SUBORDINATION AGREEMENT
Exhibit
10.6
This
Subordination Agreement (this “Agreement”) is entered into as of the 24th
day of May, 2007, by and among the signatories hereto (collectively, the
“Subordinated Lenders” and each, a “Subordinated Lender”), and Laurus Master
Fund, Ltd. (the “Senior Lender”). Unless otherwise defined herein,
capitalized terms used herein shall have the meaning provided such terms in
the
Security Agreement referred to below.
BACKGROUND
WHEREAS,
the Subordinated Lenders will purchase certain unsecured, convertible debentures
in an aggregate amount up to $3 million (the “Securities”) from, Impart Media
Group, Inc., a Nevada corporation (the “Company”) pursuant to a securities
purchase agreement to be entered by and between the Subordinated Lenders and
the
Company on or about May 24, 2007 (such securities purchase agreement,
together with all agreements and documents executed and delivered by the parties
in connection therewith, the “Junior Documents”).
WHEREAS,
it is a condition to the Senior Lender’s approval of the Company’s receipt of
such loans, which approval is required, pursuant to, and in accordance with,
(i)
that certain Security Agreement to be dated on or about January 27, 2007 by
and
between the Company and Laurus (as amended, modified or supplemented from time
to time, the "Security Agreement") and (ii) the Related Agreements referred
to
in the Security Agreement, that the Subordinated Lenders enter into this
Agreement.
NOW,
THEREFORE, each Subordinated Lender and the Senior Lender agree as
follows:
TERMS
1. All
obligations of the Company and/or any of its Subsidiaries to the Senior Lender,
howsoever created, arising or evidenced, whether direct or indirect, absolute
or
contingent or now or hereafter existing, or due or to become due are referred
to
as “Senior Liabilities”. Any and all loans made by the Subordinated
Lenders to the Company and/or any of its Subsidiaries, together with all other
obligations (whether monetary or otherwise) of the Company and/or any of its
Subsidiaries to any Subordinated Lender (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 are referred to as “Junior Liabilities”. It
is expressly understood and agreed that the term “Senior Liabilities”, as used
in this Agreement, shall include, without limitation, any and all interest,
fees
and penalties accruing on any of the Senior Liabilities after the commencement
of any proceedings referred to in paragraph 4 of this Agreement, notwithstanding
any provision or rule of law which might restrict the rights of the Senior
Lender, as against the Company, its Subsidiaries or anyone else, to collect
such
interest, fees or penalties, as the case may be.
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2. Except
as expressly otherwise provided in this Agreement or as the Senior Lender may
otherwise expressly consent in writing, the payment of the Junior Liabilities
shall be postponed and subordinated in right of payment and priority to the
payment in full of all Senior Liabilities. Furthermore, whether
directly or indirectly, no payments or other distributions whatsoever in respect
of any Junior Liabilities shall be made (whether at stated maturity, by
acceleration or otherwise), nor shall any property or assets of the Company
or
any of its Subsidiaries be applied to the purchase or other acquisition or
retirement of any Junior Liability until such time as the Senior Liabilities
have been indefeasibly paid in full. Notwithstanding anything to the
contrary contained in this paragraph 2 or elsewhere in this Agreement, the
Company and its Subsidiaries may (i) make regularly scheduled principal and
interest payments, as the case may be,
(ii) if
applicable, pay any accrued liquidated damages when due, (payment of such
liquidated damages being capped hereby to no more than $210,000 in the aggregate
(the “Liquidated Damages Cap”), to the Subordinated Lenders with respect
to the Junior Liabilities, so long as (i) no Event of Default (as defined in
the
Security Agreement or any Related Agreement has occurred and is continuing
at
the time of any such payment or after giving effect to such payment and (ii)
the
amount of such regularly scheduled principal payments, the rate of interest,
and
the Liquidated Damages Cap, in each case, with respect to the Junior Liabilities
is not increased from that in effect on the date hereof. In addition,
nothing contained herein (x) shall restrict any Subordinated Lender’s right to
receive shares of the Company’s common stock upon conversion or exercise of
securities of the Company; (y) restrict a Subordinated Lender’s right to
seek specific performance therefor to cause the Company to satisfy its
obligations under the Junior Documents; or
(z)
restrict a Subordinated Lender’s right to receive payment in shares of the
Company’s common stock in respect of liquidated damages and other fees to the
extent that payment in cash is prohibited pursuant to the foregoing clause
(y).
3. Each
Subordinated Lender hereby subordinates all claims and security interests it
may
have against, or with respect to, any of the assets of the Company and/or any
of
its Subsidiaries (the “Subordinated Lender Liens”), to the security interests
granted by the Company and/or any of its Subsidiaries to the Senior Lender
in
respect of the Senior Liabilities. The Senior Lender shall not owe
any duty to any Subordinated Lender as a result of or in connection with any
Subordinated Lender Liens, including without limitation any marshalling of
assets or protection of the rights or interests of any Subordinated
Lender. The Senior Lender shall have the exclusive right to manage,
perform and enforce the underlying terms of the Security Agreement, the Related
Agreements and each other document, instrument and agreement executed from
time
to time in connection therewith (collectively, the “Security Agreements”)
relating to the assets of the Company and its Subsidiaries and to exercise
and
enforce its rights according to its discretion. Each Subordinated
Lender waives all rights to affect the method or challenge the appropriateness
of any action taken by the Senior Lender in connection with the Senior Lender’s
enforcement of its rights under the Security Agreements. Only the
Senior Lender shall have the right to restrict permit, approve or
disapprove the sale, transfer or other disposition of the assets of the Company
or any of its Subsidiaries. As between the Senior Lender and each
Subordinated Lender, the terms of this Agreement shall govern.
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4. In
the event of any dissolution, winding up, liquidation, readjustment,
reorganization or other similar proceedings relating to the Company and/or
any
of its Subsidiaries or to its creditors, as such, or to its property (whether
voluntary or involuntary, partial or complete, and whether in bankruptcy,
insolvency or receivership, or upon an assignment for the benefit of creditors,
or any other marshalling of the assets and liabilities of the Company and/or
any
of its Subsidiaries, or any sale of all or substantially all of the assets
of
the Company and/or any of its Subsidiaries, or otherwise), the Senior
Liabilities shall first be paid in full before any Subordinated Lender shall
be
entitled to receive and to retain any payment, distribution, other rights or
benefits in respect of any Junior Liability. In order to enable the Senior
Lender to enforce its rights hereunder in any such action or proceeding, if
a
Subordinated Lender does not file proof(s) of claim(s) in connection with a
bankruptcy or insolvency proceeding involving the Company and/or any of its
Subsidiaries prior to 15 days before the expiration of the time to file claims
in any such proceeding, the Senior Lender is hereby irrevocably authorized
and
empowered in its discretion as attorney in fact for each Subordinated Lender
to
make and present for and on behalf of such Subordinated Lender such proofs
of
claims against the Company and/or its Subsidiaries as Laurus may deem expedient
or proper and to vote such proofs of claims in any such proceeding and to
receive and collect any and all dividends or other payments or disbursements
made thereon in whatever form the same may be paid or issued and to apply same
on account of any the Senior Liabilities. In the event, prior to
indefeasible payment in full of the Senior Liabilities, any Subordinated Lender
shall receive any payment in respect of the Junior Liabilities and/or in
connection with the enforcement of such Subordinated Lender’s rights and
remedies against the Company and/or any of its Subsidiaries, whether arising
in
connection with the Junior Liabilities or otherwise that is not in accordance
with the terms of this Agreement, then such Subordinated Lender shall forthwith
deliver, or cause to be delivered, the same to the Senior Lender in precisely
the form held by such Subordinated Lender (except for any necessary endorsement)
and until so delivered the same shall be held in trust by such Subordinated
Lender as the property of the Senior Lender.
5. Each
Subordinated Lender will xxxx its/his books and records so as to clearly
indicate that its/his respective Junior Liabilities are subordinated in
accordance with the terms of this Agreement. Each Subordinated Lender
will execute such further documents or instruments and take such further action
as the Senior Lender may reasonably request from time to time to
carry out the intent of this Agreement.
6. Each
Subordinated Lender hereby waives all diligence in collection or protection
of
or realization upon the Senior Liabilities or any security for the Senior
Liabilities.
7. Except
as permitted herein, until such time as the Senior Liabilities have been
indefeasibly paid in full, the Subordinated Lender will not, without the prior
written consent of the Senior Lender: (a) attempt to enforce or
collect any Junior Liability or any rights in respect of any Junior Liability
or
any other rights or remedies of any kind or nature whatsoever against any
Company and/or any of their respective Subsidiaries whether in respect of the
Junior Liabilities or otherwise (each an “Enforcement Action”); unless, in each
case (i) an event of default shall have occurred and be continuing under any
one
or more agreements between and among the Subordinated Lender, any Company and/or
any of their respective Subsidiaries which would entitle the Subordinated Lender
to take such action (each, a “Subordinated Lender Default”), (ii) the
Subordinated Lender shall have provided the Senior Lender written notice of
the
occurrence of each such Subordinated Lender Default and that it intends to
take
an Enforcement Action (each, a “Subordinated Lender Enforcement Action Notice”),
and (iii) a period of at least 120 days shall have elapsed after the receipt
by
the Senior Lender of the respective Subordinated Lender Enforcement Action
Notice; provided that, notwithstanding the foregoing, the Subordinated Lender
shall only be permitted to provide the Senior Lender with two Subordinated
Lender Enforcement Action Notices in any three hundred and sixty five (365)
day
period; or (b) commence, or join with any other creditor in commencing, any
bankruptcy, reorganization or insolvency proceedings with respect to any Company
and/or any of their respective Subsidiaries.
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8. The
Senior Lender may, from time to time, at its sole discretion and without notice
to any Subordinated Lender, 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.
9. The
Senior Lender may, from time to time, whether before or after any discontinuance
of this Agreement, without notice to any Subordinated Lender, 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 the Senior Lender, as applicable; provided, however, that,
unless the Senior Lender shall otherwise consent in writing, the Senior Lender
shall have an unimpaired right, prior and superior to that of any such assignee
or transferee, to enforce this Agreement, for the benefit of the Senior Lender,
as to those of the Senior Liabilities which the Senior Lender has not assigned
or transferred.
10. The
Senior Lender shall not be prejudiced in its rights under this Agreement by
any
act or failure to act of any Subordinated Lender, or any noncompliance of any
Subordinated Lender with any agreement or obligation, regardless of any
knowledge thereof which the Senior Lender may have or with which the Senior
Lender may be charged; and no action of the Senior Lender permitted under this
Agreement shall in any way affect or impair the rights of the Senior Lender
and
the obligations of any Subordinated Lender under this Agreement.
11. No
delay on the part of the Senior Lender 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 the Senior Lender 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 the Senior Lender except as expressly set forth in
a
writing duly signed and delivered on behalf of the Senior Lender. For
the purposes of this Agreement, Senior Liabilities shall have the meaning set
forth in Section 1 above, notwithstanding any right or power of any Subordinated
Lender 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 any Subordinated Lender
under
this Agreement.
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12. This
Agreement shall continue in full force and effect after the filing of any
petition (“Petition”) by or against the Company and/or any of its
Subsidiaries under the United States Bankruptcy Code (the “Code”) and all
converted or succeeding cases in respect thereof. All references
herein to the Company and/or Subsidiary shall be deemed to apply to the Company
and such Subsidiary as debtor-in-possession and to a trustee for the Company
and/or such Subsidiary. If the Company or any of its Subsidiaries
shall become subject to a proceeding under the Code, and if the Senior Lender
shall desire to permit the use of cash collateral or to provide post-Petition
financing from the Senior Lender to the Company or any such Subsidiary under
the
Code, each Subordinated Lender agrees as follows: (1) adequate notice
to such Subordinated Lender shall be deemed to have been provided for such
consent or post-Petition financing if such Subordinated Lender receives notice
thereof three (3) business days (or such shorter notice as is given to the
Senior Lender) prior to the earlier of (a) any hearing on a request to approve
such post-petition financing or (b) the date of entry of an order approving
same
and (2) no objection will be raised by any Subordinated Lender to any such
use
of cash collateral or such post-Petition financing from the Senior
Lender.
13. This
Agreement shall be binding upon each Subordinated Lender and upon the heirs,
legal representatives, successors and assigns of each Subordinated Lender and
the successors and assigns of any Subordinated Lender.
14. This
Agreement shall be construed in accordance with and governed by the laws of
New
York without regard to conflict of laws provisions. Wherever possible
each provision of this Agreement shall be interpreted in such manner as to
be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this
Agreement.
15. No
provision of this Agreement may be waived, modified, supplemented or amended
except in a written instrument signed, in the case of an amendment, by the
Company and the Subordinated Lenders then holding of at least 75% in interest
of
the original amount of the Securities or, in the case of a waiver, by the party
against whom enforcement of any such waived provision is sought.
[signature
page follows]
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IN
WITNESS WHEREOF, this Subordination Agreement has been made and
delivered this 24th day of May, 2007.
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LAURUS
MASTER FUND, LTD.
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By:
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Name:
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Title:
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[SUBORDINATED
LENDER SIGNATURE PAGE TO SUBORDINATION AGREEMENT
WITH LAURUS MASTER FUND, LTD.]
IN
WITNESS WHEREOF, this Subordination Agreement has been made and
delivered by the undersigned this 24th day of May,
2007.
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Name
of Subordinated Lender:
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Signature
of Authorized Signatory of Subordination
Agreement:
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Name
of Authorized Signatory:
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Title
of Authorized Signatory:
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Facsimile
Number of Purchaser:
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Address
for Notice of Subordinated Lender:
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