Exhibit 10.8
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (the "Subordination Agreement"), dated as of
December 20, 1996, by and among Indianapolis Power & Light Company (the
"Subordinated Creditor"), IPL Funding Corporation (the "Seller"), and ABN AMRO
Bank N.V., as agent for the Purchasers (as defined below) (in such capacity, the
"Agent"), for the benefit of the Agent and the Purchasers (the Agent and the
Purchasers being collectively referred to herein as the "Senior Creditors");
WITNESSETH:
WHEREAS, the Seller has entered into a Receivables Sale Agreement dated as
of December 20, 1996 (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the "Receivables Sale Agreement"), by and
among the Seller, ABN AMRO Bank N.V., as provider of the program letter of
credit (the "Enhancer"), the liquidity providers from time to time party thereto
(the "Liquidity Providers"), Windmill Funding Corporation ("WINDMILL", and
together with the Liquidity Providers and the Enhancer, the "Purchasers") and
the Agent; and
WHEREAS, the Seller has entered into a Receivables Purchase Agreement,
dated as of December 20, 1996 (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "Receivables Purchase
Agreement"), by and among the Seller and the Subordinated Creditor; and
WHEREAS, the Seller has and may, from time to time, execute certain
instruments and enter into certain agreements pursuant to which it will incur
obligations to the Subordinated Creditor; and
WHEREAS, it is a condition precedent to the obligations of the Senior
Creditors under the Receivables Sale Agreement that the Subordinated Creditor
agree to execute and deliver this Subordination Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Senior Creditors to enter into the Receivables Sale Agreement with the Seller,
and in consideration of the execution thereof, the parties hereby agree as
follows:
Section 1. Definitions. All capitalized terms used herein and not otherwise
defined herein shall have the respective meanings ascribed thereto in the
Receivables Sale Agreement. For the purposes of this Subordination Agreement,
the following terms shall have the following meaning:
"Senior Debt" shall mean all of the indebtedness, liabilities and other
obligations of the Seller at any time owed to any Senior Creditor, direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising under or in connection with the Receivables Sale Agreement (or
any other documents executed thereunder or in connection therewith), and all
interest on any such obligations owed by the Seller to any Senior Creditor in
connection therewith whether payable prior to, during the pendency of, or after
a bankruptcy, insolvency, or similar proceeding with respect to the Seller and
all Collections payable to any Senior Creditor or any other Person (other than
the Seller).
"Subordinated Debt" shall mean all of the indebtedness, liabilities and
other obligations of the Seller at any time owed to the Subordinated Creditor,
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising under or in connection with any instrument or agreement,
whether oral or written, including, without limitation, the Receivables Purchase
Agreement and the Subordinated Note, and all interest on any such obligations
owed by the Seller to the Subordinated Creditor whether payable prior to, during
the pendency of, or after a bankruptcy, insolvency or similar proceeding with
respect to the Seller.
"Subordinated Note" shall mean, the Revolving Subordinated Promissory Note
dated December 20, 1996, from the Seller to the Subordinated Creditor.
Section 2. Subordination. All Subordinated Debt shall be and hereby is
expressly made subordinate and junior in right of payment to all Senior Debt to
the extent and in the manner provided herein. The Subordinated Creditor hereby
agrees that it shall not, at any time, accelerate or otherwise cause all or any
part of the Subordinated Debt to mature prior to its scheduled maturity (if
any). After the occurrence and during the continuance of a Termination Event or
a Potential Termination Event, until all Senior Debt shall have been
indefeasibly paid in full:
(a) the Seller shall not, without the consent of the Instructing
Group, directly or indirectly, make any payment with respect to or on
account of, or transfer any collateral for any part of, the Subordinated
Debt;
(b) the Subordinated Creditor shall not demand, xxx for, or accept
from the Seller or any other Person any such payment or collateral (to the
extent not permitted pursuant to clause (a) above) nor take any other
action to collect upon any such payment or to enforce its rights in respect
of the Subordinated Debt or any collateral securing any Subordinated Debt,
including, without limitation, pursuant to a setoff of Subordinated Debt
against debt owed by the Subordinated Creditor to the Seller; and
(c) neither the Seller nor the Subordinated Creditor shall otherwise
take any action prejudicial to or inconsistent with each of the Senior
Creditors' priority position created by this Subordination Agreement.
Section 3. Limitations on Subordinated Creditor Actions. The Subordinated
Creditor will not commence or join with any other creditor or creditors of the
Seller in commencing any bankruptcy, reorganization or insolvency proceedings
against the Seller. At any general meeting of creditors of the Seller, or in the
event of any proceeding, voluntary or involuntary, for the distribution,
division or application of all or part of the assets of the Seller or its
business, or any receivership, insolvency or bankruptcy proceeding, or in an
assignment for the benefit of creditors or a proceeding by or against the Seller
for composition or extension or otherwise, if all Senior Debt has not been
indefeasibly paid in full at the time, without limiting the generality of any of
the other provisions hereof, the Agent, for the benefit of the Senior Creditors,
is hereby irrevocably authorized at any such meeting or in any such proceeding:
(a) to enforce claims comprising Subordinated Debt in the name of the
Subordinated Creditor, by proof of debt, proof of claim, suit or otherwise;
(b) to collect any assets of the Seller distributed, divided or
applied by way of dividend or payment, or such securities issued on account
of Subordinated Debt and apply the same, or the proceeds of any realization
upon the same that the Agent in its sole discretion elects to effect, to
Senior Debt until all Senior Debt shall have been indefeasibly paid in full
(each of the Senior Creditors hereby agreeing to render any surplus
remaining after such payment to the Subordinated Creditor or to whomever
may otherwise be entitled thereto); provided, however, that this subsection
(b) does not apply to any assets of the Seller received by the Subordinated
Creditor prior to and not in connection with any such meeting or any such
proceeding if receipt by the Subordinated Creditor was not in violation of
any of the other terms hereof;
(c) to vote claims comprising Subordinated Debt and to accept or
reject any plan of partial or complete liquidation, reorganization,
arrangement, composition or extension; and
(d) to take generally any action in connection with any such meeting
or proceeding which the Subordinated Creditor might otherwise take.
After the commencement of any such bankruptcy, insolvency or reorganization
proceeding, the Subordinated Creditor may inquire of the Agent in writing
whether the Agent intends to exercise the foregoing rights with respect to the
Subordinated Debt. Should the Agent fail, within thirty (30) days after its
receipt of such inquiry or such shorter period as may be required in such
proceeding, either to file a proof of claim with respect to the Subordinated
Debt and to furnish a copy thereof to the Subordinated Creditor, or to inform
the Subordinated Creditor in writing that it intends to exercise its rights to
assert the claims arising with respect to the Subordinated Debt in the manner
hereinabove provided, the Subordinated Creditor may, without prejudicing the
rights of the Senior Creditors hereunder, but shall not be required to, proceed
to file a proof of claim with respect to the Subordinated Debt and take such
further steps with respect thereto, not inconsistent with this Subordination
Agreement, as the Subordinated Creditor may deem proper.
Subject to and from and after the indefeasible payment in full of all
Senior Debt, the Subordinated Creditor shall be subrogated to the rights of the
Senior Creditors to receive payments or distributions of cash, property or
securities of the Seller applicable to the Senior Debt until all amounts owing
on the Subordinated Debt shall be paid in full. After the indefeasible payment
in full of all Senior Debt, the Senior Creditors, at the Subordinated Creditor's
expense, will duly execute, acknowledge and deliver all such documents and other
items and take such other action as the Subordinated Creditor may reasonably
request to permit the Subordinated Creditor to be subrogated to the rights of
the Senior Creditors in accordance with the immediately preceding sentence. The
provisions of this Subordination Agreement are and are intended solely for the
purpose of defining the relative rights of the Subordinated Creditor and the
Senior Creditors. Nothing contained in this Subordination Agreement is intended
to or shall impair, as between the Seller, its creditors other than the Senior
Creditors and the Subordinated Creditor, the obligation of the Seller, which is
absolute and unconditional, to pay to the Subordinated Creditor the Subordinated
Debt as and when the same shall become due and payable in accordance with its
terms, or to affect the relative rights of the Subordinated Creditor and
creditors of the Seller other than the Senior Creditors.
Section 4. No Commingling. Should any payment or distribution (whether in
cash or other property) on account of, or any collateral for any part of, the
Subordinated Debt be received by the Subordinated Creditor in violation of this
Subordination Agreement, such payment or collateral shall be delivered forthwith
by the recipient to the Agent for application to Senior Debt in accordance with
Section 5 hereof, in the form received. The Agent is irrevocably authorized to
supply any required endorsement or assignment which may have been omitted. Until
so delivered, any such payment or collateral shall be held by the recipient in
trust for the Senior Creditors and shall not be commingled with other funds or
property of the recipient.
Section 5. Application of Funds. Any funds received by the Agent pursuant
to this Subordination Agreement, unless otherwise specifically provided pursuant
to the terms hereof, shall be applied as a Collection under Section 2.3 of the
Receivables Sale Agreement.
Section 6. Title. The Subordinated Creditor hereby represents and warrants
to the Senior Creditors that it is the lawful owner of the Subordinated Debt
attributable to it and no part thereof has been assigned to or subordinated or
subjected to any other lien or encumbrance creating or evidencing subordinated
debt in favor of anyone other than the Senior Creditors. The Subordinated
Creditor may not sell, transfer or assign all or any portion of the Subordinated
Debt or create or suffer to exist any lien or encumbrance thereon or with
respect thereto.
Section 7. Specific Performance; Waiver. The Agent for the benefit of the
Senior Creditors is hereby authorized to demand specific performance of this
Subordination Agreement, whether or not the Seller shall have complied with the
provisions hereof applicable to it, at any time when the Subordinated Creditor
shall have failed to comply with any provision hereof applicable to it. The
Subordinated Creditor hereby irrevocably waives any defense based on the
adequacy of a remedy at law which might be asserted as a bar to the remedy of
specific performance hereof in any action brought therefor by the Agent. The
Subordinated Creditor further waives presentment, demand, notice and protest in
connection with all instruments and agreements creating or evidencing Senior
Debt or Subordinated Debt, notice of the acceptance of this Subordination
Agreement and proof of reliance upon the existence or terms of this
Subordination Agreement by the Senior Creditors or any other holder of Senior
Debt or other action taken in reliance hereon and all demands and notices of
every kind in connection with this Subordination Agreement, the Senior Debt or
time of payment of the Senior Debt or Subordinated Debt. The Subordinated
Creditor assents to any renewal, extension or postponement of the time of
payment of Senior Debt or any other indulgence with respect thereto, to any
substitution, exchange or release of collateral therefor, to the addition or
release of any Person primarily or secondarily liable thereon and to the
provisions of any instrument, security or other writing evidencing Senior Debt.
Section 8. Further Assurances. The Seller and the Subordinated Creditor
shall execute and deliver to the Agent such further instruments, agreements or
documents and shall take such further action as the Instructing Group may at any
time or times reasonably request in order to carry out the provisions and intent
of this Subordination Agreement.
Section 9. Senior Creditors' Duties. The rights granted to the Agent for
the benefit of the Senior Creditors and to the Senior Creditors hereunder are
solely for the protection of the Senior Creditors and nothing herein contained
shall impose on the Agent or on any Senior Creditor any duties with respect to
any property or rights of the Seller or the Subordinated Creditor received
hereunder. The Senior Creditors shall have no duty to preserve rights against
prior parties in any property of any kind received hereunder.
Section 10. No Prejudice or Impairment. (a) The rights under this
Subordination Agreement of the Agent and the Senior Creditors as against the
Subordinated Creditor shall remain in full force and effect without regard to,
and shall not be impaired or affected by:
(i) any act or failure to act on the part of any Senior Creditor or
the Seller; or
(ii) any extension or indulgence in respect of any payment or
prepayment of any Senior Debt or any part thereof or in respect of any
other amount payable to any holder of any Senior Debt; or
(iii) any amendment, modification or waiver of, or addition or
supplement to, or deletion from, or compromise, release, consent or other
action in respect of, any of the terms of any Senior Debt, any agreement or
instrument creating or evidencing any Senior Debt or any other agreement
which may be made relating to any Senior Debt; or
(iv) any exercise or nonexercise by the Senior Creditors of any right,
power, privilege or remedy under or in respect of such Senior Debt, any
agreement or instrument creating or evidencing Senior Debt or this
Subordination Agreement or any waiver of any such right, power, privilege
or remedy or of any default in respect of such Senior Debt, any agreement
or instrument creating or evidencing Senior Debt or this Subordination
Agreement, or any receipt by any Senior Creditor of any security, or any
failure by any Senior Creditor to perfect a security interest in, or any
release by any Senior Creditor of, any security for the payment of any
Senior Debt; or
(v) any merger or consolidation of the Seller or any of its
Subsidiaries into or with any other Person, any change in the existence,
structure or ownership of the Seller or any of its Subsidiaries or any
sale, lease or transfer of any or all of the assets of the Seller or any of
its Subsidiaries to any other Person; or
(vi) any insolvency, bankruptcy, reorganization or similar proceeding
against or affecting the Subordinated Creditor, the Seller or the
Receivables; or
(vii) the existence of any claim, setoff or other rights that the
Subordinated Creditor or the Seller may at any time have against any Senior
Creditor; or
(viii) any invalidity or unenforceability of any Senior Debt or any
provision or provisions of any instrument, document or agreement creating
or evidencing any Senior Debt; or
(ix) absence of any notice to, or knowledge by, any holder of any
Subordinated Debt of the existence or occurrence of any of the matters or
events set forth in the foregoing subdivisions (i) through (viii); or
(x) any other circumstance.
(b) The obligations of the holders of Subordinated Debt under this
Subordination Agreement shall continue to be effective, or be reinstated, as the
case may be, if at any time any payment in respect of any Senior Debt, or any
other payment to any holder of any Senior Debt in its capacity as such, is
rescinded or must otherwise be restored or returned by the holder of such Senior
Debt for any reason, all as though such payment had not been made.
Section 11. Lien Subordination. All liens or encumbrances on any assets or
properties of the Seller in favor of the Subordinated Creditor, whether incurred
or created prior to, subsequent to, or on the date hereof, regardless of the
time of the recording, perfection or filing thereof or the date on which amounts
secured thereby shall be or have been advanced to the Seller, shall be at all
times junior, subject and subordinate in all respects to liens or encumbrances
granted by the Seller prior to, subsequent to, or on the date hereof in favor of
the Senior Creditors created under or pursuant to the Receivables Sale Agreement
or otherwise (collectively referred to herein as the "Senior Creditors' Liens")
and to all amendments, modifications, renewals and extensions of the Senior
Creditors' Liens (all of which may be entered into without notice to or consent
of the Subordinated Creditor).
Section 12. No Waiver; Remedies. No failure or delay on the part of the
Agent for the benefit of the Senior Creditors in exercising any power, right or
remedy under this Subordination Agreement shall operate as a waiver thereof; nor
shall any single or partial exercise of any such power, right or remedy preclude
any other further exercise thereof or the exercise of any other power, right or
remedy. The rights and remedies provided in this Subordination Agreement are
cumulative and nonexclusive of any rights or remedies provided by law. Any
waiver of this Subordination Agreement shall be effective only in the specific
instance and for the specific purpose for which given.
Section 13. Amendments, etc. No amendment, supplement, modification or
waiver of any provision of this Subordination Agreement nor consent to any
departure by the Seller or the Subordinated Creditor therefrom shall in any
event be effective unless the same shall be in writing and signed by the Seller,
the Subordinated Creditor and the Agent and consented to by the Instructing
Group.
Section 14. Governing Law; Submission to Jurisdiction. This Subordination
Agreement shall be governed by and construed in accordance with the internal
laws of the State of Illinois. The Subordinated Creditor and the Seller hereby
submit to the nonexclusive jurisdiction of the United States District Court for
the Northern District of Illinois and of any Illinois state court sitting in
Chicago for purposes of all legal proceedings arising out of or relating to this
Subordination Agreement or the transactions contemplated hereby. The
Subordinated Creditor and the Seller hereby irrevocably waive, to the fullest
extent it may effectively do so, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum. Nothing in this Section 14 shall affect the right of
the Agent or any Senior Creditor to bring any action or proceeding against the
Subordinated Creditor or the Seller or their respective properties in the courts
of other jurisdictions.
Section 15. Assignment. This Subordination Agreement shall (i) be binding
upon the Seller and the Subordinated Creditor, and their respective successors
and assigns and (ii) inure to the benefit of and be enforceable by the Agent for
the benefit of the Senior Creditors and their respective successors, transferees
and assigns; provided however, that the obligations of the Seller and the
Subordinated Creditor hereunder may not be assigned, transferred or delegated
without the prior written consent of the Agent and any such purported
assignment, transfer or delegation absent such consent shall be void.
Section 16. Confidentiality of Agreement. Unless otherwise consented to by
the Agent, the Seller and the Subordinated Creditor will use its best efforts
not to disclose without the prior written consent of the Agent the contents of
this Agreement, the Receivables Sale Agreement, or any other confidential or
proprietary information furnished by the Agent or any Purchaser, to any Person
other than to its officers, directors, members, managers, employees, outside
accountants, auditors, attorneys or financial advisors or as required by
applicable law or Governmental Authorities with appropriate jurisdiction.
Section 17. Headings; Counterparts. Section headings in this Agreement are
for reference only and shall not affect the construction of this Agreement. This
Agreement may be executed by different parties on any number of counterparts,
each of which shall constitute an original and all of which, taken together,
shall constitute one and the same agreement.
Section 18. Cumulative Rights and Severability. All rights and remedies of
the Senior Creditors and Agent hereunder shall be cumulative and non-exclusive
of any rights or remedies such Persons have under law or otherwise. Any
provision hereof this is prohibited or unenforceable in any jurisdiction shall,
in such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provision hereof and without
affecting such provision in any other jurisdiction.
Section 19. Entire Agreement. This Agreement constitutes the entire
understanding of the parties thereto concerning the subject matter hereof. Any
previous or contemporaneous agreements, whether written or oral, concerning such
matters are superseded hereby.
IN WITNESS WHEREOF, the parties hereto have caused this Subordination
Agreement to be duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.
ABN AMRO Bank N.V., as Agent
By: /s/ Xxxx X. Xxxxx
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Title: Vice President
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By: /s/ Xxxxxx X. Xxxxxx
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Title: Group Vice President
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INDIANAPOLIS POWER & LIGHT COMPANY
By: /s/ Xxxx X. Xxxxx
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Its: SVP-Finance and Information
Services
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Accepted and Agreed:
IPL FUNDING CORPORATION
By: /s/ Xxxxxx X. Xxxxx
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Its: Treasurer
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