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EXHIBIT 10.59
CONFORMED AS EXECUTED
INTERCREDITOR AGREEMENT
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INTERCREDITOR AGREEMENT (as amended, modified or supplemented
from
time to time, this
"Agreement"), dated as of December 22, 2003, among
Morgan
Stanley & Co.,
Incorporated, as Collateral Agent (as defined in below) for
the
benefit of the First Lien
Creditors (as defined below), Morgan Stanley Senior
Funding, Inc., as
Administrative Agent (as defined in below) for the benefit
of
the Bank Lender Creditors (as
defined below), Citibank, N.A., as the Overdraft
Creditor (as defined below),
and The Bank of New York, as trustee (together with
any successor trustee, the
"Additional Senior Secured Notes Trustee") for its
benefit and the benefit of
the holders from time to time of the Additional
Senior Secured Notes (as
defined below), and acknowledged and agreed to by the
US Credit Parties (as defined
in, or incorporated by reference into, the US
Security Agreement referred
to below) from time to time party hereto.
Capitalized terms used herein
shall have the meaning specified in Section 9
hereof or, if not defined
therein, as specified in (or incorporated by reference
into) the US Security
Agreement (as defined in the Bank Credit Agreement
referred to
below).
WITNESSETH:
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WHEREAS, Resolution Performance Products Inc. ("Holdings"),
Resolution
Performance Products LLC
("RPP USA"), RPP Capital Corporation ("US Finance
Corp." and, together with RPP
USA, the "US Borrowers" and each, a "US
Borrower"), Resolution Europe
B.V. (formerly known as Resolution Nederland B.V.)
(the "Dutch Borrower" and,
together with the US Borrowers, the "Borrowers" and
each, a "Borrower"), the
lenders from time to time party thereto (the
"Lenders"), Salomon Smith
Barney Inc., as Syndication Agent, JPMorgan Chase Bank
(formerly known as Morgan
Guaranty Trust Company of New York), as Documentation
Agent, and Morgan Stanley
Senior Funding, Inc., as Lead Arranger, sole Book
Manager and Administrative
Agent (in such capacity, together with any successor
administrative agent, the
"Administrative Agent"), have entered into a Credit
Agreement, dated as of
November 14, 2000 (as amended, modified, extended,
renewed, replaced, restated,
supplemented or refinanced from time to time, and
including any agreement
extending the maturity of, or refinancing or
restructuring (including, but
not limited to, the inclusion of additional
borrowers or guarantors
thereunder or any increase in the amount borrowed
thereunder) all or any
portion of the indebtedness under such agreement or any
successor agreement, whether
or not with the same agent, trustee,
representative, lenders,
holders or group of lenders or holders, the "Bank
Credit Agreement"), providing
for the making of Loans to the Borrowers and the
issuance of, and
participation in, Letters of Credit for the account of the
US
Borrowers as contemplated
therein (the Lenders, the Administrative Agent, each
Letter of Credit Issuer and
the Collateral Agent are herein called the "Bank
Lender
Creditors");
WHEREAS, each Borrower or another Assignor has entered into, or may
at
any time and from time to
time after the date hereof enter into or guaranty the
obligations of one or more
other Assignors or Subsidiaries thereof under, one or
more Interest Rate Protection
Agreements or Other Hedging Agreements with one or
more Bank Lender Creditors or
any affiliate thereof (each such Bank Lender
Creditor or affiliate, even
if the respective Bank Lender Creditor subsequently
ceases to be a Lender under
the Bank Credit Agreement for any reason, together
with such Bank Lender
Creditor's or affiliate's successors and assigns, if
any,
collectively, the "Other
Creditors");
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WHEREAS, RPP USA, one or more Wholly-Owned Subsidiaries of RPP USA
and
Citibank, N.A. (or any
successor by merger thereto) and/or one or more of its
banking affiliates or another
bank reasonably satisfactory to the Administrative
Agent (collectively, the
"Overdraft Creditors" and, together with the Bank
Lender Creditors and the
Other Creditors, the "Senior First Lien Creditors")
have entered into, or in the
future may enter into, a credit arrangement (as
amended, modified,
supplemented, replaced or refinanced from time to time,
the
"Overdraft Agreement"),
providing for (i) the extension of a line of credit or
an overdraft facility (the
"Overdraft Line") to RPP USA and such Wholly-Owned
Subsidiaries in the aggregate
principal amount not to exceed $20,000,000 at any
time outstanding and (ii) the
guaranty by the respective Assignors of the
obligations of one another
thereunder (although no Foreign Subsidiary of RPP USA
shall guaranty the
obligations of RPP USA or a Domestic Subsidiary
thereunder)
(each, an "Overdraft
Guaranty" and, collectively, the "Overdraft
Guarantees");
WHEREAS, the US Borrowers and the Additional Senior Secured
Notes
Trustee have entered into an
Indenture, dated as of December 22, 2003 (as
amended, modified, extended,
renewed, replaced, restated, supplemented or
refinanced from time to time,
and including any agreement extending the maturity
of, or refinancing or
restructuring (including, but not limited to, the
inclusion of additional
borrowers, issuers or guarantors thereunder or any
increase in the amount
borrowed thereunder) all or any portion of the
indebtedness under such
Indenture or any successor agreement whether or not with
the same trustee,
representative, agent, lenders, holders or group of lenders
or
holders, the "Note Credit
Agreement" and, together with the Bank Credit
Agreement, collectively, the
"Credit Agreement"), providing for (i) the issuance
by the US Borrowers of their
8% Senior Secured Notes due December 15, 2009 (the
"Additional Senior Secured
Notes") to the holders thereof from time to time
(such holders, the
"Additional Senior Secured Noteholders" and, together
with
the Additional Senior Secured
Notes Trustee, the "Junior First Lien Creditors";
and the Junior First Lien
Creditors, together with the Senior First Lien
Creditors, the "First Lien
Creditors") and (ii) the guaranty by any future US
Credit Party that is a
Subsidiary Guarantor of the US Borrowers' obligations
under the Note Credit
Agreement and the Additional Senior Secured Notes (each
such guaranty, together with
the Note Credit Agreement and the Additional Senior
Secured Notes, are herein
called the "Note Credit Documents");
WHEREAS, pursuant to each Guaranty entered into pursuant to the
Bank
Credit Agreement, each US
Credit Party that is a party thereto has guaranteed to
the Bank Lender Creditors and
the Other Creditors the payment and performance
when due of all Guaranteed
Obligations, all US Guaranteed Obligations or all
Dutch Guaranteed Obligations,
as the case may be, as described in each such
Guaranty;
WHEREAS, pursuant to the US Security Agreement and the US
Pledge
Agreements, each US Credit
Party thereto has granted to the Collateral Agent a
security interest in the
Collateral for the benefit of the First Lien Creditors
and the Second Lien Creditors
(although the Note Lender Creditors do not have a
security interest in the
Additional Senior Secured Notes Excluded Collateral and
the Second Lien Creditors do
not have a security interest in the Second Lien
Excluded
Collateral);
WHEREAS, pursuant to the Fifth Amendment to the Bank Credit
Agreement,
dated as of December 15,
2003, the Required Secured Creditors (determined before
giving effect
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to the amendment to the US
Security Agreement dated as of December 22, 2003)
have authorized the
Administrative Agent and the Collateral Agent to enter
into
this Agreement;
WHEREAS, pursuant to the Note Credit Agreement, the Additional
Senior
Secured Notes Trustee has
agreed to enter into (and to be bound by), and the
Additional Senior Secured
Noteholders have authorized the Additional Senior
Secured Notes Trustee to
enter into (on their behalf) (and to be bound by), this
Agreement, in each case on
the terms and conditions provided for herein; and
WHEREAS, the First Lien Creditors wish to enter into this
Agreement
to, inter alia, set forth the
rights, benefits and privileges, as among the
First Lien Creditors, in
respect of the Collateral, this Agreement, the US
Security Agreement and the US
Pledge Agreements;
NOW, THEREFORE, it is agreed:
1.
Appointment; etc. (a) The Junior First Lien Creditors, by
their
acceptance of the benefits of
the US Security Agreement and each US Pledge
Agreement hereby (x)
irrevocably designate Morgan Stanley & Co., Incorporated
as
Collateral Agent (and any
successor Collateral Agent) to act as specified herein
and in the applicable US
Security Documents, (y) agree to all of the provisions
of this Agreement and (z)
agree to all of the provisions of the applicable US
Security Documents
(including, without limitation, to all of the provisions
of
Annex N to the US Security
Agreement). Each Junior First Lien Creditor hereby
irrevocably authorizes, and
each holder of any Junior First Lien Obligation by
the acceptance of such Junior
First Lien Obligation and by the acceptance of the
benefits of the applicable US
Security Documents shall be deemed irrevocably to
authorize, the Collateral
Agent to take such action on its behalf under the
provisions of this Agreement
and the applicable US Security Documents and any
instruments and agreements
referred to herein and therein and to exercise such
powers and to perform such
duties thereunder as are specifically delegated to or
required of the Collateral
Agent by the terms hereof or thereof and such other
powers as are reasonably
incidental thereto. The Collateral Agent may perform
any of its duties hereunder
or thereunder by or through its affiliates, agents,
sub-agents or
employees.
(b) Each Senior
First Lien Creditor (by their acceptance of the
benefits of the applicable
Security Documents) also agrees to the provisions of
this Agreement.
2.
Priorities with Respect to the Collateral. The Junior First
Lien
Creditors hereby acknowledge
and agree that all Obligations shall be secured
pursuant to the Security
Documents in accordance with the terms thereof,
provided that,
notwithstanding anything to the contrary contained in any
Secured
Debt Agreement (including any
Security Document)), as between the Senior First
Lien Creditors and the Junior
First Lien Creditors, the following priorities and
other rights, benefits and
privileges with respect to the Collateral and the
applicable Security Documents
shall apply:
(i) the security
interests granted pursuant to the applicable
Security
Documents (x) for the benefit of the Senior First Lien
Creditors
shall be senior
in priority in all respects to the security interests
granted pursuant
thereto for the benefit of the Junior First Lien
Creditors
and (y) for the
benefit of the Junior First Lien Creditors shall be
junior,
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subordinate and
subject in all respects to the security interests
granted
under the
applicable Security Documents for the benefit of the Senior
First
Lien
Creditors;
(ii) the Junior First
Lien Creditors agree that (x) all of their
rights, benefits
and privileges afforded to them hereunder and under the
applicable
Security Documents are expressly subject to the terms
and
conditions of
this Agreement and (y) they shall not be entitled to
receive
any of the
proceeds or other distributions in respect of (or from)
any
Collateral until
all Senior First Lien Obligations have been paid in full
in cash in
accordance with the terms thereof (including, without
limitation, all
interest that accrues after the commencement of any
case,
proceeding or
other action relating to the bankruptcy, insolvency,
reorganization
or similar proceeding of any US Credit Party at the rate
provided for in
the respective documentation for the Senior First Lien
Obligations,
whether or not a claim for post-petition interest is
allowed
in any such
case, proceeding or other action or under applicable
law);
(iii) until all Senior First Lien Obligations have been paid in
full
in cash in
accordance with the terms thereof, all Letters of Credit
under
the Bank Credit
Agreement have been terminated, the Total Commitment
under
the Bank Credit
Agreement has been terminated, all Interest Rate
Protection
Agreements and
Other Hedging Agreements entered into with Other
Creditors
have been
terminated and each Overdraft Agreement has been terminated,
each
Junior First
Lien Creditor hereby agrees (A) to the extent that any
amendment,
modification, change, waiver, consent, release or variance
to
any of the
Security Documents, or any action (or inaction) to be taken
(or
not taken) by
the Collateral Agent under (or pursuant to, including
pursuant to any
of the remedial provisions of) any of the Security
Documents, in
either case would require the vote or consent of any of
the
Junior First
Lien Creditors, whether acting as part of the Required
Secured
Creditors, as
part of the Required Lender Creditors, as part of the
class
of Lender
Creditors or otherwise, each such Junior First Lien
Creditor
hereby agrees
that any such amendment, modification, change, waiver,
consent,
release, variance, action or inaction may be taken (or not
taken,
as the case may
be) at the direction of the Required First Lien
Creditors,
provided that,
except as permitted by Section 14(b) hereof, in the case
of
any amendment,
modification, change, waiver, consent, release or
variance
to any Security
Document materially adversely affecting the rights and
benefits of the
Junior First Lien Creditors (and not all First Lien
Creditors in a
like or similar manner), such amendment, modification,
change, waiver,
release or variance shall be made at the direction of
the
Required First
Lien Creditors and the Additional Senior Secured Notes
Trustee (acting
at the direction of the Additional Senior Secured
Noteholders
holding at least a majority of the then outstanding
principal
amount of all
Additional Senior Secured Notes), and (B) to effectuate
the
foregoing,
except in cases described in the proviso to preceding
clause
(A), each Junior
First Lien Creditor hereby (x) authorizes and instructs
the Additional
Senior Secured Notes Trustee to (and the Additional
Senior
Secured Notes
Trustee agrees to) vote (on behalf of the Junior First
Lien
Creditors) in a
manner consistent with, and to sign any such amendment,
modification,
change, waiver, consent, release or variance, or any
direction for
any such action or inaction, in either case which has
otherwise been
approved by, the Required First Lien Creditors and (y)
constitutes and
appoints the Collateral Agent its true and lawful
attorney,
irrevocably
(which power is coupled with an interest), to sign on behalf
of
the Additional
Senior Secured Notes Trustee any such
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amendment,
modification, change, waiver, consent, release or variance,
or
any such action
or inaction, to the extent that the Additional Senior
Secured Notes
Trustee refuses to sign same as provided above; and
(iv) the Junior First
Lien Creditors do not have a security interest
in, and the
grant of security interests pursuant to the applicable
US
Security
Documents for the benefit of the Junior First Lien Creditors
shall
not extend to,
any Additional Senior Secured Notes Excluded Collateral,
and
with respect to
the Junior First Lien Creditors, the term "Collateral"
shall not
include the Additional Senior Secured Notes Collateral.
3.
Application of Proceeds. (a) Except to the extent
otherwise
provided in Section 9.4(e) of
the US Security Agreement, all moneys collected or
otherwise received by the
Collateral Agent pursuant to the applicable US
Security Documents for
application to the First Lien Obligations (including,
for
the avoidance of doubt, upon
any (i) distribution of any Collateral in the event
of any bankruptcy,
arrangement, receivership, assignment for the benefit of
creditors or any other action
or proceeding involving the readjustment of the
obligations and indebtedness
of any US Credit Party or the application of any
Collateral to the payment
thereof, (ii) distribution of the Collateral upon the
liquidation or dissolution of
any US Credit Party, or the winding up of the
assets or business of any US
Credit Party, (iii) realization by the Collateral
Agent or any of the other
Secured Creditors with respect to the Liens pursuant
to any Secured Debt
Agreement, whether pursuant to a Remedial Action or
otherwise or (iv) Disposition
of any Collateral (to the extent that any part of
the proceeds of such
Disposition are required to be applied to any of the
Obligations or held by the
Collateral Agent in accordance with the provisions of
any of the Security
Documents)), shall, as between the Senior First Lien
Creditors and the Junior
First Lien Creditors, be distributed or paid to (or
retained by) the Collateral
Agent for application in the following manner:
(i) first, an
amount equal to the outstanding Senior First Lien
Primary
Obligations shall be paid to the Senior First Lien Creditors
as
provided in
Section 3(e) hereof, with each Senior First Lien
Creditor
receiving an
amount equal to its outstanding Senior First Lien
Primary
Obligations or,
if the proceeds are insufficient to pay in full all such
Senior First
Lien Primary Obligations, its Senior First Lien Creditor
Pro
Rata Share of
the amount remaining to be distributed;
(ii) second, to the
extent proceeds remain after the application
pursuant to the
preceding clause (i), an amount equal to the outstanding
Senior First
Lien Secondary Obligations shall be paid to the Senior
First
Lien Creditors
as provided in Section 3(e) hereof, with each Senior
First
Lien Creditor
receiving an amount equal to its outstanding Senior
First
Lien Secondary
Obligations or, if the proceeds are insufficient to pay
in
full all such
Senior First Lien Secondary Obligations, its Senior
First
Lien Creditor
Pro Rata Share of the amount remaining to be
distributed;
(iii) third, to the extent proceeds remain after the
application
pursuant to the
preceding clauses (i) and (ii), to the payment of all
amounts owing
the Additional Senior Secured Notes Trustee in its
capacity
as such pursuant
to the Note Credit Agreement; and
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(iv) fourth, to the
extent proceeds remain after the application
pursuant to the
preceding clauses (i) through (iii), inclusive, an
amount
equal to the
outstanding Junior First Lien Obligations shall be paid to
the
Junior First
Lien Creditors as provided in Section 3(e) hereof, with
each
Junior First
Lien Creditor receiving an amount equal to its
outstanding
Junior First
Lien Obligations or, if the proceeds are insufficient to
pay
in full all such
Junior First Lien Obligations, its Junior First Lien
Creditor Pro
Rata Share of the amount remaining to be distributed.
(b) (i) For
purposes of this Agreement, "Senior First Lien Creditor
Pro Rata Share" shall mean,
when calculating a Senior First Lien Creditor's
portion of any distribution
or amount, that amount (expressed as a percentage)
equal to a fraction the
numerator of which is the then unpaid amount of such
Senior First Lien Creditor's
Senior First Lien Primary Obligations or Senior
First Lien Secondary
Obligations, as the case may be, and the denominator of
which is the then outstanding
amount of all Senior First Lien Primary
Obligations or Senior First
Lien Secondary Obligations, as the case may be.
(ii) For the purposes
of this Agreement, "Junior First Lien Creditor
Pro Rata Share" shall mean,
when calculating a Junior First Lien Creditor's
portion of any distribution
or amount, that amount (expressed as a percentage)
equal to a fraction the
numerator of which is the then unpaid amount of such
Junior First Lien Creditor's
Junior First Lien Obligations and the denominator
of which is the then
outstanding amount of all Junior First Lien Obligations.
(c) When
payments to the Senior First Lien Creditors are based
upon
their respective Senior First
Lien Creditor Pro Rata Shares, the amounts
received by such Senior First
Lien Creditors hereunder shall be applied (for
purposes of making
determinations under this Section 3 only) (i) first, to
their
Senior First Lien Primary
Obligations and (ii) second, to their Senior First
Lien Secondary Obligations.
If any payment to any Senior First Lien Creditor of
its Senior First Lien
Creditor Pro Rata Share of any distribution would result
in overpayment to such Senior
First Lien Creditor, such excess amount shall
instead be distributed in
respect of the unpaid Senior First Lien Primary
Obligations or Senior First
Lien Secondary Obligations, as the case may be, of
the other Senior First Lien
Creditors, with each Senior First Lien Creditor
whose Senior First Lien
Primary Obligations or Senior First Lien Secondary
Obligations, as the case may
be, have not been paid in full to receive an amount
equal to such excess amount
multiplied by a fraction the numerator of which is
the unpaid Senior First Lien
Primary Obligations or Senior First Lien Secondary
Obligations, as the case may
be, of such Senior First Lien Creditor and the
denominator of which is the
unpaid Senior First Lien Primary Obligations or
Senior First Lien Secondary
Obligations, as the case may be, of all Senior First
Lien Creditors entitled to
such distribution.
(d) Each of the
First Lien Creditors, by their acceptance of the
benefits hereof and of the
applicable US Security Documents, agrees and
acknowledges that if the Bank
Lender Creditors receive a distribution on account
of undrawn amounts with
respect to Letters of Credit issued (or deemed issued)
under the Bank Credit
Agreement (which shall only occur after all outstanding
Revolving Loans under the
Bank Credit Agreement and all Unpaid Drawings with
respect to such Letters of
Credit have been paid in full), such amounts shall be
paid to the Administrative
Agent under the Bank Credit Agreement and held by it,
for the equal and ratable
benefit of the Bank Lender Creditors, as cash security
for the repayment of the Bank
Credit
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Document Obligations owing to
the Bank Lender Creditors as such. If any amounts
are held as cash security
pursuant to the immediately preceding sentence, then
upon the termination of all
outstanding Letters of Credit under the Bank Credit
Agreement, and after the
application of all such cash security to the repayment
of all the Bank Credit
Document Obligations owing to the Bank Lender Creditors
after giving effect to the
termination of all such Letters of Credit, if there
remains any excess cash, such
excess cash shall be returned by the
Administrative Agent to the
Collateral Agent for distribution in accordance with
Section 3(a)
hereof.
(e) All payments
required to be made hereunder shall be made (w) if
to the Bank Lender Creditors,
to the Administrative Agent for the account of the
Bank Lender Creditors, (x) if
to the Other Creditors, to the Representative for
the Other Creditors, or, in
the absence of such a Representative, directly to
the Other Creditors, (y) if
to the Overdraft Creditors, directly to the
Overdraft Creditors, and (z)
if to the Junior First Lien Creditors, to the
Additional Senior Secured
Notes Trustee.
(f) For purposes
of applying payments received in accordance with
this Section 3, the
Collateral Agent shall be entitled to rely upon (i) the
Administrative Agent under
the Bank Credit Agreement, (ii) the Representative
for the Other Creditors or,
in the absence of such a Representative, upon the
Other Creditors, (iii) the
Overdraft Creditors and (iv) the Additional Senior
Secured Notes Trustee, in
each case, for a determination (which the
Administrative Agent, each
Representative for the Other Creditors, the Overdraft
Creditors, the Additional
Senior Secured Notes Trustee and the First Lien
Creditors agree (or shall
agree) to provide upon request of the Collateral
Agent) of the outstanding
Obligations (and type of Obligations) owed to the Bank
Lender Creditors, the Other
Creditors, the Overdraft Creditors or the Junior
First Lien Creditors, as the
case may be. Unless it has actual knowledge
(including by way of written
notice from a Bank Lender Creditor, an Other
Creditor or an Overdraft
Creditor) to the contrary, the Administrative Agent and
each Representative, in
furnishing information pursuant to the preceding
sentence, and the Collateral
Agent, in acting hereunder, shall be entitled to
assume that no Senior First
Lien Secondary Obligations are outstanding. Unless
it has actual knowledge
(including by way of written notice from an Other
Creditor) to the contrary,
the Collateral Agent, in acting hereunder, shall be
entitled to assume that no
Interest Rate Protection Agreements or Other Hedging
Agreements are in
existence.
4.
Relative Acknowledgment/Priorities of Security Interests
and
Liens. (a) Each of the First
Lien Creditors acknowledges and agrees (x) to the
relative priorities as to the
Collateral (and the application of the proceeds
therefrom) as provided in
this Agreement and acknowledges and agrees that such
priorities (and the
application of the proceeds from the Collateral) shall
not
be affected or impaired in
any manner whatsoever including, without limitation,
on account of (i) the
invalidity, irregularity, diminution in value or
unenforceability of all or
any part of any Secured Debt Agreement or any of the
Obligations thereunder, (ii)
the actual date and time of execution, delivery,
recording, filing or
perfection of any security interests in the Collateral,
(iii) any nonperfection of
any Lien purportedly securing any of the Obligations,
(iv) any amendment, change or
modification of any Secured Debt Agreement or (v)
any impairment, modification,
change, exchange, release or subordination of or
limitation on, any liability
of, or stay of action
