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EXHIBIT 4.3
EXECUTION VERSION
AMENDED AND RESTATED
SUBORDINATION AND INTERCREDITOR AGREEMENT
This AMENDED AND RESTATED
SUBORDINATION AND INTERCREDITOR AGREEMENT, dated as of June 1, 2007
is entered into by and among GLOBAL CROSSING LIMITED, an exempt
company with limited liability organized under the laws of Bermuda
(the “ Company ”), each other Grantor (as
defined below) from time to time party hereto, GOLDMAN SACHS CREDIT
PARTNERS L.P., in its capacity as administrative agent and
collateral agent under the Senior Debt Documents (as defined below)
(together with its successors and assigns in such capacity from
time to time, the “ Senior Agent ”), WELLS FARGO
BANK, NATIONAL ASSOCIATION, not in its individual capacity but
solely as trustee under the Subordinated Debt Documents (as defined
below) (together with its successors and assigns in such capacity
from time to time, the “ Trustee ”) and STT
CROSSING LTD. (“ STT ”), a company organized
under the laws of Mauritius, as the Subordinated Creditor (as
defined below). Capitalized terms used herein have the meanings set
forth in Section 1 below.
RECITALS
WHEREAS, the Company, the
other Grantors party thereto from time to time, the Senior Agent
and the Trustee have entered into that certain Subordination and
Intercreditor Agreement, dated as of May 9, 2007 (as amended,
restated, amended and restated, renewed, extended, supplemented
and/or otherwise modified to, but not including, the date hereof,
the “ Existing Intercreditor Agreement
”);
WHEREAS, the Company, the
other Grantors party thereto from time to time, the Senior Lenders
party thereto from time to time and the Senior Agent have entered
into that certain Credit and Guaranty Agreement, dated as of
May 9, 2007, as amended by Amendment No. 1 to Credit and
Guaranty, dated as of June 1, 2007 (as further amended,
restated, amended and restated, supplemented, modified and/or
Refinanced from time to time, the “ Senior Credit
Agreement ”), providing for the making of term
loans;
WHEREAS, the obligations
under the Senior Credit Documents of the Company and the other
Grantors from time to time party thereto, and all Hedging
Agreements with one or more Other Creditors, are secured by
substantially all the assets of the Company and such Grantors
pursuant to the Senior Security Documents;
WHEREAS, the Company, as
issuer, the other Grantors party thereto from time to time and the
Trustee have entered into that certain Indenture, dated as of
December 23, 2004 (as amended, restated, amended and restated,
supplemented, modified and/or Refinanced from time to time, in
accordance with this Agreement, including, without limitation,
pursuant to that certain Supplemental Indenture, dated as of the
date hereof the “ Indenture ”), pursuant to
which the Company has issued payable-in-kind notes (the “
PIK Notes ”);
WHEREAS, the obligations
under the Subordinated Debt Documents of the Company and the other
Grantors from time to time party thereto are secured by
substantially all the assets of the Company and the other Grantors
pursuant to the Subordinated Security Documents; and
Exhibit M
Page 2
WHEREAS, the parties hereto
desire to enter into this Agreement in order to subordinate the
payment obligations and Liens under the Subordinated Debt Documents
to the payment obligations and Liens under the Senior Debt
Documents, in each case on the terms and conditions set forth
herein;
NOW, THEREFORE, in
consideration of the foregoing, the mutual covenants and
obligations herein set forth and for other good and valuable
consideration, the sufficiency and receipt of which are hereby
acknowledged, the parties hereto, intending to be legally bound,
hereby agree that the Existing Intercreditor Agreement shall be and
is hereby amended and restated in its entirety as
follows:
SECTION 1. Definitions
.
1.1 Defined
Terms . As used in this Agreement, the following terms shall
have the following meanings:
“ Affiliate
” has the meaning set forth in the Senior Credit
Agreement.
“ Agreement
” means this Amended and Restated Subordination and
Intercreditor Agreement, as amended, restated, amended and
restated, renewed, extended, supplemented and/or otherwise modified
from time to time in accordance with the terms hereof.
“ Amendment
No. 1 Effective Date ” has the meaning set forth in
the Senior Credit Agreement.
“ Bankruptcy
Code ” means Title 11 of the United States Code entitled
“Bankruptcy,” as now and hereafter in effect, or any
successor statute.
“ Bankruptcy Law
” means the Bankruptcy Code and any similar federal, state or
foreign law for the relief of debtors.
“ Business Day
” means a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required
by law to close.
“ Cap Amount
” means $350,000,000, reduced by the amount of payments and
prepayments actually received by any Senior Creditor which resulted
in repayments of principal with respect to the Senior
Obligations.
“ Cash
Collateral ” has the meaning set forth in
Section 363(a) of the Bankruptcy Code.
“ Closing Date
” has the meaning set forth in the Senior Credit
Agreement.
“ Collateral
” means, collectively, Common Collateral and Specified
Collateral.
Exhibit M
Page 3
“ Common
Collateral ” means, at any time, all of the assets and
property of any Grantor, whether real, personal or mixed,
constituting both Senior Collateral and Subordinated
Collateral.
“ Company
” has the meaning set forth in the first paragraph of this
Agreement.
“ Comparable
Subordinated Security Document ” means, in relation to
any Common Collateral subject to any Lien created under any Senior
Security Document, that Subordinated Security Document which
creates a Lien on the same Common Collateral, granted by the same
Grantor.
“ Creditors
” means, collectively, the Senior Creditors and the
Subordinated Creditor.
“ Defaulting
Creditor ” has the meaning set forth in
Section 5.13(d) hereof.
“ Discharge of
Senior Credit Agreement Obligations ” means, except to
the extent otherwise provided in Section 5.12 hereof (and
subject to Section 6.5 hereof), (a) payment in full in
cash of the principal of and interest (including interest accruing
on or after the commencement of any Proceeding at the rate provided
for in the respective Senior Documents, whether or not such
interest would be allowed in any such Proceeding) and premium
(including, without limitation, any applicable prepayment penalty),
if any, on all Indebtedness outstanding under the Senior Credit
Documents, (b) payment in full in cash of all other Senior
Obligations (other than Other Obligations) that are due and payable
or otherwise accrued and owing at or prior to the time such
principal and interest are paid, and (c) termination of all
other commitments of the Senior Creditors under the Senior Credit
Documents.
“ Discharge of
Senior Obligations ” means, except to the extent
otherwise provided in Section 5.12 hereof (and subject to
Section 6.5 hereof), (a) payment in full in cash of the
principal of and interest (including interest accruing on or after
the commencement of any Proceeding at the rate provided for in the
respective Senior Credit Document, whether or not such interest
would be allowed in any such Proceeding) and premium (including,
without limitation, any applicable prepayment penalty), if any, on
all Indebtedness outstanding under the Senior Credit Documents,
(b) payment in full in cash of all other Senior Obligations
that are due and payable or otherwise accrued and owing at or prior
to the time such principal and interest are paid,
(c) termination (without any prior demand for payment
thereunder having been made or, if made, with such demand having
been fully reimbursed in cash) or cash collateralization (in an
amount and manner, and on terms reasonably satisfactory to the
Senior Agent) of all Hedging Agreements issued or entered into, as
the case may be, by any Senior Creditor permitted by the Senior
Credit Agreement and (d) termination of all other commitments
of the Senior Creditors under the Senior Credit
Documents.
“ Disposition
” has the meaning set forth in Section 5.2(a)(ii)
hereof.
“ Eligible
Purchaser ” has the meaning set forth in
Section 5.13(a) hereof.
Exhibit M
Page 4
“ Enforcement
Action ” shall mean any action to collect, or enforce
payment of, the Subordinated Obligations, or exercise any of the
remedies with respect to the Subordinated Obligations set forth in
any of the Subordinated Debt Documents or that otherwise may be
available to the Trustee or the Subordinated Creditor, either at
law or in equity, by judicial proceedings (including by filing a
Proceeding) or otherwise (including, without limitation, taking any
action under state or Federal law (including the UCC) to foreclose
upon, take possession of, sell any Collateral or otherwise exercise
remedies as a secured creditor); provided that the exercise
of any right or option to effect the PIK Conversion with respect to
any PIK Notes shall not constitute an Enforcement
Action.
“ Excluded
Obligations ” has the meaning set forth in the definition
of Senior Obligations.
“Exempt Subordinated
Costs and Expenses” means (i) a restructuring fee
equal to (a) $7,500,000 payable on or about the date hereof by
the Company to the Subordinated Creditor plus (b) the Consent
Warrants (as defined in the Recapitalization Agreement) to be
delivered by the Company to the Subordinated Creditor concurrently
with the consummation of the PIK Conversion or, if the Company
fails (and for reasons other than those due to a default of the
Subordinated Creditor under the Recapitalization Agreement) to
timely deliver the Consent Warrants pursuant to the terms of the
Recapitalization Agreement, the amount of $10,500,000 payable in
connection with the consummation of the PIK Conversion, plus
(c) any reasonable out-of-pocket costs and expenses of the
Subordinated Creditor reimbursable by the Company pursuant to
Section 4.1 of the Recapitalization Agreement which are paid
to or received by the Subordinated Creditor, (ii) any
out-of-pocket costs and expenses (including, without limitation,
reasonable legal fees) reimbursable by the Company to the Trustee,
and fees payable by the Company to the Trustee, in either case
pursuant to the terms of the Indenture and/or Subordinated Debt
Documents which are paid to or received by the Trustee and
(iii) so long as no Senior Acceleration Event has occurred and
no event of default under the Senior Debt Documents has occurred
and is continuing and no Proceeding under any applicable Bankruptcy
Law has been commenced, any reasonable out-of-pocket costs and
expenses of the Subordinated Creditor (including, without
limitation, reasonable legal fees and reasonable out-of-pocket
costs and expenses incurred by the Subordinated Creditor in
connection with its review of any request for a waiver under the
Subordinated Debt Documents) reimbursable by the Company pursuant
to the terms of the Indenture and/or Subordinated Debt Documents
which are paid to or received by the Subordinated
Creditor.
“ Existing
Intercreditor Agreement ” has the meaning set forth in
the recitals hereto.
“ Governmental
Authority ” means the government of the United States of
America or any other nation, or of any political subdivision
thereof, whether state or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other
entity exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or functions of or pertaining
to government (including any supra-national bodies such as the
European Union or the European Central Bank).
Exhibit M
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“ Grantors
” means the Company and each other Person that has executed
and delivered, or may from time to time hereafter execute and
deliver, a Senior Security Document or a Subordinated Security
Document.
“ Hedging
Agreements ” means and includes each Interest Rate
Protection Agreement and each Other Hedging Agreement.
“ Indebtedness
” means and includes all Obligations that constitute
“Indebtedness” within the meaning of the Senior Credit
Agreement or the Indenture.
“ Indenture
” has the meaning set forth in the recitals
hereto.
“ Interest Rate
Protection Agreement ” means any interest rate swap
agreement, interest rate cap agreement, interest rate collar
agreement, interest rate hedging agreement or other similar
agreement or arrangement.
“ Lien ”
means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement,
any financing or similar statement or notice filed under the UCC or
any similar recording or notice statute, and any lease having
substantially the same effect as the foregoing).
“ Loans ”
means “Loans” under, and as defined in, the Senior
Credit Agreement.
“ New Agent
” has the meaning set forth in Section 5.12
hereof.
“ Obligations
” means any and all obligations (including guaranty
obligations) with respect to the payment and performance of
(a) any principal of or interest or premium on any
indebtedness, including any reimbursement obligation in respect of
any letter of credit, or any other liability, including interest
that accrues on or after the commencement of any Proceeding of any
Grantor at the rate provided for in the respective documentation,
whether or not a claim for post-petition interest is allowed in any
such Proceeding, (b) any fees, indemnification obligations,
expense reimbursement obligations or other liabilities payable
under the documentation governing any indebtedness (including,
without limitation, the retaking, holding, selling or otherwise
disposing of or realizing on the Collateral), (c) any
obligation to post cash collateral in respect of letters of credit
or any other obligations, and (d) all performance obligations
under the documentation governing any indebtedness.
“ Other Creditor
” means (i) each Senior Lender, any Agent (as defined in
the Senior Credit Agreement), or any affiliate of the foregoing
(even if the respective Senior Lender or Agent subsequently ceases
to be a Senior Lender or Agent under the Senior Credit Agreement
for any reason) party to a Hedging Agreement with any Grantor and
(ii) the respective successors and assigns of each such Senior
Lender, Agent, affiliate or other financial institution referred to
in clause (i) above.
Exhibit M
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“ Other Hedging
Agreement ” means any foreign exchange contract, currency
swap agreement, commodity agreement or other similar arrangement
designed to protect against fluctuations in currency values or
commodity prices.
“ Other
Obligations ” means (i) the full and prompt payment
when due (whether at the stated maturity, by acceleration or
otherwise) of all obligations (including obligations which, but for
the automatic stay under Section 362(a) of the Bankruptcy
Code, would become due) and liabilities (including, without
limitation, indemnities, fees and interest thereon and all interest
that accrues on or after the commencement of any Proceeding at the
rate provided for in the respective Hedging Agreement, whether or
not a claim for post-petition interest is allowed in any such
Proceeding) of each Grantor owing to the Other Creditors, now
existing or hereafter incurred under, arising out of or in
connection with each Hedging Agreement (including all such
obligations and indebtedness under any guarantee to which each
Grantor is a party) and (ii) the due performance and
compliance by each Grantor with the terms, conditions and
agreements of each Hedging Agreement.
“ Permitted
Subordinated Debt Payments ” means (i) interest
payments on account of the Subordinated Indebtedness evidenced by
the PIK Notes but only to the extent made on a paid-in-kind or
accretion basis (and not made in cash), and (ii) the accrual
(and not payment in cash) of default interest on Subordinated
Obligations evidenced by the PIK Notes, in each instance, to the
extent then due and payable in accordance with the terms of the
Subordinated Debt Documents .
“ Person ”
means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership,
Governmental Authority or other entity.
“ PIK Conversion
” has the meaning set forth in Section 3.2(a)
hereof
“ PIK Notes
” has the meaning set forth in the recitals
hereto.
“ Post-Closing
Collateral Requirement ” has the meaning set forth in the
Senior Credit Agreement.
“ Post-Petition
Financing ” has the meaning set forth in Section 6.1
hereof.
“ Priority Lien
” has the meaning set forth in Section 5.2(b)
hereof.
“ Proceeding
” has the meaning set forth in Section 2.2(b)
hereof.
“ Purchase
Notice ” has the meaning set forth in
Section 5.13(b) hereof.
“ Recapitalization
Agreement ” means the Recapitalization Agreement, dated
as of May 9, 2007, between the Company and the Subordinated
Creditor, as amended as of the date hereof and in effect on the
date hereof.
“ Recovery
” has the meaning set forth in Section 6.5
hereof.
Exhibit M
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“ Refinance
” means, in respect of any indebtedness, to refinance,
extend, renew, defease, amend, modify, supplement, restructure,
replace, refund or repay, or to issue other indebtedness, in
exchange or replacement for, such indebtedness. “
Refinanced ” and “ Refinancing ”
shall have correlative meanings.
“ Remedial
Action ” has the meaning set forth in
Section 5.2(a)(i) hereof.
“ Reorganization
Subordinated Securities ” means any (i) equity
securities of the Company or any of its Subsidiaries and
(ii) notes or other debt securities issued in substitution of
all or any portion of the Subordinated Obligations that are
subordinated, including in right of payment, to the Senior
Obligations (or any notes or other securities issued in
substitution of all or any portion of the Senior Obligations) at
least to the same extent and, in the case of clause (ii), on
substantially the same terms, on which the Subordinated Obligations
are subordinated to the Senior Obligations pursuant to the terms of
this Agreement, and which securities have maturities and other
terms no less advantageous to the Grantors and Senior Creditors
than the terms contained in the Subordinated Debt
Documents.
“ Required Senior
Creditors ” means (i) at all times prior to the
occurrence of the Discharge of Senior Credit Agreement Obligations,
the Required Senior Lenders (or, to the extent required by the
Senior Credit Agreement, each of the Senior Lenders), and
(ii) at all times after the occurrence of the Discharge of
Senior Credit Agreement Obligations, the holders of at least the
majority of the then outstanding Other Obligations (determined by
the Senior Agent in such reasonable manner as is acceptable to
it).
“ Required Senior
Lenders ” means the “Requisite Lenders”
under, and as defined in, the Senior Credit Agreement.
“ Security
Documents ” means, collectively, the Senior Security
Documents and the Subordinated Security Documents.
“ Senior
Acceleration Event ” as the meaning set forth in
Section 2.2(a) hereof.
“ Senior Agent
” has the meaning set forth in the recitals
hereto.
“ Senior
Collateral ” means, at any time, all of the assets and
property of any Grantor, whether real, personal or mixed, with
respect to which a Lien is granted (or purported to be granted) as
security for any Senior Obligations pursuant to any Senior Debt
Document.
“ Senior Credit
Agreement ” has the meaning set forth in the recitals
hereto.
“ Senior Credit
Documents ” means the Senior Credit Agreement and the
other Credit Documents (as defined in the Senior Credit Agreement)
and each of the other agreements, documents and instruments
providing for or evidencing any other Senior Obligation and any
other document or instrument executed or delivered at any time in
connection with any Senior Obligation (including any intercreditor
or joinder agreement among holders of Senior Obligations but
excluding Hedging Agreements), to the extent such are effective at
the relevant time, as each may be amended, restated, amended and
restated, modified, supplemented, replaced and/or Refinanced from
time to time in accordance with the terms thereof and
hereof.
Exhibit M
Page 8
“ Senior
Creditors ” means, at any relevant time, the holders of
Senior Obligations at such time, including, without limitation, the
Senior Lenders, the Other Creditors, the Senior Agent and the other
agents and arrangers under the Senior Credit Agreement.
“ Senior Debt
Documents ” means and includes the Senior Credit
Documents and the Hedging Agreements entered into with one or more
Other Creditors.
“ Senior Lenders
” means the “Lenders” under, and as defined in,
the Senior Credit Agreement.
“ Senior
Obligations ” means (i) subject to the second
succeeding sentence herein, all Obligations outstanding under the
Senior Credit Agreement and the other Senior Credit Documents, and
(ii) all Other Obligations. “ Senior Obligations
” shall in any event include: (a) all interest accrued
or accruing (or which would, absent commencement of a Proceeding
(and the effect of provisions such as Section 502(b)(2) of the
Bankruptcy Code), accrue) on or after the commencement of a
Proceeding in accordance with the rate specified in the relevant
Senior Debt Document, whether or not the claim for such interest is
allowed or allowable as a claim in such Proceeding, (b) any
and all reasonable fees and expenses (including reasonable
attorneys’ and/or financial consultants’ fees and
expenses) incurred by the Senior Agent and the other Senior
Creditors on or after the commencement of a Proceeding, whether or
not the claim for fees and expenses is allowed or allowable under
Section 506(b) of the Bankruptcy Code or any other provision
of the Bankruptcy Code or Bankruptcy Law as a claim in such
Proceeding, and (c) all obligations for the payment of money
and liabilities of each Grantor under each Senior Debt Document to
which it is a party which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due. The
Senior Obligations shall not include (x) principal of Loans in
excess of the Cap Amount as in effect at the time incurred or
(y) any amount in clauses (a) through (c) of the
preceding sentence incurred in connection with the enforcement of
the excess amounts referred to in preceding clause
(x) (excluding, in either case, any such excess amounts
representing the capitalization of interest or fees or resulting
from fluctuations in currency values, which excess amounts shall be
Senior Obligations) (the Obligations described in clauses
(x) and (y), collectively, the “ Excluded
Obligations ”).
“ Senior Security
Documents ” means the Collateral Documents (as defined in
the Senior Credit Agreement) and any other agreement, document or
instrument pursuant to which a Lien is granted (or purported to be
granted) securing any Senior Obligations or under which rights or
remedies with respect to such Liens are governed, as the same may
be amended, supplemented, restated, modified and/or Refinanced from
time to time.
“ Service of Process
Agent ” means The Corporate Trust Company, presently
located at 1209 Orange Street, Wilmington , DE 19805.
“ Specified
Collateral ” means, at any time, all of the assets and
property of any Grantor, whether real, personal or mixed,
constituting Subordinated Collateral that do not also constitute
Senior Collateral.
Exhibit M
Page 9
“ Subordinated
Collateral ” means, at any time, all of the assets of the
Company or any of its Subsidiaries, whether real, personal or
mixed, with respect to which a Lien is granted (or purported to be
granted) as security for any Subordinated Obligations pursuant to
any Subordinated Debt Document (for the avoidance of doubt,
irrespective of whether any such Subsidiary is a party hereto or to
any Senior Debt Document).
“ Subordinated
Creditor ” means the Subordinated Creditor that is a
signatory hereto and, at any relevant time, the holders of
Subordinated Obligations at such time, including, without
limitation, the Subordinated Noteholders and any agents and
arrangers under the Indenture.
“ Subordinated Debt
Documents ” means the Indenture, the Security Documents
(as defined in the Indenture), the PIK Notes and each of the other
agreements, documents and instruments providing for or evidencing
any other Subordinated Obligation, and any other document or
instrument executed or delivered at any time in connection with any
Subordinated Obligation (but excluding, in any event, the
Recapitalization Agreement), as the same may be amended, restated,
modified and/or otherwise supplemented from time to time in
accordance with the terms hereof and thereof.
“ Subordinated
Noteholders ” means the “Holders” under and
as defined in the Indenture.
“ Subordinated
Obligations ” means all Obligations outstanding under the
Indenture and the other Subordinated Debt Documents. “
Subordinated Obligations ” shall in any event include:
(a) all interest accrued or accruing (or which would, absent
commencement of an Proceeding (and the effect of provisions such as
Section 502(b)(2) of the Bankruptcy Code), accrue) on or after
commencement of a Proceeding in accordance with the rate specified
in the relevant Subordinated Credit Document whether or not the
claim for such interest is allowed or allowable as a claim in such
Proceeding, (b) any and all reasonable fees and expenses
(including reasonable attorneys’ and/or financial
consultants’ fees and expenses) incurred by the Trustee and
the Subordinated Creditor on or after the commencement of a
Proceeding, whether or not the claim for fees and expenses is
allowed or allowable under Section 506(b) of the Bankruptcy
Code or any other provision of the Bankruptcy Code or Bankruptcy
Law as a claim in such Proceeding, and (c) all obligations for
the payment of money and liabilities of each Grantor under each
Subordinated Debt Document to which it is a party which, but for
the automatic stay under Section 362(a) of the Bankruptcy
Code, would become due.
“ Subordinated
Security Documents ” means the Security Documents (as
defined in the Indenture) and any other agreement, document,
mortgage or instrument pursuant to which a Lien is granted (or
purported to be granted) securing any Subordinated Obligations or
under which rights or remedies with respect to such Liens are
governed, as the same may be amended, supplemented, restated or
otherwise modified from time to time in accordance with the terms
hereof and thereof.
“ Subsidiary
” of any Person means and includes (i) any corporation
more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the
directors of such corporation (irrespective of whether or not at
the time
Exhibit M
Page 10
stock of any class or classes of such
corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person
directly or indirectly through Subsidiaries and (ii) any
partnership, limited liability company, association, joint venture
or other entity (other than a corporation) in which such Person
directly or indirectly through Subsidiaries, has more than a 50%
equity interest at the time.
“ Subsidiary
Guarantors ” means each Subsidiary of the Company which
enters into a guaranty of any Senior Obligations or Subordinated
Obligations.
“ Substantial
Completion of the Senior Collateral ” means the date on
which not less than 80% of the book value of the Collateral (as
determined by the Senior Agent in its reasonable discretion and
following receipt by the Senior Agent and the Subordinated Creditor
of a certificate of an authorized officer of the Company certifying
the same and setting forth in reasonable detail the related
calculations (such certificate to be delivered promptly by an
officer of the Company upon reaching such 80% threshold described
above)), becomes subject to a perfected Lien in favor of the Senior
Agent securing the Senior Obligations.
“ Trigger Date
” has the meaning set forth in Section 3.2(a)
hereof.
“ Trustee
” has the meaning set forth in the first paragraph of this
Agreement.
“ Uniform Commercial
Code ” or “ UCC ” means the Uniform
Commercial Code as from time to time in effect in the State of New
York.
1.2 Terms
Generally . The definitions of terms herein shall apply equally
to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words
“include”, “includes” and
“including” shall be deemed to be followed by the
phrase “without limitation.” The word
“will” shall be construed to have the same meaning and
effect as the word “shall”. Unless the context requires
otherwise (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to
time amended, supplemented or otherwise modified, (b) any
reference herein to any Person shall be construed to include such
Person’s successors and assigns, (c) the words
“herein”, “hereof” and
“hereunder”, and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any
particular provision hereof, (d) all references herein to
Exhibits or Sections shall be construed to refer to Exhibits or
Sections of this Agreement, (e) the words “asset”
and “property” shall be construed to have the same
meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities,
accounts and contract rights, (f) terms defined in the UCC but
not otherwise defined herein shall have the same meanings herein as
are assigned thereto in the UCC, (g) reference to any law
means such law as amended, modified, codified, replaced or
re-enacted, in whole or in part, and in effect on the date hereof,
including rules, regulations, enforcement procedures and any
interpretations promulgated thereunder, and (h) references to
Sections or clauses shall refer to those portions of this
Agreement, and any references to a clause shall, unless otherwise
identified, refer to the appropriate clause within the same Section
in which such reference occurs.
Exhibit M
Page 11
SECTION 2. Subordination
of Subordinated Obligations to Senior Obligations .
2.1
Subordination . The Subordinated Obligations, including all
payments of principal, interest, fees and all other amounts
thereunder are hereby, and shall continue to be, subject and
subordinate in right of payment to the prior payment in full, in
cash, of all Senior Obligations to the extent, and in the manner,
set forth herein. The foregoing shall apply notwithstanding the
availability of Collateral to the Senior Creditors, the Trustee or
the Subordinated Creditor or the actual date and time of execution,
delivery, recordation, filing or perfection of any security
interests granted with respect to the Senior Obligations or the
Subordinated Obligations, or the lien or priority of payment
thereof, and in any instance wherein the Senior Obligations or any
claim for the Senior Obligations is subordinated, avoided or
disallowed, in whole or in part, under the Bankruptcy Code or other
applicable federal, foreign, state or local law.
2.2 Restriction on
Enforcement by Subordinated Creditor; Payment Restrictions;
Proceedings; Etc . Each of the Trustee and the Subordinated
Creditor hereby agrees that until the Discharge of Senior
Obligations has occurred:
(a) Neither the Trustee nor
the Subordinated Creditor shall, without the prior written consent
of the Required Senior Creditors, which consent may be withheld or
conditioned in the Required Senior Creditors’ sole
discretion, commence, or join or participate in, any Enforcement
Action. Subject to the terms and conditions of Section 2.2(f),
(g), (h) and (i), if, as a result of an event of default under
the Senior Credit Agreement, the Senior Obligations have become or
are declared to be due and payable in full (a “ Senior
Acceleration Event ”) and an event of default has
occurred and is continuing under the Indenture, the Senior Agent
shall be entitled to instruct the Trustee or the Subordinated
Creditor in writing to pursue any Enforcement Action (or to cease
any such Enforcement Action after having been so instructed) with
respect to any Specified Collateral and the Trustee or Subordinated
Creditor shall use reasonable efforts to promptly comply with such
instructions. Notwithstanding any provision of the Subordinated
Debt Documents to the contrary and in addition to any other
limitations set forth herein or therein, no payment (whether in
cash, property, securities (other than Reorganization Subordinated
Securities) or otherwise) of principal, interest, premium or any
other amount due with respect to the Subordinated Obligations shall
be made or received, and neither the Trustee nor the Subordinated
Creditor shall exercise any right of set-off or recoupment with
respect to any Subordinated Obligations, until the Discharge of
Senior Obligations has occurred; provided , however ,
the Company may make, and the Trustee and the Subordinated Creditor
may accept and retain, Permitted Subordinated Debt Payments and
Exempt Subordinated Costs and Expenses.
(b) Until the Discharge of
Senior Obligations has occurred, in the event that any
distribution, division or application, partial or complete,
voluntary or involuntary, by operation of law or otherwise, is made
of all or any part of the property, assets or business of the
Company or any other Grantor or the proceeds thereof, in whatever
form, to any creditor or creditors of the Company or any other
Grantor or to any holder of indebtedness of the Company or any
other Grantor or by reason any liquidation, dissolution or other
winding up of the Company or any Grantor or their respective
businesses, or of any receivership or custodianship for the Company
or any other Grantor or of all or substantially all of their
respective property, or
Exhibit M
Page 12
of any insolvency or bankruptcy
proceedings or assignment for the benefit of creditors or any
proceeding by or against the Company or any other Grantor for any
relief under any bankruptcy, reorganization or insolvency law or
laws, federal, foreign, state or local, or any law, federal,
foreign, state or local relating to the relief of debtors,
readjustment of indebtedness, reorganization, composition or
extension (each, a “ Proceeding ”), then except
as contemplated by the last sentence of Section 2.2(a),
(i) no payment of any kind or character (whether in cash,
property, securities or otherwise (other than Reorganization
Subordinated Securities and Exempt Subordinated Costs and Expenses)
shall be made to or accepted by the Trustee or the Subordinated
Creditor in respect of the Subordinated Obligations and
(ii) any payment or distribution of any kind or character,
whether in cash, property, securities or otherwise (other than
Reorganization Subordinated Securities and Exempt Subordinated
Costs and Expenses), which, but for the terms hereof, otherwise
would be payable or deliverable in respect of the Subordinated
Obligations, shall be paid or delivered to the Senior Agent, and
each of the Trustee and the Subordinated Creditor irrevocably
authorizes, empowers and directs all receivers, trustees,
liquidators, custodians, conservators and others having authority
in the premises to effect all such payments and deliveries. In any
such event, the Trustee, on behalf of itself and each other
Subordinated Creditor, hereby (x) irrevocably authorizes
empowers and directs the Senior Agent to demand, sue for, collect
and receive every such payment or distribution, (y) agrees to
execute and deliver to the Senior Agent or its representative all
such further instruments confirming the authorization referred to
in immediately preceding clause (x) as the Senior Agent may
reasonably request and (z) irrevocably authorizes, empowers
and appoints the Senior Agent its agent and attorney-in-fact to
execute, verify, deliver and file any proofs of claim in respect of
the Subordinated Obligations in connection with any such Proceeding
upon the failure of such Person to do so 15 days before the
expiration of the time to file any such proof of claim;
provided , however , that the Senior Agent shall have
no obligation to execute, verify, deliver, and/or file any such
proof of claim. The Senior Obligations shall continue to be treated
as Senior Obligations and the provisions of this Agreement shall
continue to govern the relative rights and priorities of the Senior
Agent, each Senior Creditor, the Trustee and the Subordinated
Creditor even if all or part of the Senior Obligations or the Liens
securing the Senior Obligations are subordinated, set aside,
avoided or disallowed in connection with any such Proceeding. Each
of the Trustee and the Subordinated Creditor hereby agrees to not
exercise any and all rights that it may acquire by subrogation or
otherwise to any Lien of the Senior Obligations or any portion
thereof until the Discharge of Senior Obligations has
occurred.
(c) In any Proceeding,
neither the Trustee nor the Subordinated Creditor shall
(i) oppose, object to, or vote against any plan of
reorganization or disclosure statement, or join with or support any
third party in doing so, to the extent the terms of such plan or
disclosure statement comply with the following clause (ii) and
are otherwise consistent with the rights of the Senior Creditors
under this Agreement or (ii) support or vote for any plan of
reorganization or disclosure statement of any Grantor unless
(x) such plan provides for the payment in full in cash of all
Senior Obligations (including all post-petition interest, fees and
expenses as provided in Section 6.6 hereof) on the effective
date of such plan of reorganization, or (y) such plan provides
on account of the Senior Obligations for Liens for the benefit of
the Senior Creditors on all Collateral, and on all proceeds
thereof, and such plan also provides that any Liens retained by, or
granted to, the Trustee are only on assets or property securing the
Senior Obligations and shall have the same relative priority with
respect to the Collateral or other assets or property,
Exhibit M
Page 13
respectively, as provided in this
Agreement with respect to Common Collateral, and to the extent such
plan provides for deferred cash payments, or for the distribution
of any other property of any kind or nature, on account of the
Senior Obligations or the Subordinated Obligations, such plan
provides that any such deferred cash payments or other
distributions in respect of the Subordinated Obligations shall be
delivered to the Senior Agent and distributed in accordance with
the payment subordination provisions and Lien priorities provided
herein, it being understood that, in the event that any plan is
proposed by any debtor, creditor, or other party in interest in any
such Proceeding that is inconsistent with or purports to alter the
provisions of this Agreement, the Senior Agent shall be deemed to
have been granted, as of the date hereof, an irrevocable power of
attorney to vote the claims of the Subordinated Creditor against
any such plan, with such appointment being coupled with an
interest, and the Senior Agent shall be deemed the
“holder” of such claims within the meaning of
Section 1126(a) of the Bankruptcy Code. Except as provided in
this Section 2.2(c), the Subordinated Creditor shall remain
entitled to vote its claims in any such Proceeding.
(d) Neither the Trustee nor
the Subordinated Creditor shall pledge, assign, hypothecate,
transfer, convey or sell any Subordinated Obligations or any
interest in any Subordinated Obligations to any entity (other than
under the relevant Senior Security Documents or Subordinated
Security Documents and in accordance with the relevant requirements
of the Senior Credit Agreement to a Credit Party (as defined in the
Senior Credit Agreement) which is a party hereto) without the prior
written consent of the Senior Agent (with the prior written consent
of the Required Senior Creditors), provided that
Subordinated Creditor may assign some or all of the Subordinated
Obligations to any assignee or transferee so long as such assignee
or transferee acquiring any interest in the Subordinated
Obligations shall execute and deliver a written acknowledgment to
the Senior Agent of receipt of a copy of this Agreement and the
written agreement by such Person to be bound by the terms of this
Agreement.
(e) Upon the reasonable
request by the Senior Agent or the Required Senior Creditors, the
Trustee or the Subordinated Creditor, as applicable, shall within
ten (10) days furnish the Senior Creditors with a statement,
duly acknowledged and certified, setting forth the original
principal amount of the notes evidencing the Indebtedness with
respect to the Subordinated Obligations, the unpaid principal
balance, all accrued interest but unpaid interest and any other
sums due and owing thereunder, the rate of interest, the monthly
payments and further certifying that, to the best knowledge of the
Trustee or the Subordinated Creditor, there exist no defaults with
respect to any Subordinated Obligations, or if any such defaults
exist, specifying the defaults and the nature thereof.
(f) Notwithstanding anything
to the contrary contained herein, neither the Trustee nor the
Subordinated Creditor shall be required to take any action
(i) which is contrary to this Agreement, (ii) which is
contrary to applicable law, or (iii) if the Trustee and/or the
Subordinated Creditor have not received an indemnity or other
undertaking from the Senior Agent and/or the Required Senior
Creditors with respect to any claim, suit or cause of action of any
third party arising out of such action, which undertaking is
satisfactory to the Trustee and the Subordinated Creditor in their
reasonable discretion.
(g) Neither the Trustee nor
the Subordinated Creditor, nor any of their respective Affiliates,
shall be responsible to any Senior Creditor for (i) any
recitals, statements,
Exhibit M
Page 14
representations or warranties made by
the Company or any other Grantor contained in this Agreement, the
Indenture, the PIK Notes or any Subordinated Debt Documents or in
any certificate or other document referred to or provided for in,
or received by Trustee or Subordinated Creditor under, contained in
this Agreement, the Indenture, or any Subordinated Debt Documents,
(ii) the value, validity, effectiveness, genuineness,
enforceability or sufficiency of any Collateral, the Indenture, the
PIK Notes or any Subordinated Debt Documents or any other documents
referred to or provided for hereunder or thereunder, or (iii) any
failure by the Company or any Grantor to perform their respective
obligations hereunder or thereunder; provided ,
however , that nothing in this Section shall be deemed or
construed as limiting the rights of the Trustee or the Subordinated
Creditor or the obligations of the Company and/or the Grantors in
this Agreement, the Indenture, the PIK Notes or any Subordinated
Debt Documents.
(h) The Trustee shall be
entitled to advice of counsel and other professionals concerning
all matters relating to its duties hereunder, but the Trustee shall
not be answerable for the professional malpractice of any
attorney-at-law or certified public accountant or for the acts or
omissions of any other professional in connection with the
rendering of professional advice in accordance with the terms of
this Agreement. The Trustee may employ agents and attorneys-in-fact
and shall not be responsible for the acts or omissions of any of
such agents or attorneys-in-fact selected by it in good
faith.
(i) The Trustee shall not be
responsible to any Senior Creditor for any action taken or omitted
to be taken by it hereunder or under any Subordinated Debt
Document, or in connection herewith or therewith, except for its
own gross negligence or willful misconduct. The Trustee shall have
no fiduciary duty to any Senior Creditor.
2.3 Enforcement by
Senior Agent or Senior Creditors . In taking any Enforcement
Action or otherwise exercising any rights and remedies (with
respect to Collateral or otherwise) in accordance with the terms of
the Senior Debt Documents or the terms hereof, the Senior Agent and
the other Senior Creditors may enforce the provisions of the Senior
Credit Documents and (with respect to Specified Collateral) the
Subordinated Debt Documents and undertake Enforcement Actions in
such order and in such manner as they may determine in the exercise
of their sole discretion. Such exercise and enforcement shall
include the rights of an agent appointed by them to sell or
otherwise dispose of Collateral upon foreclosure, to incur expenses
in connection with such sale or disposition, and to exercise all
the rights and remedies of a secured creditor under the Uniform
Commercial Code of any applicable jurisdiction and of a secured
creditor under Bankruptcy Laws of any applicable
jurisdiction.
2.4 Incorrect
Payments; Payments from Enforcement Actions with respect to
Specified Collateral . If any payment (whether in cash,
property or securities, and including, without limitation, any
proceeds of any Collateral pursuant to the enforcement of any
Security Document or the exercise of any remedial provision
thereunder) (x) not permitted to be accepted by the Trustee or
the Subordinated Creditor under this Agreement or (y) received
by the Trustee or the Subordinated Creditor in connection with an
Enforcement Action undertaken pursuant to the second sentence of
Section 2.2(a) is received by the Trustee or the Subordinated
Creditor on account of any Subordinated Obligations prior to the
occurrence of the Discharge of Senior Obligations, such payment
shall not be commingled with any asset of such Person, shall be
held in trust by such Person for the benefit of the Senior Agent
and the other Senior
Exhibit M
Page 15
Creditors and shall be paid over to the
Senior Agent, or its designated representative, for application to
the payment of the Senior Obligations then remaining unpaid;
provided , however , that the Subordinated Agent or
the Subordinated Creditor shall be entitled to receive payment from
the Company for any Exempt Subordinated Costs and Expenses and/or
recoup from amounts realized by it in any Enforcement Action or
other exercise of rights or remedies with respect to Specified
Collateral pursuant to the second sentence of Section 2.2(a)
the amount of any reasonable out-of-pocket expenses incurred by it
in connection therewith.
SECTION 3. Priority of
Liens; Etc .
3.1 Subordination
of Liens, Etc . (a) Notwithstanding the date, manner or
order of grant, attachment or perfection of any Liens securing the
Subordinated Obligations granted on the Collateral or of any Liens
securing the Senior Obligations granted on the Collateral and
notwithstanding any provision of the UCC, or any applicable law or
the Subordinated Debt Documents or any other circumstance
whatsoever (including any non-perfection of any Lien purporting to
secure the Senior Obligations and/or Subordinated Obligations),
each of the Trustee and the Subordinated Creditor hereby agrees
that: (a) any Lien on Common Collateral securing any Senior
Obligations now or hereafter held by or on behalf of the Senior
Agent or any Senior Creditor or any agent or trustee therefor,
regardless of how acquired, whether by grant, possession, statute,
operation of law, subrogation or otherwise, shall be senior in all
respects and prior to any Lien on Common Collateral securing any of
the Subordinated Obligations; and (b) any Lien on Common
Collateral now or hereafter held by or on behalf of the Trustee,
the Subordinated Creditor or any agent or trustee therefor
regardless of how acquired, whether by grant, possession, statute,
operation of law, subrogation or otherwise, shall be junior and
subordinate in all respects to all Liens on Common Collateral
securing any Senior Obligations. All Liens on Common Collateral
securing any Senior Obligations shall be and remain senior in all
respects and prior to all Liens on Common Collateral securing any
Subordinated Obligations for all purposes, whether or not such
Liens securing any Senior Obligations are subordinated to any Lien
securing any other obligation of the Company, any other Grantor or
any other Person. The parties hereto acknowledge and agree that it
is their intent that the Senior Obligations (and the security
therefor) constitute a separate and distinct class (and separate
and distinct claims) from the Subordinated Obligations (and the
security therefor).
3.2 Conversion of
PIK Notes; Perfection of Senior Agent’s First-Priority
Lien . (a) The Subordinated Creditor shall promptly (but
in any event within 30 days) after the earlier to occur of
(x) Substantial Completion of the Senior Collateral and
(y) August 7, 2007 (the earlier of (x) and (y), the
“ Trigger Date ”), effect a conversion of the
PIK Notes to common stock and warrants of the Company pursuant to
the Indenture and the Recapitalization Agreement (the “
PIK Conversion ”), provided that, so long as
(i) an event of default under the Sections 7.1(i) or 7.1(j) of
the Indenture or Sections 8.1(f) or 8.1(g) of the Senior Credit
Agreement has occurred and is continuing or (ii) the
conditions precedent to the PIK Conversion in Section 5.1 of
the Recapitalization Agreement have not been satisfied, the
Subordinated Creditor may, but shall not be obligated to,
consummate the PIK Conversion. So long as any event described in
clause (i) or (ii) above remains continuing, consummation
of the PIK Conversion shall be at the sole option of the
Subordinated Creditor. The Company agrees
Exhibit M
Page 16
to use its best efforts to meet all
conditions precedent to the effectiveness of the PIK Conversion
under the Recapitalization Agreement. In the event that the PIK
Conversion has not been consummated because the Company has failed
to meet any condition precedent in Section 5.1 of the
Recapitalization Agreement, the Company shall continue to use its
best efforts to satisfy such condition(s) and consummate the PIK
Conversion as soon as possible.
(b) It is understood and
agreed that it is the intent of the parties that, as soon as
practicable following the Closing Date, all Senior Obligations
shall be secured by a perfected first-priority Lien on all
Collateral in accordance with the Post-Closing Collateral
Requirement. In furtherance of the foregoing, each of the Trustee
and the Subordinated Creditor agrees, upon the request of the
Senior Agent, promptly to enter into, execute and/or deliver any
agreements, filings, instruments or other documents reasonably
requested by the Senior Agent (including, without limitation,
(x) delivery of any Collateral in which a security interest
may be perfected by possession and (y) following the
occurrence of the PIK Conversion, releases of the Liens of the
Trustee in existence on the date hereof) and to otherwise use its
best efforts to permit the Senior Agent to obtain a first-priority
perfected Lien on all Collateral. This Section 3.2(b) shall
survive termination of this Agreement.
3.3 Prohibition on
Contesting Liens . Each of the Trustee and the Subordinated
Creditor and the Senior Agent, for itself and on behalf of each
Senior Creditor, agrees that it shall not (and hereby waives any
right to) contest or support any other Person in contesting, in any
proceeding (including any Proceeding), (i) the validity or
enforceability of any Security Document or any Obligation
thereunder, (ii) the validity, perfection, priority or
enforceability of the Liens, mortgages, assignments and security
interests granted pursuant to the Security Documents with respect
to the Senior Obligations or (iii) the relative rights and
duties of the holders of the Senior Obligations and the
Subordinated Obligations granted and/or established in this
Agreement or any other Security Document with respect to such
Liens, mortgages, assignments, and security interests;
provided , however , that nothing in this Agreement
shall be construed to prevent or impair the rights of the Senior
Agent or any other Senior Creditor to enforce this Agreement,
including the priority of the Liens securing the Senior Obligations
as provided in Section 3.1 hereof.
3.4 No New
Liens . So long as the Discharge of Senior Obligations has not
occurred, the parties hereto agree that the Company shall not, and
shall not permit any other Grantor to, grant or permit any
additional Liens, or take any action to perfect any additional
Liens, on any asset or property to secure any Subordinated
Obligation unless it has also granted a Lien on such asset or
property to secure the Senior Obligations and has taken all actions
to perfect such Liens. To the extent that the foregoing provisions
are not complied with for any reason, without limiting any other
rights and remedies available to the Senior Agent and/or the other
Senior Creditors, each of the Trustee and the Subordinated Creditor
agrees that any amounts received by or distributed to any of them
pursuant to or as a result of Liens granted in contravention of
this Section 3.4 shall be subject to Section 2.4
hereof.
SECTION 4. Lien
Enforcement .
4.1 Exercise of
Remedies . (a) Subject to the provisions of the second
sentence of Section 2.2(a) hereof, so long as the Discharge of
Senior Obligations has not
Exhibit M
Page 17
occurred, whether or not any Proceeding
has been commenced by or against the Company or any other Grantor:
(i) neither the Trustee nor the Subordinated Creditor will exercise
or seek to exercise any rights or remedies (including setoff) with
respect to any Collateral (including, without limitation, the
exercise of any right under any lockbox agreement, control account
agreement, landlord waiver or bailee’s letter or similar
agreement or arrangement to which the Trustee or any Subordinated
Creditor is a party) or institute or commence, or join with any
Person in commencing, any action or proceeding with respect to such
rights or remedies (including any action of foreclosure,
enforcement, collection or execution and any Proceeding), and will
not contest, protest or object to any foreclosure proceeding or
action brought by the Senior Agent or any other Senior Creditor or
any other exercise by the Senior Agent or any other Senior Creditor
of any rights and remedies relating to Collateral under the Senior
Credit Documents or otherwise, or object to the forbearance by the
Senior Agent or the other Senior Creditors from bringing or
pursuing any foreclosure proceeding or action or any other exercise
of any rights or remedies relating to Collateral; and (ii) the
Senior Agent shall have the exclusive right, and the Required
Senior Creditors shall have the exclusive right to instruct the
Senior Agent, to enforce rights, exercise remedies (including
set-off and the right to credit bid their debt) and make
determinations regarding the release, disposition, or restrictions
with respect to Collateral without any consultation with or the
consent of the Trustee or the Subordinated Creditor, all as though
the Subordinated Obligations did not exist; provided ,
however , that (A) in any Proceeding commenced by or against
the Company or any other Grantor, the Trustee may (x) subject to
the provisions of Section 2.2(b) hereof, file a claim or statement
of interest with respect to the Subordinated Obligations and (y)
subject to the provisions of Section 2.2(c) hereof, vote such
claim, (B) the Trustee, at the written direction of the
Subordinated Creditor, may take any action (not adverse to the
prior Liens on Common Collateral securing the Senior Obligations,
or the rights of the Senior Agent or the other Senior Creditors to
exercise remedies in respect thereof) in order to preserve or
protect its Lien on Collateral in accordance with the terms of this
Agreement (and, with respect to its Liens on Specified Collateral,
shall take any such action if instructed to do so by the Senior
Agent), (C) the Subordinated Creditor shall be entitled to file any
necessary responsive or defensive pleading in opposition to any
motion, claim, adversary proceeding or other pleading made by any
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