INTERCREDITOR AGREEMENT

(Multi-Creditor Lien Priority and Payment Waterfall)

Effective Date: [DATE]
Agreement Number: [UNIQUE IDENTIFIER]

PARTIES

This Intercreditor Agreement ("Agreement") is entered into as of [EFFECTIVE DATE] by and among:

FIRST LIEN CREDITOR:

SECOND LIEN CREDITOR:

BORROWER (for acknowledgment):

RECITALS

A. First Lien Credit Facility: First Lien Creditor has extended or will extend credit to Borrower pursuant to that certain [Credit Agreement/Loan Agreement] dated [DATE] (as amended, the "First Lien Credit Agreement") in the maximum principal amount of $[AMOUNT] (the "First Lien Facility"), secured by substantially all assets of Borrower.

B. Second Lien Credit Facility: Second Lien Creditor has extended or will extend credit to Borrower pursuant to that certain [Credit Agreement/Loan Agreement] dated [DATE] (as amended, the "Second Lien Credit Agreement") in the maximum principal amount of $[AMOUNT] (the "Second Lien Facility"), secured by the same collateral securing the First Lien Facility.

C. Purpose: The parties desire to establish their respective rights with respect to the Collateral, payment priority, and enforcement actions.

NOW, THEREFORE, for good and valuable consideration, the parties agree as follows:

ARTICLE 1: DEFINITIONS

"Bankruptcy Code" means Title 11 of the United States Code.

"Borrower" means [BORROWER NAME] and its subsidiaries and affiliates that are parties to the Credit Facilities.

"Collateral" means all property, real or personal, tangible or intangible, securing the First Lien Obligations or the Second Lien Obligations.

"Credit Facilities" means the First Lien Facility and the Second Lien Facility, collectively.

"DIP Financing" means debtor-in-possession financing in any Insolvency Proceeding.

"Discharge of First Lien Obligations" means the date on which all First Lien Obligations have been indefeasibly paid in full in cash and all commitments under the First Lien Credit Agreement have terminated.

"Enforcement Action" means any action to accelerate, collect, enforce, foreclose, realize upon, or exercise any rights or remedies with respect to the Collateral or obligations.

"First Lien Creditor" means [NAME] and its successors and assigns, including any agent acting on behalf of first lien lenders.

"First Lien Debt Cap" means $[MAXIMUM AMOUNT] in aggregate principal amount of First Lien Obligations.

"First Lien Documents" means the First Lien Credit Agreement and all related loan documents.

"First Lien Obligations" means all present and future obligations of Borrower under the First Lien Documents, including principal, interest (including post-petition interest), fees, costs, and expenses, not to exceed the First Lien Debt Cap.

"Insolvency Proceeding" means any bankruptcy, insolvency, receivership, liquidation, reorganization, assignment for benefit of creditors, or similar proceeding.

"Second Lien Creditor" means [NAME] and its successors and assigns, including any agent acting on behalf of second lien lenders.

"Second Lien Documents" means the Second Lien Credit Agreement and all related loan documents.

"Second Lien Obligations" means all present and future obligations of Borrower under the Second Lien Documents.

"Standstill Period" has the meaning set forth in Section 4.2.

"UCC" means the Uniform Commercial Code as enacted in [GOVERNING LAW STATE].

ARTICLE 2: LIEN PRIORITY

2.1 Priority of Liens

Notwithstanding the order of granting, attachment, perfection, or filing of any security interest or financing statement:

(a) First Priority: All liens and security interests securing the First Lien Obligations shall be senior and prior to all liens and security interests securing the Second Lien Obligations;

(b) Second Priority: All liens and security interests securing the Second Lien Obligations shall be junior and subordinate to all liens and security interests securing the First Lien Obligations;

(c) No Challenge: Second Lien Creditor shall not challenge, contest, or support any challenge to the validity, perfection, priority, or enforceability of the liens securing the First Lien Obligations.

2.2 Agreement to Subordinate

Second Lien Creditor hereby subordinates its liens and security interests in the Collateral to the liens and security interests of First Lien Creditor. This subordination is effective regardless of:

(a) Any provision of the UCC or other applicable law;
(b) The order of attachment, perfection, or filing;
(c) The time of granting of any lien;
(d) Any failure to perfect or maintain any lien;
(e) Any other circumstance.

2.3 Maintenance of Liens

(a) First Lien Creditor: First Lien Creditor shall maintain the first-priority perfected security interest in the Collateral, including by timely filing continuation statements.

(b) Second Lien Creditor: Second Lien Creditor may file financing statements evidencing its second-priority security interest, which shall expressly state that such interest is subordinate to First Lien Creditor's interest.

2.4 Release of Collateral

If First Lien Creditor releases any Collateral (other than in connection with the Discharge of First Lien Obligations), Second Lien Creditor's lien on such Collateral shall automatically be released to the same extent, provided the release is in accordance with the First Lien Documents.

ARTICLE 3: PAYMENT WATERFALL

3.1 Priority of Payment

Until the Discharge of First Lien Obligations, all payments, proceeds, and distributions from the Collateral or Borrower shall be applied in the following order (the "Payment Waterfall"):

FIRST: To First Lien Creditor:
1. Costs of collection, enforcement, and administration
2. Accrued and unpaid interest on First Lien Obligations
3. Outstanding principal of First Lien Obligations
4. All other First Lien Obligations
5. Any termination or breakage costs

SECOND: After Discharge of First Lien Obligations, to Second Lien Creditor:
1. Costs of collection, enforcement, and administration
2. Accrued and unpaid interest on Second Lien Obligations
3. Outstanding principal of Second Lien Obligations
4. All other Second Lien Obligations

THIRD: After payment of all obligations, to Borrower or as otherwise required by law

3.2 Scheduled Payments

(a) First Lien Payments: Borrower may make all scheduled payments of principal, interest, fees, and costs under the First Lien Documents when due.

(b) Second Lien Payments: Subject to Section 3.3, Borrower may make all scheduled payments of principal, interest, fees, and costs under the Second Lien Documents when due.

3.3 Payment Blockage

(a) Blockage Trigger: Upon occurrence of a payment or bankruptcy default under the First Lien Documents, First Lien Creditor may deliver a Payment Blockage Notice to Second Lien Creditor.

(b) Effect of Blockage: During the Blockage Period, no payments (other than interest payments, if permitted below) shall be made on the Second Lien Obligations.

(c) Blockage Period: The Blockage Period shall be [179] days following the Payment Blockage Notice, unless:
- The default is cured or waived earlier; or
- First Lien Creditor accelerates the First Lien Obligations.

(d) Limitation: Only [TWO] Blockage Periods may occur in any [365]-day period.

(e) Interest Payments During Blockage: ☐ Permitted ☐ Not Permitted

3.4 Turnover

If Second Lien Creditor receives any payment, distribution, or proceeds in respect of the Collateral or Second Lien Obligations (other than as permitted hereunder), Second Lien Creditor shall hold such amount in trust and promptly turn it over to First Lien Creditor to be applied to the First Lien Obligations.

ARTICLE 4: ENFORCEMENT STANDSTILL

4.1 No Enforcement Actions

Until the Discharge of First Lien Obligations, Second Lien Creditor shall not take any Enforcement Action, including:

(a) Accelerating the Second Lien Obligations;
(b) Commencing or joining any lawsuit against Borrower;
(c) Exercising set-off rights;
(d) Taking possession of Collateral;
(e) Foreclosing on any Collateral;
(f) Notifying account debtors;
(g) Exercising any other remedy.

EXCEPT as provided in Section 4.2.

4.2 Standstill Period and Expiration

(a) Initial Standstill: Following any default under the Second Lien Documents, Second Lien Creditor shall give written notice to First Lien Creditor and refrain from taking Enforcement Action for a period of [180] days (the "Standstill Period").

(b) Tolling: The Standstill Period shall be tolled during any Insolvency Proceeding.

(c) Expiration: After expiration of the Standstill Period:
- If First Lien Creditor has not commenced and is not diligently pursuing Enforcement Actions, Second Lien Creditor may take Enforcement Actions;
- All proceeds and distributions shall remain subject to the Payment Waterfall.

4.3 First Lien Creditor's Enforcement Rights

(a) Sole Control: First Lien Creditor shall have the exclusive right to manage, perform, and enforce the First Lien Documents and to exercise remedies against the Collateral.

(b) Sale of Collateral: First Lien Creditor may sell Collateral free and clear of Second Lien Creditor's liens, with the Second Lien Creditor's liens attaching to the proceeds (subject to the Payment Waterfall).

(c) Credit Bidding: First Lien Creditor may credit bid up to the full amount of the First Lien Obligations at any sale of Collateral.

4.4 No Interference

Second Lien Creditor shall not take any action that would interfere with First Lien Creditor's rights or remedies, and shall cooperate in any Enforcement Action.

ARTICLE 5: BANKRUPTCY AND INSOLVENCY

5.1 Acknowledgment of Subordination

Second Lien Creditor acknowledges that this subordination is intended to be enforceable in any Insolvency Proceeding under Bankruptcy Code Section 510(a).

5.2 DIP Financing

Second Lien Creditor shall not object to any DIP Financing:

(a) That is consented to by First Lien Creditor;
(b) That provides for the DIP Lender to have a lien on the Collateral senior to the Second Lien, provided:
- The DIP Facility does not exceed $[AMOUNT]; or
- The DIP Facility is on commercially reasonable terms; and
- The Second Lien Creditor retains its second lien position.

5.3 Use of Cash Collateral

Second Lien Creditor shall not object to use of cash collateral consented to by First Lien Creditor, provided Second Lien Creditor receives adequate protection of its lien position.

5.4 Relief from Stay

(a) First Lien Creditor: Second Lien Creditor shall not oppose any motion by First Lien Creditor for relief from the automatic stay.

(b) Second Lien Creditor: Second Lien Creditor may seek relief from stay after the Standstill Period has expired, subject to this Agreement.

5.5 Plan of Reorganization

Second Lien Creditor shall not vote for or support any plan of reorganization that does not provide for:

(a) Payment in full in cash of the First Lien Obligations; or
(b) The consent of First Lien Creditor.

5.6 Post-Petition Interest

The subordination applies to all First Lien Obligations, including interest accruing after the filing of any bankruptcy petition, whether or not allowed as a claim.

5.7 Avoidance Actions

If any payment to First Lien Creditor is avoided or returned as a preference or otherwise, the subordination shall be reinstated.

ARTICLE 6: PURCHASE OPTION

6.1 Right to Purchase

Second Lien Creditor shall have the right, but not the obligation, to purchase all (but not less than all) of the First Lien Obligations upon the occurrence of:

(a) Acceleration of the First Lien Obligations;
(b) Commencement of an Insolvency Proceeding;
(c) Exercise of enforcement remedies by First Lien Creditor.

6.2 Exercise of Purchase Option

(a) Notice: Second Lien Creditor must give written notice of intent to purchase within [10] Business Days after becoming aware of the trigger event.

(b) Purchase Price: The purchase price shall equal the outstanding First Lien Obligations, including all principal, accrued interest, fees, costs, and expenses, plus any breakage costs.

(c) Closing: The purchase shall close within [20] Business Days after the notice, subject to receipt of required approvals.

(d) Assignment: Upon payment of the purchase price, First Lien Creditor shall assign all First Lien Obligations and related documents to Second Lien Creditor without recourse or warranty (except as to First Lien Creditor's own actions).

6.3 Termination of Option

The purchase option shall terminate if:
(a) Second Lien Creditor fails to timely exercise it;
(b) Second Lien Creditor fails to timely close;
(c) The Collateral is sold and proceeds distributed.

ARTICLE 7: AMENDMENT RESTRICTIONS

7.1 First Lien Documents

First Lien Creditor may amend the First Lien Documents without Second Lien Creditor's consent, EXCEPT that the following require Second Lien Creditor's consent:

(a) Increasing the First Lien Debt Cap beyond $[CAP AMOUNT];
(b) Increasing the interest rate by more than [2]% above the current rate;
(c) Shortening any maturity or payment dates in a manner adverse to Second Lien Creditor;
(d) Adding guarantors that are not also guarantors of the Second Lien Obligations;
(e) Releasing all or substantially all Collateral (except in connection with a permitted sale).

7.2 Second Lien Documents

Without First Lien Creditor's consent, Second Lien Creditor shall not amend the Second Lien Documents to:

(a) Increase the principal amount;
(b) Increase the interest rate above [PERCENTAGE]%;
(c) Shorten the maturity date to a date earlier than [90] days after the First Lien maturity;
(d) Add covenants more restrictive than the First Lien covenants;
(e) Modify payment terms in a manner inconsistent with this Agreement.

ARTICLE 8: REPRESENTATIONS AND WARRANTIES

8.1 First Lien Creditor Represents:

(a) Authority to execute this Agreement;
(b) First Lien Documents have been duly executed and delivered;
(c) First Lien Obligations are currently outstanding in the approximate amount of $[AMOUNT].

8.2 Second Lien Creditor Represents:

(a) Authority to execute this Agreement;
(b) Second Lien Documents have been duly executed and delivered;
(c) Second Lien Obligations are currently outstanding in the approximate amount of $[AMOUNT];
(d) No other subordination or intercreditor agreements exist affecting the Second Lien Obligations.

ARTICLE 9: NOTICES

9.1 Required Notices

Each party shall provide prompt written notice to the other parties of:

(a) Any default under its credit facility;
(b) Any acceleration;
(c) Commencement of any Enforcement Action;
(d) Commencement of any Insolvency Proceeding;
(e) Any material amendment to its credit documents;
(f) Any material release of Collateral;
(g) Payment Blockage Notices.

9.2 Notice Method

All notices shall be in writing and delivered by:
(a) Overnight courier;
(b) Email (with confirmation);
(c) Certified mail, return receipt requested.

ARTICLE 10: GENERAL PROVISIONS

10.1 Governing Law

This Agreement shall be governed by the laws of the State of [GOVERNING LAW STATE].

10.2 Forum Selection

Any action shall be brought exclusively in the state or federal courts located in [COUNTY], [STATE].

10.3 Waiver of Jury Trial

EACH PARTY WAIVES ANY RIGHT TO TRIAL BY JURY.

10.4 Termination

This Agreement shall terminate on the Discharge of First Lien Obligations, provided that it shall be reinstated if any payment to First Lien Creditor is avoided or returned.

10.5 Successors and Assigns

This Agreement binds and benefits successors and assigns. Any assignee of First Lien or Second Lien Obligations shall be bound by this Agreement.

10.6 Amendments

This Agreement may be amended only by written instrument signed by First Lien Creditor and Second Lien Creditor. Borrower's consent is not required.

10.7 Severability

Invalid provisions shall be modified; remainder continues in force.

10.8 Counterparts

May be executed in counterparts. Electronic signatures valid.

10.9 No Third-Party Beneficiaries

Borrower and other parties not signatory hereto have no rights under this Agreement.

SIGNATURES

IN WITNESS WHEREOF, the parties have executed this Intercreditor Agreement as of the Effective Date.

FIRST LIEN CREDITOR:

[FIRST LIEN CREDITOR NAME]

By: _________________________________

Name: [NAME]

Title: [TITLE]

Date: ___________

SECOND LIEN CREDITOR:

[SECOND LIEN CREDITOR NAME]

By: _________________________________

Name: [NAME]

Title: [TITLE]

Date: ___________

ACKNOWLEDGED AND AGREED BY BORROWER:

[BORROWER NAME]

By: _________________________________

Name: [NAME]

Title: [TITLE]

Date: ___________

COMPLIANCE CHECKLIST

☐ Lien priority clearly established
☐ First Lien Debt Cap specified
☐ Payment waterfall defined
☐ Standstill period specified
☐ Bankruptcy provisions comprehensive
☐ Purchase option terms clear
☐ Amendment restrictions specified
☐ Notice provisions complete
☐ All parties executed
☐ Legal counsel review completed

LEGAL CITATIONS REFERENCE

UCC Article 9

• § 9-339: Priority subject to subordination
• § 9-315: Proceeds of collateral

Bankruptcy Code

• 11 U.S.C. § 510(a): Subordination agreements enforceable
• 11 U.S.C. § 364: DIP financing
• 11 U.S.C. § 362: Automatic stay

Prepared for professional use. Verify all terms before execution.