EXHIBIT 4.10
INTERCREDITOR AGREEMENT
THIS INTERCREDITOR AGREEMENT, dated as of June 30, 2002 (as
may be amended, supplemented or otherwise modified from time to time, this
"Agreement"), is made by and among THE BANK OF NEW YORK, a New York banking
corporation, in its capacity as trustee for and on behalf of the holders of
indebtedness issued under the Senior Notes Indenture described below (together
with its successors and assigns in such capacity, the "Senior Notes Trustee"),
BANK ONE TRUST COMPANY, N.A., a national banking association, in its capacity as
trustee for and on behalf of the holders of indebtedness issued under the Junior
Notes Indenture described below (together with its successors and assigns in
such capacity, the "Junior Notes Trustee") and KOMAG, INCORPORATED, a Delaware
corporation (the "Borrower").
W I T N E S S E T H:
WHEREAS, pursuant to the terms and conditions of that certain
Indenture, dated as of June 30, 2002, between the Borrower and the Senior Notes
Trustee (as amended, restated, modified, renewed or extended from time to time,
the "Senior Notes Indenture"), the Senior Noteholders have agreed to accept the
Borrower's Senior Secured Notes (collectively, the "Senior Notes") in the
aggregate original principal amount of $128,832,000, issued by the Borrower as
required by the Borrower's Plan of Reorganization;
WHEREAS, pursuant to the terms and conditions of that certain
Indenture, dated as of June 30, 2002, between the Borrower and the Junior Notes
Trustee (as amended, restated, modified, renewed or extended from time to time,
the "Junior Notes Indenture"), the Junior Noteholders (as herein defined) have
agreed to accept the Borrower's Junior Secured Notes due 2007 (collectively, the
"Junior Notes") in the aggregate original principal amount of $7,000,000, issued
by the Borrower as required by the Borrower's Plan of Reorganization;
WHEREAS, pursuant to certain security, pledge, and mortgage
documents executed and delivered in connection with the Senior Notes Indenture,
the Borrower has granted to the Senior Notes Trustee, for the benefit of the
Senior Noteholders, a second priority security interest in and to the Collateral
in order to secure its obligations arising in connection with the Senior Notes
Indenture and the Senior Notes; and
WHEREAS, pursuant to certain security, pledge, and mortgage
documents executed and delivered in connection with the Junior Notes Indenture,
the Borrower has granted to the Junior Notes Trustee, for the benefit of the
Junior Noteholders, a third priority security interest in and to the Collateral
in order to secure its obligations arising in connection with the Junior Notes
Indenture and the Junior Notes
NOW, THEREFORE, in consideration of the premises, the parties
hereto hereby agree as follows:
1. Definitions.
(a) As used in this Agreement, (i) the terms defined in
the preamble and recitals shall have the meanings assigned thereto, (ii)
capitalized terms that are used herein without being defined shall have the
meanings assigned thereto in the Senior Notes Indenture, and (iii) the following
terms shall have the following meanings:
"Agreement" has the meaning set forth in the preamble to this
Agreement.
"Bankruptcy Code" means United States Bankruptcy Code, as in
effect from time to time.
"Blockage Period" means a Non-Payment Blockage Period or a
Payment Blockage Period, as the case may be.
"Borrower" has the meaning set forth in the preamble to this
Agreement.
"Cap Amount" means one hundred sixty-eight million six hundred
and eighty-two thousand dollars ($168,682,000).
"Collateral" means any assets or property of the Borrower, and
any proceeds thereof, at any time subject to (a) a Lien in favor of the Senior
Notes Trustee, for the benefit of the Senior Noteholders, under the Senior Notes
Indenture or any of the other Senior Documents to secure the Senior Obligations
or (b) a Lien in favor of the Junior Notes Trustee, for the benefit of the
Junior Noteholders, under the Junior Notes Indenture or any of the other Junior
Documents, to secure the Junior Obligations, including without limitation, all
"Collateral" as defined in the Senior Security Documents and all "Collateral" as
defined in the Subordinated Security Documents.
"Controlled Collateral" has the meaning specified in Section
2(d).
"DIP Financing" has the meaning specified in Section 7(c).
"Indemnitee" has the meaning specified in Section 18(b).
"Insolvency Proceeding" means (a) any case, action, or
proceeding before any court or other governmental authority having jurisdiction
over the applicable Person or its assets relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up, or relief of
debtors, or (b) any general assignment for the benefit of creditors,
composition, marshaling of assets for creditors, or other similar arrangement in
respect of its creditors generally or any substantial portion of its creditors;
in each case whether undertaken under Federal (including the Bankruptcy Code),
state, or local law.
"Junior Lien" means the Liens in and to the Collateral granted
pursuant to the Subordinated Documents to secure the Junior Obligations.
"Junior Noteholders" means the holders of the Junior Notes.
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"Junior Notes" has the meaning set forth in the recitals to
this Agreement.
"Junior Notes Trustee" has the meaning set forth in the
recitals to this Agreement.
"Junior Obligations" means all of the obligations,
liabilities, and indebtedness of the Borrower under the Subordinated Documents,
irrespective of whether on account of principal, premium, interest, fees, costs,
or expenses and including any premium, interest, fees, costs, or expenses which
would accrue and become due but for the commencement of an Insolvency
Proceeding, whether or not such premium, interest, fees, costs, or expenses are
allowed or allowable in whole or in part in any such Insolvency Proceeding.
"Lien" means any interest in an asset securing an obligation
owed to, or a claim by, any Person other than the owner of the asset, whether
such interest shall be based on the common law, statute, or contract, whether
such interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, conditional
sale, or trust receipt.
"Liquidity Facility" means the Loan and Security Agreement,
dated as of the date hereof, by and among the Borrower, Foothill Capital
Corporation, as arranger and administrative agent, Ableco Finance LLC, as
collateral agent, and the lenders party thereto, as such Loan and Security
Agreement may be amended, restated, modified, renewed or extended from time to
time in accordance with the terms of the Senior Notes Indenture and the Junior
Notes Indenture.
"Liquidity Facility Cap Amount" means the amount equal to the
lesser of (a) 110% of the aggregate amount of the commitments of the lenders in
effect from time to time under the Liquidity Facility and (b) $22,000,000.
"Liquidity Facility Collateral Agent" means the collateral
agent under the Liquidity Facility.
"Liquidity Facility Intercreditor Agreement" means that
certain Intercreditor Agreement among the Trustee, the collateral agent under
the Liquidity Facility, the Junior Notes Trustee and the Borrower, which shall
be entered into concurrently with or prior to the date hereof, as amended,
supplemented or otherwise modified from time to time, to the extent permitted by
law.
"Liquidity Facility Obligations" means all of the obligations,
liabilities and indebtedness of the Borrower under the Liquidity Facility,
irrespective of whether on account of principal, premium, interest, fees, costs,
or expenses which would accrue and become due but for the commencement of an
Insolvency Proceeding, whether or not such premium, interest, fees, costs, or
expenses are allowed or allowable in whole or in part in any such Insolvency
Proceeding; provided that to the extent any indebtedness on account of principal
of the Borrower owed to the lenders under the Liquidity Facility exceeds the
Liquidity Facility Cap Amount, such obligations, to the extent of such excess,
shall not be "Liquidity Facility Obligations" under this Agreement.
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"Non-Payment Blockage Period" means, with respect to any
Non-Payment Default, the period (a) beginning upon the receipt by the Junior
Notes Trustee of a Non-Payment Default Notice pursuant to this Agreement,
provided that if such Non-Payment Default is continuing on or after the receipt
by each of the Senior Notes Trustee and the Junior Notes Trustee of notice
pursuant to the Liquidity Facility Intercreditor Agreement (a "Liquidity
Facility Notice") of any Liquidity Facility default in payment or other event of
default resulting in a "Blockage Period" under the Liquidity Facility
Intercreditor Agreement then in effect (or if such Non-Payment Default relates
to the same Liquidity Facility event of default referred to in any Liquidity
Facility Notice), such period shall begin, if earlier, on the receipt by each of
the Senior Notes Trustee and the Junior Notes Trustee of such Liquidity Facility
Notice, and (b) ending upon the earlier of (i) 180 days following the earlier of
(x) the delivery of such Non-Payment Default Notice or (y) the delivery of such
Liquidity Facility Notice and (ii) the cure or waiver of such Non-Payment
Default or, if applicable, such Liquidity Facility default in payment or other
event of default, provided, however that if such Blockage Period was triggered
by a notice delivered pursuant to the Liquidity Facility Intercreditor Agreement
in accordance with the proviso to clause (a) of this definition, such 180-day
period shall be extended for so long as such Non-Payment Default shall be
continuing, but not to exceed an additional 30 days.
"Non-Payment Default" has the meaning specified in Section
5(b).
"Non-Payment Default Notice" means a written notice from or on
behalf of the Senior Notes Trustee or, in accordance with the Senior Indenture,
Senior Noteholders, to the Junior Notes Trustee of the existence of a
Non-Payment Default and specifically designating such notice as a "Non-Payment
Default Notice."
"Paying Agent" has the meaning set forth in the Junior Notes
Indenture.
"Payment Blockage Period" means, with respect to any Payment
Default, the period (a) beginning upon receipt by the Junior Notes Trustee of a
Payment Default Notice pursuant to this Agreement, provided that if such Payment
Default is continuing on or after the receipt by each of the Senior Notes
Trustee and the Junior Notes Trustee of notice pursuant to the Liquidity
Facility Intercreditor Agreement (a "Liquidity Facility Notice") of any
Liquidity Facility default in payment resulting in a "Blockage Period" under the
Liquidity Facility Intercreditor Agreement then in effect, such period shall
begin, if earlier, on the receipt by each of the Senior Notes Trustee and the
Junior Notes Trustee of such Liquidity Facility Notice, and (b) ending upon the
first to occur of (i) the date on which such Payment Default or, if applicable,
such Liquidity Facility payment default, shall have been cured or expressly
waived in writing by the Senior Notes Trustee in the case of a Payment Default
or by the Liquidity Facility Collateral Agent in the case of a Liquidity
Facility payment default, or (ii) the date on which the Senior Notes Trustee
shall expressly and irrevocably waive the application of Section 5(a) in
writing.
"Payment Default" has the meaning specified in Section 5(a).
"Payment Default Notice" means a written notice from or on
behalf of the Senior Notes Trustee or, in accordance with the Senior Indenture,
Senior Noteholders, of the existence of a Payment Default and specifically
designating such notice as a "Payment Default Notice."
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"Plan of Reorganization" means the Chapter 11 First Amended
Plan of Reorganization of the Borrower filed in the Chapter 11 Case on November
7, 2001, as amended and as it may be further modified or amended from time to
time; provided, that any amendment or modification materially adverse to the
Senior Noteholders shall have been consented to by the Senior Noteholders, and
any amendment or modification materially adverse to the Junior Noteholders shall
have been consented to by the Junior Noteholders.
"Scheduled Payment" has the meaning specified in Section 5(a)
hereof.
"Scheduled Payment Date" has the meaning specified in Section
5(a) hereof.
"Senior Documents" means the Senior Notes Indenture, the
Senior Notes, the Senior Security Documents and any other agreements,
instruments, and certificates executed and delivered in connection with the
Senior Notes Indenture, the Senior Notes and the Senior Security Documents.
"Senior Lien" means the Liens in and to the Collateral granted
pursuant to the Senior Security Documents or otherwise to secure the Senior
Obligations.
"Senior Noteholders" means the holders of the Senior Notes.
"Senior Notes" has the meaning set forth in the recitals to
this Agreement.
"Senior Notes Indenture" has the meaning set forth in the
recitals to this Agreement.
"Senior Notes Trustee" has the meaning set forth in the
preamble to this Agreement.
"Senior Obligations" means all of the obligations,
liabilities, and indebtedness of the Borrower under any of the Senior Documents,
irrespective of whether on account of principal, premium, interest, fees, costs,
or expenses and including any premium, interest, fees, costs, or expenses which
would accrue and become due but for the commencement of an Insolvency
Proceeding, whether or not such premium, interest, fees, costs, or expenses are
allowed or allowable in whole or in part in any such Insolvency Proceeding;
provided that to the extent any indebtedness on account of principal of the
Senior Obligations exceeds the Cap Amount, such obligations, to the extent of
such excess, shall not be "Senior Obligations" under this Agreement.
"Senior Security Documents" means those certain security
agreements, pledge agreements, deeds of trust, mortgages, and other agreements
or documents executed and delivered by the Borrower in connection with the
Senior Notes Indenture in order to provide Liens in and to all or any portion of
its assets or properties.
"Standstill Period" means, with respect to any Payment or
Non-Payment Default, the period (a) beginning upon the beginning of the
applicable Payment Blockage Period or Non-Payment Blockage Period, as the case
may be, and (b) ending on the last day of such Blockage Period, provided,
however, that in the case of a Payment Blockage Period such Standstill Period
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shall in no event extend beyond 180 days, provided, however that if such
Standstill Period with respect to a Payment Default was triggered by a notice of
a Liquidity Facility payment default delivered pursuant to the Liquidity
Facility Intercreditor Agreement in accordance with the proviso to clause (a) of
the definition of Payment Blockage Period, such 180-day period shall be extended
for so long as such Payment Default shall be continuing, but not to exceed an
additional 30 days or (c) the date on which there is commenced, either by or
against the Borrower, any Insolvency Proceeding.
"Subordinated Documents" means the Junior Notes Indenture, the
Junior Notes, the Subordinated Security Documents and any other agreements,
instruments, and certificates executed and delivered in connection with the
Junior Notes Indenture, the Junior Notes and the Subordinated Security
Documents.
"Subordinated Security Documents" means those certain security
agreements, pledge agreements, deeds of trust, mortgages, and other agreements
or documents executed and delivered by the Borrower in connection with the
Junior Notes Indenture in order to provide Liens in and to all any portion of
its assets or properties.
(b) The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
paragraph references are to this Agreement unless otherwise specified. The
phrases "prior payment in full," "payment in full," "paid in full" and any other
similar terms or phrases when used herein with respect to any Senior Obligations
shall mean the final indefeasible payment in full and in cash of all such Senior
Obligations (other than contingent indemnity obligations of the Borrower that
shall survive payment in full).
(c) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
2. Acknowledgments; Agreements.
(a) The Junior Notes Trustee hereby acknowledges as
Junior Notes Trustee and on behalf of the Junior Noteholders in its capacity as
such that the Senior Notes Trustee, for the benefit of the Senior Noteholders,
has been granted Liens upon all or substantially all of the assets of the
Borrower pursuant to the Senior Notes Indenture and hereby consents thereto. The
Senior Notes Trustee hereby acknowledges as Senior Notes Trustee and on behalf
of the Senior Noteholders in its capacity as such that the Junior Notes Trustee
has been granted Liens upon all or substantially all of the assets of the
Borrower pursuant to the Subordinated Documents and hereby consents thereto.
(b) The Junior Notes Trustee hereby acknowledges and
agrees, as Junior Notes Trustee and on behalf of the Junior Noteholders in its
capacity as such, that (i) the Junior Lien in and to the Collateral shall under
all circumstances be junior in priority and subordinated to the Senior Lien in
and to the Collateral and that the Junior Notes Trustee shall not have any claim
to or in respect of the Collateral, or any proceeds of or realization in and to
the Collateral, on a parity with or prior to the claim of the Senior
Noteholders, (ii) any Lien at any time granted to or otherwise obtained by
Senior Noteholders with respect to the Collateral shall have priority
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over, and shall be senior to, any Lien therein at any time granted to or
otherwise obtained by the Junior Notes Trustee, (iii) until the Senior
Obligations have been paid in full and in cash and the Senior Notes Trustee has
provided prompt written notice thereof to the Junior Notes Trustee, which the
Senior Notes Trustee agrees to provide, the exercise of rights and remedies in
respect of the Junior Lien by the Junior Notes Trustee under the Subordinated
Documents and applicable law shall be limited to the extent set forth in, and
shall be governed by, this Agreement and (iv) the Senior Notes Trustee would not
have executed the Senior Documents, as trustee on behalf of the Senior
Noteholders, in the absence of the execution and delivery of this Agreement by
the parties hereto.
(c) The priority agreements set forth in subsection (b)
above shall be applicable irrespective of the order, time or method of the
creation, attachment, or perfection of any Lien of the Senior Notes Trustee or
the Junior Notes Trustee upon all or any portion of the Collateral, or the order
or time of filing or recordation of any document or instrument for perfecting a
Lien in favor of the Senior Notes Trustee or the Junior Notes Trustee in any
such Collateral, and notwithstanding any conflicting terms or conditions that
may be contained in any of the Senior Documents or Subordinated Documents.
(d) The Senior Notes Trustee, as Senior Notes Trustee and
on behalf of the Senior Noteholders in its capacity as such, and the Junior
Notes Trustee, as Junior Notes Trustee and on behalf of the Junior Noteholders
in its capacity as such, acknowledge and agree that after payment in full of the
Liquidity Facility Obligations and until the Senior Obligations have been paid
in full and the Senior Notes Trustee has provided prompt written notice thereof
to the Junior Notes Trustee, which the Senior Notes Trustee agrees to provide,
the Senior Notes Trustee shall (i) hold all of the Collateral for which the
security interest therein is perfected by obtaining possession or dominion and
control, as applicable, of such Collateral (the "Controlled Collateral") pledged
to the Senior Notes Trustee pursuant to the Senior Documents, and (ii) for so
long as the Controlled Collateral forms a part of the Collateral for the Junior
Obligations, hold in its capacity as bailee for the Junior Notes Trustee and for
the benefit of the Junior Noteholders all of the Controlled Collateral pledged
to the Junior Notes Trustee pursuant to the Subordinated Documents. To the
extent permitted by law, the Senior Notes Trustee shall deliver such Controlled
Collateral possessed by it or its right to the control thereof to the Junior
Notes Trustee promptly after the Senior Obligations have been paid in full.
3. Rights in Collateral.
(a) So long as this Agreement has not been terminated
pursuant to the provisions hereof, and regardless of whether or not the Senior
Obligations or the Junior Obligations have been accelerated or any Insolvency
Proceeding has been commenced by or against the Borrower:
(i) Except as otherwise provided in subsection
(b), until payment in full of the Senior Obligations and the Senior Notes
Trustee has provided prompt written notice thereof to the Junior Notes Trustee
which the Senior Notes Trustee agrees to provide, the Junior Notes Trustee shall
not exercise any rights or remedies in respect of the Collateral or the Junior
Lien, whether under the Subordinated Documents, applicable law or otherwise,
including without limitation, any action to institute any judicial or
nonjudicial or similar action or
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proceeding in respect of the Junior Lien or to seek relief from the automatic
stay pursuant to Section 362 of the Bankruptcy Code, and the Junior Notes
Trustee shall not have any right whatsoever to direct the Senior Notes Trustee
to exercise or seek to exercise or refrain from exercising any rights or
remedies in respect of the Collateral;
(ii) Except as otherwise provided in subsection
(b), subject to the terms of the Senior Documents and the Liquidity Facility
Intercreditor Agreement, the Senior Notes Trustee shall have the exclusive right
to exercise rights and remedies in respect of the Collateral under the Senior
Documents, applicable law or otherwise and, in exercising such rights and
remedies with respect to the Collateral, the Senior Notes Trustee may enforce
the provisions of the Senior Documents and exercise remedies thereunder and
under applicable law (or refrain from enforcing any such rights and exercising
any such remedies), all in such order and in such manner as it may determine in
the exercise of its discretion. Such exercise and enforcement shall include,
without limitation, the rights of the Senior Notes Trustee to sell or otherwise
dispose of the Collateral (such sale to be free and clear of the Junior Lien and
the Junior Notes Trustee agrees to execute any and all Lien releases requested
by the Senior Notes Trustee in connection therewith), to incur reasonable
expenses in connection with such exercise and enforcement, and to exercise all
the rights and remedies of a secured lender under the Uniform Commercial Code of
any applicable jurisdiction and of a secured creditor under bankruptcy or
similar laws of any applicable jurisdiction; provided, that the proceeds of any
such sale, disposition or other exercise of rights and remedies are applied to
the reasonable expenses incurred in connection therewith and to the payment of
the Senior Obligations until satisfied in full, with any excess being remitted
to the Junior Notes Trustee to be applied by the Junior Notes Trustee in
accordance with the Junior Notes Indenture and the documents related thereto;
(iii) Notwithstanding anything to the contrary
contained in the Subordinated Documents, prior to the date on which the Senior
Obligations have been paid in full and the Senior Notes Trustee has provided
prompt written notice thereof to the Junior Notes Trustee, which the Senior
Notes Trustee agrees to provide, if an Event of Default has occurred and is
continuing under the Senior Notes Indenture and if and to the extent that the
Senior Notes Indenture shall have permitted or approved the sale, transfer, or
other disposition of any Collateral, then the Junior Notes Trustee shall be
bound by such permission or approval and shall execute any and all Lien releases
requested by the Junior Notes Trustee in connection therewith; provided, that
the Senior Notes Trustee references this Section 3(a)(iii) in connection with
such request; and provided, further, that the proceeds of any such sale,
transfer, or other disposition are applied to the reasonable expenses incurred
in connection therewith and to the payment of the Senior Obligations until
satisfied in full with any excess being remitted to the Junior Notes Trustee to
be applied by the Junior Notes Trustee in accordance with the Junior Notes
Indenture and the documents related therein.
(iv) The Junior Notes Trustee, as Junior Notes
Trustee and on behalf of the Junior Noteholders in its capacity as such, shall
not (A) contest, protest, object to or seek to enjoin any exercise of rights or
remedies by the Senior Notes Trustee or Senior Noteholders under any Senior
Document or applicable law in respect of the Collateral or the Senior Lien,
including without limitation, any action of foreclosure, or (B) contest the
validity or enforceability of the Senior Obligations or the validity,
perfection, priority or enforceability of the Senior Lien (it being understood
and agreed that the terms of this Agreement shall govern
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even if part or all of the Senior Obligations or the Senior Lien are avoided,
disallowed, set aside or otherwise invalidated in any judicial proceeding or
otherwise); and
(v) Except to the extent the Junior Notes
Trustee or the Junior Noteholders are permitted under the terms of this
Agreement to receive payments from the Borrower, unless and until the Senior
Obligations have been paid in full and the Senior Notes Trustee has provided
prompt written notice thereof to the Junior Notes Trustee, which the Senior
Notes Trustee agrees to provide, any money, property, securities, or other
direct or indirect distributions of any nature whatsoever received by the Junior
Notes Trustee or the Junior Noteholders in respect of the Junior Obligations
resulting from the sale, disposition, or other realization upon or other
exercise of remedies in respect of all or any part of the Collateral, regardless
of whether such money, property, securities, or other distributions are received
directly or indirectly during the pendency of or in connection with any
bankruptcy, insolvency or other like proceeding or otherwise, shall be delivered
to the Senior Notes Trustee in the form received, duly indorsed to such party,
if required, and applied by the Senior Notes Trustee as provided in the Senior
Documents. Until so delivered, such payment or distribution to the extent
received by the Junior Notes Trustee or the Junior Noteholders shall be held in
trust by such party as the property of the Senior Notes Trustee, for the benefit
of the Senior Noteholders, segregated from other funds and property held by the
Junior Notes Trustee.
(b) The limitations set forth in clauses (a)(i) and (a)
(ii) above notwithstanding, the Junior Notes Trustee and the Junior Noteholders
shall in all events be entitled (A) to exercise the rights and remedies
available to the Junior Notes Trustee and the Junior Noteholders under the
Junior Documents except during any Standstill Period and (B) to accelerate the
Junior Obligations. The Senior Notes Trustee shall provide prompt written notice
to the Junior Notes Trustee of the acceleration of the Senior Obligations.
(c) The Collateral shall be deemed to include casualty
insurance proceeds and, therefore, the priorities set forth herein shall govern
the ultimate disposition of casualty insurance proceeds related to some or all
of the Collateral. Subject to the terms of the Liquidity Facility Intercreditor
Agreement, the Senior Notes Trustee shall have the sole and exclusive right, as
against the Junior Notes Trustee, to adjust settlement of insurance claims in
the event of any covered loss, theft, or destruction of the Collateral. Subject
to the terms of the Liquidity Facility Intercreditor Agreement, if such proceeds
are applied to the Senior Obligations, any proceeds remaining after payment of
the Senior Obligations and all reasonable expenses of collection, including
reasonable costs, fees, and expenses, shall be remitted promptly to the Junior
Notes Trustee for application pursuant to the Subordinated Documents.
(d) The Junior Notes Trustee, as Junior Notes Trustee and
on behalf of the Junior Noteholders in its capacity as such, hereby waives any
right to require the Senior Notes Trustee to marshal any security or collateral
or otherwise to compel the Senior Notes Trustee to seek recourse against or
satisfaction of the indebtedness owing to Senior Noteholders from one source
before seeking recourse or satisfaction from another source. To the extent that
it is entitled to receive and apply the same pursuant to the provisions of this
Agreement, the Senior Notes Trustee shall be authorized to apply any and all
payments, collections, and proceeds of Collateral received by it to such portion
of the Senior Obligations as the Senior Notes Trustee lawfully may elect
consistent with the provisions of the Senior Documents.
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4. Rights to Payment.
(a) Except as restricted by clause (b) below, and without
modifying or limiting the restrictions set forth in Section 3 hereof, prior to
the commencement of, and following the expiration of, any Blockage Period, the
Junior Notes Trustee or any Paying Agent shall be entitled to: (i) demand,
receive, and retain scheduled payments of interest on the Junior Obligations as
the same shall come due and are payable in cash (as opposed to the scheduled
payments of interest thereon that are payable-in-kind, including by increases to
principal in accordance with the terms of the Subordinated Documents, which
shall in no event be restricted by this Agreement) in accordance with the terms
of the Subordinated Documents; and (ii) demand, receive and retain scheduled
installments or other payments of principal on the Junior Obligations as the
same shall come due in accordance with the terms of the Subordinated Documents.
(b) Under no circumstances shall the Borrower be entitled
to make, or the Junior Notes Trustee or any Junior Noteholder be entitled to
demand, take, receive, accept or retain, any prepayments (including payments due
as a result of any mandatory prepayment provisions of the Subordinated Documents
or the acceleration of the Junior Obligations) of principal, interest, or
premium on account of any of the Junior Obligations prior to the repayment in
full of the Senior Obligations.
5. Subordination.
Anything in the Junior Notes Indenture, the Junior Notes, or
the other Subordinated Documents to the contrary notwithstanding, the Junior
Notes Trustee and each Junior Noteholder by its acceptance of such Junior Note
agrees that the Junior Obligations are and shall be, to the extent set forth
below, subordinate and junior and subject in right of payment to the prior
payment in full of all Senior Obligations.
(a) Except in accordance with subsection (d) below, if
(i) the Borrower shall default in the payment of any Senior Obligations in
respect of principal or interest in accordance with the Senior Note Indenture
when the same becomes due and payable, whether at maturity or at a date fixed
for scheduled payment or by declaration or acceleration or otherwise (a "Payment
Default"), and (ii) the Junior Notes Trustee shall have received a Payment
Default Notice, then the Borrower shall not make and neither the Junior Notes
Trustee nor any Junior Noteholder shall accept or receive, except as otherwise
provided in the proviso set forth in Section 5(d), any direct or indirect
payment or distribution of any kind or character (whether in cash, securities,
assets, by set-off, or otherwise) on account of the Junior Obligations during
the Payment Blockage Period applicable to such Payment Default; provided,
however, that in the case of any payment on or in respect of any Junior
Obligation that would (in the absence of any such Payment Default Notice) have
been due and payable on any date (a "Scheduled Payment Date") during such
Payment Blockage Period, the provisions of this subsection (a) shall not prevent
(x) the making of such payment (a "Scheduled Payment") on or after the date
immediately following the termination of such Payment Blockage Period or (y) the
making of any payment-in-kind, including increases to the principal amount of
any of the Junior Notes. If the Junior Notes Trustee shall have received a
Payment Default Notice from or on behalf of the Senior Notes Trustee or, in
accordance with the Senior Indenture, the Senior Noteholders, then the Junior
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Notes Trustee and each Junior Noteholder shall, during the Standstill Period
applicable thereto, be prohibited from enforcing any of their default remedies
(other than accelerating the indebtedness evidenced by the Junior Notes or the
imposition of a default rate of interest, but including the right to exercise
set-off rights) with respect thereto (including any right to xxx the Borrower or
to file or participate in the filing of an involuntary bankruptcy petition
against the Borrower) until such Standstill Period shall cease to be in effect;
provided, however, that if the Junior Notes Trustee or any Junior Noteholder had
initiated an enforcement action prior to the commencement of such Standstill
Period at a time when the Junior Notes Trustee or such Junior Noteholder was
entitled to do so, then the Junior Notes Trustee or such Junior Noteholder, as
applicable, shall not be prevented during such Standstill Period from taking
those steps, but no others, with respect to such pending enforcement action as
are required by a mandatory provision of law. The Junior Notes Trustee and each
Junior Noteholder, upon the termination of any Standstill Period applicable
thereto, may, at its sole election, exercise any and all remedies available to
it under the Subordinated Documents or applicable law.
In the event that, notwithstanding the foregoing, the Borrower
shall make any payment to the Junior Notes Trustee or any Junior Noteholder
prohibited by the foregoing provisions of this subsection (a), then and in such
event such payment shall be segregated by the Junior Notes Trustee or such
Junior Noteholder and held in trust for the benefit of and immediately shall be
paid over to the Senior Notes Trustee (in the same form received, with all
necessary endorsements) for application against the Senior Obligations remaining
unpaid until the Senior Obligations are paid in full.
(b) Except under circumstances when the terms of
subsections (a) or (d) are applicable, if (i) an event of default other than a
Payment Default shall have occurred and be continuing under the Senior Documents
(a "Non-Payment Default"), and (ii) the Junior Notes Trustee shall have received
a Non-Payment Default Notice, then the Borrower shall not make and neither the
Junior Notes Trustee nor any Junior Noteholder shall accept or receive any
direct or indirect payment or distribution of any kind or character (whether in
cash, assets, securities, by set-off, or otherwise) on account of the Junior
Obligations during the Non-Payment Blockage Period applicable to such
Non-Payment Default; provided, however, that in the case of any Scheduled
Payment on or in respect of any Junior Obligation that would (in the absence of
any such Non-Payment Default Notice) have been due and payable on any Scheduled
Payment Date during such Non-Payment Blockage Period, the provisions of this
subsection (b) shall not prevent (x) the making of such Scheduled Payment on or
after the date immediately following the termination of such Non-Payment
Blockage Period or (y) the making of any payment-in-kind in accordance with the
Subordinated Documents, including increases to the principal amount of any of
the Junior Notes. If the Junior Notes Trustee shall have received a Non-Payment
Default Notice from or on behalf of the Senior Notes Trustee or, in accordance
with the Senior Indenture, the Senior Noteholders, then the Junior Notes Trustee
and each Junior Noteholder, during the Standstill Period applicable thereto,
shall be prohibited from enforcing any of their default remedies (other than
accelerating the indebtedness evidenced by the Junior Notes or the imposition of
a default rate of interest, but including the right to exercise set-off rights)
with respect thereto (including any right to xxx the Borrower or to file or
participate in the filing of an involuntary bankruptcy petition against the
Borrower) until such Standstill Period shall cease to be in effect; provided,
however, that if the Junior Notes Trustee or a Junior Noteholder had initiated
an enforcement action prior to the commencement of such Standstill Period at a
time
11
when the Junior Notes Trustee or such Junior Noteholder was entitled to do so,
then the Junior Notes Trustee or such Junior Noteholder, as applicable, shall
not be prevented during such Standstill Period from taking those steps, but no
others, with respect to such pending enforcement action as are required by a
mandatory provision of law. The Junior Notes Trustee and each Junior Noteholder,
upon the termination of any Standstill Period applicable thereto, may, at its
sole election, exercise any and all remedies available to it under the
Subordinated Documents or applicable law.
In the event that, notwithstanding the foregoing, the Borrower
shall make any payment to the Junior Notes Trustee or any Junior Noteholder
prohibited by the foregoing provisions of this subsection (b), then and in such
event such payment shall be segregated by the Junior Notes Trustee or such
Junior Noteholder and held in trust for the benefit of and immediately shall be
paid over to the Senior Notes Trustee (in the same form received, with all
necessary endorsements) for application against the Senior Obligations remaining
unpaid until the Senior Obligations are paid in full.
(c) Anything contained in Section 5(a) or 5(b) to the
contrary notwithstanding, no more than 8 Non-Payment Default Notices (including
"Non-Payment Default Notices" as defined in the Liquidity Facility Intercreditor
Agreement) may be sent to the Junior Notes Trustee (and any Non-Payment Default
Notices in excess of such number that are sent to the Junior Notes Trustee shall
be ineffective to commence a Non-Payment Blockage Period or a Standstill
Period); (iii) the aggregate number of days that the Junior Notes Trustee and
Junior Noteholders shall be subject to one or more Non-Payment Blockage Periods
(including "Non-Payment Blockage Periods" as defined in the Liquidity Facility
Intercreditor Agreement) shall not exceed 210 days in any 360 consecutive day
period; and (iv) the aggregate number of days that the Junior Notes Trustee or
the Junior Noteholders shall be subject to one or more Standstill Periods
(including "Standstill Periods" as defined in the Liquidity Facility
Intercreditor Agreement) shall not exceed 210 days in any 360 consecutive day
period. No Non-Payment Default that existed on the date of delivery of any
Non-Payment Default Notice or during the first 150 days of the Non-Payment
Blockage Period commenced by such notice shall be made the basis for a
subsequent Non-Payment Blockage Period or Standstill Period. No Non-Payment
Default or Payment Default that existed on the date of delivery of any Payment
Default Notice or during the first 150 days of the Payment Blockage Period
commenced by such notice shall be made the basis for a subsequent Non-Payment
Blockage Period, Payment Blockage Period or Standstill Period.
(d) Subject to the Liquidity Facility Intercreditor
Agreement, in the event of the institution of an Insolvency Proceeding relative
to the Borrower or its property, (Y) all Senior Obligations shall first be paid
in full before any payment is made by or on behalf of the Borrower on the Junior
Obligations; (Z) any payment or distribution of any kind or character (whether
in cash, securities, assets, by set-off, or otherwise) to which the Junior Notes
Trustee or Junior Noteholders would be entitled but for the provisions of this
subsection (d) (including, without limitation, any payment or distribution which
may be payable or deliverable to the Junior Notes Trustee or such Junior
Noteholders by reason of the payment of any other indebtedness of the Borrower
or its Subsidiaries being subordinated to payment of the Junior Obligations)
shall be paid or delivered by the Person making such payment or distribution,
whether a trustee in bankruptcy, a receiver, a liquidating trustee, or
otherwise, directly to the Senior Notes Trustee,
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for the benefit of the Senior Noteholders, to the extent necessary to make
payment in full of all Senior Obligations remaining unpaid; provided, however,
that no such delivery of stock or obligations that are issued pursuant to a plan
of reorganization pursuant to applicable bankruptcy law shall be required to be
made to the Senior Notes Trustee, if such stock or obligations are subordinate
and junior at least to the extent provided in this Section 5 to the payment of
all Senior Obligations then outstanding and to the payment of any stock or
obligations which are issued in exchange or substitution for any Senior
Obligations then outstanding. In the event that, in the circumstances
contemplated by this subsection (d), and notwithstanding the foregoing
provisions of this subsection (d) (but after giving effect to the proviso in
this subsection), the Junior Notes Trustee or Junior Noteholders shall have
received any such payment or distribution of any kind or character (whether in
cash, securities, assets, by setoff, or otherwise) that they are not entitled to
receive by the foregoing provisions, before all Senior Obligations are paid in
full, then and in such event such payment or distribution shall be segregated
and held in trust for the benefit of and immediately shall be paid over to the
Senior Notes Trustee, for the benefit of the Senior Holders, for application
against the payment of all Senior Obligations remaining unpaid until all such
Senior Obligations shall have been paid in full.
(e) If the Junior Notes Trustee or the Junior Noteholders
do not file a proper claim or proof of debt or other document or amendment
thereof in the form required in any proceeding under the Bankruptcy Code prior
to 30 days before the expiration of time to file such claim or other document or
amendment thereof, then, subject to the Liquidity Facility Intercreditor
Agreement, the Senior Notes Trustee shall have the right (but not the
obligation) in such proceeding, and hereby irrevocably is appointed lawful
attorney of the Junior Notes Trustee and the Junior Noteholders for the purpose
of enabling the Senior Notes Trustee to demand, xxx for, collect, receive and
give receipt for the payments and distributions in respect of the Junior
Obligations that are made in such proceeding and that are required to be paid or
delivered to the Senior Notes Trustee as provided in subsection (d), and to file
and prove all claims therefor and to execute and deliver all documents in such
proceeding in name of the Junior Notes Trustee or the Junior Noteholders or
otherwise in respect of such claims, as the Senior Notes Trustee reasonably may
determine to be necessary or appropriate.
(f) No right of any present or future holder of the
Senior Obligations 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
the Borrower, or by any non-compliance by the Borrower or by the Junior Notes
Trustee or any Junior Noteholder with the terms, provisions, and covenants of
this Agreement or the Subordinated Documents, regardless of any knowledge
thereof any such holder of the Senior Obligations may have or be otherwise
charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of the Senior Obligations may, at any time and from time
to time, without the consent of or notice to the Junior Notes Trustee or the
Junior Noteholders, without incurring responsibility to the Junior Notes Trustee
or the Junior Noteholders, and without impairing or releasing the subordination
provided in this Section 5 or the obligations of the Junior Notes Trustee or the
Junior Noteholders to the holders of the Senior Obligations, do any one or more
of the following: (i) change the manner, place, or terms of payment (including
any change in the rate of interest) or extend the time of payment of, or renew,
amend, modify, alter, or grant any waiver or release with respect to, or consent
to any departure from, any Senior Obligations or any instrument
13
evidencing the same or any agreement evidencing, governing, creating,
guaranteeing or securing any Senior Obligations; (ii) sell, exchange, release,
or otherwise deal with any property pledged, mortgaged or otherwise securing the
Senior Obligations; provided, that the proceeds of any such sale, exchange or
release are applied to the reasonable expenses incurred in connection therewith
and to the payment of the Senior Obligations until satisfied in full, and then
in accordance with the Subordinated Documents; (iii) release any Person liable
under or in respect of the Senior Obligations; (iv) fail or delay in the
perfection of Liens securing the Senior Obligations; (v) exercise or refrain
from exercising any rights against the Borrower and any other Person; or (vi)
amend, or grant any waiver or release with respect to, or consent to any
departure from, any guarantee for all or any of the Senior Obligations.
(g) The provisions of this Section 5 are for the purpose
of defining the relative rights of the holders of Senior Obligations on the one
hand, and the Junior Notes Trustee and the Junior Noteholders on the other hand,
and nothing herein shall impair, as between the Borrower and the Junior Notes
Trustee or the Junior Noteholders, the obligation of the Borrower, which is
unconditional and absolute, to pay to the holders thereof the principal thereof
and premium, if any, and interest thereon in accordance with their terms and the
provisions hereof, nor shall anything herein (other than the rights of the
Senior Notes Trustee herein) prevent the Junior Notes Trustee or the Junior
Noteholders from exercising all remedies against the Borrower or its assets
otherwise permitted by applicable law or under the Subordinated Documents upon
default thereunder (including the right to demand payment and xxx for
performance under the Junior Notes Indenture and of the Junior Notes and to
accelerate the maturity thereof). Upon payment in full of the Senior Obligations
and the termination of all obligations of the Senior Noteholders under the
Senior Documents, the Junior Notes Trustee or the Junior Noteholders shall be
subrogated (without any representation or warranty on the part of the Senior
Notes Trustee or any holder of Senior Obligations) to the rights of the holders
of the Senior Obligations to receive payments or distributions of assets of the
Borrower made on account of the Senior Obligations(and any security therefor)
until the Junior Obligations shall be paid in full, and, for the purposes of
such subrogation, no payments to the holders of Senior Obligations of any cash,
assets, stock, or obligations or other property to which the Junior Notes
Trustee or the Junior Noteholders would be entitled except for the provisions of
this Section 5 above shall, as between the Borrower, its creditors (other than
the holders of the Senior Obligations), and the Junior Notes Trustee or the
Junior Noteholders, be deemed to be a payment by the Borrower to the holders of
or on account of the Senior Obligations.
(h) The agreements contained in this Section 5 shall
continue to be effective or shall be automatically reinstated, as the case may
be, if at any time any payment (or any part of any payment) on the Senior
Obligations shall be returned by any holder of Senior Obligations under any
state or federal law upon or following the insolvency, bankruptcy, or
reorganization of the Borrower or otherwise, as though such payment had not been
made.
(i) The foregoing provisions of this Section 5 shall
constitute a continuing offer to all Persons who, in reliance upon such
provisions, become holders of Senior Obligations, and such provisions are made
for the benefit of, and may be enforced directly by, holders of the Senior
Obligations, who hereby are expressly stated to be intended beneficiaries of
this Section 5.
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6. Obligations Unconditional; Waivers, Covenants and Agreements
of the Junior Notes Trustee.
(a) All rights and interests of the Senior Notes Trustee
hereunder and all agreements and obligations of the Junior Notes Trustee
hereunder shall remain in full force and effect irrespective of:
(i) any lack of validity or enforceability of
the Senior Obligations, the Senior Lien, any Senior Document, or any other
document or agreement in respect of the Senior Obligations or the Senior Lien,
including without limitation, any exchange, release, or non-perfection of the
Senior Lien;
(ii) any change in the time, manner, or place of
payment, or in any other term, of all or any of the Senior Obligations(including
without limitation, any rescission, in whole or in part, by the Senior Notes
Trustee of any demand for payment of any Senior Obligations), or any
participation, sale, assignment, or other transfer of any of the Senior
Obligations, or any amendment, waiver, deferral, extension, renewal,
refinancing, replacement, refunding, acceleration, compromise, release,
alteration, supplementation, termination, or other modification, in whole or in
part, including any increase in the amount thereof (subject to the limitations
in the definition of Senior Obligations), whether by course of conduct or
otherwise, of the Senior Obligations or of the terms of the Senior Notes
Indenture, any other Senior Document or any other document or agreement relating
to the Senior Obligations or the Senior Lien; or
(iii) any other circumstances which otherwise
might constitute a defense available to, or a discharge of, the Borrower in
respect of the Senior Obligations or the Senior Lien, including without
limitation, the avoidance or disallowance in any bankruptcy, insolvency or other
like proceeding or otherwise, of the Senior Obligations or the Senior Lien.
(b) The Junior Notes Trustee, in its capacity as Junior
Notes Trustee and on behalf of the Junior Noteholders in its capacity as such
hereby waives (i) reliance by the Senior Notes Trustee upon the subordination
and other intercreditor arrangements set forth in this Agreement, and (ii) any
notice of the creation, renewal, extension, or accrual of any of the Senior
Obligations and notice of, or proof of reliance by, the Senior Notes Trustee
upon this Agreement. The Senior Obligations shall be deemed conclusively to have
been created, contracted, or incurred in reliance on this Agreement, and all
dealings between the Borrower, the Junior Notes Trustee, and the Senior Notes
Trustee shall be deemed to have been consummated in reliance upon this
Agreement.
(c) So long as the Senior Notes Trustee and the Senior
Noteholders act in accordance with the terms of this Agreement, the Junior Notes
Trustee, in its capacity as Junior Notes Trustee and on behalf of the Junior
Noteholders in its capacity as such, hereby waives any claim against the Senior
Notes Trustee or the Senior Noteholders with respect to, or arising out of, any
action or inaction or any error of judgment, negligence, or mistake, or
oversight whatsoever on the part of the Senior Notes Trustee or Senior
Noteholders or their respective directors, officers, employees, or agents (i)
with respect to any exercise of (or any delay in exercising, failure to exercise
or decision to refrain from exercising) any rights or remedies in respect of the
Senior Obligations and the Senior Lien under the Senior Documents or applicable
15
law, or (ii) in connection with any transaction relating to the Collateral.
Neither the Senior Notes Trustee nor the Senior Noteholders nor any of their
respective directors, officers, employees, or agents shall be liable for failure
to demand, collect, or realize upon any of the Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Borrower or any other person or entity or to
take any other action whatsoever with regard to the Collateral or any part
thereof, except as specifically provided in this Agreement.
(d) The Senior Notes Trustee and the Senior Noteholders
have not made, and do not hereby or otherwise make to the Junior Notes Trustee
or the Junior Noteholders, any representations or warranties, express or implied
(other than the Senior Notes Trustee's authority to enter into this Agreement
and to bind the Senior Noteholders hereby), nor do the Senior Notes Trustee or
the Senior Noteholders assume any liability to the Junior Notes Trustee or the
Junior Noteholders with respect to the financial or other condition of the
Borrower, the Borrower's title to, the value of, or any other matter in respect
of any Collateral or the enforceability, validity, priority, value or
collectability of the Senior Obligations, any Senior Document, the Senior Lien,
the Junior Obligations, the Subordinated Documents, or the Junior Lien.
(e) The Junior Notes Trustee and the Junior Noteholders
have not made, and do not hereby or otherwise make to the Senior Notes Trustee
or the Senior Noteholders, any representations or warranties, express or implied
(other than the Junior Notes Trustee's authority to enter into this Agreement
and to bind the Junior Noteholders hereby), nor do the Junior Notes Trustee or
the Junior Noteholders assume any liability to the Senior Notes Trustee or the
Senior Noteholders with respect to the financial or other condition of the
Borrower, the Borrower's title to, the value of, or any other matter in respect
of any Collateral or the enforceability, validity, priority, value or
collectability of the Senior Obligations, any Senior Document, the Senior Lien,
the Junior Obligations, the Subordinated Documents, or the Junior Lien.
7. Provisions Applicable After Bankruptcy.
The intercreditor and subordination arrangements set forth in
this Agreement, including without limitation, the subordination of the Junior
Obligations to the Senior Obligations and the subordination of the Junior Lien
to the Senior Lien, shall continue in full force and effect notwithstanding the
occurrence of any case under the Bankruptcy Code, and in furtherance thereof:
(a) the Senior Lien shall be reinstated to the extent the
Senior Notes Trustee or Senior Noteholders are required to turn over or
otherwise pay to the bankruptcy estate of the Borrower any amount of the Senior
Obligations(and as a result thereof any portion of the Senior Lien is released),
and the Senior Lien so reinstated shall have the same benefits hereunder as if
the Senior Obligations had never been paid;
(b) to the extent that the Junior Notes Trustee has or
acquires any rights under Section 363 or Section 364 of the Bankruptcy Code with
respect to the Junior Lien, (i) the Junior Notes Trustee agrees, as Junior Notes
Trustee and on behalf of the Junior Noteholders in its capacity as such, to only
assert such rights in a manner consistent with the provisions hereof, including
without limitation, in a manner consistent with the subordination, pursuant to
this
16
Agreement, of the Junior Lien to the Senior Lien, and (ii) the benefit of the
existence, acquisition, or assertion of any such rights shall be subject to the
subordination and other terms of this Agreement;
(c) in connection with any use of cash collateral of the
Senior Notes or of the Liquidity Facility or DIP Financing by the Liquidity
Facility subsequent to the commencement of a case under the Bankruptcy Code
(collectively, "DIP Financing"), the Junior Notes Trustee and the Junior
Noteholders shall be deemed to have consented to any DIP Financing and shall
have no further right to adequate protection in connection therewith, provided
that (i) the Junior Notes Trustee is granted (x) replacement Liens on property
that are subordinate and junior in all respects (on the same terms as are
provided herein) to the Liens of the Senior Notes Trustee granted in connection
with such DIP Financing, and (y) status as a holder of an administrative claim
of the same type as provided to the Senior Noteholders, but subordinate and
junior to any administrative claim granted to the Senior Noteholders, (ii) the
Junior Notes Trustee receives reimbursement for the reasonable fees and expenses
of a single counsel to the Junior Notes Trustee and (iii) the Junior Noteholders
receive reimbursement for the reasonable fees and expenses of a single counsel
to some or all of the Junior Noteholders;
(d) the Junior Notes Trustee is not entitled to seek
adequate protection except (i) as provided in subsection (c) above, and (ii)
with respect to DIP Financing (other than as described in subsection (c) above)
so long as such adequate protection is consistent with the subordination in this
Agreement; and
(e) nothing in this Agreement shall apply to claims of,
or payments to, the Junior Notes Trustee under or pursuant to Section 7.7 of the
Junior Notes Indenture (without giving effect to any subsequent amendments of
such section).
8. Further Assurances. The Borrower and the Junior Notes Trustee,
at the Borrower's expense and at any time from time to time, upon the reasonable
request of the Senior Notes Trustee, will promptly and duly execute and deliver
such further instruments and documents (including amendments to financing
statements filed against the Borrower stating that the rights of the Junior
Notes Trustee are subject to the terms hereof and together with such assignments
or endorsements as the Senior Notes Trustee may reasonably deem necessary) and
take such further actions as the Senior Notes Trustee may reasonably request for
the purposes of obtaining or preserving the full benefits of this Agreement and
of the rights and powers herein granted.
9. Provisions Define Relative Rights. This Agreement is intended
solely for the purpose of defining the relative rights of the Senior Notes
Trustee and the Senior Noteholders and the Junior Notes Trustee in respect of
the subordination of the Junior Obligations to the Senior Obligations and the
Collateral and no other Person or entity shall have any right, benefit or other
interest under this Agreement. Nothing contained in this Agreement is intended
to affect or limit, in any way whatsoever, the security interests, Liens, and
other rights that the Senior Notes Trustee, the Senior Noteholders and the
Junior Notes Trustee have under the Senior Documents and the Subordinated
Documents, respectively, insofar as the rights of the Borrower or any other
Person or entity are involved.
17
10. Termination of Agreement. Upon payment in full of the Senior
Obligations, this Agreement shall terminate, and the exercise of rights and
remedies by the Junior Notes Trustee in respect of the Collateral shall
thereafter be governed by the Subordinated Documents. If the Senior Notes
Trustee receives as part of any enforcement or collection proceedings any
amounts or property in excess of that required to pay the Senior Obligations in
full, then the Senior Notes Trustee shall pay to the Junior Notes Trustee as
promptly as is commercially reasonable all such amounts, in the same form as
received, with any necessary non-recourse endorsement.
11. Powers Coupled With An Interest.
(a) All powers, authorizations, and agencies contained in
this Agreement are coupled with an interest and are irrevocable until the Senior
Obligations are paid in full.
(b) The Senior Notes Trustee and the Junior Notes Trustee
are hereby authorized to demand specific performance of the provisions of this
Agreement when any party hereto has failed to comply with any terms or
provisions hereof, and each party waives any defense based on the adequacy of a
remedy at law that might be asserted as a bar to such remedy of specific
performance.
12. Notices.
(a) (i) All notices, requests and demands to or upon the
Senior Notes Trustee, the Senior Noteholders or the Borrower to be effective
shall be made in accordance with the provisions of the Senior Notes Indenture,
and (ii) all notices, requests, and demands to or upon the Junior Notes Trustee
to be effective shall be made in accordance with the provisions of the Junior
Notes Indenture. The Borrower shall give notice to the Junior Trustee of any
cure or waiver of any event of default under the Senior Documents.
(b) Notice to Trustee. The Borrower shall give prompt
written notice to each of the Senior and Junior Notes Trustees of any default or
event of default under any Senior Documents or Subordinated Documents or under
any agreement pursuant to which any Senior Documents or Subordinated Documents
may have been issued, or as to any other fact known to the Borrower which would
prohibit the making of any payment to or by the Senior or Junior Notes Trustee
in respect of the Senior or Junior Notes. Notwithstanding the provisions of this
clause (b) or any other provision of this Agreement or any other Senior
Documents, the Junior Notes Trustee shall not be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or by
the Junior Notes Trustee in respect of the Junior Notes pursuant to the
provisions of this clause (b) unless and until the Junior Notes Trustee shall
have received written notice thereof from the Borrower, or the Senior Notes
Trustee, and prior to the receipt of any such written notice, the Junior Notes
Trustee, subject to the provisions of Section 7.1 of the Junior Notes Indenture
solely in relation to the Junior Noteholders, shall be entitled in all respects
conclusively to assume that no such facts exist.
13. Counterparts. This Agreement may be executed by one or
more of the parties on any number of separate counterparts (including by
facsimile transmission), each of which shall constitute an original, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument.
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14. Severability. Any provision of this Agreement that 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 any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
15. Integration. This Agreement constitutes the entire agreement
of the parties hereto concerning the subject matter hereof and may not be
contradicted by evidence of prior, contemporaneous, or subsequent oral
agreements of the parties hereto. The parties hereto agree that, subject to the
provisions of the Trust Indenture Act of 1939, as amended, which shall govern
and control in the event, and to the extent, of any inconsistency with the terms
of this Agreement, the terms of this Agreement shall govern and control in the
event, and to the extent, of any inconsistency between the terms of this
Agreement and either of the Senior Documents or the Subordinated Documents.
16. Amendments in Writing; Cumulative Remedies.
(a) None of the terms or provisions of this Agreement may
be waived, amended, supplemented or otherwise modified except by a written
instrument executed and delivered by the Senior Notes Trustee and the Junior
Notes Trustee; it being expressly understood and agreed that the execution and
delivery of such instrument by the Borrower shall not be required unless it
creates additional burdens or obligations on the Borrower, but no such
additional burdens or obligations on the Borrower shall arise solely from any
change in the relative rights or obligations of the Senior Noteholders, the
Junior Noteholders, the Senior Notes Trustee or the Junior Notes Trustee or the
Senior Notes Trustee's or any Senior Noteholder's waiver of any rights in favor
of the Junior Notes Trustee or the Junior Noteholders.
(b) The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law. No failure to exercise, nor any delay
in exercising, on the part of the Senior Notes Trustee, any right, power or
privilege hereunder or under any Senior Document shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
17. Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns to the same extent as if any such successor or assign was
an original party hereto.
18. Expenses.
(a) The Borrower shall pay (i) all reasonable
out-of-pocket expenses incurred by each of the Senior Notes Trustee and the
Junior Notes Trustee, including the reasonable fees, charges, and disbursements
of a single counsel for each of the Senior Notes Trustee and the Junior Notes
Trustee, in connection with the preparation and administration of this
Agreement, and (ii) all reasonable out-of-pocket expenses incurred by the Senior
Notes Trustee, the Senior Noteholders, the Junior Notes Trustee and the Junior
Noteholders in connection with the enforcement or protection of any rights under
this Agreement, including the reasonable fees,
19
charges and disbursements of a single counsel for each of the Senior Notes
Trustee, some or all of the Senior Noteholders (not to exceed one counsel for
all Senior Noteholders), the Junior Notes Trustee and some or all of the Junior
Noteholders (not to exceed one counsel for all Junior Noteholders) in connection
with the enforcement or protection of any rights under this Agreement.
(b) Without limiting the indemnity obligations of the
Borrower under the Senior Notes Indenture or the indemnity obligations of the
Borrower under the Junior Notes Indenture, the Borrower shall pay, indemnify,
and hold the Senior Notes Trustee, the Senior Noteholders and the Junior Notes
Trustee and the Junior Noteholders (each such Person, an "Indemnitee") harmless
from and against any and all liabilities, obligations, losses, damages,
penalties, actions (whether sounding in contract, tort, or on any other ground),
judgments, suits, costs, expenses, or disbursements of any kind or nature
whatsoever (including without limitation fees, reasonable fees and disbursements
of any counsel for any Indemnitee) arising out of, in connection with, or as a
result of (i) the execution and delivery of this Agreement by the Borrower, or
(ii) any action taken or omitted to be taken by the Borrower with respect to
this Agreement, provided that such indemnity under clauses (i) and (ii) above
shall not be available to the extent such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, or disbursements
are determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or wilful misconduct of such
Indemnitee.
19. Governing Law; Jurisdiction. This Agreement shall be governed
by, and construed and interpreted in accordance with, the law of the State of
New York. Each party hereto agrees that all judicial proceedings brought against
it arising out of or relating to this Agreement or its obligations hereunder may
be brought in any state or federal court of competent jurisdiction in the State
of New York, County of New York, and accepts generally and unconditionally the
nonexclusive jurisdiction and venue of such courts.
20. No Fiduciary Duties Created. The Junior Notes Trustee shall
not be deemed to owe any fiduciary duty to the Senior Notes Trustee or to the
Senior Noteholders. The Senior Notes Trustee shall not be deemed to owe any
fiduciary duty to the Junior Notes Trustee or the Junior Noteholders. With
respect to the Senior Notes Trustee or the Senior Noteholders, the Junior Notes
Trustees undertake to perform or to observe only such of their covenants or
obligations as are specifically set forth in this Agreement and no implied
covenants or obligations with respect to the Senior Notes Trustee or the Senior
Noteholders shall be read into this Agreement against the Junior Notes Trustee.
21. NO JURY TRIAL. EACH PARTY HEREBY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING UNDER THIS
AGREEMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS
OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT, WHETHER NOW EXISTING OR
HEREAFTER.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
THE BANK OF NEW YORK,
a New York banking corporation,
as Senior Notes Trustee
By: _______________________________
Title:
BANK ONE TRUST COMPANY, N.A.
a national banking association
as Junior Notes Trustee
By: _______________________________
Title:
KOMAG, INCORPORATED,
a Delaware corporation
By: _______________________________
Title:
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