SUBORDINATION AGREEMENT
This
Subordination Agreement (this “Agreement”) is hereby made as of this 30th
day of November, 2007, by and between Xxxxxx Micro Inc. (“Creditor”) with
a place of business located at 0000 Xxxxxx Xxxxx, Xxxxxxxxxxxxx, Xxx Xxxx 00000
and LV Administrative Services, Inc., as agent for the Lenders (as defined
below) (“Agent”) with a place of business at 000 Xxxxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000.
RECITAL
IP
Global
Voice, Inc., a Delaware corporation (“IP Global”), entered into that
certain Security Agreement dated as of August 31, 2005 (as in effect on the
date
hereof, the “Xxxxxx Security Agreement”) in favor of the Creditor
pursuant to which IP Global granted to Creditor a security interest in all
or
substantially all its assets to secure its obligations to the
Creditor.
IP
Global
and certain of its affiliates wish to obtain financing pursuant to that certain
Security Agreement dated as of the date hereof (as amended, supplemented,
modified or restated from time to time, the “Security Agreement”) by and
among IP Global, various affiliates of IP Global, the lenders from time to
time
party thereto (the “Lenders”) and Agent (the Agent and the Lenders
together, the “Senior Creditors”) and the Ancillary Agreements (as
defined in the Security Agreement). In connection therewith, IP
Global and its affiliates have granted Agent, for the ratable benefit of the
Senior Creditors, a security interest in all or substantially all its assets
to
secure their obligations to the Senior Creditors under the Security Agreement
and the Ancillary Agreements (as defined in the Security
Agreement).
The
Lenders have agreed to provide such financing on the condition that Creditor
subordinates to Agent all security interests which Creditor may presently have
or may hereafter acquire in and to IP Global’s assets. Creditor is
willing to subordinate its security interests in accordance with the terms
of
this Agreement.
NOW,
THEREFORE, in order to induce Lenders to extend such financing to, among others,
IP Global, and for the other good and valuable consideration, the receipt and
sufficiently of which are hereby acknowledged, Creditor agrees as
follows:
1. Creditor
unconditionally subordinates to Senior Creditors any and all security interests
which Creditor may presently have or which it may hereafter acquire to any
and
all security interest which Senior Creditors may presently have or which they
may hereafter acquire, in each case, in and to all of IP Global’s now owned and
hereafter acquired assets, including, without limitation, inventory, equipment,
fixtures, accounts, contract rights, chattel paper, security agreements,
instruments, deposit accounts, reserves, documents, and general intangibles
and
all proceeds therefrom (collectively, the “Collateral”).
2. This
Agreement shall constitute a continuing agreement of subordination, and Lenders
may provide financing to, among others, IP Global on the basis of this
Agreement. The priority granted to Senior Creditors hereunder is
enforceable regardless of the time or order of attachment or perfection of
security interests or any previous agreement entered into between the parties
hereto.
3. All
proceeds of the Collateral received by Creditor in violation of the terms of
this Agreement shall be forthwith paid over, in the funds and currency received,
to the Agent for application to the Senior Liabilities (as defined below) until
the Senior Liabilities have been paid in full in cash and the Security Agreement
and Ancillary Agreements have been terminated (“Paid in
Full”). Any proceeds of Collateral that may be received by
Creditor in violation of the terms of this Agreement prior to the Senior
Liabilities having been Paid in Full shall be segregated and held in trust
and
promptly paid over to the Agent, for the benefit of the Senior Creditors, in
the
same form as received, with any necessary endorsements, and Creditor hereby
authorizes the Agent to make any such endorsements as agent for the Creditor
(which authorization, being coupled with an interest, is
irrevocable). Any proceeds of Collateral that may be received by any
Senior Creditor after the Senior Liabilities have been paid in full shall be
segregated and held in trust and promptly paid over to the Creditor, in the
same
form as received, with any necessary endorsements, and Senior Creditors hereby
authorize the Creditor to make any such endorsements as agent for the Senior
Creditors (which authorization, being coupled with an interest, is
irrevocable).
4. (a) Until
the Senior Liabilities (as defined below) have been Paid in Full, the Creditor
shall not take any Enforcement Action (as defined below) with respect to the
Junior Liabilities (as defined below); provided, however, the
Creditor may take any Enforcement Action following the passage of sixty (60)
days (the “Standstill Period”) from the date the Agent shall have
received a written notice from the Creditor of the occurrence of an Event of
Default (as defined in the Xxxxxx Security Agreement) (other than an Event
of
Default under Section 7(a)(ix) of the Xxxxxx Security Agreement) which notice
describes such Event of Default. Notwithstanding anything herein to
the contrary, without the express written consent of the Senior Creditors,
in no
event shall the Creditor exercise any rights or remedies against IP Global
or
against the Collateral if, notwithstanding the expiration of any Standstill
Period, the Senior Creditors commenced the exercise of their rights and remedies
during such Standstill Period and continue to diligently pursue the exercise
of
such rights or remedies following the expiration of such Standstill
Period.
(b) All
Enforcement Actions taken by the Creditor hereunder shall at all times be and
remain subject to the terms of this Agreement and any and all payments and
collections received by the Creditor in respect of the Junior Liabilities
pursuant to any Enforcement Action shall be paid over to the Agent for
application to the payment in full of the Senior Liabilities (whether or not
then due) in such order and manner as the Agent shall determine until all Senior
Liabilities have been Paid in Full.
(c) As
used
herein, the following terms shall have the meanings set forth
below:
(i) “Enforcement
Action” shall mean (i) any action by the Creditor to foreclose on its
security interest in any Collateral, (ii) any action by the Creditor to take
possession of, or sell or otherwise realize upon, or to exercise any other
rights or remedies with respect to, any Collateral, (iii) the taking of any
other actions by the Creditor to collect or enforce all or any part of the
Junior Liabilities or any claims in respect thereof (A) against IP Global or
(B)
any of its property or assets, including the taking of control or possession
of,
or the exercise of any right of setoff with respect to, any property or assets
of IP Global or the sale or other disposition of any interest in such property
or assets and/or (iv) the commencement by the Creditor of any legal proceedings
or actions against or with respect to (A) IP Global or (B) any of its property
or assets or any Collateral to facilitate the actions described in clauses
(i),
(ii) and (iii) above;
(ii) “Junior
Liabilities” shall mean any and all obligations (whether monetary or
otherwise) of IP Global and/or any of its affiliates to Creditor (in each case
including any interest, fees or penalties related thereto), howsoever created,
arising or evidenced, whether direct or indirect, absolute or contingent or
now
or hereafter existing, or due or to become due; and
(iii) “Senior
Liabilities” shall mean all obligations of IP Global and/or any of its
affiliates to the Senior Creditors under the Senior Security Agreements (as
defined in Section 5 hereof), howsoever created, arising or evidenced, whether
direct or indirect, absolute or contingent or now or hereafter existing, or
due
or to become due (including, without limitation, any and all interest, fees
and
penalties accruing on any of the obligations after the commencement of any
bankruptcy, insolvency, reorganization or other similar
proceeding).
5. The
Creditor hereby waives the right, if any, to require that any Senior Creditor
marshal or otherwise proceed to dispose of or foreclose upon Collateral in
any
particular manner or order. Subject to Section 4 hereof, the Agent,
on behalf of the Lenders, shall have the exclusive right to manage, perform
and
enforce the underlying terms of the Security Agreement and each other document,
instrument and agreement executed from time to time in connection therewith
(collectively, the “Senior Security Agreements”) relating to the assets
of IP Global and to exercise and enforce rights and remedies
thereunder. The Creditor agrees not to attempt to prevent or hinder
any action taken by the Agent, on behalf of the Lenders, in connection with
the
Agent’s enforcement of rights and remedies under the Security Agreements;
provided, however, the foregoing provisions of this Section 5 shall not
constitute a waiver of any of Creditor’s rights to contest such action on the
basis of such action not being commercially reasonable or in violation of any
applicable law. Subject to Section 4 hereof, only the Senior
Creditors shall have the right to restrict, permit, approve or disapprove the
sale, transfer or other disposition of the assets of IP Global. As
between the Agent and the Creditor, the terms of this Agreement shall govern
even if all or part of the liens securing the Senior Liabilities (as defined
below) are avoided, disallowed, set aside or otherwise invalidated.
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6. The
Agent, on behalf of the Lenders, may, from time to time, and without notice
to
the Creditor, take any or all of the following actions: (a) retain or
obtain a security interest in any property to secure any of the Senior
Liabilities; (b) retain or obtain the primary or secondary obligation of any
other obligor or obligors with respect to any of the Senior Liabilities; (c)
extend or renew for one or more periods (whether or not longer than the original
period), alter, increase or exchange any of the Senior Liabilities, or release
or compromise any obligation of any nature of any obligor with respect to any
of
the Senior Liabilities; and (d) release its security interest in, or surrender,
release or permit any substitution or exchange for, all or any part of any
property securing any of the Senior Liabilities, or extend or renew for one
or
more periods (whether or not longer than the original period) or release,
compromise, alter or exchange any obligations of any nature of any obligor
with
respect to any such property.
7. The
Senior Creditors may, from time to time, whether before or after any
discontinuance of this Agreement, without notice to the Creditor, assign or
transfer any or all of the Senior Liabilities or any interest in the Senior
Liabilities; and, notwithstanding any such assignment or transfer or any
subsequent assignment or transfer of the Senior Liabilities, such Senior
Liabilities shall be and remain Senior Liabilities for the purposes of this
Agreement, and every immediate and successive assignee or transferee of any
of
the Senior Liabilities or of any interest in the Senior Liabilities shall,
to
the extent of the interest of such assignee or transferee in the Senior
Liabilities, be entitled to the benefits of this Agreement to the same extent
as
if such assignee or transferee were a Senior Creditor, as applicable; provided,
however, that, unless the Senior Creditor that is the assignor and/or transferor
shall otherwise consent in writing, such Senior Creditor shall have an
unimpaired right, prior and superior to that of any such assignee or transferee,
to enforce this Agreement, for the benefit of such Senior Creditor, as to those
of the Senior Liabilities which such Senior Creditor has not assigned or
transferred.
8. The
Senior Creditors shall not be prejudiced in their rights under this Agreement
by
any act or failure to act of the Creditor, or any noncompliance of the Creditor
with any agreement or obligation, regardless of any knowledge thereof which
any
Senior Creditor may have or with which any Senior Creditor may be charged;
and
no action of any Senior Creditor permitted under this Agreement shall in any
way
affect or impair the rights of the Senior Creditors and the obligations of
the
Creditor under this Agreement.
9. No
delay
on the part of any Senior Creditor in the exercise of any right or remedy shall
operate as a waiver of such right or remedy, and no single or partial exercise
by any Senior Creditor of any right or remedy shall preclude other or further
exercise of such right or remedy or the exercise of any other right or remedy;
nor shall any modification or waiver of any of the provisions of this Agreement
be binding upon any Senior Creditor except as expressly set forth in a writing
duly signed and delivered on behalf of the Senior Creditors. For the
purposes of this Agreement, Senior Liabilities shall have the meaning set forth
in Section 4 above, notwithstanding any right or power of the Creditor or anyone
else to assert any claim or defense as to the invalidity or unenforceability
of
any such obligation, and no such claim or defense shall affect or impair the
agreements and obligations of the Creditor under this Agreement.
10. This
Agreement shall continue in full force and effect after the filing of any
petition by or against IP Global under the United States Bankruptcy Code and
all
converted or succeeding cases in respect thereof. All references
herein to IP Global shall be deemed to apply to IP Global as
debtor-in-possession and to a trustee for IP Global.
11. This
Agreement shall be binding on, and shall inure to the benefit of, the respective
successors and assigns of the Senior Creditors and Creditor. Creditor
hereby represents and warrants to Agent that Creditor has not heretofore
assigned, transferred, subordinated or terminated any of Creditor’s security
interests in or to any of the Collateral subordinated to Agent pursuant to
the
terms of this Agreement. This Agreement is not intended, nor shall it
be deemed, to directly or indirectly benefit any person or entity which is
not a
party hereto.
12. Except
as
otherwise stated herein, all notices, responses, requests and documents will
be
sufficiently given or served if mailed or delivered: (i) to Agent, c/o Valens
Management, LLC at 000 Xxxxxxx Xxxxxx, 00xx Xxxxx,
Xxx Xxxx,
Xxx Xxxx 00000; and (ii) to Creditor at 0000 Xxxxxx Xxxxx, Xxxxxxxxxxxxx, Xxx
Xxxx 00000-0000, Attention: Legal Department; or such other address as the
parties may specify from time to time in writing.
13. The
failure of either party to exercise any rights granted hereunder shall not
operate as a waiver of any of those rights. THE LAWS OF THE STATE OF
NEW YORK WILL GOVERN THIS AGREEMENT AND ALL TRANSACTIONS HEREUNDER AS TO
INTERPRETATION, ENFORCEMENT, VALIDITY, CONSTRUCTION, EFFECT AND IN ALL OTHER
RESPECTS. EACH PARTY WAIVES ANY RIGHT TO A JURY TRIAL IN ANY SUCH
PROCEEDING. EACH PARTY AGREES TO SUBMIT TO THE JURISDICTION OF THE
COURTS OF NEW YORK AND AGREES THAT ALL LEGAL PROCEEDINGS WILL BE TRIED IN A
COURT OF COMPETENT JURISDICTION IN NEW YORK BY A JUDGE WITHOUT
JURY.
14. Nothing
in this Agreement, express or implied, shall impair in any way or hinder the
enforcement of any rights Creditor has or may have against any guarantor of
the
Junior Liabilities.
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[Signature
Page to Follow]
IN
WITNESS WHEREOF, the duly authorized representatives of Creditor and Agent
have
executed this Subordination Agreement on the date set forth above.
| XXXXXX MICRO INC | |||
|
Date
|
By:
|
/s/ Xxxxx Xxxxxxx | |
| Name: Xxxxx Xxxxxxx | |||
| Title: Director of Credit | |||
| LV ADMINISTRATIVE SERVICES, INC., | |||
|
Date
|
By:
|
/s/ Xxxxx Xxxxxxxxx | |
| Name: Xxxxx Xxxxxxxxx | |||
| Title: Authorized Signatory | |||
| Acknowledged and Agreed to by | |||
| IP GLOBAL VOICE, INC. | |||
|
|
By:
|
/s/ Xxxxx X. Xxxxxx | |
| Name: Xxxxx X. Xxxxxx | |||
| Title: CEO | |||
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