Exhibit 4.2
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT is dated as of January 26, 1998, and is
made by and among XXXXX & XXXXX COMPANY, a Delaware corporation (the
"Borrower"), and EACH OF THE CORPORATIONS LISTED ON THE ATTACHED SUBSIDIARIES
SCHEDULE I (the "Subsidiaries" being collectively referred to herein together
with Borrower as the "Companies" and individually as a "Company"), and for
the benefit of the BANKS and PNC BANK, NATIONAL ASSOCIATION, as Agent for the
Banks (the "Agent"). Each capitalized term used herein shall, unless
otherwise defined herein, have the same meaning given to such term in the
Amended and Restated Credit Agreement of even date herewith (as it may
hereafter be amended, restated, supplemented or otherwise modified from time
to time, the "Credit Agreement") by and among the Borrower, each of the
Guarantors party thereto (as defined in the Credit Agreement), the Banks and
the Agent.
WITNESSETH THAT:
WHEREAS, pursuant to the Credit Agreement, the Banks intends to make or
have made Revolving Credit Loans to the Borrower as provided therein;
WHEREAS, the Companies are now or may hereafter become indebted to each
other (all present and future indebtedness of the Companies to each other,
whether created directly or acquired by assignment or otherwise, and interest
and premiums, if any, thereon and other amounts payable in respect thereof are
hereinafter collectively referred to as the "SUBORDINATED DEBT"); and
WHEREAS, the obligation of the Banks to make Revolving Credit Loans and the
obligation of the Agent to issue Letters of Credit are subject to the condition,
among others, that the Companies subordinate the Subordinated Debt to the
Obligations of the Loan Parties to the Agent and the Banks pursuant to the Loan
Documents (the "SENIOR DEBT") in the manner set forth herein.
NOW, THEREFORE, intending to be legally bound hereby, the parties hereto
covenant and agree as follows:
1. SUBORDINATED DEBT SUBORDINATED TO SENIOR DEBT. The recitals set forth
above are hereby incorporated by reference. All Subordinated Debt shall be
subordinate and subject in right of payment to the prior indefeasible payment in
full of all Senior Debt pursuant to the provisions contained herein.
2. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC. Upon any distribution
of assets of any Company (a) in the event of any insolvency or bankruptcy case
or proceeding, or any receivership, liquidation, reorganization, assignment for
the benefit of creditors or other similar case or proceeding in connection
therewith, relative to any such Company or to its assets, or
(b) after the occurrence and during the continuance of an Event of Default or
Potential Default under the Credit Agreement or any liquidation, dissolution
or other winding up of any such Company, whether voluntary or involuntary and
whether or not involving insolvency or bankruptcy, or (c) in the event of any
assignment for the benefit of creditors or any marshalling of assets and
liabilities of any such Company (a Company distributing assets as set forth
herein being referred to in such capacity as a "DISTRIBUTING COMPANY"), then
and in any such event the Agent and the Banks shall be entitled to receive
indefeasible payment in full of all amounts due at the time of such event and
which are incurred by the Agent and the Banks thereafter which are payable by
the Borrower under the Credit Agreement (whether or not an Event of Default
has occurred under the terms of the Loan Documents or the Senior Debt has
been declared due and payable prior to the date on which it would otherwise
have become due and payable) on or in respect of any and all Senior Debt
before the holder of any Subordinated Debt owed by the Distributing Company
is entitled to receive any payment on account of the principal of or interest
on such Subordinated Debt, and to that end the Agent shall be entitled to
receive, for application to the payment of the Senior Debt, any payment or
distribution of any kind or character, whether in cash, property or
securities, which may be payable or deliverable in respect of the
Subordinated Debt owed by the Distributing Company in any such case,
proceeding, dissolution, liquidation or other winding up or event.
3. NO COMMENCEMENT OF ANY PROCEEDING. Each Company agrees that, so long
as the Senior Debt shall remain unpaid, it will not commence, or join with any
creditor other than the Agent in commencing, any collection or enforcement
proceeding against any other Company, including, but not limited to, those
described in Section 2 hereof, or any other enforcement action of any kind
against any Company in respect of the Subordinated Debt.
4. PRIOR PAYMENT OF SENIOR DEBT UPON ACCELERATION OF SUBORDINATED DEBT.
If any portion of the Subordinated Debt owed by any Company becomes or is
declared due and payable before its stated maturity based upon a default or an
event of default under any loan document evidencing the Subordinated Debt, then
and in such event the Agent and the Banks shall be entitled to receive
indefeasible payment in full of all amounts due and to become due on or in
respect of the Senior Debt (whether or not an Event of Default has occurred
under the terms of the Credit Agreement or the Senior Debt has been declared due
and payable prior to the date on which it would otherwise have become due and
payable) before the holder of any such Subordinated Debt is entitled to receive
any payment thereon.
5. NO PAYMENT WHEN SENIOR DEBT IN DEFAULT. If any Event of Default under
the Credit Agreement shall have occurred and be continuing or such an Event of
Default would result from or exist after giving effect to a payment with respect
to any portion of the Subordinated Debt, unless the Required Banks shall have
consented to or waived the same, so long as any of the Senior Debt shall remain
outstanding, no payment shall be made by the Company owing such Subordinated
Debt on account of principal or interest on any portion of the Subordinated
Debt.
6. PAYMENT PERMITTED IF NO DEFAULT. Nothing contained in this Agreement
shall prevent any of the Companies, at any time, except during the pendency of
any of the conditions described in Sections 2, 4 and 5, from making the
regularly scheduled payments of the Subordinated Debt, or the retention thereof
by any of the Companies of any money deposited with it for the regularly
scheduled payments of or on account of the Subordinated Debt.
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7. RECEIPT OF PROHIBITED PAYMENTS. If, notwithstanding the foregoing
provisions of Sections 2, 4, 5 and 6, a Company which is owed Subordinated Debt
by a Distributing Company shall have received any payment or distribution of
assets from the Distributing Company of any kind or character, whether in cash,
property or securities, other than as expressly permitted by the terms of this
Agreement, then and in such event such payment or distribution shall be held in
trust for the benefit of the Agent and the Banks, shall be segregated from other
funds and property held by such Company, and shall be forthwith paid over to the
Agent in the same form as so received (with any necessary endorsement) to be
applied (in the case of cash) to or held as collateral (in the case of non-cash
property) for the payment or prepayment of the Senior Debt in accordance with
the terms of the Credit Agreement.
8. RIGHTS OF SUBROGATION. Each Company agrees that no payment or
distribution to the Agent or the Banks pursuant to the provisions of this
Agreement shall entitle the Company to exercise any rights of subrogation in
respect thereof until the Senior Debt shall have been indefeasibly paid in full
and the Commitments under the Credit Agreement shall have terminated.
9. INSTRUMENTS EVIDENCING SUBORDINATED DEBT. At the request of the
Agent, each Company shall cause each instrument which now or hereafter evidences
all or a portion of the Subordinated Debt to be conspicuously marked as follows:
"This instrument is subject to the terms of a Subordination
Agreement dated as of January 26, 1998, in favor of PNC Bank, National
Association, as Agent, which Subordination Agreement is incorporated
herein by reference. Notwithstanding any contrary statement contained
in the within instrument, no payment on account of the principal
thereof or interest thereon shall become due or payable except in
accordance with the express terms of said Subordination Agreement."
At the Agent's request, each Company will further xxxx its books of account in
such a reasonable manner as shall be effective to give proper notice to the
effect of this Agreement.
10. AGREEMENT SOLELY TO DEFINE RELATIVE RIGHTS. The purpose of this
Agreement is solely to define the relative rights of the Companies, on the one
hand, and the Agent and the Banks, on the other hand. Nothing contained in this
Agreement is intended to or shall prevent the Companies from exercising all
remedies otherwise permitted by applicable law upon default under any agreement
pursuant to which the Subordinated Debt is created, subject to Sections 2, 3, 4,
5 and 6 hereof, including, without limitation, the rights under this Agreement
of the Agent to receive cash, property or securities otherwise payable or
deliverable with respect to the Subordinated Debt.
11. NO IMPLIED WAIVERS OF SUBORDINATION. No right of the Agent or the
Banks to enforce subordination as herein provided shall at any time in any way
be prejudiced or impaired by any act or failure to act on the part of any
Company, by any act or failure to act by the Agent or the Banks, or by any
non-compliance by any Company with the terms, provisions and covenants of any
agreement pursuant to which the Subordinated Debt is created, regardless of any
knowledge thereof the Agent or the Banks may have or be otherwise charged with.
Each Company by its acceptance hereof agrees that, so long as there is Senior
Debt outstanding or any
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Commitment is in effect under the Credit Agreement, such Company shall not agree
to sell, assign, pledge, encumber or otherwise dispose of, the obligations of
the Subordinated Debt, other than by means of payment of such Subordinated Debt
according to its terms, without the prior written consent of the Agent.
Without in any way limiting the generality of the foregoing paragraph, in
accordance with the Credit Agreement, the Agent and the Banks, at any time and
from time to time, without the consent of or notice to the Companies, except to
the extent required by the Credit Agreement or other Loan Documents, without
incurring responsibility to the Companies and without impairing or releasing the
subordination provided in this Agreement or the obligations hereunder of the
Companies to the Agent, may do any one or more of the following: (i) change the
manner, place or terms of payment, or extend the time of payment, renew or alter
the Senior Debt or otherwise amend, restate, supplement or otherwise modify the
Senior Debt or the Credit Agreement; (ii) release any person liable in any
manner for the payment or collection of the Senior Debt; and (iii) exercise or
refrain from exercising any rights against any of the Companies and any other
person or entity.
12. ADDITIONAL SUBSIDIARIES. The Companies covenant and agree that each of
them shall cause any Subsidiary (including, without limitation, each direct or
indirect Subsidiary) which it creates or acquires after the date hereof to
become a party to this Agreement by executing a joinder to this Agreement in a
form of the Guarantor Joinder attached to the Credit Agreement as Exhibit
1.1(G)(1) promptly after such Company acquires or creates such Subsidiary.
13. CONTINUING FORCE AND EFFECT. This Agreement shall continue in force
until all of the Senior Debt is indefeasibly paid in full and the Commitments
under the Credit Agreement have terminated, it being contemplated that this
Agreement be of a continuing nature.
14. MODIFICATION, AMENDMENTS OR WAIVERS. Any and all agreements amending
or changing any provision of this Agreement or the rights of the Agent and the
Banks hereunder, and any and all waivers or consents to any departures from the
due performance of the Companies hereunder shall be made only by written
agreement, waiver or consent signed by the Agent and the Loan Parties.
15. EXPENSES. To the extent set forth in and subject to the Credit
Agreement, the Companies each unconditionally and jointly and severally agree
upon demand to pay to the Agent and the Banks the amount of any and all
reasonable and necessary out-of-pocket costs, expenses and disbursements,
including but not limited to reasonable fees and expenses of counsel, which may
be incurred by the Agent and the Banks in connection with (a) the exercise or
enforcement of any of the rights of the Agent and the Banks hereunder, or
(b) the failure by the Companies to perform or observe any of the provisions
hereof.
16. SEVERABILITY. The provisions of this Agreement are intended to be
severable. If any provision of this Agreement shall be held invalid or
unenforceable in whole or in part in any jurisdiction, such provision shall, as
to such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions hereof in any
jurisdiction.
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17. GOVERNING LAW. This Agreement shall be a contract under the internal
laws of the Commonwealth of Pennsylvania and for all purposes shall be construed
in accordance with the laws of said Commonwealth without giving effect to its
conflicts of law principles.
18. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
the Agent, the Banks and their respective successors and assigns, and the
obligations of the Companies shall be binding upon their respective successors
and assigns. The duties and obligations of each of the Companies may not be
delegated or transferred by it.
19. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which, when executed and delivered, shall be deemed an original, but all such
counterparts shall constitute but one and the same instrument.
20. ATTORNEYS-IN-FACT. Each Company hereby authorizes and empowers the
Agent, at its election and in the name of either itself, or in the name of each
Company after the occurrence and during the continuance of an Event of Default,
to execute and file proofs and documents and take any other action the Agent may
deem advisable in good faith to enforce the Agent's and the Banks' interests
relating to the Subordinated Debt created hereunder and their right of
enforcement thereof as set forth herein, and to that end the Companies hereby
irrevocably make, constitute and appoint the Agent, its officers, employees and
Agents, or any of them, with full power of substitution, as the true and lawful
attorney-in-fact and agent of such Company and with full power for such Company
and in the name, place and stead of such Company for the purpose of carrying out
the provisions of this Agreement and taking any action and executing,
delivering, filing and recording any instruments which the Agent may deem
necessary or advisable in good faith to accomplish the purposes hereof, which
power of attorney, being given for security, is coupled with an interest and
irrevocable. Each Company hereby ratifies and confirms and agrees to ratify and
confirm all action taken by the Agent, its officers, employees or agents
pursuant to and in accordance with the foregoing power of attorney.
21. REMEDIES. In the event of a breach by any of the Companies in the
performance of any of the terms of this Agreement, the Agent and the Banks may
demand specific performance of this Agreement and seek injunctive relief and may
exercise any other remedy available at law or in equity, it being recognized
that the remedies of the Agent and the Banks at law may not fully compensate the
Agent and the Banks for the damages it may suffer in the event of a breach
hereof.
22. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. EACH COMPANY HEREBY
IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF THE COURT OF COMMON
PLEAS OF ALLEGHENY COUNTY, PENNSYLVANIA AND THE UNITED STATES DISTRICT COURT FOR
THE WESTERN DISTRICT OF PENNSYLVANIA. EACH COMPANY HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT. EACH COMPANY (i) ACKNOWLEDGES THAT IT HAS
BEEN REPRESENTED BY COUNSEL IN CONNECTION WITH THE EXECUTION AND DELIVERY OF
THIS AGREEMENT, (ii) CERTIFIES THAT NO
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REPRESENTATIVE OR ATTORNEY OF THE AGENT OR ANY BANK HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER, AND (iii) ACKNOWLEDGES THAT THE ENTERING INTO OF
THE CREDIT AGREEMENT BY THE AGENT AND THE BANKS HAS BEEN INDUCED BY, AMONG OTHER
THINGS, THE WAIVERS AND CERTIFICATIONS SET FORTH IN THIS SECTION.
23. NOT A NOVATION. This Agreement amends and restates that certain
Subordination Agreement dated March 13, 1997, by the Borrower and the Companies
for the benefit of PNC Bank, National Association. This Agreement is not
intended as a novation, and shall not be a novation, of the obligations of the
parties thereto and hereto.
[Signatures Appear on the Next Page.]
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[SIGNATURE PAGE 1 OF 1 TO SUBORDINATION AGREEMENT]
WITNESS the due execution hereof as of the day and year first above
written.
XXXXX & XXXXX COMPANY
By: /s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
Senior Vice President and
Chief Financial Officer
Each of the Subsidiaries listed on
the attached Schedule I
By: /s/ Xxxxx Xxxxxx
-----------------
Xxxxx Xxxxxx
Senior Vice President and
Chief Financial Officer
of each of the
Subsidiaries listed on
Schedule I
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