SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT is dated as of May 25, 2001 by
and among XXXXXX XXXXXXX LLC, a Delaware limited liability company (the
"COMPANY"), XXXXXX XXXXXXX LTD., a Bermuda corporation (the "PARENT"), and BANK
or. AMERICA, N.A., in its capacity as agent (the "AGENT") for the lenders (the
"LENDERS ") party to the Credit Agreement referred to below. Each capitalized
term used herein shall, unless other-wise defined herein, have the same meaning
given to such term in the Second Amended and Restated Revolving Credit Agreement
dated as of May 25, 2001 (as it may hereafter be amended, restated, supplemented
or otherwise modified from time to time, the "CREDIT AGREEMENT") by and among
the Company, the Borrowing Subsidiaries party thereto, the Guarantors party
thereto, the Lenders and the Agent.
WITNESSETH THAT:
WHEREAS, pursuant to the Credit Agreement, the Lenders intend
to extend certain credit facilities to the Borrowers as provided therein;
WHEREAS, the Company may hereafter become indebted to the
Parent (all present and future indebtedness of the Company to the Parent,
whether created directly or acquired by assignment or otherwise, and interest
and premiums, if any, thereon and other amounts payable in respect thereof are
hereinafter collectively referred to as the "INTERCOMPANY DEBT "); and
WHEREAS, the obligation of the Lenders to extend such credit
facilities to the Borrowers are subject to the condition, among others, that the
Company and the Parent subordinate the Intercompany Debt to the Obligations of
the Company to the Lenders pursuant to the Loan Documents (the "SENIOR DEBT") in
the manner set forth herein.
NOW, THEREFORE, intending to be legally bound hereby, the
parties hereto covenant and agree as follows:
1. INTERCOMPANY DEBT SUBORDINATED TO SENIOR DEBT. The recitals
set forth above are hereby incorporated by reference. All Intercompany Debt
shall be subordinate and subject in right of payment to the prior indefeasible
payment in full of all Senior Debt pursuant to the provisions contained herein.
2. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC. Upon any
distribution of assets of the Company (a) in the event of any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation, reorganization,
assignment for the benefit of creditors or other similar case or proceeding in
connection therewith, relative to the Company or to its assets, or (b) in the
event of any liquidation, dissolution or other winding up of the Company,
whether voluntary or involuntary and whether or not involving insolvency or
bankruptcy, or (c) in the event of any assignment for the benefit of creditors
or any marshalling of assets of the Company, then and in any such event the
Lenders shall be entitled to receive indefeasible payment in full of all amounts
due or to become due on or in respect of any and all Senior Debt before the
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holder of any Intercompany Debt owed by the Company is entitled to receive any
payment on account of the principal of, interest on or premiums on such
Intercompany Debt, and to that end the Lenders shall be entitled to receive, for
application to the payment of the Senior Debt, any payment or distribution of
any kind or character, whether in cash, property or securities, which may be
payable or deliverable in respect of the Intercompany Debt owed by the Company
in any such case, proceeding, dissolution, liquidation or other winding up or
event.
3. NO COMMENCEMENT OF ANY PROCEEDING. The Parent agrees that,
so long as the Senior Debt shall remain unpaid, it will not commence, or join
with any creditor other than the Lenders or the Agent on behalf of the Lenders
in commencing, any collection or enforcement proceeding against the Company.
4. PRIOR PAYMENT OF SENIOR DEBT UPON ACCELERATION OF
INTERCOMPANY DEBT. If any portion of the Intercompany Debt owed by the Company
becomes or is declared due and payable before its stated maturity, then and in
such event the Lenders shall be entitled to receive indefeasible payment in full
of all amounts due and to become due on or in respect of the Senior Debt
(whether or not an Event of Default has occurred under the terms of the Credit
Agreement or the Senior Debt has been declared due and payable prior to the date
on which it would otherwise have become due and payable) before the holder of
any such Intercompany Debt is entitled to receive any payment thereon.
5. NO PAYMENT WHEN SENIOR DEBT IN DEFAULT. At any time that
the subordination provisions contained in the Convertible Subordinated Notes
prohibit the Parent or the Company from making payments thereon, unless the
Required Lenders shall have consented to or waived the same and so long as any
of the Senior Debt shall remain outstanding, no payment shall be made by the
Company on account of the Intercompany Debt, whether in respect of principal,
interest or premiums.
6. PAYMENT PERMITTED IF NO DEFAULT. Nothing contained in this
Agreement shall prevent the Company, at any time, except during, the pendency of
any of the conditions described in Sections 2, 4 and 5 above, from making the
regularly scheduled payments (including premiums) of the Intercompany Debt, or
the retention thereof by the Parent of any money deposited with it for the
regularly scheduled payments of or on account of the Intercompany Debt.
7. RECEIPT OF PROHIBITED PAYMENTS. If, notwithstanding the
foregoing provisions of Sections 2, 4 and 5 above, the Parent receives any
payment or distribution of any kind on account of the Intercompany Debt at a
time when such payment is prohibited by such Section 2, 4 or 5, then and in such
event such payment or distribution shall be held in trust for the benefit of the
Lenders, shall be segregated from other funds and property held by the Parent,
and shall be forthwith paid over to the Agent for the benefit of the Lenders in
the same form as so received (with any necessary endorsement) to be applied (in
the case of cash) to or held as collateral (in the case of non-cash property)
for the payment or prepayment of the Senior Debt in accordance with the terms of
the Credit Agreement.
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8. RIGHTS OF SUBROGATION. The Parent agrees that no payment or
distribution to the Lenders pursuant to the provisions of this Agreement shall
entitle the Parent to exercise any rights of subrogation in respect thereof
until the Senior Debt shall have been indefeasibly paid in full and the
Commitments under the Credit Agreement shall have terminated.
9. INSTRUMENTS EVIDENCING INTERCOMPANY DEBT. At the request of
the Agent, the Parent shall cause each instrument which now or hereafter
evidences all or a portion of the Intercompany Debt to be conspicuously marked
as follows:
"This instrument is subject to the terms of a Subordination
Agreement dated as of May 25, 2001, in favor of Bank of
America, N.A., as Agent, which Subordination Agreement is
incorporated herein by reference. Notwithstanding any
contrary statement contained in the within instrument, no
payment on account of the principal thereof, interest
thereon or premium thereon shall become due or payable to
the extent such payment is prohibited to be made at such
time pursuant to the express terms of said Subordination
Agreement."
and promptly deliver such instrument to the Agent to be pledged under the
Security Agreement. At the Agent's request, the Parent will further xxxx its
books of account in such a manner as shall be effective to give proper notice to
the effect of this Agreement.
10. AGREEMENT SOLELY TO DEFINE RELATIVE RIGHTS. The purpose of
this Agreement is solely to define the relative rights of the Parent and the
Company, on the one hand, and the Lenders, on the other hand. Nothing contained
in this Agreement is intended to or shall (1) prevent the Parent from exercising
all remedies otherwise permitted by applicable law upon default under any
agreement pursuant to which the Intercompany Debt is created, subject to
Sections 2, 3, 4, 5 and 6 hereof, including, without limitation, the rights
under this Agreement of the Lenders to receive cash, property or securities
otherwise payable or deliverable with respect to the Intercompany Debt or (ii)
modify the obligations of the Company in respect of the Intercompany Debt, which
obligations remain unconditional and in full force and effect.
11. NO IMPLIED WAIVERS OF SUBORDINATION. No right of the
Lenders 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 Parent
or the Company, by any act or failure to act by any Lender, or by any
non-compliance by the Parent or the Company with the terms, provisions and
covenants of any agreement pursuant to which the Intercompany Debt is created,
regardless of any knowledge thereof any Lender may have or be otherwise charged
with. The Parent and the Company by its acceptance hereof agree that, so long as
there is Senior Debt outstanding or any Commitment is in effect under the Credit
Agreement, the Parent and the Company shall not agree to sell, assign, pledge,
encumber or otherwise dispose of, the obligations of the Intercompany Debt,
other than by means of payment of such Intercompany Debt according to its terms,
without the prior written consent of the Agent.
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Without in any way limiting the generality of the foregoing
paragraph, in accordance with the Credit Agreement, the Agent on behalf of the
Lenders, the Lenders, or the Required Lenders, as the case may be, at any time
and from time to time, without the consent of or notice to the Parent or the
Company, except to the extent required by the Credit Agreement or the other Loan
Documents, without incurring responsibility to the Parent or the Company and
without impairing or releasing the subordination provided in this Agreement or
the obligations hereunder of the Parent and the Company to the Lenders, may do
any one or more of the following- (i) change the manner, place or terms of
payment, or extend the time of payment, renew or alter the Senior Debt or
otherwise amend, restate, supplement or otherwise modify the Senior Debt or the
Credit Documents; (ii) release any collateral or any person liable in any manner
for the payment or collection of the Senior Debt; and (ill) exercise or refrain
from exercising any rights against the Parent, the Company and any other person
or entity.
12. CONTINUING FORCE AND EFFECT. This Agreement shall continue
in force until all of the Senior Debt is indefeasibly paid in full and the
Commitments under the Credit Agreement have terminated, it being contemplated
that this Agreement be of a continuing nature.
13. MODIFICATION, AMENDMENTS OR WAIVERS. Any and all
agreements amending or changing any provision of this Agreement or the rights of
the Agent on behalf of the Lenders or the Lenders hereunder, and any and all
waivers or consents to any departures from the due performance of the Parent or
the Company hereunder shall be made only by written agreement, waiver or consent
signed by the Agent, the Parent and the Company.
14. EXPENSES. In accordance with the Credit Agreement, the
Parent and the Company each unconditionally and jointly and severally agree upon
demand to pay to the Agent the amount of any and all reasonable and necessary
out-of-pocket costs, expenses and disbursements including but not limited to
reasonable fees and expenses of counsel, which may be incurred by the Lenders in
connection with (a) the exercise or enforcement of any of the rights of the
Lenders hereunder, or (b) the failure by the Parent and the Company to perform
or observe any of the provisions hereof.
15. SEVERABILITY. The provisions of this Agreement are
intended to be severable. If any provision of this Agreement shall be held
invalid or unenforceable in whole or in part in any jurisdiction, such provision
shall, as to such jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without in any manner affecting, the validity or
enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
16 GOVERNING LAW. This Agreement shall be a contract under the
internal laws of the State of New York and for all purposes shall be construed
in accordance with the laws of said State without giving effect to its conflicts
of law principles.
17. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of the Lenders and their respective successors and assigns, and the
obligations of the Parent and the Company shall be binding upon their respective
successors and assigns. The duties and obligations of the Parent or the Company
may not be delegated or transferred by it.
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18. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which, when executed and delivered, shall be deemed an original, but all
such counterparts shall constitute but one and the same instrument.
19. ATTORNEYS-IN-FACT. The Parent and the Company each hereby
authorize and empower the Agent, at its election and in the name of either
itself, or in the name of the Parent and the Company after an Event of Default,
to execute and file proofs and documents and take any other action the Agent may
deem advisable to enforce the Lenders' interests relating to the Intercompany
Debt created hereunder and their right of enforcement thereof as set forth
herein, and to that end the Parent and the Company each hereby irrevocably make,
constitute and appoint the Agent, its officers, employees and agents, or any of
them, with full power of substitution, as the true and lawful attorney-in-fact
and agent of the Parent and the Company and with full power for the Parent and
the Company and in the name, place and stead of the Parent and the Company for
the purpose of carrying out the provisions of this Agreement and taking any
action and executing, delivering, filing and recording any instruments which the
Agent may deem necessary or advisable to accomplish the purposes hereof, which
power of attorney, being given for security, is coupled with an interest and
irrevocable. The Parent and the Company each hereby ratifies and confirms and
agrees to ratify and confirm all action taken by the Agent, its officers,
employees or agents pursuant to the foregoing power of attorney.
20. APPLICATION OF PAYMENTS. In the event any payments are
received by the Agent on behalf of the Lenders or any Lender under the terms of
this Agreement for application to the Senior Debt at any time when the Senior
Debt has not been declared due and payable and prior to the date on which it
would otherwise become due and payable, such payment shall constitute a
voluntary prepayment of the Senior Debt for all purposes under the Credit
Agreement.
21. REMEDIES. In the event of a breach by either the Parent or
the Company in the performance of any of the terms of this Agreement, the Agent
on behalf of the Lenders or any Lender may demand specific performance of this
Agreement and seek injunctive relief and may exercise any other remedy available
at law or in equity, it being recognized that the remedies of the Lenders at law
may not fully compensate the Lenders for the damages it may suffer in the event
of a breach hereof.
22 CONSENT TO JURISDICTION, WAIVER OR JURY TRIAL. THE PARENT
AND THE COMPANY EACH HEREBY IRREVOCABLY CONSENT TO THE NONEXCLUSIVE JURISDICTION
OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY AND ITIE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND THE PARENT AND THE
COMPANY EACH WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT TO THE FULL EXTENT PERMITTED BY LAW.
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WITNESS the due execution hereof as of the day and year
first above written.
XXXXXX XXXXXXX LTD.
By: /S/ XXXXXX X. XXXXXX
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Title: Chief Financial Officer
XXXXXX XXXXXXX LLC
By: Foreign Holdings Ltd.,
its sole member
By: /S/ XXXXXX X. XXXXXX
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Title: Vice President
AGREED AND ACCEPTED:
BANK OF AMERICA, N.A.
By: /S/ XXXXXX X. XXXXXXXX
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Title: MANAGING DIRECTOR
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