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INTERCREDITOR AND SUBORDINATION AGREEMENT
Dated as of June 25, 2002
Among
THE ADMINISTRATIVE AGENT UNDER THE CREDIT AGREEMENT,
THE TRANCHE A LENDERS PARTY TO THE CREDIT AGREEMENT,
THE TRANCHE B LENDERS PARTY TO THE CREDIT AGREEMENT,
THE HOLDERS PARTY TO THE WARRANT AGREEMENT,
and
THE COLLATERAL AGENT
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS. ................................................................................ 1
1.1 Certain Defined Terms ....................................................................... 1
SECTION 2. SUBORDINATION OF JUNIOR OBLIGATIONS. ........................................................ 3
2.1 Subordination to Senior Obligations ......................................................... 3
2.2 Payment Over of Proceeds Upon Dissolution, etc .............................................. 4
2.3 Authorization of the Initial Tranche A Lender to File Claims, etc ........................... 5
2.4 No Payment; etc ............................................................................. 5
2.5 Limitation on Remedies ...................................................................... 7
2.6 Provisions Solely to Define Relative Rights ................................................. 8
2.7 No Waiver of Subordination Provisions ....................................................... 8
2.8 Legend on Tranche B Notes and Warrants ...................................................... 9
2.9 Further Instruments and Documents ........................................................... 9
2.10 Transfer of Junior Obligations Subject to this Agreement .................................... 9
2.11 Subrogation ................................................................................. 10
SECTION 3. COLLATERAL AGENT. ........................................................................... 10
3.1 Appointment ................................................................................. 10
3.2 Exculpatory Provisions ...................................................................... 11
3.3 Reliance by Collateral Agent ................................................................ 11
3.4 Notice of Default ........................................................................... 11
3.5 Indemnification ............................................................................. 12
3.6 Successor Collateral Agent .................................................................. 12
3.7 Miscellaneous ............................................................................... 13
SECTION 4. MISCELLANEOUS. .............................................................................. 13
4.1 Severability ................................................................................ 13
4.2 Notices ..................................................................................... 13
4.3 Successors and Assigns ...................................................................... 14
4.4 Counterparts ................................................................................ 14
4.5 Special Exculpation ......................................................................... 14
4.6 Governing Law ............................................................................... 14
4.7 Waiver of Jury Trial ........................................................................ 14
4.8 No Impairments of Other Rights of Secured Parties and no Rights or Obligations of the
Company ..................................................................................... 14
4.9 Amendment; Waiver ........................................................................... 15
4.10 Headings; Table of Contents, etc ............................................................ 15
4.11 Conflicts With Other Security Documents ..................................................... 15
4.12 Marshaling .................................................................................. 15
4.13 Waiver of Rights ............................................................................ 15
4.14 Continuation of Subordination; Termination of Agreement ..................................... 15
(i)
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4.15 Specific Performance....................................................... 15
(ii)
INTERCREDITOR AND SUBORDINATION AGREEMENT, dated as of June 25, 2002,
among (i) XXXXXX COMMERCIAL PAPER INC., as Administrative Agent (the
"Administrative Agent") under the Credit Agreement (as defined herein), (ii) the
Tranche A Lenders party to the Credit Agreement from time to time (the "Tranche
A Lenders"), (iii) the Tranche B Lenders party to the Credit Agreement from time
to time (the "Tranche B Lenders"), (iv) the Holders party to the Warrant
Agreement from time to time (the "Tranche B Holders") and (v) DEUTSCHE BANK
TRUST COMPANY AMERICAS, as Collateral Agent (the "Collateral Agent") for the
benefit of the Lenders.
W I T N E S S E T H
WHEREAS, PG&E Corporation (the "Company"), the Tranche A Lenders, and
certain of the Tranche B Lenders are parties to that certain Credit Agreement,
dated as of March 1, 2001, as amended (the "Existing Credit Agreement");
WHEREAS, on the date hereof the Existing Credit Agreement is being
amended and restated in its entirety by the Amended and Restated Credit
Agreement, dated as of June 25, 2002 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among the Company, the
Lenders from time to time parties thereto, the Administrative Agent and others;
WHEREAS, the obligations of the Credit Parties under the Financing
Documents (such term and other capitalized terms used herein being used with the
definitions given to such terms in Section 1.1) are secured as set forth in the
Security Documents; and
WHEREAS, the parties hereto desire to enter into this Agreement to
set forth their mutual understanding with respect to the exercise of certain
rights, remedies and options by the respective parties hereto under the
above-described documents, and the priority of their respective security
interests created by the Security Documents;
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS.
1.1 Certain Defined Terms. (a) Unless otherwise defined herein, all
capitalized terms used herein and defined in Appendix A to the Credit Agreement
shall be used herein as therein defined and the principles of construction set
forth in Appendix A to the Credit Agreement shall apply to this Agreement.
(b) In addition, the following capitalized terms used herein shall
have the definitions specified below:
"Agreement" shall mean this Intercreditor and Subordination
Agreement, as amended, supplemented or otherwise modified from time to time.
"Credit Parties" shall mean the Company, NEG, Inc. and LLC,
collectively.
"Default Notice" shall mean a written notice delivered by the Initial
Tranche A Lender to the Administrative Agent stating that (i) a Tranche A
Default for non-payment of principal, interest or any other amounts under the
Financing Documents with respect to the Tranche A Loan has occurred or (ii) an
Event of Default has occurred.
"Event of Default" shall mean a Tranche A Event of Default and/or a
Tranche B Event of Default.
"Initial Tranche A Lender" shall mean General Electric Capital
Corporation, a Delaware corporation.
"Junior Obligations" shall mean, on any date, collectively, (i) all
obligations of the Company and the other Credit Parties in respect of principal
of, and interest on (including, without limitation, interest accruing after the
filing of a petition initiating any proceeding under the Bankruptcy Code,
whether or not allowed as a claim in such proceeding) the Tranche B Loan, (ii)
all payment obligations of the Company and the other Credit Parties in respect
of the Warrant Agreement to the Tranche B Holders, (iii) all other obligations
of the Company and the other Credit Parties owing to the Tranche B Lenders under
or relating to the Financing Documents (other than the Option Agreement) in
respect of fees, premiums, indemnities, reimbursement of fees, expenses or other
amounts, and (iv) any debt which is incurred in compliance with the terms and
conditions of this Agreement and the Credit Agreement for the purpose of
refinancing, restructuring, extending or renewing the obligations of one or more
of the Credit Parties in respect of the Tranche B Loan; provided, that
obligations of the Credit Parties to the Tranche B Lenders or any affiliate
thereof, and their respective successors and assigns, under the Option Agreement
shall not constitute Junior Obligations.
"Junior Obligees" shall mean the holders of the Junior Obligations.
"Payment Blockage Period" has the meaning provided in Section 2.4(b).
"Put Option Purchase Price" has the meaning provided in the Option
Agreement.
"Reorganization Securities" shall mean shares of stock of the
Borrower as reorganized or readjusted, or securities of the Borrower or any
other corporation provided for by a plan of reorganization or readjustment with
respect to the Borrower, the terms of which are not substantially better for the
holders thereof than the terms of the Junior Obligations and the payment of
which is subordinated, at least to the extent provided in this Agreement with
respect to the Junior Obligations, to the payment in full of all Senior
Obligations which may at the time be outstanding; provided that (i) the Senior
Obligations are (A) assumed without modification and without alteration of the
legal, equitable and contractual rights of the holders of the Senior Obligations
by the new corporation, if any, resulting from any such reorganization or
readjustment, or (B) the legal, equitable and contractual rights of the holders
of Senior Obligations, are reinstated in accordance with Section 1124 of the
United States Bankruptcy Code, or (ii) the legal, equitable and contractual
rights of the holders of Senior Obligations under the Financing Documents and
this Agreement are not, without the consent of such holders, altered by such
reorganization or readjustment.
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"Senior Obligations" shall mean, on any date, collectively, (i) all
obligations of the Company and the other Credit Parties in respect of principal
of, and interest on (including, without limitation, interest accruing after the
filing of a petition initiating any proceeding under the Bankruptcy Code,
whether or not allowed as a claim in such proceeding) the Tranche A Loan, (ii)
all other obligations of the Company and the other Credit Parties due and owing
to the Tranche A Lenders or GPSF-F Inc. (or its successors and assigns) under or
relating to the Financing Documents in respect of fees, premiums, indemnities,
reimbursement of fees, expenses or other amounts, (iii) any debt which is
incurred in compliance with the terms and conditions of this Agreement and the
Credit Agreement for the purpose of refinancing, restructuring, extending or
renewing the obligations of one or more of the Credit Parties in respect of the
Tranche A Loan, (iv) the obligations of the Credit Parties to purchase any
shares covered by a Put Notice (as defined in the Option Agreement) delivered by
any Holder, or any of its successors and assigns, at the Put Option Purchase
Price, prior to such date pursuant to the terms of the Option Agreement and (v)
any claims of the Senior Obligees with respect to any judgment ordered by a
court in any action brought at law or in equity (such as an action brought for
recession, restitution, or unjust enrichment) against the Borrower on any Credit
Party in lieu, in whole or in part, of an action to enforce the obligations of
the Borrower or any Credit Party under the Financing Documents.
For the avoidance of doubt, "Specified Rated Indebtedness" does not
constitute "Senior Obligations" for purposes of this Agreement.
"Senior Obligees" shall mean the holders of the Senior Obligations.
"Tranche A Default" shall mean any event or circumstance which with
notice or lapse of time or both would become a Tranche A Event of Default.
"Tranche A Event of Default" shall have the meaning set forth in the
Credit Agreement.
"Tranche B Event of Default" shall have the meaning set forth in the
Credit Agreement.
"Transition Date" shall mean the date upon which the Senior
Obligations shall have been indefeasibly paid in full in cash.
"Warrants" shall have the meaning provided in the Warrant Agreement.
SECTION 2. SUBORDINATION OF JUNIOR OBLIGATIONS.
2.1 Subordination to Senior Obligations. Each Junior Obligee and each
holder of a Junior Obligation by its acceptance thereof, on behalf of itself and
its successors and assigns, hereby covenants and agrees, that (a) to the extent
and in the manner set forth in this Section 2, the Junior Obligations are hereby
expressly made subordinate and junior in right of payment to the indefeasible
payment in full in cash of all of the Senior Obligations, and (b) the security
interests held for the benefit of the Senior Obligations in any Collateral rank
and will rank superior and prior to the security interests held for the benefit
of the Junior Obligations, irrespective of any statement to the contrary in any
Financing Document or any other agreement,
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the time or order or method of attachment or perfection of Liens, the time or
order of filing of financing statements, or the giving or failure to give notice
of the acquisition or expected acquisition of purchase money or other security
interests. The provisions of this Section 2 shall constitute a continuing offer
to all Persons who, in reliance upon such provisions, become holders of, or
continue to hold, Senior Obligations, and such provisions are made for the
benefit of the holders of Senior Obligations, and such holders are hereby made
obligees hereunder to the same extent as if they were parties to this Agreement,
and they and/or each of them may proceed to enforce such provisions.
2.2 Payment Over of Proceeds Upon Dissolution, etc. In the event (a)
of any insolvency or bankruptcy case or proceeding, or any receivership,
reorganization or other similar case or proceeding in connection therewith,
relative to the Company or any of the other Credit Parties, or to any such
Credit Party's assets, (b) of any total or partial liquidation, dissolution or
other winding up of the Company or any other Credit Party, whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy, (c) of any
assignment for the benefit of creditors or any other marshaling of assets and
liabilities of the Company or any other Credit Party, in each case whether
voluntary or involuntary or (d) the Senior Obligations, or any part thereof,
shall mature or be declared due and payable prior to the stated maturity date
thereof upon the occurrence of any Event of Default, then and in any such event:
(i) the Senior Obligees shall first be entitled to receive
indefeasible payment in full in cash of all amounts due in respect of the
Put Option Price after delivery by a Holder of the Put Notice (as such
payment obligation is more fully described in clause (iv) of the
definition of "Senior Obligations" in Section 1.1) and all other amounts
due or to become due in respect of the other Senior Obligations
(including, without limitation, all amounts (including, without
limitation, any prepayments) in respect of the Senior Obligations, whether
due in the ordinary course or by reason of acceleration or otherwise)
before the Junior Obligees are entitled to receive any payment (in cash,
property or securities (other than the Tranche B Interest Reserve Account
and any proceeds thereof, Reorganization Securities and the pay-in-kind
interest due and payable from time to time under Section 2.5(g) of the
Credit Agreement) or by set-off or otherwise), directly or indirectly, on
account of any principal, interest, premium or other amount on or in
respect of the Junior Obligations or as a redemption, retirement,
purchase, defeasance, prepayment or acquisition of any Junior Obligations;
(ii) any payment by, or distribution of assets of any Credit Party of
any kind or character (in cash, property or securities (other than the
Tranche B Interest Reserve Account and any proceeds thereof,
Reorganization Securities and the pay-in-kind interest due and payable
from time to time under Section 2.5(g) of the Credit Agreement) or by
set-off or otherwise), to which any Junior Obligee would be entitled but
for the provisions of this Section 2, shall be paid by the liquidating
trustee or agent or other Person making such payment or distribution
(whether a trustee in bankruptcy, a receiver, custodian or liquidating
trustee or otherwise) directly to the Initial Tranche A Lender, for
application to payment of all Senior Obligations (including, without
limitation, all amounts (including, without limitation, any prepayments)
in respect of Senior Obligations, whether due in the ordinary course or by
reason of acceleration), to the extent necessary to indefeasibly pay in
full in cash all Senior Obligations remaining
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unpaid, after giving effect to any concurrent payment or distribution
directly to the Senior Obligees; and
(iii) notwithstanding the foregoing provisions of this Section 2.2,
after any of the events described in clauses (a) through (d) of this
Section 2.2, in the event that any payment or distribution of assets of
any Credit Party of any kind or character (in cash, property or securities
(other than the Tranche B Interest Reserve Account and any proceeds
thereof, Reorganization Securities and the pay-in-kind interest due and
payable from time to time under Section 2.5(g) of the Credit Agreement) or
by set-off or otherwise), shall be received by any Junior Obligee,
directly or indirectly, whether on account of any principal, interest,
premium or other amount on or in respect of the Junior Obligations or as a
redemption, retirement, purchase, defeasance, prepayment or acquisition of
any Junior Obligations or otherwise, before all Senior Obligations are
indefeasibly paid in full in cash, such payment or distribution shall be
received and held in trust for the benefit of, and shall be immediately
paid over to, the Initial Tranche A Lender, for application to payment of
all Senior Obligations, to the extent necessary to indefeasibly pay in
full in cash all Senior Obligations (including, without limitation, all
amounts (including, without limitation, any prepayments) in respect of
Senior Obligations, whether due in the ordinary course or by reason of
acceleration) remaining unpaid, after giving effect to any concurrent
payment or distribution directly to the Senior Obligees.
2.3 Authorization of the Initial Tranche A Lender to File Claims,
etc. Subject to the rights of the Junior Obligees provided in Section 2.5, in
the event that (i) a bankruptcy proceeding shall be commenced by or against the
Borrower and (ii) on or before the date which is ten Business Days before the
last date upon which the Junior Obligees are required to file a proof of claim
in such bankruptcy proceeding any Junior Obligee (the claims of which have not
been scheduled by the Borrower in its filing as undisputed) does not file a
proof of claim in respect of the Junior Obligations owing to such Junior Obligee
(any Junior Obligee, the claims of which have not been scheduled by the Borrower
in its filing as undisputed, and which has failed to so file such proof of
claim, a "Defaulting Junior Obligee"), then, in such event, such Defaulting
Junior Obligee hereby irrevocably authorizes and empowers (without imposing any
obligation on) the Initial Tranche A Lender under the circumstances set forth in
Section 2.2 to file such proof of claim in respect of the Junior Obligations
owing to such Defaulting Junior Obligee. The proceeds of all such claims shall
be applied as required by the provisions of this Agreement. Each Defaulting
Junior Obligee hereby irrevocably appoints the Initial Tranche A Lender as
attorney-in-fact and shall execute and deliver to the Initial Tranche A Lender
all such further instruments confirming the foregoing appointment and
authorization, and all such proofs of claim and other instruments, and shall
take all such other action as may be reasonably requested by the Initial Tranche
A Lender in order to enable the Initial Tranche A Lender to, subject to the
rights of such Defaulting Junior Obligee provided in Section 2.5, enforce all
claims upon or in respect of the Junior Obligations owing to such Defaulting
Junior Obligee.
2.4 No Payment; etc. (a) So long as any Senior Obligations shall
remain outstanding and shall not have been indefeasibly paid in full in cash, no
payment (in cash, property or securities (whether or not such securities are
subordinated) or by set-off or otherwise) shall be made or agreed to be made by
the Company (and the Company will not permit any other
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Credit Party to make, or agree to make, any payment), directly or indirectly, on
account of any amounts (including, without limitation, any prepayments) in
respect of the Junior Obligations or as a redemption, retirement, purchase,
defeasance, prepayment or acquisition of any Junior Obligations, except as
expressly permitted by this Agreement and the other Financing Documents. Except
as otherwise provided in Section 2.5(c) below, the Senior Obligees shall have
the right in their sole discretion to exercise or direct the Collateral Agent to
exercise any remedies against the Collateral (other than the Tranche B Interest
Reserve Account and any proceeds thereof) at any time following a Tranche A
Event of Default and to control all decisions with respect to the timing on
waiver of exercise of remedies under the Financing Documents, including any
remedies against the Collateral (other than the Tranche B Interest Reserve
Account and any proceeds thereof).
(b) Notwithstanding the provisions of the preceding paragraph to the
contrary, (i) except during the Payment Blockage Period, the Company may
continue to make payment of interest on any Junior Obligation when due and
payable pursuant to the Credit Agreement, (ii) whether or not a Payment Blockage
Period is then in effect, the Company may (x) continue to make payment of
interest, but solely from proceeds of the Tranche B Interest Reserve Account, on
any Junior Obligations when due and payable pursuant to the Credit Agreement,
(y) continue to make payment of pay-in-kind interest when due and payable
pursuant to the Credit Agreement and (z) make payments to the Junior Obligees
under Section 3.8 of the Credit Agreement if any Tranche A Lender shall not have
accepted the Change of Control Offer to Repay. As used herein, "Payment Blockage
Period" shall mean the period commencing the date the Initial Tranche A Lender
has delivered a Default Notice to the Administrative Agent and during which
period payments in respect of the Junior Obligations are not permitted to be
retained by the Junior Obligees pursuant to Section 2 of this Agreement;
provided that (i) any Payment Blockage Period arising from an Event of Default
(other than a payment or bankruptcy Event of Default) by the Company under
Section 8 of the Credit Agreement shall terminate on the earlier of (A) the date
on which such Event of Default is cured or waived in accordance with the Credit
Agreement and (B) the date which is 179 days after the date of the receipt by
the Administrative Agent of the Default Notice with respect thereto, (ii) no
more than one Default Notice may be delivered to initiate a Payment Blockage
Period during any consecutive 365-day period, (iii) the Initial Tranche A Lender
agrees not to deliver a Default Notice to block payment of amounts payable by
the Company to the Junior Obligees under Section 3.8 of the Credit Agreement if
any Tranche A Lender shall not have accepted the Change of Control Offer to
Repay and (iv) any Payment Blockage Period arising from a payment Event of
Default shall terminate on the date on which such Event of Default is cured or
waived by the Tranche A Lenders in accordance with the Credit Agreement.
(c) In the event that, notwithstanding the foregoing provisions of
Section 2.4(a), any payment prohibited by said Section shall be received by any
Junior Obligee, such payment shall be held in trust for the benefit of, and
shall be paid over to, the Initial Tranche A Lender, for application pursuant to
the provisions of the Credit Agreement and this Agreement. Any payment or
distribution that is so paid over to the Initial Tranche A Lender and applied to
the Senior Obligations shall not be deemed to have been a payment on account of,
and shall not reduce the amount of, the Junior Obligations.
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2.5 Limitation on Remedies. (a)(I) So long as any Senior Obligation
shall remain outstanding or during any Payment Blockage Period, except as
expressly permitted by and subject to the terms of this Agreement (including,
without limitation, Section 2.5(a)(II) below), the Junior Obligees shall have no
right to (i) except to the extent not prohibited by clause (II) of this Section
2.5(a), commence, prosecute or participate in any administrative, legal or
equitable action against any of the Credit Parties relating to any Junior
Obligations (it being understood that the holders of the Junior Obligations may
participate in any such action in which the Tranche A Lender or its
representative is participating (and not commenced by the holders of the Junior
Obligations in such capacity) to the extent necessary to maintain their claims
to, and to preserve their rights in respect of, the Junior Obligations), (ii)
commence or join in the commencement of a proceeding under any bankruptcy,
insolvency, liquidation, reorganization or other similar law in its capacity as
a holder of Junior Obligations (it being understood that the holders of the
Junior Obligations may participate in any such proceeding not commenced by the
holders of the Junior Obligations in such capacity to the extent necessary to
maintain their claims to, and to preserve their rights in respect of, the Junior
Obligations), or (iii) direct the Administrative Agent or the Collateral Agent
to do any of the foregoing and (II) during any Payment Blockage Period, except
as expressly permitted by and subject to the terms of this Agreement (including,
without limitation, Section 2.5(c) below), the Junior Obligees shall have no
right to (i) take any action or institute any proceedings to collect or enforce
the payment of any of the Junior Obligations (other than the Tranche B Interest
Reserve Account and any proceeds thereof), (ii) take any action under the
Financing Documents or otherwise to foreclose or sell or otherwise realize upon
any Collateral (other than the Tranche B Interest Reserve Account and any
proceeds thereof) or enforce any of the Financing Documents or to exercise any
right, remedy or power in respect of the Junior Obligations under any of the
Financing Documents or otherwise available to it under applicable law, or (iii)
direct the Administrative Agent or the Collateral Agent to do any of the
foregoing.
(b) If any Junior Obligee, in violation of the provisions herein set
forth, shall commence, prosecute or participate in any suit, action, case or
proceeding against any Credit Party, any Senior Obligee may at the expense of
the Junior Obligees, intervene and interpose as a defense or plea the provisions
set forth herein, and such Senior Obligee shall, in any event, be entitled to
restrain the enforcement of the payment provisions of the Junior Obligations in
its own name in the same suit, action, case or proceeding or in any independent
suit, action, case or proceeding.
(c) In the event of the occurrence and continuance of a Tranche B
Event of Default, the Junior Obligees, pursuant to the terms of this Agreement,
shall not exercise any of their remedies against any Credit Party or the
Collateral under the Financing Documents unless the Junior Obligees shall have
first delivered to the Senior Obligees a notice of such Tranche B Event of
Default together with reasonable detail describing the nature of such Tranche B
Event of Default and the Senior Obligees shall have a period of 180 days after
the receipt of such notice to, at its option, elect to cure such Tranche B Event
of Default. After the expiration of such 180 day period, if the Tranche B Event
of Default shall not have been cured or waived in accordance with the Credit
Agreement, the Junior Obligees may (i) exercise their rights and remedies under
the Financing Documents (other than to foreclose on the Collateral) and/or (ii)
foreclose on the Collateral pursuant to the terms of the Security Documents;
provided that the Junior Obligees may not foreclose on any Collateral unless
either (x) the Junior Obligees shall have delivered
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evidence reasonably satisfactory to the Senior Obligees of binding written
commitment(s) from creditworthy purchaser(s) committing to purchase the
Collateral in cash or equivalent consideration, subject only to customary
closing conditions precedent, such that the net proceeds of the foreclosure of
the Collateral shall be sufficient to indefeasibly pay and satisfy the Senior
Obligations in full or (y) the Senior Obligees shall have consented thereto in
writing.
Upon satisfaction of either of the conditions set forth in Section
2.5(c)(iii), the Senior Obligees agree to direct the Collateral Agent to follow
the instructions of the Tranche B Lenders with respect to the exercise of the
rights and remedies under the Financing Documents to foreclose on the
Collateral, subject to the other terms of this Agreement and the other Financing
Documents, including, without limitation, the order of priority in the
application of proceeds with respect thereto as set forth herein or therein.
(d) If the Senior Obligees shall elect to cure any Tranche B Event of
Default as contemplated in Section 2.5(c) above, the Senior Obligees shall be
subrogated to the rights of the Junior Obligees to receive payments or
distribution of assets of the Credit Parties made on the Junior Obligations so
satisfied or to bring any claim or action against the Credit Parties with
respect thereto.
(e) In the event that (i) an Event of Default has occurred and is
continuing under the Credit Agreement and (ii) the Senior Obligee has not
delivered a Payment Blockage Notice to the Trustee under, and in each case as
defined in, the Convertible Notes Indenture, nothing in this Agreement shall
prohibit the Junior Obligee or the Administrative Agent from delivering such a
Payment Blockage Notice.
2.6 Provisions Solely to Define Relative Rights. Nothing contained in
this Agreement is intended to or shall impair, as among the Credit Parties, the
Senior Obligees, and the Junior Obligees, the obligations of the Credit Parties,
which are absolute and unconditional, to pay the Senior Obligees and the Junior
Obligees, as and when the same shall become due and payable in accordance with
the terms of the Financing Documents, the principal of, interest on and other
amounts due with respect to the Senior Obligations and the Junior Obligations,
or affect the relative rights of the Senior Obligees and the Junior Obligees
vis-a-vis other creditors of the Credit Parties.
2.7 No Waiver of Subordination Provisions. (a) The provisions
contained in this Section 2, the subordination effected thereby, and the rights
of the Senior Obligees shall not be affected by, (i) any amendment of, or
addition or supplement to, any Financing Document or any instrument or agreement
relating thereto or to the Senior Obligations, (ii) any exercise or non-exercise
of any right, power or remedy under or in respect of any Financing Document or
the Collateral or any instrument or agreement relating thereto or to the Senior
Obligations, (iii) any waiver, consent, release, indulgence, extension, renewal,
modification, delay, nonperfection or other action, inaction or omission in
respect of any Financing Document or the Collateral or any instrument or
agreement relating thereto or to the Senior Obligations, (iv) any deferral,
extension, renewal, modification, refinancing or refunding of the Senior
Obligations, or (v) any merger or consolidation of any Credit Party into or with
another Person or any sale, lease or transfer of any or all of the assets of any
Credit Party to any other Person.
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(b) The obligations of the Junior Obligees under these
subordination provisions shall continue to be effective, or be reinstated, as
the case may be, if at any time any payment in respect of any Senior Obligation,
or any other payment to any holder of any Senior Obligation in its capacity as
such, is rescinded or must otherwise be restored or returned by the holder of
such Senior Obligation upon the occurrence of any proceeding under any
bankruptcy, insolvency, liquidation, reorganization or other similar law, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, any Credit Party or any substantial part
of its property, or otherwise, all as though such payment had not been made.
2.8 Legend on Tranche B Notes and Warrants. (a) Each Tranche
B Note shall contain the following legend conspicuously noted on the face
thereof: "THIS PROMISSORY NOTE IS SUBJECT TO THE SUBORDINATION AND OTHER
PROVISIONS SET FORTH IN THE INTERCREDITOR AND SUBORDINATION AGREEMENT DATED AS
OF JUNE 25, 2002 AMONG THE ADMINISTRATIVE AGENT, THE TRANCHE A LENDERS PARTY
THERETO, THE TRANCHE B LENDERS PARTY THERETO, THE HOLDERS PARTY THERETO, AND THE
COLLATERAL AGENT, AND THE HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE HEREOF,
SHALL BE BOUND BY THE TERMS OF SUCH INTERCREDITOR AND SUBORDINATION AGREEMENT,
AS THE SAME MAY BE AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO
TIME", and shall specifically state that a copy of this Agreement is on file
with the Collateral Agent and is available for inspection at the Collateral
Agent's offices.
(b) Each Warrant shall contain the following legend
conspicuously noted on the face thereof: "THIS WARRANT IS SUBJECT TO THE
SUBORDINATION AND OTHER PROVISIONS SET FORTH IN THE INTERCREDITOR AND
SUBORDINATION AGREEMENT DATED AS OF JUNE 25, 2002 AMONG THE ADMINISTRATIVE
AGENT, THE TRANCHE A LENDERS PARTY THERETO, THE TRANCHE B LENDERS PARTY THERETO,
THE HOLDERS PARTY THERETO AND THE COLLATERAL AGENT, AND THE HOLDER OF THIS
INSTRUMENT, BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND BY THE TERMS OF SUCH
INTERCREDITOR AND SUBORDINATION AGREEMENT, AS THE SAME MAY BE AMENDED,
SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME", and shall specifically
state that a copy of this Agreement is on file with the Collateral Agent and is
available for inspection at the Collateral Agent's offices.
2.9 Further Instruments and Documents. Each Junior Obligee
agrees that, from time to time, it will execute and deliver all further
instruments and documents, and take all further actions, that are necessary or
that any Senior Obligee may reasonably request, in order to effectuate the
subordination provisions contained in this Section 2 and to enforce the Senior
Obligees' rights and remedies hereunder with respect to such subordination
provisions.
2.10 Transfer of Junior Obligations Subject to this Agreement.
The Junior Obligees shall require each transferee or assignee of all or part of
the Junior Obligations to agree in writing that such transferee or assignee and
such Junior Obligations are subject to the provisions of this Agreement.
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2.11 Subrogation. (a) The Junior Obligees hereby waive all
rights of subrogation to the claims of any of the Senior Obligees against any
Credit Party, and waive all rights of recourse to any security for any Senior
Obligations, until such time as all Senior Obligations shall have been
indefeasibly paid in full in cash pursuant to the terms and provisions thereof;
provided, that if any payment to any Senior Obligee is rescinded as a result of
a legal proceeding or otherwise, the subrogation of Junior Obligees as provided
herein shall likewise be rescinded until all of the Senior Obligations are
indefeasibly paid in full in cash.
(b) Subject to the indefeasible payment in full of the Senior
Obligations in cash pursuant to the terms and provisions thereof, the Junior
Obligees shall be subrogated to the extent of the payments or distributions made
to the Senior Obligees pursuant to the provisions of this Agreement to the
rights of the Senior Obligees to receive payments or distributions applicable to
the Senior Obligations until the Junior Obligations shall be paid in full; and,
for the purposes of such subrogation, no payments or distributions to the Senior
Obligees of any cash, property or securities to which the Junior Obligees would
be entitled except for the provisions of this Agreement, and no payment over
pursuant to the provisions of this Agreement, to or for the benefit of the
holders of Senior Obligations, shall, as between the Borrower, its creditors
other than the Senior Obligees, and the Junior Obligees, be deemed to be a
payment by the Borrower to or on account of the Senior Obligations; and no
payments or distributions of cash, property or securities to or for the benefit
of the Junior Obligees pursuant to the subrogation provisions of this Agreement,
which would otherwise have been paid to the Senior Obligees shall be deemed to
be a payment by the Borrower to or for the account of the Senior Obligees. It is
understood that the provisions of this Section 2 are and are intended solely for
the purposes of defining the relative rights of the Junior Obligees, on the one
hand, and the Senior Obligees, on the other hand.
SECTION 3. COLLATERAL AGENT.
3.1 Appointment. Each Lender hereby appoints, designates and
authorizes the Collateral Agent to take such action on its behalf under the
provisions of this Agreement and each Security Document and to exercise such
powers and perform such duties as are expressly delegated to it by the terms of
this Agreement or any Security Document, together with such powers as are
reasonably incidental thereto. Each Lender authorizes the Collateral Agent to
execute, deliver and perform each of the Security Documents and such Lender
agrees to be bound by all of the agreements of the Collateral Agent contained in
the Security Documents. Notwithstanding any provision to the contrary contained
elsewhere in this Agreement or in any other Financing Document, the Collateral
Agent shall not have any duties or responsibilities except those expressly set
forth herein and in the Security Documents, and the Collateral Agent does not
have or shall not be deemed to have any fiduciary relationship with any Lender,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any Financing Document or
otherwise exist against the Collateral Agent. Without limiting the generality of
the foregoing sentence, the use of the term "Collateral Agent," in this
Agreement with reference to the Collateral Agent is not intended to connote any
fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable Law. Instead, such term is used merely as a matter of
market custom, and is intended to create or reflect only a relationship between
independent contracting parties.
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3.2 Exculpatory Provisions. Neither the Collateral Agent nor
any of its officers, directors, employees or agents shall (i) be liable for any
action taken or omitted to be taken by it under or in connection with this
Agreement or any other Financing Document or the transactions contemplated
hereby (except for its own gross negligence or willful misconduct), or (ii) be
responsible in any manner to any of the Lenders or any other Person for any
recital, statement, representation or warranty made by any Covered Party or any
Affiliate of any Covered Party, or any officer thereof, contained in this
Agreement or in any other Financing Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Collateral Agent under or in connection with, this Agreement or any other
Financing Document, or for the value of or title to any Collateral, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Financing Document, or for any failure of any Covered
Party or any other party to any Financing Document to perform its obligations
hereunder or thereunder. The Collateral Agent shall not be under any obligation
to any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Financing Document, or to inspect the books or records of any Covered
Party or any Affiliate of any Covered Party. Anything in this Agreement to the
contrary notwithstanding, in no event shall the Collateral Agent be liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to loss of profits).
3.3 Reliance by Collateral Agent. The Collateral Agent shall
be entitled to rely conclusively, and shall be fully protected in so relying,
upon any writing, resolution, notice, consent, certificate, affidavit, letter,
telegram, facsimile, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and statements of
legal counsel, independent accountants and other experts selected by the
Collateral Agent. The Collateral Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any other Financing Document
(i) if such action would, in the opinion of the Collateral Agent (upon
consultation with counsel), be contrary to applicable Law or the terms of any
Financing Document, (ii) if such action is not specifically provided for in the
Financing Documents, and it shall not have received such written advice or
concurrence of (A) with respect to each Security Document other than the Tranche
B Interest Reserve Account Control Agreement, the Majority Tranche A Lenders
(or, after the Transition Date, the Majority Tranche B Lenders) or (B) with
respect to the Tranche B Interest Reserve Account Control Agreement, the
Majority Tranche B Lenders, in each case as the Collateral Agent deems
appropriate, (iii) unless, if it so requests, such Collateral Agent shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Collateral Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement and the Security
Documents in accordance with a written request or written consent of (A) with
respect to each Security Document other than the Tranche B Interest Reserve
Account Control Agreement, the Majority Tranche A Lenders (or, after the
Transition Date, the Majority Tranche B Lenders) or (B) with respect to the
Tranche B Interest Reserve Account Control Agreement, the Majority Tranche B
Lenders, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all of the Lenders.
3.4 Notice of Default. The Collateral Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default unless the Collateral
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Agent shall have received written notice from a Lender or the Borrower referring
to the Credit Agreement, describing such Default or Event of Default and stating
that such notice is a "Notice of Default". If the Collateral Agent receives any
such notice of the occurrence of a Default or an Event of Default, it shall give
notice thereof to the Administrative Agent and the Lenders. The Collateral Agent
shall take such action with respect to such Default or Event of Default as may
be requested in writing by (A) with respect to each Security Document other than
the Tranche B Interest Reserve Account Control Agreement, the Majority Tranche A
Lenders (or, after the Transition Date, the Majority Tranche B Lenders) or (B)
with respect to the Tranche B Interest Reserve Account Control Agreement, the
Majority Tranche B Lenders; provided, however, that unless and until the
Collateral Agent has received any such request, the Collateral Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default under the Security Documents as
it shall deem advisable or in the best interest of the Lenders.
3.5 Indemnification. Whether or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify upon demand the
Collateral Agent, its officers, directors, employees, counsel, agents and
attorneys in fact ("Agent Related Person") (to the extent not reimbursed by or
on behalf of any Covered Party within 90 days of the Collateral Agent's request
to the Borrower for payment and without limiting the obligation of the Covered
Parties to do so), pro rata in accordance with the aggregate principal amount of
the Loans held by such Lenders (as determined by the Administrative Agent), from
and against any and all Indemnified Liabilities; provided, however, that no
Lender shall be liable for the payment to the Collateral Agent or the Agent
Related Persons of any portion of such Indemnified Liabilities resulting solely
from such Person's gross negligence or willful misconduct. Without limitation of
the foregoing, each Lender shall reimburse the Collateral Agent upon demand as
provided above of any costs or out-of-pocket expenses incurred by such
Collateral Agent or Agent Related Person (to the extent not reimbursed by or on
behalf of the Covered Parties within 90 days of the Collateral Agent's request
to the Borrower for payment and without limiting the obligation of the Covered
Parties to do so) in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement or any document contemplated by
or referred to herein, pro rata in accordance with the aggregate principal
amount of the Loans held by such Lenders (as determined by the Administrative
Agent). The provisions of this section shall survive termination of this
Agreement or earlier resignation or removal of the Collateral Agent.
Notwithstanding anything herein to the contrary, the
Collateral Agent shall be entitled to set off from any Collateral or proceeds
thereof any amounts due and owing to it pursuant to this Section 3.5 solely to
the extent such amounts are not paid by any Covered Party or the Lenders as
provided herein and in the Financing Documents and such amounts remain unpaid by
the Lenders for a period of thirty days after demand therefor.
3.6 Successor Collateral Agent. Subject to the appointment
and acceptance of a successor as provided below, the Collateral Agent may resign
at any time by giving notice thereof to the Lenders and the Borrower, and the
Collateral Agent may be removed at any time with or without cause by the
Required Waiver Lenders upon thirty (30) days prior written notice. Upon any
such resignation or removal, the Required Waiver Lenders shall have the right to
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appoint a successor to the Collateral Agent. If no successor Collateral Agent
shall have been appointed by the Required Waiver Lenders, and shall have
accepted such appointment within 30 days after the resigning Collateral Agent's
giving of notice of resignation or the giving of any notice of removal of such
Collateral Agent, then the resigning Collateral Agent or Collateral Agent being
removed, as the case may be, may at the Borrower's expense, appoint a successor
to such Collateral Agent. If the Collateral Agent shall resign or be removed
pursuant to the foregoing provisions, upon the acceptance of appointment by a
successor Collateral Agent hereunder, the former Collateral Agent shall deliver
all Collateral then in its possession to the successor Collateral Agent. Upon
the acceptance of its appointment as a successor Collateral Agent hereunder,
such successor Collateral Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of such resigning or removed
Collateral Agent, and such resigning Collateral Agent or removed Collateral
Agent shall be discharged from its duties and obligations hereunder and under
the other Financing Documents.
3.7 Miscellaneous. (a) None of the provisions of this
Agreement or any other Financing Document shall require the Collateral Agent to
expend or risk its own funds or otherwise to incur any liability, financial or
otherwise, in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers if it shall have reasonable grounds for believing
that repayment of such funds or indemnity satisfactory to it against such risk
or liability is not assured to it.
(b) The Collateral Agent may execute any of the trusts or
powers hereunder or perform any duties hereunder or under any Security Document
either directly or by or through agents, attorneys, custodians or nominees
appointed with due care, and shall not be responsible for any willful misconduct
or negligence on the part of any agent, attorney, custodian or nominee so
appointed.
(c) Any corporation into which the Collateral Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Collateral
Agent shall be a party, or any corporation succeeding to the business of the
Collateral Agent shall be the successor of the Collateral Agent hereunder
without the execution or filing of any paper with any party hereto or any
further act on the part of any of the parties hereto except where an instrument
of transfer or assignment is required by law to effect such succession, anything
herein to the contrary notwithstanding.
SECTION 4. MISCELLANEOUS.
4.1 Severability. Any provision hereof which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof and without affecting the validity or enforceability
of any provision in any other jurisdiction.
4.2 Notices. All notices, requests, demands or other
communications hereunder shall be made in the manner and with the effect
provided in Section 9.3 of the Credit Agreement at the addresses provided
therein (and to the Collateral Agent, at the address set forth below its
signature block hereto) or at such other address as shall have been furnished in
writing by the relevant Person to the party required to give notice hereunder.
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4.3 Successors and Assigns. Whenever in this Agreement any of
the parties hereto is named or referred to, the successors and assigns of such
party shall be deemed to be included and all covenants, promises and agreements
in this Agreement by or on behalf of the respective parties hereto shall bind
and inure to the benefit of the respective successors and permitted assigns of
such parties, whether so expressed or not. Nothing in this Agreement, express or
implied, is intended or shall be construed to confer upon, or to give to, any
Person other than the parties hereto and their respective successors and
permitted assigns and Persons for whom the parties hereto are acting as agents
or representatives, any right, remedy or claim under or by reason of this
Agreement or any covenant, condition or stipulation hereof; and the covenants,
stipulations and agreements contained in this Agreement are and shall be for the
sole and exclusive benefit of the parties hereto and their respective successors
and permitted assigns and Persons for whom the parties hereto are acting as
agents or representatives.
4.4 Counterparts. This Agreement may be executed in any number
of counterparts, each executed counterpart constituting an original but all
counterparts together constituting only one instrument.
4.5 Special Exculpation. NO CLAIM MAY BE MADE BY THE COMPANY
OR ANY OTHER PERSON AGAINST THE COLLATERAL AGENT OR ANY LENDER OR THE
AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS OR AGENTS OF ANY OF THEM
FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT OF ANY
CLAIM FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF OR
RELATING TO THE FINANCING DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY, OR
ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH AND THE COMPANY
HEREBY WAIVES, RELEASES AND AGREES NOT TO XXX UPON ANY CLAIM FOR ANY SUCH
DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST
IN ITS FAVOR.
4.6 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE CONFLICT OF LAW RULES THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW).
4.7 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT ANY OF THEM MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF,
UNDER OR IN CONNECTION WITH, THIS AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY RELATING
HERETO.
4.8 No Impairments of Other Rights of Secured Parties and no
Rights or Obligations of the Company. Nothing in this Agreement is intended or
shall be construed to impair,
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diminish or otherwise adversely affect any other rights the Lenders may have or
may obtain against the Company or any other Credit Party.
4.9 Amendment; Waiver. No amendment or waiver of any
provision of this Agreement shall be effective unless the same shall be in
writing and signed by the parties hereto and any such waiver or amendment shall
be effective only in the specific instance and for the specific purpose for
which given. No delay on the part of any Person in the exercise of any right,
power or remedy shall operate as a waiver thereof, nor shall any single or
partial waiver by such Person of any right, power or remedy preclude any further
exercise thereof, or the exercise of any other right, power or remedy.
4.10 Headings; Table of Contents, etc. Headings herein and the
table of contents hereof are for convenience only and shall not be relied upon
in interpreting or enforcing this Agreement.
4.11 Conflicts With Other Security Documents. In the event of
any conflict between the terms of this Agreement and the other Financing
Documents, the provisions of this Agreement shall control.
4.12 Marshaling. The Junior Obligees hereby waive, to the
fullest extent permitted by applicable law, any rights they may have under
applicable law to assert the doctrine of marshaling or otherwise to require any
Senior Obligee to marshal any Property of any Credit Party for the benefit of
any Lender.
4.13 Waiver of Rights. Each Junior Obligee hereby waives, to
the fullest extent permitted by applicable law, any rights it may have to enjoin
or otherwise obtain a judicial or administrative order preventing any Senior
Obligee from taking, or refraining from taking, any action with respect to all
or any part of the Collateral that is permitted under this Agreement.
4.14 Continuation of Subordination; Termination of Agreement.
This Agreement shall in all respects be a continuing agreement and shall remain
in full force and effect until Senior Obligees shall have received indefeasible
payment in full in cash of all Senior Obligations pursuant to the respective
terms and provisions of the Financing Documents; provided, that this Agreement
shall continue to be effective or be reinstated, as the case may be, (i) if at
any time any payment of any Senior Obligations is rescinded, avoided or must
otherwise be returned by any Tranche A Lender upon the insolvency, bankruptcy or
reorganization of any Credit Party, all as though such payment had not been
made, and (ii) irrespective of any invalidity, unenforceability or illegality of
the Senior Obligations, any part thereof or any of the transactions contemplated
by the Financing Documents, and (iii) shall also apply with respect to any
judgment ordered by a court in any action brought at law or in equity (such as
an action brought for rescission, restitution, or unjust enrichment) against the
Borrower or any other Credit Party in lieu, in whole or in part, of an action to
enforce the obligations of the Borrower or any Credit Party under the Financing
Documents.
4.15 Specific Performance. Each party hereto agrees that as
between the Senior Obligees and the Junior Obligees, such parties may demand
specific performance of the provisions of this Agreement, at any time the Senior
Obligees or the Junior Obligees, as the case
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may be, shall have failed to comply with any term or provision hereof. The
Lenders hereby irrevocably waive any defense based on the adequacy of a remedy
at law that might be asserted as a bar to such remedy of specific performance.
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IN WITNESS WHEREOF, the parties hereto, by their officers duly
authorized, have caused this Intercreditor and Subordination Agreement to be
duly executed and delivered as of the date first above written.
XXXXXX COMMERCIAL PAPER INC.,
as Administrative Agent
By:_____________________________________
Title:
