision to enter into each of the Subordinated Lien Documents and be bound by the terms of this Agreement and they will continue to

 

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make their own decision in taking or not taking any action under the Subordinated Lien Documents or this Agreement.

 

7.2          No Warranties or Liability.  The First Lien Collateral Agent, on behalf of itself and the First Lien Claimholders under the First Lien Documents, acknowledges and agrees that each of the Subordinated Collateral Trustee and the Subordinated Lien Claimholders have made no express or implied representation or warranty, including with respect to the execution, validity, legality, completeness, collectibility or enforceability of any of the Subordinated Lien Documents, the ownership of any Collateral or the perfection or priority of any Liens thereon.  Except as otherwise provided herein, the Subordinated Lien Claimholders will be entitled to manage and supervise their respective loans and extensions of credit under the Subordinated Lien Documents in accordance with law and as they may otherwise, in their sole discretion, deem appropriate.  Except as otherwise provided herein, the Subordinated Collateral Trustee, on behalf of itself and the Subordinated Lien Obligations, acknowledges and agrees that the First Lien Collateral Agent and the First Lien Claimholders have made no express or implied representation or warranty, including with respect to the execution, validity, legality, completeness, collectibility or enforceability of any of the First Lien Documents, the ownership of any Collateral or the perfection or priority of any Liens thereon.  Except as otherwise provided herein, the First Lien Claimholders will be entitled to manage and supervise their respective loans and extensions of credit under their respective First Lien Documents in accordance with law and as they may otherwise, in their sole discretion, deem appropriate.  The Subordinated Collateral Trustee and the Subordinated Lien Claimholders shall have no duty to the First Lien Collateral Agent or any of the First Lien Claimholders, and the First Lien Collateral Agent and the First Lien Claimholders shall have no duty to the Subordinated Collateral Trustee or any of the Subordinated Lien Claimholders, to act or refrain from acting in a manner which allows, or results in, the occurrence or continuance of an event of default or default under any agreements with the Company or any other Grantor (including the First Lien Documents and the Subordinated Lien Documents), regardless of any knowledge thereof which they may have or be charged with.

 

7.3          No Waiver of Lien Priorities.

 

(a)           No right of the First Lien Claimholders, the First Lien Collateral Agent or any of them to enforce any provision of this Agreement or any First Lien Document shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or any other Grantor or by any act or failure to act by any First Lien Claimholder or the First Lien Collateral Agent, or by any noncompliance by any Person with the terms, provisions and covenants of this Agreement, any of the First Lien Documents or any of the Subordinated Lien Documents, regardless of any knowledge thereof which the First Lien Collateral Agent or the First Lien Claimholders, or any of them, may have or be otherwise charged with.

 

(b)           Without in any way limiting the generality of the foregoing paragraph (but subject to the rights of the Company and the other Grantors under the First Lien Documents), the First Lien Claimholders, the First Lien Collateral Agent and any of

 

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them may, at any time and from time to time in accordance with the First Lien Documents and/or applicable law, without the consent of, or notice to, the Subordinated Collateral Trustee or any Subordinated Lien Claimholders, without incurring any liabilities to the Subordinated Collateral Trustee or any Subordinated Lien Claimholders and without impairing or releasing the Lien priorities and other benefits provided in this Agreement (even if any right of subrogation or other right or remedy of the Subordinated Collateral Trustee or any Subordinated Lien Claimholders is affected, impaired or extinguished thereby) do any one or more of the following:

 

(i)            change the manner, place or terms of payment or change or extend the time of payment of, or amend, renew, exchange, increase or alter, the terms of any of the First Lien Obligations or any Lien on any First Lien Collateral or guaranty thereof or any liability of the Company or any other Grantor, or any liability incurred directly or indirectly in respect thereof (including any increase in or extension of the First Lien Obligations, without any restriction as to the tenor or terms of any such increase or extension) or otherwise amend, renew, exchange, extend, modify or supplement in any manner any Liens held by the First Lien Collateral Agent or any of the First Lien Claimholders, the First Lien Obligations or any of the First Lien Documents; provided that any such increase in the First Lien Obligations shall not increase the sum of the Indebtedness constituting principal under the First Lien Credit Agreement and the face amount of any letters of credit issued under the First Lien Credit Agreement and not reimbursed to an amount in excess of the Cap Amount;

 

(ii)           sell, exchange, release, surrender, realize upon, enforce or otherwise deal with in any manner and in any order any part of the First Lien Collateral or any liability of the Company or any other Grantor to the First Lien Claimholders or the First Lien Collateral Agent, or any liability incurred directly or indirectly in respect thereof;

 

(iii)          settle or compromise any First Lien Obligation or any other liability of the Company or any other Grantor or any security therefor or any liability incurred directly or indirectly in respect thereof and apply any sums by whomsoever paid and however realized to any liability (including the First Lien Obligations) in any manner or order; and

 

(iv)          exercise or delay in or refrain from exercising any right or remedy against the Company or any security or any other Grantor or any other Person, elect any remedy and otherwise deal freely with the Company, any other Grantor or any First Lien Collateral and any security and any guarantor or any liability of the Company or any other Grantor to the First Lien Claimholders or any liability incurred directly or indirectly in respect thereof.

 

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(c)           Except as otherwise expressly provided herein, the Subordinated Collateral Trustee, on behalf of itself and the Subordinated Lien Claimholders, also agrees that the First Lien Claimholders and the First Lien Collateral Agent shall have no liability to the Subordinated Collateral Trustee or any Subordinated Lien Claimholders, and the Subordinated Collateral Trustee, on behalf of itself and the Subordinated Lien Claimholders, hereby waives any claim against any First Lien Claimholder or the First Lien Collateral Agent, arising out of any and all actions which the First Lien Claimholders or the First Lien Collateral Agent may take or permit or omit to take with respect to:

 

(i)            the First Lien Documents (other than this Agreement);

 

(ii)           the collection of the First Lien Obligations; or

 

(iii)          the foreclosure upon, or sale, liquidation or other disposition of, any First Lien Collateral.  The Subordinated Collateral Trustee, on behalf of itself and the Subordinated Lien Claimholders, agrees that the First Lien Claimholders and the First Lien Collateral Agent have no duty to them in respect of the maintenance or preservation of the First Lien Collateral, the First Lien Obligations or otherwise.

 

(d)           Until the Discharge of First Lien Obligations, the Subordinated Collateral Trustee, on behalf of itself and the Subordinated Lien Claimholders, agrees not to assert and hereby waives, to the fullest extent permitted by law, any right to demand, request, plead or otherwise assert or otherwise claim the benefit of, any marshalling, appraisal, valuation or other similar right that may otherwise be available under applicable law with respect to the Collateral or any other similar rights a junior secured creditor may have under applicable law.

 

7.4          Obligations Unconditional.  All rights, interests, agreements and obligations of the First Lien Collateral Agent and the First Lien Claimholders and the Subordinated Collateral Trustee and the Subordinated Lien Claimholders, respectively, hereunder shall remain in full force and effect irrespective of:

 

(a)           any lack of validity or enforceability of any First Lien Documents or any Subordinated Lien Documents;

 

(b)           except as otherwise expressly set forth in this Agreement, any change in the time, manner or place of payment of, or in any other terms of, all or any of the First Lien Obligations or Subordinated Lien Obligations, or any amendment or waiver or other modification, including any increase in the amount thereof, whether by course of conduct or otherwise, of the terms of any First Lien Document or any Subordinated Lien Document;

 

(c)           except as otherwise expressly set forth in this Agreement, any exchange of any security interest in any Collateral or any other collateral, or any amendment, waiver or other modification, whether in writing or by course of conduct or

 

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otherwise, of all or any of the First Lien Obligations or Subordinated Lien Obligations or any guaranty thereof;

 

(d)           the commencement of any Insolvency or Liquidation Proceeding in respect of the Company or any other Grantor; or

 

(e)           any other circumstances which otherwise might constitute a defense available to, or a discharge of, the Company or any other Grantor in respect of the First Lien Collateral Agent, the First Lien Obligations, any First Lien Claimholder, the Subordinated Collateral Trustee, the Subordinated Lien Obligations or any Subordinated Lien Claimholder in respect of this Agreement.

 

SECTION 8.  Miscellaneous.

 

8.1          Conflicts.  In the event of any conflict between the provisions of this Agreement and the provisions of the First Lien Documents or the Subordinated Lien Documents, the provisions of this Agreement shall govern and control.

 

8.2          Effectiveness; Continuing Nature of this Agreement; Severability.  This Agreement shall become effective when executed and delivered by the parties hereto.  This is a continuing agreement of lien subordination and the First Lien Claimholders may continue, at any time and without notice to the Subordinated Collateral Trustee or any Subordinated Lien Claimholder subject to the Subordinated Lien Documents, to extend credit and other financial accommodations and lend monies to or for the benefit of the Company or any Grantor constituting First Lien Obligations in reliance hereof.  The Subordinated Collateral Trustee, on behalf of itself and the Subordinated Lien Claimholders, hereby waives any right it may have under applicable law to revoke this Agreement or any of the provisions of this Agreement.  The terms of this Agreement shall survive, and shall continue in full force and effect, in any Insolvency or Liquidation Proceeding.  Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall not invalidate the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  All references to the Company or any other Grantor shall include the Company or such Grantor as debtor and debtor-in-possession and any receiver or trustee for the Company or any other Grantor (as the case may be) in any Insolvency or Liquidation Proceeding.  This Agreement shall terminate and be of no further force and effect:

 

(a)           with respect to the First Lien Collateral Agent, the First Lien Claimholders and the First Lien Obligations, on the date of Discharge of First Lien Obligations, subject to the rights of the First Lien Claimholders under Section 6.5; and

 

(b)           with respect to the Subordinated Collateral Trustee, the Subordinated Lien Claimholders and the Subordinated Lien Obligations, upon the later of (1) the date upon which the Subordinated Lien Documents are terminated and (2) the date on which the Subordinated Lien Obligations are paid in full.

 

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If a Discharge of First Lien Obligations occurs prior to the termination of this Agreement in accordance with this Section 8.2, to the extent that First Lien Obligations are incurred or reinstated in accordance with Section 6.5, the Discharge of First Lien Obligations shall (effective upon the incurrence of such additional First Lien Obligations or reinstatement of such First  Lien Obligations, as applicable) be deemed to no longer be effective.

 

8.3          Amendments; Waivers.  No amendment, modification or waiver of any of the provisions of this Agreement by the Subordinated Collateral Trustee or the First Lien Collateral Agent shall be deemed to be made unless the same shall be in writing signed on behalf of each party hereto or its authorized agent and each waiver, if any, shall be a waiver only with respect to the specific instance involved and shall in no way impair the rights of the parties making such waiver or the obligations of the other parties to such party in any other respect or at any other time.  The First Lien Collateral Agent and the Subordinated Collateral Trustee shall be directed and authorized to exercise their respective rights and obligations hereunder by the First Lien Claimholders or Subordinated Lien Claimholders, as applicable, pursuant to the terms of the applicable First Lien Document or Subordinated Lien Document, including, with respect to the First Lien Collateral Agent, pursuant to the First Lien Intercreditor Agreement and with respect to the Subordinated Collateral Trustee, the Subordinated Lien Collateral Trust Agreement.  Notwithstanding the foregoing, the Company shall not have any right to consent to or approve any amendment, modification or waiver of any provision of this Agreement except to the extent its rights are directly affected (which includes, but is not limited to any amendment to the Grantors’ ability to cause additional obligations to constitute First Lien Obligations or Subordinated Lien Obligations as the Company may designate).

 

8.4          Information Concerning Financial Condition of the Company and its Subsidiaries.  The First Lien Collateral Agent and the First Lien Claimholders, on the one hand, and the Subordinated Lien Claimholders and the Subordinated Collateral Trustee, on the other hand, shall each be responsible for keeping themselves informed of (x) the financial condition of the Company and its Subsidiaries and all endorsers and/or guarantors of the First Lien Obligations or the Subordinated Lien Obligations and (y) all other circumstances bearing upon the risk of nonpayment of the First Lien Obligations or the Subordinated Lien Obligations.  The First Lien Collateral Agent and the First Lien Claimholders shall have no duty to advise the Subordinated Collateral Trustee or any Subordinated Lien Claimholder of information known to it or them regarding such condition or any such circumstances or otherwise and the Subordinated Collateral Trustee and the Subordinated Lien Claimholders shall have no duty to advise the First Lien Collateral Agent or any First Lien Claimholder of information known to it or them regarding such condition or any such circumstances or otherwise.  In the event the First Lien Collateral Agent or any of the First Lien Claimholders or the Subordinated Collateral Trustee or any of the Subordinated Lien Claimholders, as applicable, in its or their sole discretion, undertakes at any time or from time to time to provide any such information to the Subordinated Collateral Trustee or any Subordinated Lien Claimholder or the First Lien Collateral Agent or any of the First Lien Claimholder, as applicable, it or they shall be under no obligation:

 

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(a)           to make, and the First Lien Collateral Agent and the First Lien Claimholders or the Subordinated Collateral Trustee and the Subordinated Lien Claimholders, as applicable, shall not make, any express or implied representation or warranty, including with respect to the accuracy, completeness, truthfulness or validity of any such information so provided;

 

(b)           to provide any additional information or to provide any such information on any subsequent occasion;

 

(c)           to undertake any investigation; or

 

(d)           to disclose any information, which pursuant to accepted or reasonable commercial finance practices, such party wishes to maintain confidential or is otherwise required to maintain confidential.

 

8.5          Subrogation.  With respect to the value of any payments or distributions in cash, property or other assets that any of the Subordinated Lien Claimholders or the Subordinated Collateral Trustee pays over to the First Lien Collateral Agent or the First Lien Claimholders under the terms of this Agreement, the Subordinated Lien Claimholders and the Subordinated Collateral Trustee shall be subrogated to the rights of the First Lien Collateral Agent and the First Lien Claimholders; provided that, the Subordinated Collateral Trustee, on behalf of itself and the Subordinated Lien Claimholders, hereby agrees not to assert or enforce all such rights of subrogation it may acquire as a result of any payment hereunder until the Discharge of First Lien Obligations has occurred.  The Company acknowledges and agrees that the value of any payments or distributions in cash, property or other assets received by the Subordinated Collateral Trustee or the Subordinated Lien Claimholders that are paid over to the First Lien Collateral Agent or the First Lien Claimholders pursuant to this Agreement shall not reduce any of the Subordinated Lien Obligations.

 

8.6          Application of Payments.  All payments received by the First Lien Collateral Agent or the First Lien Claimholders may be applied, reversed and reapplied, in whole or in part, to such part of the First Lien Obligations provided for in the First Lien Documents (which shall include any fees due to the First Lien Collateral Agent and the Subordinated Collateral Trustee).  The Subordinated Collateral Trustee, on behalf of itself and the Subordinated Lien Claimholders, assents (i) to any extension or postponement of the time of payment of the First Lien Obligations or any part thereof and to any other indulgence with respect thereto, (ii) to any substitution, exchange or release of any security which may at any time secure any part of the First Lien Obligations and (iii) to the addition or release of any other Person primarily or secondarily liable therefor.

 

8.7          SUBMISSION TO JURISDICTION; WAIVERS.  (a)  ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PARTY ARISING OUT OF OR RELATING HERETO MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK.  BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH

 

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PARTY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY:

 

(1)           ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS;

 

(2)           WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;

 

(3)           AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 8.8; AND

 

(4)           AGREES THAT SERVICE AS PROVIDED IN CLAUSE (3) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT.

 

(b)           EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR ANY OTHER FIRST LIEN DOCUMENT OR SUBORDINATED LIEN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR ACTION OF ANY PARTY HERETO.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER HEREOF, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.  EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS.  EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  THIS WAIVER IS IRREVOCABLE; MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 8.7(b) AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO.

 

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IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

8.8          Notices.  All notices to the Subordinated Lien Claimholders and the First Lien Claimholders permitted or required under this Agreement shall also be sent to the Subordinated Collateral Trustee and the First Lien Collateral Agent, respectively.  Unless otherwise specifically provided herein, any notice hereunder shall be in writing and may be personally served, telexed or sent by telefacsimile or United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service and signed for against receipt thereof, upon receipt of telefacsimile or telex, or three (3) Business Days after depositing it in the United States mail with postage prepaid and properly addressed.  For the purposes hereof, the addresses of the parties hereto shall be as set forth below each party’s name on the signature pages hereto, or, as to each party, at such other address as may be designated by such party in a written notice to all of the other parties.

 

8.9          Further Assurances.  The First Lien Collateral Agent, on behalf of itself and the First Lien Claimholders under the First Lien Documents, and the Subordinated Collateral Trustee, on behalf of itself and the Subordinated Lien Claimholders under the Subordinated Lien Documents, and the Company, agree that each of them shall take such further action and shall execute and deliver such additional documents and instruments (in recordable form, if requested) as the First Lien Collateral Agent or the Subordinated Collateral Trustee may reasonably request to effectuate the terms of and the Lien priorities contemplated by this Agreement.

 

8.10        APPLICABLE LAW.  THIS AGREEMENT, AND ANY CLAIM OR CONTROVERSY RELATING TO THE SUBJECT MATTER HEREOF WHETHER SOUNDING IN CONTRACT LAW OR TORT LAW, SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

8.11        Binding on Successors and Assigns.  This Agreement shall be binding upon the First Lien Collateral Agent, the First Lien Claimholders, the Subordinated Collateral Trustee, the Subordinated Lien Claimholders and their respective successors and assigns.  If either of the First Lien Collateral Agent or the Subordinated Collateral Trustee resigns or is replaced pursuant to the First Lien Documents or the Subordinated Lien Documents, as applicable, its successor shall be deemed to be a party to this Agreement and shall have all the rights of, and be subject to all the obligations of, this Agreement.

 

8.12        Specific Performance.  Each of the First Lien Collateral Agent and the Subordinated Collateral Trustee may demand by injunction, specific performance of this Agreement or other equitable relief.  The First Lien Collateral Agent, on behalf of itself and the First Lien Claimholders under the First Lien Documents, and the Subordinated Collateral Trustee, on behalf of itself and the Subordinated Lien Claimholders, hereby irrevocably waive any defense based on the adequacy of a remedy at law and any other defense which might be asserted to bar the remedy of specific

 

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performance in any action which may be brought by the First Lien Collateral Agent or the First Lien Claimholders or the Subordinated Collateral Trustee or the Subordinated Lien Claimholders, as the case may be.  The Subordinated Collateral Trustee on behalf of each Subordinated Lien Claimholder agrees that (i) the First Lien Claimholders’ damages from its actions may at that time be difficult to ascertain and may be irreparable, and (ii) each Subordinated Lien Claimholder waives any defense that the Grantors and/or the First Lien Claimholders cannot demonstrate damage and/or be made whole by the awarding of damages.

 

8.13        Headings.  Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect.

 

8.14        Counterparts.  This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  Delivery of an executed counterpart of a signature page of this Agreement or any document or instrument delivered in connection herewith by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement or such other document or instrument, as applicable.

 

8.15        Authorization.  By its signature, each Person executing this Agreement on behalf of a party hereto represents and warrants to the other parties hereto that it is duly authorized to execute this Agreement.

 

8.16        No Third Party Beneficiaries.  This Agreement and the rights and benefits hereof shall inure to the benefit of each of the parties hereto and its respective successors and assigns and shall inure to the benefit of each of the First Lien Claimholders and the Subordinated Lien Claimholders.  Nothing in this Agreement shall impair, as between the Company and the other Grantors and the First Lien Collateral Agent and the First Lien Claimholders, or as between the Company and the other Grantors and the Subordinated Collateral Trustee and the Subordinated Lien Claimholders, the obligations of the Company and the other Grantors to pay principal, interest, fees and other amounts as provided in the First Lien Documents and the Subordinated Lien Documents, respectively.

 

8.17        Provisions Solely to Define Relative Rights.  The provisions of this Agreement are and are intended solely for the purpose of defining the relative rights of the First Lien Collateral Agent and the First Lien Claimholders on the one hand and the Subordinated Collateral Trustee and the Subordinated Lien Claimholders on the other hand.  Except as expressly provided in this Agreement and except as set forth in Sections 8.1, 8.2, 8.3, 8.7, 8.8, 8.10, 8.11, 8.13, 8.14, 8.15 and 8.16, none of the Company, any other Grantor or any other creditor thereof shall have any rights hereunder and neither the Company nor any Grantor may rely on the terms hereof.  Nothing in this Agreement is intended to or shall impair the obligations of the Company or any other Grantor, which are absolute and unconditional, to pay the First Lien Obligations and the Subordinated

 

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Lien Obligations as and when the same shall become due and payable in accordance with their terms.

 

8.18        USA Patriot Act.  The parties hereto acknowledged that in accordance with Section 326 of the USA Patriot Act, Wells Fargo Bank, National Association, as the Subordinated Collateral Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with Wells Fargo Bank, National Association.  The Company and each Grantor agree that they will provide the Subordinated Collateral Agent with such information as it may requires in order for the Subordinated Collateral Trustee to satisfy the requirements of the USA Patriot Act.

 

8.19        Force Majeure.  The Subordinated Collateral Trustee and the First Lien Collateral Agent shall not incur any liability for not performing any act or fulfilling any duty, obligation or responsibility hereunder by reason of any occurrence beyond the control of the Subordinated Collateral Trustee or the First Lien Collateral Agent, as applicable (including, but not limited to, any act or provision of any present or future law or regulation or governmental authority, any act of God or war, civil unrest, local or national disturbance or disaster, any act of terrorism, or the unavailability of the Federal Reserve Bank wire or facsimile or other wire or communications facility).

 

 [Signature Pages to Follow]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Intercreditor Agreement as of the date first written above.

 

	
 
    	
First Lien Collateral Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WELLS FARGO BANK, NATIONAL ASSOCIATION,
    
	
 
    	
as   First Lien Collateral Agent,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Martin Reed
    
	
 
    	
 
    	
Name:
    	
Martin   Reed
    
	
 
    	
 
    	
Title:
    	
Vice   President
    

 

Wells Fargo Bank, National Association

45 Broadway, 14th Floor

New York, NY 10006

Attn:  Corporate Trust Services — Administrator Coffeyville Resources, LLC

Fax: (212) 515-5189

 

FIRST AND SUBORDINATED LIEN INTERCREDITOR AGREEMENT

 

 

	
 
    	
Subordinated Collateral Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Subordinated   Collateral Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Martin Reed
    
	
 
    	
 
    	
Name:
    	
Martin   Reed
    
	
 
    	
 
    	
Title:
    	
Vice   President
    

 

Wells Fargo Bank, National Association

45 Broadway, 14th Floor

New York, NY 10006

Attn:  Corporate Trust Services — Administrator Coffeyville Resources, LLC

Fax: (212) 515-5189

 

FIRST AND SUBORDINATED LIEN INTERCREDITOR AGREEMENT

 

 

	
 
    	
Company
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Coffeyville Resources, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Edward A. Morgan
    
	
 
    	
 
    	
Name:
    	
Edward   A. Morgan
    
	
 
    	
 
    	
Title:
    	
Chief   Financial Officer and 
    
	
 
    	
 
    	
 
    	
Treasurer
    

 

FIRST AND SUBORDINATED LIEN INTERCREDITOR AGREEMENTExhibit 10.36

 

EMPLOYMENT AGREEMENT

 

EMPLOYMENT AGREEMENT, dated as of December 7, 2012 (the “Employment Agreement”), by and between CVR ENERGY, INC., a Delaware corporation (the “Company”), and FRANK A. PICI (the “Executive”).

 

In consideration of the mutual covenants contained herein and other valid consideration the sufficiency of which is acknowledged, the parties hereto agree as follows:

 

Section 1.               Employment.

 

1.1.          Term.  The Company agrees to employ the Executive, and the Executive agrees to be employed by the Company, in each case pursuant to this Employment Agreement, for a period commencing on January 4, 2012 (the “Commencement Date”) and ending on the earlier of (i) the third (3rd) anniversary of the Commencement Date and (ii) the termination or resignation of the Executive’s employment in accordance with Section 3 hereof (the “Term”).

 

1.2.          Duties.  During the Term, the Executive shall serve as Chief Financial Officer and Treasurer of the Company and such other or additional positions as an officer or director of the Company, and of such direct or indirect affiliates of the Company (“Affiliates”), as the Executive and the board of directors of the Company (the “Board”) or its designee shall mutually agree from time to time.  In such positions, the Executive shall perform such duties, functions and responsibilities during the Term commensurate with the Executive’s positions as reasonably directed by the Board.

 

1.3.          Exclusivity.  During the Term, the Executive shall devote substantially all of Executive’s working time and attention to the business and affairs of the Company and its Affiliates, shall faithfully serve the Company and its Affiliates, and shall in all material respects conform to and comply with the lawful and reasonable directions and instructions given to Executive by the Board, or its designee, consistent with Section 1.2 hereof.  During the Term, the Executive shall use Executive’s best efforts during Executive’s working time to promote and serve the interests of the Company and its Affiliates and shall not engage in any other business activity, whether or not such activity shall be engaged in for pecuniary profit.  The provisions of this Section 1.3 shall not be construed to prevent the Executive from (i) investing Executive’s personal, private assets as a passive investor in such form or manner as will not require any active services on the part of the Executive in the management or operation of the affairs of the companies, partnerships, or other business entities in which any such passive investments are made, or (ii) serving on the board of directors of Norse Energy Corp. (provided, such service does not conflict with the Executive’s duties and obligations to the Company).

 

Section 2.               Compensation.

 

2.1.          Salary.  As compensation for the performance of the Executive’s services hereunder, during the Term, the Company shall pay to the Executive a salary at an annual rate of $350,000 which annual salary shall be prorated for any partial year at the beginning or end of the Term and shall accrue and be payable in accordance with the Company’s

 

 

standard payroll policies, as such salary may be adjusted upward by the Compensation Committee of the Board in its discretion (as adjusted, the “Base Salary”).

 

2.2.          Annual Bonus.  For each completed fiscal year occurring during the Term, the Executive shall be eligible to receive an annual cash bonus (the “Annual Bonus”).  Commencing with fiscal year 2012, the target Annual Bonus shall be 100% of the Executive’s Base Salary as in effect at the beginning of the Term in fiscal year 2012 and at the beginning of each such fiscal year thereafter during the Term, the actual Annual Bonus to be based upon such individual and/or Company performance criteria established for each such fiscal year by the Compensation Committee of the Board.  The Annual Bonus, if any, payable to Executive for a fiscal year will be paid by the Company to the Executive pursuant to the Company’s Performance Incentive Plan.

 

2.3.          Relocation Expense Allowance.  The Company shall pay for Executive’s relocation to Houston, Texas, in accordance with the mutual agreement of the parties.

 

2.4.          Employee Benefits.  During the Term, the Executive shall be eligible to participate in such health, insurance, retirement, and other employee benefit plans and programs of the Company as in effect from time to time on the same basis as other senior executives of the Company.

 

2.5.          Paid Time Off.  During the Term, the Executive shall be entitled to twenty-five (25) days of paid time off (“PTO”) each year.

 

2.6.          Business Expenses.  The Company shall pay or reimburse the Executive for all commercially reasonable business out-of-pocket expenses that the Executive incurs during the Term in performing Executive’s duties under this Employment Agreement upon presentation of documentation and in accordance with the expense reimbursement policy of the Company as approved by the Board and in effect from time to time.  Notwithstanding anything herein to the contrary or otherwise, except to the extent any expense or reimbursement described in this Employment Agreement does not constitute a “deferral of compensation” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the Treasury regulations and other guidance issued thereunder, any expense or reimbursement described in this Employment Agreement shall meet the following requirements:  (i) the amount of expenses eligible for reimbursement provided to the Executive during any calendar year will not affect the amount of expenses eligible for reimbursement to the Executive in any other calendar year; (ii) the reimbursements for expenses for which the Executive is entitled to be reimbursed shall be made on or before the last day of the calendar year following the calendar year in which the applicable expense is incurred; (iii) the right to payment or reimbursement or in-kind benefits hereunder may not be liquidated or exchanged for any other benefit; and (iv) the reimbursements shall be made pursuant to objectively determinable and nondiscretionary Company policies and procedures regarding such reimbursement of expenses.

 

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Section 3.               Employment Termination.

 

3.1.          Termination of Employment.  The Company may terminate the Executive’s employment for any reason during the Term, and the Executive may voluntarily resign Executive’s employment for any reason during the Term, in each case (other than a termination by the Company for Cause) at any time upon not less than thirty (30) days’ notice to the other party.  Upon the termination or resignation of the Executive’s employment with the Company for any reason (whether during the Term or thereafter), the Executive shall be entitled to any Base Salary earned but unpaid through the date of termination or resignation, any earned but unpaid Annual Bonus for completed fiscal years, any unused accrued PTO and any unreimbursed expenses in accordance with Section 2.6 hereof (collectively, the “Accrued Amounts”).

 

3.2.          Certain Terminations.

 

(a)           Termination by the Company Other Than For Cause or Disability; Resignation by the Executive for Good Reason.  If during the Term (i) the Executive’s employment is terminated by the Company other than for Cause or Disability or (ii) the Executive resigns for Good Reason, then in addition to the Accrued Amounts the Executive shall be entitled to the following payments and benefits:  (x) the continuation of Executive’s Base Salary at the rate in effect immediately prior to the date of termination or resignation (or, in the case of a resignation for Good Reason, at the rate in effect immediately prior to the occurrence of the event constituting Good Reason, if greater) for a period of twelve (12) months (or, if earlier, until and including the month in which the Executive attains age 70) (the “Severance Period”) and (y) a Pro-Rata Bonus and (z) to the extent permitted pursuant to the applicable plans, the continuation on the same terms as an active employee (including, where applicable, coverage for the Executive and the Executive’s dependents) of medical, dental, vision and life insurance benefits (“Welfare Benefits”) the Executive would otherwise be eligible to receive as an active employee of the Company for twelve (12) months or, if earlier, until such time as the Executive becomes eligible for Welfare Benefits from a subsequent employer (the “Welfare Benefit Continuation Period”) (such payments, collectively, the “Severance Payments”).  If the Executive is not permitted to continue participation in the Company’s Welfare Benefit plans pursuant to the terms of such plans or pursuant to a determination by the Company’s insurance providers or such continued participation in the plan would result in the imposition of an excise tax to the Company pursuant to Section 4980D of the Code, the Company shall use reasonable efforts to obtain individual insurance policies providing the Welfare Benefits to the Executive during the Welfare Benefit Continuation Period and, if applicable, the Additional Welfare Benefit Continuation Period (as defined below), but shall only be required to pay for such policies an amount equal to the amount the Company would have paid had the Executive continued participation in the Company’s Welfare Benefits plans; provided, that, if such coverage cannot be obtained, the Company shall pay to the Executive monthly during the Welfare Benefit Continuation Period and, if applicable, the Additional Welfare Benefit Continuation Period, an amount equal to the amount the Company would have paid had the Executive continued participation in the Company’s Welfare Benefits plans.  The Company’s obligations to make the Severance Payments shall be conditioned upon: (i) the Executive’s continued compliance with Executive’s obligations under Section 4 of this Employment Agreement and (ii) the Executive’s execution, delivery and non-revocation of a valid and enforceable release of claims arising in

 

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connection with the Executive’s employment and termination or resignation of employment with the Company (the “Release”) in a form reasonably acceptable to the Company and the Executive that becomes effective not later than forty-five (45) days after the date of such termination or resignation of employment.  In the event that the Executive breaches any of the covenants set forth in Section 4 of this Employment Agreement, the Executive will immediately return to the Company any portion of the Severance Payments that have been paid to the Executive pursuant to this Section 3.2(a).  Subject to the foregoing and Section 3.2(e), the Severance Payments will commence to be paid to the Executive on the forty-fifth (45th) day following the Executive’s termination of employment, except that the Pro-Rata Bonus shall be paid at the time when annual bonuses are paid generally to the Company’s senior executives for the year in which the Executive’s termination of employment occurs.

 

(b)           Change in Control Termination.   If (A) (i) the Executive’s employment is terminated by the Company other than for Cause or Disability, or (ii) the Executive resigns for Good Reason, and such termination or resignation described in (i) or (ii) of this Clause (A) occurs within the one (1) year period following a Change in Control, or (B) the Executive’s termination or resignation is a Change in Control Related Termination, then, in addition to the Severance Payments described in Section 3.2(a), the Executive shall also be entitled to (I) the continuation of Executive’s Base Salary at the rate in effect immediately prior to the date of termination or resignation (determined without regard to any reduction in Base Salary subsequent to the Change in Control or in connection with the Change in Control Related Termination) for a period of twelve (12) months  (or, if earlier, until and including the month in which the Executive attains age 70) commencing on the one (1) year anniversary of the date of termination or resignation (the “Additional Severance Period”), (II) a payment each month during the Severance Period and the Additional Severance Period equal to one-twelfth (1/12th) of the target Annual Bonus for the year in which the Executive’s termination or resignation occurs (determined without regard to any reduction in Base Salary or target Annual Bonus percentage subsequent to the Change in Control or in connection with the Change in Control Related Termination) and (III) the continuation of the Welfare Benefits for the twelve (12) month period commencing on the one (1) year anniversary of the date of termination or resignation or, if earlier, until such time as the Executive becomes eligible for Welfare Benefits from a subsequent employer (the “Additional Welfare Benefit Continuation Period”).  Amounts received pursuant to this Section 3.2(b) shall be deemed to be included in the term Severance Payments for purposes of this Employment Agreement.

 

(c)           Retirement.  Upon Retirement, the Executive, whether or not Section 3.2(a) also applies but without duplication of benefits, shall be entitled to (i) a Pro-Rata Bonus, (ii) to the extent permitted pursuant to the applicable plans, the continuation on the same terms as an active employee of Welfare Benefits the Executive would otherwise be eligible to receive as an active employee of the Company for twenty-four (24) months following the date of the Executive’s Retirement or, if earlier, until such time as the Executive becomes eligible for Welfare Benefits from a subsequent employer and, thereafter, shall be eligible to continue participation in the Company’s Welfare Benefits plans, provided that such continued participation shall be entirely at the Executive’s expense and shall cease when the Executive becomes eligible for Welfare Benefits from a subsequent employer.  Notwithstanding the foregoing, (x) if the Executive is not permitted to continue participation in the Company’s Welfare Benefit plans pursuant to the terms of such plans or pursuant to a determination by the

 

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Company’s insurance providers or such continued participation in any plan would result in the plan being discriminatory within the meaning of Section 4980D of the Code, the Company shall use reasonable efforts to obtain individual insurance policies providing the Welfare Benefits to the Executive for such twenty-four (24) months, but shall only be required to pay for such policies an amount equal to the amount the Company would have paid had the Executive continued participation in the Company’s Welfare Benefit plans; provided, that, if such coverage cannot be obtained, the Company shall pay to the Executive monthly for such twenty-four (24) months an amount equal to the amount the Company would have paid had the Executive continued participation in the Company’s Welfare Benefits plans and (y) any Welfare Benefits coverage provided pursuant to this Section 3.2(b), whether through the Company’s Welfare Benefit plans or through individual insurance policies, shall be supplemental to any benefits for which the Executive becomes eligible under Medicare, whether or not the Executive actually obtains such Medicare coverage.  The Pro-Rata Bonus shall be paid at the time when annual bonuses are paid generally to the Company’s senior executives for the year in which the Executive’s Retirement occurs.

 

(d)           Definitions.  For purposes of this Section 3.2, the following terms shall have the following meanings:

 

(1)           A resignation for “Good Reason” shall mean a resignation by the Executive within thirty (30) days following the date on which the Company has engaged in any of the following:  (i) the assignment of duties or responsibilities to the Executive that reflect a material diminution of the Executive’s position with the Company; (ii) a relocation of the Executive’s principal place of employment that increases the Executive’s commute by more than fifty (50) miles; or (iii) a reduction in the Executive’s Base Salary, other than across-the-board reductions applicable to similarly situated employees of the Company; provided, however, that the Executive must provide the Company with notice promptly following the occurrence of any of the foregoing and at least thirty (30) days to cure.

 

(2)           “Cause” shall mean that the Executive has engaged in any of the following:  (i) willful misconduct or breach of fiduciary duty; (ii) intentional failure or refusal to perform reasonably assigned duties after written notice of such willful failure or refusal and the failure or refusal is not corrected within ten (10) business days; (iii) the indictment for, conviction of or entering a plea of guilty or nolo contendere to a crime constituting a felony (other than a traffic violation or other offense or violation outside of the course of employment which does not adversely affect the Company and its Affiliates or their reputation or the ability of the Executive to perform Executive’s employment-related duties or to represent the Company and its Affiliates); provided, however, that (A) if the Executive is terminated for Cause by reason of Executive’s indictment pursuant to this clause (iii) and the indictment is subsequently dismissed or withdrawn or the Executive is found to be not guilty in a court of law in connection with such indictment, then the Executive’s termination shall be treated for purposes of this Employment Agreement as a termination by the Company other than for Cause, and the Executive will be entitled to receive (without duplication of benefits and to the extent permitted by law and the terms of the then-applicable Welfare Benefits plans) the payments and benefits set forth in Section 3.2(a) and, to the extent either or both are applicable, Section 3.2(b) and Section 3.2(c), following such dismissal, withdrawal or finding, payable in the manner and subject to the conditions set forth in such Sections and (B) if such indictment relates

 

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to environmental matters and does not allege that the Executive was directly involved in or directly supervised the action(s) forming the basis of the indictment, Cause shall not be deemed to exist under this Employment Agreement by reason of such indictment until the Executive is convicted or enters a plea of guilty or nolo contendere in connection with such indictment; or (iv) material breach of the Executive’s covenants in Section 4 of this Employment Agreement or any material written policy of the Company or any Affiliate after written notice of such breach and failure by the Executive to correct such breach within ten (10) business days, provided that no notice of, nor opportunity to correct, such breach shall be required hereunder if such breach cannot be cured by the Executive.

 

(3)           “Change in Control” shall have the meaning set forth on Appendix A.

 

(4)           “Change in Control Related Termination” shall mean a termination of the Executive’s employment by the Company other than for Cause or Executive’s resignation for Good Reason, in each case at any time prior to the date of a Change in Control and (A) the Executive reasonably demonstrates that such termination or the basis for resignation for Good Reason occurred in anticipation of a transaction that, if consummated, would constitute a Change in Control, (B) such termination or the basis for resignation for Good Reason occurred after the Company entered into a definitive agreement, the consummation of which would constitute a Change in Control or (C) the Executive reasonably demonstrates that such termination or the basis for resignation for Good Reason was implemented at the request of a third party who has indicated an intention or has taken steps reasonably calculated to effect a Change in Control.

 

(5)           “Disability” shall mean the Executive’s inability, due to physical or mental ill health, to perform the essential functions of the Executive’s job, with or without a reasonable accommodation, for 180 days during any 365 day period irrespective of whether such days are consecutive.

 

(6)           “Pro-Rata Bonus” shall mean, the product of (A) a fraction, the numerator of which is the number of days the Executive is employed by the Company during the year in which the Executive’s employment terminates pursuant to Section 3.2(a) or (c) prior to and including the date of the Executive’s termination and the denominator of which is 365 and (B) an amount for that year equal to the Annual Bonus the Executive would have been entitled to receive had his employment not terminated, based on the actual performance of the Company or the Executive, as applicable, for the full year.

 

(7)           “Retirement” shall mean the Executive’s termination or resignation of employment for any reason (other than by the Company for Cause or by reason of the Executive’s death) following the date the Executive attains age 62.

 

(e)           Section 409A.  To the extent applicable, this Employment Agreement shall be interpreted, construed and operated in accordance with Section 409A of the Code and the Treasury regulations and other guidance issued thereunder. If on the date of the Executive’s separation from service (as defined in Treasury Regulation §1.409A-1(h)) with the Company the Executive is a specified employee (as defined in Code Section 409A and Treasury

 

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Regulation §1.409A-1(i)), no payment constituting the “deferral of compensation” within the meaning of Treasury Regulation §1.409A-1(b) and after application of the exemptions provided in Treasury Regulation §§1.409A-1(b)(4) and 1.409A-1(b)(9)(iii) shall be made to Executive at any time during the six (6) month period following the Executive’s separation from service, and any such amounts deferred such six (6) months shall instead be paid in a lump sum on the first payroll payment date following expiration of such six (6) month period. For purposes of conforming this Employment Agreement to Section 409A of the Code, the parties agree that any reference to termination of employment, severance from employment, resignation from employment or similar terms shall mean and be interpreted as a “separation from service” as defined in Treasury Regulation §1.409A-1(h).

 

3.3.          Exclusive Remedy.  The foregoing payments upon termination or resignation of the Executive’s employment shall constitute the exclusive severance payments due the Executive upon a termination or resignation of Executive’s employment under this Employment Agreement.

 

3.4.          Resignation from All Positions.  Upon the termination or resignation of the Executive’s employment with the Company for any reason, the Executive shall be deemed to have resigned, as of the date of such termination or resignation, from and with respect to all positions the Executive then holds as an officer, director, employee and member of the Board of Directors (and any committee thereof) of the Company and any of its Affiliates.

 

3.5.          Cooperation.  For one (1) year following the termination or resignation of the Executive’s employment with the Company for any reason, the Executive agrees to reasonably cooperate with the Company upon reasonable request of the Board and to be reasonably available to the Company with respect to matters arising out of the Executive’s services to the Company and its Affiliates, provided, however, such period of cooperation shall be for three (3) years, following any such termination or resignation of Executive’s employment for any reason, with respect to tax matters involving the Company or any of its Affiliates.  The Company shall reimburse the Executive for expenses reasonably incurred in connection with such matters as agreed by the Executive and the Board and the Company shall compensate the Executive for such cooperation at an hourly rate based on the Executive’s most recent base salary rate assuming two thousand (2,000) working hours per year; provided, that if the Executive is required to spend more than forty (40) hours in any month on Company matters pursuant to this Section 3.5, the Executive and the Board shall mutually agree to an appropriate rate of compensation for the Executive’s time over such forty (40) hour threshold.

 

Section 4.               Unauthorized Disclosure; Non-Competition; Non-Solicitation; Proprietary Rights.

 

4.1.          Unauthorized Disclosure.  The Executive agrees and understands that in the Executive’s position with the Company and any Affiliates, the Executive has been and will be exposed to and has and will receive information relating to the confidential affairs of the Company and its Affiliates, including, without limitation, technical information, intellectual property, business and marketing plans, strategies, customer information, software, other information concerning the products, promotions, development, financing, expansion plans, business policies and practices of the Company and its Affiliates and other forms of information

 

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considered by the Company and its Affiliates to be confidential and in the nature of trade secrets (including, without limitation, ideas, research and development, know-how, formulas, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information and business and marketing plans and proposals) (collectively, the “Confidential Information”); provided, however, that Confidential Information shall not include information which (i) is or becomes generally available to the public not in violation of this Employment Agreement or any written policy of the Company; or (ii) was in the Executive’s possession or knowledge on a non-confidential basis prior to such disclosure.  The Executive agrees that at all times during the Executive’s employment with the Company and thereafter, the Executive shall not disclose such Confidential Information, either directly or indirectly, to any individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof (each, for purposes of this Section 4, a “Person”) without the prior written consent of the Company and shall not use or attempt to use any such information in any manner other than in connection with Executive’s employment with the Company, unless required by law to disclose such information, in which case the Executive shall provide the Company with written notice of such requirement as far in advance of such anticipated disclosure as possible.  Executive’s confidentiality covenant has no temporal, geographical or territorial restriction.  Upon termination or resignation of the Executive’s employment with the Company, the Executive shall promptly supply to the Company all property, keys, notes, memoranda, writings, lists, files, reports, customer lists, correspondence, tapes, disks, cards, surveys, maps, logs, machines, technical data and any other tangible product or document which has been produced by, received by or otherwise submitted to the Executive during or prior to the Executive’s employment with the Company, and any copies thereof in Executive’s (or capable of being reduced to Executive’s) possession.

 

4.2.          Non-Competition.  By and in consideration of the Company’s entering into this Employment Agreement and the payments to be made and benefits to be provided by the Company hereunder, and in further consideration of the Executive’s exposure to the Confidential Information of the Company and its Affiliates, the Executive agrees that the Executive shall not, during the Term and for a period of twelve (12) months thereafter (the “Restriction Period”), directly or indirectly, own, manage, operate, join, control, be employed by, or participate in the ownership, management, operation or control of, or be connected in any manner with, including, without limitation, holding any position as a stockholder, director, officer, consultant, independent contractor, employee, partner, or investor in, any Restricted Enterprise (as defined below); provided, that in no event shall ownership of one percent (1%) or less of the outstanding securities of any class of any issuer whose securities are registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), standing alone, be prohibited by this Section 4.2, so long as the Executive does not have, or exercise, any rights to manage or operate the business of such issuer other than rights as a stockholder thereof.  For purposes of this paragraph, “Restricted Enterprise” shall mean any Person that is actively engaged in any business which is either (i) in competition with the business of the Company or any of its Affiliates conducted during the preceding twelve (12) months (or following the Term, the twelve (12) months preceding the last day of the Term), or (ii) proposed to be conducted by the Company or any of its Affiliates in the Company’s or Affiliate’s business plan as in effect at that time (or following the Term, the business plan as in effect as of the last day of the Term); provided, that (x) with respect to any Person that is actively engaged in the refinery business, a Restricted Enterprise shall only include such a Person that operates or markets in any geographic

 

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area in which the Company or any of its Affiliates operates or markets with respect to its refinery business and (y) with respect to any Person that is actively engaged in the fertilizer business, a Restricted Enterprise shall only include such a Person that operates or markets in any geographic area in which the Company or any of its Affiliates operates or markets with respect to its fertilizer business.  During the Restriction Period, upon request of the Company, the Executive shall notify the Company of the Executive’s then-current employment status.  For the avoidance of doubt, a Restricted Enterprise shall not include any Person or division thereof that is engaged in the business of supplying (but not refining) crude oil or natural gas.

 

4.3.          Non-Solicitation of Employees.  During the Restriction Period, the Executive shall not directly or indirectly contact, induce or solicit (or assist any Person to contact, induce or solicit) for employment any person who is, or within twelve (12) months prior to the date of such solicitation was, an employee of the Company or any of its Affiliates.

 

4.4.          Non-Solicitation of Customers/Suppliers.  During the Restriction Period, the Executive shall not (i) contact, induce or solicit (or assist any Person to contact, induce or solicit) any Person which has a business relationship with the Company or of any of its Affiliates in order to terminate, curtail or otherwise interfere with such business relationship or (ii) solicit, other than on behalf of the Company and its Affiliates, any Person that the Executive knows or should have known (x) is a current customer of the Company or any of its Affiliates in any geographic area in which the Company or any of its Affiliates operates or markets or (y) is a Person in any geographic area in which the Company or any of its Affiliates operates or markets with respect to which the Company or any of its Affiliates has, within the twelve (12) months prior to the date of such solicitation, devoted more than de minimis resources in an effort to cause such Person to become a customer of the Company or any of its Affiliates in that geographic area.  For the avoidance of doubt, the foregoing does not preclude the Executive from soliciting, outside of the geographic areas in which the Company or any of its Affiliates operates or markets, any Person that is a customer or potential customer of the Company or any of its Affiliates in the geographic areas in which it operates or markets.

 

4.5.          Extension of Restriction Period.  The Restriction Period shall be extended for a period of time equal to any period during which the Executive is in breach of any of Sections 4.2, 4.3 or 4.4 hereof.

 

4.6.          Proprietary Rights.  The Executive shall disclose promptly to the Company any and all inventions, discoveries, and improvements (whether or not patentable or registrable under copyright or similar statutes), and all patentable or copyrightable works, initiated, conceived, discovered, reduced to practice, or made by Executive, either alone or in conjunction with others, during the Executive’s employment with the Company and related to the business or activities of the Company and its Affiliates (the “Developments”).  Except to the extent any rights in any Developments constitute a work made for hire under the U.S. Copyright Act, 17 U.S.C. § 101 et seq. that are owned ab initio by the Company and/or its applicable Affiliates, the Executive assigns all of Executive’s right, title and interest in all Developments (including all intellectual property rights therein) to the Company or its nominee without further compensation, including all rights or benefits therefor, including without limitation the right to sue and recover for past and future infringement.  The Executive acknowledges that any rights in any developments constituting a work made for hire under the U.S. Copyright Act, 17 U.S.C §

 

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101 et seq. are owned upon creation by the Company and/or its applicable Affiliates as the Executive’s employer.  Whenever requested to do so by the Company, the Executive shall execute any and all applications, assignments or other instruments which the Company shall deem necessary to apply for and obtain trademarks, patents or copyrights of the United States or any foreign country or otherwise protect the interests of the Company and its Affiliates therein.  These obligations shall continue beyond the end of the Executive’s employment with the Company with respect to inventions, discoveries, improvements or copyrightable works initiated, conceived or made by the Executive while employed by the Company, and shall be binding upon the Executive’s employers, assigns, executors, administrators and other legal representatives.  In connection with Executive’s execution of this Employment Agreement, the Executive has informed the Company in writing of any interest in any inventions or intellectual property rights that Executive holds as of the date hereof.  If the Company is unable for any reason, after reasonable effort, to obtain the Executive’s signature on any document needed in connection with the actions described in this Section 4.6, the Executive hereby irrevocably designates and appoints the Company, its Affiliates, and their duly authorized officers and agents as the Executive’s agent and attorney in fact to act for and in the Executive’s behalf to execute, verify and file any such documents and to do all other lawfully permitted acts to further the purposes of this Section with the same legal force and effect as if executed by the Executive.

 

4.7.          Confidentiality of Agreement.  Other than with respect to information required to be disclosed by applicable law, the parties hereto agree not to disclose the terms of this Employment Agreement to any Person; provided the Executive may disclose this Employment Agreement and/or any of its terms to the Executive’s immediate family, financial advisors and attorneys.  Notwithstanding anything in this Section 4.7 to the contrary, the parties hereto (and each of their respective employees, representatives, or other agents) may disclose to any and all Persons, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated by this Employment Agreement, and all materials of any kind (including opinions or other tax analyses) related to such tax treatment and tax structure; provided that this sentence shall not permit any Person to disclose the name of, or other information that would identify, any party to such transactions or to disclose confidential commercial information regarding such transactions.

 

4.8.          Remedies.  The Executive agrees that any breach of the terms of this Section 4 would result in irreparable injury and damage to the Company and its Affiliates for which the Company and its Affiliates would have no adequate remedy at law; the Executive therefore also agrees that in the event of said breach or any threat of breach, the Company and its Affiliates shall be entitled to an immediate injunction and restraining order to prevent such breach and/or threatened breach and/or continued breach by the Executive and/or any and all Persons acting for and/or with the Executive, without having to prove damages, in addition to any other remedies to which the Company and its Affiliates may be entitled at law or in equity, including, without limitation, the obligation of the Executive to return any Severance Payments made by the Company to the Company.  The terms of this paragraph shall not prevent the Company or its Affiliates from pursuing any other available remedies for any breach or threatened breach hereof, including, without limitation, the recovery of damages from the Executive.  The Executive and the Company further agree that the provisions of the covenants contained in this Section 4 are reasonable and necessary to protect the businesses of the

 

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Company and its Affiliates because of the Executive’s access to Confidential Information and Executive’s material participation in the operation of such businesses.

 

Section 5.               Representation.

 

The Executive represents and warrants that (i) Executive is not subject to any contract, arrangement, policy or understanding, or to any statute, governmental rule or regulation, that in any way limits Executive’s ability to enter into and fully perform Executive’s obligations under this Employment Agreement and (ii) Executive is not otherwise unable to enter into and fully perform Executive’s obligations under this Employment Agreement.

 

Section 6.               Withholding.

 

All amounts paid to the Executive under this Employment Agreement during or following the Term shall be subject to withholding and other employment taxes imposed by applicable law.

 

Section 7.               Effect of Section 280G of the Code.

 

7.1.          Payment Reduction.  Notwithstanding anything contained in this Employment Agreement to the contrary, (i) to the extent that any payment or distribution of any type to or for the Executive by the Company, any affiliate of the Company, any Person who acquires ownership or effective control of the Company or ownership of a substantial portion of the Company’s assets (within the meaning of Section 280G of the Code and the regulations thereunder), or any affiliate of such Person, whether paid or payable or distributed or distributable pursuant to the terms of this Employment Agreement or otherwise (the “Payments”) constitute “parachute payments” (within the meaning of Section 280G of the Code), and if (ii) such aggregate would, if reduced by all federal, state and local taxes applicable thereto, including the excise tax imposed under Section 4999 of the Code (the “Excise Tax”), be less than the amount the Executive would receive, after all taxes, if the Executive received aggregate Payments equal (as valued under Section 280G of the Code) to only three times the Executive’s “base amount” (within the meaning of Section 280G of the Code), less $1.00, then (iii) such Payments shall be reduced (but not below zero) if and to the extent necessary so that no Payments to be made or benefit to be provided to the Executive shall be subject to the Excise Tax; provided, however, that the Company shall use its reasonable best efforts to obtain shareholder approval of the Payments provided for in this Employment Agreement in a manner intended to satisfy requirements of the “shareholder approval” exception to Section 280G of the Code and the regulations promulgated thereunder, such that payment may be made to the Executive of such Payments without the application of an Excise Tax.  If the Payments are so reduced, the Company shall reduce or eliminate the Payments (x) by first reducing or eliminating the portion of the Payments which are not payable in cash (other than that portion of the Payments subject to clause (z) hereof), (y) then by reducing or eliminating cash payments (other than that portion of the Payments subject to clause (z) hereof) and (z) then by reducing or eliminating the portion of the Payments (whether payable in cash or not payable in cash) to which Treasury Regulation § 1.280G-1 Q/A 24(c) (or successor thereto) applies, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time.

 

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7.2.          Determination of Amount of Reduction (if any).  The determination of whether the Payments shall be reduced as provided in Section 7.1 and the amount of such reduction shall be made at the Company’s expense by an accounting firm selected by the Company from among the four (4) largest accounting firms in the United States (the “Accounting Firm”).  The Accounting Firm shall provide its determination (the “Determination”), together with detailed supporting calculations and documentation, to the Company and the Executive within ten (10) days after the Executive’s final day of employment.  If the Accounting Firm determines that no Excise Tax is payable by the Executive with respect to the Payments, it shall furnish the Executive with an opinion reasonably acceptable to the Executive that no Excise Tax will be imposed with respect to any such payments and, absent manifest error, such Determination shall be binding, final and conclusive upon the Company and the Executive.

 

Section 8.               Miscellaneous.

 

8.1.          Amendments and Waivers.  This Employment Agreement and any of the provisions hereof may be amended, waived (either generally or in a particular instance and either retroactively or prospectively), modified or supplemented, in whole or in part, only by written agreement signed by the parties hereto; provided, that, the observance of any provision of this Employment Agreement may be waived in writing by the party that will lose the benefit of such provision as a result of such waiver.  The waiver by any party hereto of a breach of any provision of this Employment Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach, except as otherwise explicitly provided for in such waiver.  Except as otherwise expressly provided herein, no failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder, or otherwise available in respect hereof at law or in equity, shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy.

 

8.2.          Fees and Expenses.  The Company shall pay all legal fees and related expenses (including the costs of experts, evidence and counsel) incurred by the Executive as a result of (i) the termination of the Executive’s employment by the Company or the resignation by the Executive for Good Reason (including all such fees and expenses, if any, incurred in contesting, defending or disputing the basis for any such termination or resignation of employment) or (b) the Executive seeking to obtain or enforce any right or benefit provided by this Employment Agreement; provided, that, if it is determined that the Executive’s termination of employment was for Cause, the Executive shall not be entitled to any payment or reimbursement pursuant to this Section 8.2.

 

8.3.          Indemnification.  To the extent provided in the Company’s Certificate of Incorporation or Bylaws, as in effect from time to time, and subject to any separate agreement (if any) between the Company and the Executive regarding indemnification, the Company shall indemnify the Executive for losses or damages incurred by the Executive as a result of causes of action arising from the Executive’s performance of duties for the benefit of the Company, whether or not the claim is asserted during the Term.

 

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8.4.          Assignment.  This Employment Agreement, and the Executive’s rights and obligations hereunder, may not be assigned by the Executive, and any purported assignment by the Executive in violation hereof shall be null and void.

 

8.5.          Payments Following Executive’s Death.  Any amounts payable to the Executive pursuant to this Employment Agreement that remain unpaid at the Executive’s death shall be paid to the Executive’s estate.

 

8.6.          Notices.  Unless otherwise provided herein, all notices, requests, demands, claims and other communications provided for under the terms of this Employment Agreement shall be in writing.  Any notice, request, demand, claim or other communication hereunder shall be sent by (i) personal delivery (including receipted courier service) or overnight delivery service, (ii) facsimile during normal business hours, with confirmation of receipt, to the number indicated, (iii) reputable commercial overnight delivery service courier or (iv) registered or certified mail, return receipt requested, postage prepaid and addressed to the intended recipient as set forth below:

 

	
If to the Company:
    	
CVR   Energy, Inc.

10   E. Cambridge Circle, Suite 250

Kansas   City, KS 66103

Attention:   General Counsel

Facsimile:   (913) 982-5651
    
	
 
    	
 
    
	
with a copy to:
    	
Fried,   Frank, Harris, Shriver & Jacobson LLP

One   New York Plaza

New   York, NY 10004

Attention:   Donald P. Carleen, Esq.

Facsimile:   (212) 859-4000
    
	
 
    	
 
    
	
If to the Executive:
    	
Frank   A. Pici

2277   Plaza Drive, Suite 500

Sugar   Land, TX 77479

Facsimile:   (281) 207-
    

 

All such notices, requests, consents and other communications shall be deemed to have been given when received.  Any party may change its facsimile number or its address to which notices, requests, demands, claims and other communications hereunder are to be delivered by giving the other parties hereto notice in the manner then set forth.

 

8.7.          Governing Law.  This Employment Agreement shall be construed and enforced in accordance with, and the rights and obligations of the parties hereto shall be governed by, the laws of the State of Texas, without giving effect to the conflicts of law principles thereof.  Each of the parties hereto irrevocably and unconditionally consents to submit to the exclusive jurisdiction of the courts of Texas  (collectively, the “Selected Courts”) for any action or proceeding relating to this Employment Agreement, agrees not to commence any action or proceeding relating thereto except in the Selected Courts, and waives any forum or venue objections to the Selected Courts.

 

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8.8.          Severability.  Whenever possible, each provision or portion of any provision of this Employment Agreement, including those contained in Section 4 hereof, will be interpreted in such manner as to be effective and valid under applicable law but the invalidity or unenforceability of any provision or portion of any provision of this Employment Agreement in any jurisdiction shall not affect the validity or enforceability of the remainder of this Employment Agreement in that jurisdiction or the validity or enforceability of this Employment Agreement, including that provision or portion of any provision, in any other jurisdiction.  In addition, should a court or arbitrator determine that any provision or portion of any provision of this Employment Agreement, including those contained in Section 4 hereof, is not reasonable or valid, either in period of time, geographical area, or otherwise, the parties hereto agree that such provision should be interpreted and enforced to the maximum extent which such court or arbitrator deems reasonable or valid.

 

8.9.          Entire Agreement.  From and after the Commencement Date, this Employment Agreement constitutes the entire agreement between the parties hereto, and supersedes all prior representations, agreements and understandings (including any prior course of dealings), both written and oral, relating to any employment of the Executive by the Company or any of its Affiliates.

 

8.10.        Counterparts.  This Employment Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all such counterparts shall together constitute one and the same instrument.

 

8.11.        Binding Effect.  This Employment Agreement shall inure to the benefit of, and be binding on, the successors and assigns of each of the parties, including, without limitation, the Executive’s heirs and the personal representatives of the Executive’s estate and any successor to all or substantially all of the business and/or assets of the Company.

 

8.12.        General Interpretive Principles.  The name assigned this Employment Agreement and headings of the sections, paragraphs, subparagraphs, clauses and subclauses of this Employment Agreement are for convenience of reference only and shall not in any way affect the meaning or interpretation of any of the provisions hereof.  Words of inclusion shall not be construed as terms of limitation herein, so that references to “include”, “includes” and “including” shall not be limiting and shall be regarded as references to non-exclusive and non-characterizing illustrations.

 

8.13.        Mitigation.  Notwithstanding any other provision of this Employment Agreement, (a) the Executive will have no obligation to mitigate damages for any breach or termination of this Employment Agreement by the Company, whether by seeking employment or otherwise and (b) except for Welfare Benefits provided pursuant to Section 3.2(a) or Section 3.2(b), the amount of any payment or benefit due the Executive after the date of such breach or termination will not be reduced or offset by any payment or benefit that the Executive may receive from any other source.

 

8.14.        Company Actions.  Any actions, approvals, decisions, or determinations to be made by the Company under this Employment Agreement shall be made by the Company’s Board, except as otherwise expressly provided herein.  For purposes of any

 

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references herein to the Board’s designee, any such reference shall be deemed to include the Chief Executive Officer of the Company and such other or additional officers, or committees of the Board, as the Board may expressly designate from time to time for such purpose.

 

[signature page follows]

 

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IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of the date first written above.

 

 

	
 
    	
 
    	
CVR   ENERGY, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Frank A. Pici
    	
 
    	
By:   
    	
/s/   John J. Lipinski
    
	
FRANK A. PICI
    	
 
    	
 
    	
Name:   John J. Lipinski
    
	
 
    	
 
    	
 
    	
Title:   Chief Executive Officer and President
    
	
 
    	
 
    	
 
    

 

[Signature Page to Employment Agreement]

 

 

APPENDIX A

 

“Change in Control” means the occurrence of any of the following:

 

(a)           An acquisition (other than directly from the Company) of any voting securities of the Company (the “Voting Securities”) by any “Person” (as the term “person” is used for purposes of Section 13(d) or 14(d) of the Exchange Act), immediately after which such Person has “Beneficial Ownership” (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than thirty percent (30%) of (i) the then-outstanding Shares or (ii) the combined voting power of the Company’s then-outstanding Voting Securities; provided, however, that in determining whether a Change in Control has occurred pursuant to this paragraph (a), the acquisition of Shares or Voting Securities in a Non-Control Acquisition (as hereinafter defined) shall not constitute a Change in Control.  A “Non-Control Acquisition” shall mean an acquisition by (i) an employee benefit plan (or a trust forming a part thereof) maintained by (A) the Company or (B) any corporation or other Person the majority of the voting power, voting equity securities or equity interest of which is owned, directly or indirectly, by the Company (for purposes of this definition, a “Related Entity”), (ii) the Company or any Related Entity, or (iii) any Person in connection with a Non-Control Transaction (as hereinafter defined);

 

(b)           The consummation of:

 

(i)            A merger, consolidation or reorganization (x) with or into the Company or (y) in which securities of the Company are issued (a “Merger”), unless such Merger is a “Non-Control Transaction.”  A “Non-Control Transaction” shall mean a Merger in which:

 

(A)          the shareholders of the Company immediately before such Merger own directly or indirectly immediately following such Merger at least a majority of the combined voting power of the outstanding voting securities of (1) the corporation resulting from such Merger (the “Surviving Corporation”), if fifty percent (50%) or more of the combined voting power of the then outstanding voting securities by the Surviving Corporation is not Beneficially Owned, directly or indirectly, by another Person (a “Parent Corporation”) or (2) if there is one or more than one Parent Corporation, the ultimate Parent Corporation;

 

(B)           the individuals who were members of the Board immediately prior to the execution of the agreement providing for such Merger constitute at least a majority of the members of the board of directors of (1) the Surviving Corporation, if there is no Parent Corporation, or (2) if there is one or more than one Parent Corporation, the ultimate Parent Corporation; and

 

(C)           no Person other than (1) the Company or another corporation that is a party to the agreement of Merger, (2) any Related Entity, (3) any employee benefit plan (or any trust forming a part thereof) that, immediately prior to the Merger, was maintained by the Company or any Related Entity, or (4) any Person who, immediately prior to the Merger, had Beneficial Ownership of thirty percent (30%) or more of the then outstanding Shares or Voting Securities, has Beneficial Ownership, directly or indirectly, of thirty percent (30%) or more of the combined voting power of the outstanding voting securities or common stock of (x) the

 

 

Surviving Corporation, if there is no Parent Corporation, or (y) if there is one or more than one Parent Corporation, the ultimate Parent Corporation.

 

(ii)           A complete liquidation or dissolution of the Company; or

 

(iii)          The sale or other disposition of all or substantially all of the assets of the Company and its Subsidiaries taken as a whole to any Person (other than (x) a transfer to a Related Entity or (y) the distribution to the Company’s shareholders of the stock of a Related Entity or any other assets).

 

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the “Subject Person”) acquired Beneficial Ownership of more than the permitted amount of the then outstanding Shares or Voting Securities as a result of the acquisition of Shares or Voting Securities by the Company which, by reducing the number of Shares or Voting Securities then outstanding, increases the proportional number of shares Beneficially Owned by the Subject Persons; provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Shares or Voting Securities by the Company and, after such share acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional Shares or Voting Securities and such Beneficial Ownership increases the percentage of the then outstanding Shares or Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur.

 

For purposes of this definition, the term “Shares” means the common stock, par value $.01 per share, of the Company and any other securities into which such shares are changed or for which such shares are exchanged.

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