SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT is dated as of February 24, 1998 and by and
among E-P ACQUISITION, INC., 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
Guaranteed Creditors (as defined in the Credit Agreement defined below) and ABN
AMRO BANK N.V., in its capacity as agent for the Guaranteed Creditors (the
"AGENT"). Each capitalized term used herein shall, unless otherwise defined
herein, have the same meaning given to such term in the Credit Agreement dated
as of February 19, 1998 (as it may hereafter be amended, restated, supplemented
or otherwise modified from time to time, the "CREDIT AGREEMENT") by and among
the Borrower, the Lenders (as defined in the Credit Agreement) and the Agent.
WITNESSETH THAT:
WHEREAS, pursuant to the Credit Agreement, the Lenders intend to extend
certain credit facilities 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 "INTERCOMPANY DEBT"); and
WHEREAS, the obligation of the Lenders to extend such credit facilities to
the Borrower are subject to the condition, among others, that the Companies
subordinate the Intercompany Debt to the Obligations of the Credit Parties to
the Guaranteed Creditors pursuant to the Credit Documents and the obligations of
the Borrower under Interest Rate Protection Agreements with any Lender or
affiliate thereof (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. INTERCOMPANY DEBT SUBORDINATED TO SENIOR DEBT. The recitals set
forth above are hereby incorporated by reference. All Intercompany 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
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
Guaranteed Creditors shall be entitled to receive indefeasible payment in full
of all amounts due or to become due (whether or not an Event of Default has
occurred under the terms of the Credit 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 Intercompany Debt owed by the Distributing Company is entitled to
receive any payment on account of the principal of or interest on such
Intercompany Debt, and to that end the Guaranteed Creditors 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 Intercompany 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
credit other than the Guaranteed Creditors or the Agent on behalf of the
Guaranteed Creditors 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 Intercompany Debt.
4. PRIOR PAYMENT OF SENIOR DEBT UPON ACCELERATION OF INTERCOMPANY DEBT.
If any portion of the Intercompany Debt owed by any Company becomes or is
declared due and payable before its stated maturity, then and in such event the
Guaranteed Creditors 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
Intercompany 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 Intercompany Debt, unless the Lenders or
Required Lenders 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 Intercompany Debt on account of principal or interest on any
portion of the Intercompany 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 Intercompany 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 Intercompany Debt.
7. RECEIPT OF PROHIBITED PAYMENTS. If, notwithstanding the foregoing
provisions of Sections 2, 4, 5 and 6, a Company which is owed Intercompany 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 Guaranteed Creditors, shall be segregated from
other funds and property held by such Company, and shall be forthwith paid over
to the Agent for the benefit of the Guaranteed Creditors 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 Guaranteed Creditors 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 INTERCOMPANY DEBT. At the request of the
Agent, each Company shall cause each instrument which now or hereafter evidences
all or a portion of the Intercompany Debt to be conspicuously marked as follows:
"This instrument is subject to the terms of a
Subordination Agreement dated as of February 24,
1998, in favor of ABN AMRO Bank N.V., 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."
and promptly deliver such instrument to the Agent to be pledged under the
Security Agreement. At the Agent's request, each Company will further xxxx its
books of account in such a 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 Guaranteed Creditors, 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 Intercompany Debt is created, subject to
Sections 2, 3, 4, 5 and 6 hereof, including, without limitation, the rights
under this Agreement of the Guaranteed Creditors to receive cash, property or
securities otherwise payable or deliverable with respect to the Intercompany
Debt.
11. NO IMPLIED WAIVERS OF SUBORDINATION. No right of the Guaranteed
Creditors 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 any Guaranteed Creditor, or by any
non-compliance by any Company with the terms, provisions and covenants of any
agreement pursuant to which the Intercompany Debt is created, regardless of any
knowledge thereof any Guaranteed Creditor 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 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 Intercompany Debt, other than by
means of payment of such Intercompany 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 on behalf of the Lenders, the
Lenders, or the Required Lenders, as the case may be, 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 Credit 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 Guaranteed Creditors, 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 Documents; (ii) release any
collateral or 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 acceptable to and approved by the Agent 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
on behalf of the Guaranteed Creditors or the Guaranteed Creditors 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 Credit Parties.
15. EXPENSES. In accordance with the Credit Agreement, the Companies
each unconditionally and jointly and severally agree upon demand to
pay to the Agent 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 Guaranteed
Creditors in connection with (a) the exercise or enforcement of any of the
rights of the Guaranteed Creditors 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.
17. GOVERNING LAW. This Agreement shall be a contract under the
internal laws of the State of New York and for all purposes shall be construed
in accordance with the laws of said State without giving effect to its conflicts
of law principles.
18. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of the Guaranteed Creditors 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 an Event of Default, to execute and file proofs and documents and
take any other action the Agent may deem advisable to enforce the Guaranteed
Creditors' interests relating to the Intercompany 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 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 the foregoing power of attorney.
21. APPLICATION OF PAYMENTS. In the event any payments are received by
the Agent on behalf of the Guaranteed Creditors or any Guaranteed Creditor under
the terms of this Agreement for application to the Senior Debt at any time when
the Senior Debt has not been declared due and payable and prior to the date on
which it would otherwise become due and payable, such payment shall constitute a
voluntary prepayment of the Senior Debt for all purposes under the Credit
Agreement.
22. 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 on behalf of the
Guaranteed Creditors or any Guaranteed Creditor 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
Guaranteed Creditors at law may not fully compensate the Guaranteed Creditors
for the damages it may suffer in the event of a breach hereof.
23. CONSENT TO JURISDICTION; WAIVER OR JURY TRIAL. EACH COMPANY HEREBY
IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE
COURT SITTING IN NEW YORK CITY AND THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND EACH COMPANY WAIVES TRIAL BY JURY IN ANY
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT TO THE FULL EXTENT PERMITTED
BY LAW.
WITNESS the due execution hereof as of the day and year first above
written.
E-P ACQUISITION, INC.
By:.........................................
Name:.......................................
Title:......................................
Each of the Subsidiaries listed on
the attached Schedule I
By:.........................................
Name:.......................................
Title:......................................
of each of the Subsidiaries listed
on Schedule I
SCHEDULE I TO SUBORDINATION AGREEMENT
LIST OF SUBSIDIARIES
