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SUBORDINATION AND INTERCREDITOR AGREEMENT
THIS SUBORDINATION AND INTERCREDITOR AGREEMENT (this "AGREEMENT") is
dated for reference purposes only as of September 25, 1997 by and among Solo
Serve Corporation, a Delaware corporation ("BORROWER"), Sanwa Business Credit
Corporation, a Delaware corporation ("SENIOR LENDER"), and Xxxxxxx X. Xxxxxx
and the Xxxxxx Family Trust (collectively, "SUBORDINATE LENDER").
RECITALS:
A. Senior Lender has agreed to extend financial accommodations to
Borrower pursuant to the terms of the Senior Loan Documents (defined below).
B. As security for the financial accommodations made by Senior
Lender, Borrower has granted to Senior Lender a security interest in all of the
assets of Borrower, other than real property.
C. Xxxxxxx Xxxxxx is one of the shareholders of Borrower.
D. As a condition to agreeing to make the financial
accommodations to Borrower, Senior Lender has required and Subordinate Lender
has agreed to make a loan to Borrower in the aggregate amount of $500,000,
which loan is to be expressly subordinate to the obligations of Borrower to
Senior Lender.
NOW, THEREFORE, in consideration of the foregoing Recitals and the
mutual covenants and agreements set forth herein, and for other good and
valuable consideration, the mutuality, receipt and sufficiency of which hereby
are acknowledged, and intending to be legally bound, the parties hereto agree
as follows:
1. DEFINITIONS.
Certain terms used herein and not otherwise defined (including
capitalized terms used in the foregoing Recitals) shall have the following
meanings:
"BORROWER OBLIGATION" means the Senior Secured Obligations or the
Subordinate Obligations, as the context requires.
"DIP FACILITY" shall have the meaning set forth in Section 2.5.
"PAYMENT IN FULL" or "PAID IN FULL" or any similar term(s) with
respect to any Borrower Obligation means (a) the indefeasible satisfaction and
final payment in full of
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such Borrower Obligation in cash or cash equivalents reasonably acceptable to
the payee and the termination of any obligation on the part of the holder of
such Borrower Obligation to make any loans or to afford any financial
accommodation to Borrower and the full and timely performance of all other
obligations to the holder of such Borrower Obligation or (b) in the case of any
Borrower Obligation consisting of contingent obligations (including without
limitation contingent obligations in respect of letters of credit or other
indemnifications under the Senior Loan Documents), the setting apart of cash
sufficient to discharge such portion of such Borrower Obligation in an account
for the exclusive benefit of the holders thereof, in which account such holders
shall be granted by Borrower a first priority perfected security interest in a
manner acceptable to such holders, which payment or perfected security interest
shall have been retained by the holders, in the case of each of (a) and (b)
above, for a period of time in excess of all applicable preference or other
similar periods under applicable bankruptcy, insolvency or creditors' rights
laws.
"SENIOR LOAN AGREEMENT" means that certain Loan and Security Agreement
dated for reference purposes only as of September 25, 1997, by and among Senior
Lender and Borrower, as the same may hereafter be amended, modified,
supplemented, restated, replaced or refinanced from time to time.
"SENIOR LOAN DOCUMENTS" means the Senior Loan Agreement and all other
instruments, agreements and documents which create, evidence or secure the
Senior Secured Obligations from time to time (including but not limited to any
promissory notes, security agreements, pledge agreements, hypothecation
agreements, mortgages, financing statements, and all other agreements of any
type whatsoever), delivered by Borrower, or Trustee to Senior Lender, as such
may be amended, modified, supplemented, restated, replaced or refinanced from
time to time.
"SENIOR SECURED OBLIGATIONS" means all "Secured Obligations" as that
term is defined in the Senior Loan Documents (which definition is hereby
incorporated herein by reference), including but not limited to principal,
interest, fees and all other amounts owing to Senior Lender under the Senior
Loan Documents, from time to time.
"SUBORDINATE DEBT" means all principal, interest, fees and other
amounts owing to Subordinate Lender under the Subordinate Loan Documents from
time to time, whether in respect of principal, interest or otherwise.
"SUBORDINATE LOAN DOCUMENTS" means those promissory notes attached
hereto as Exhibit A.
"SUBORDINATE OBLIGATIONS" means any of Borrower's Obligations to
Subordinate Lender under any of the Subordinate Loan Documents.
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2. SUBORDINATION AND INTERCREDITOR PROVISIONS.
2.1. Subordination.
(a) Senior Lender hereby consents to Borrower obtaining the
financial accommodation from Subordinate Lender in accordance with the
Subordinate Loan Documents.
(b) Subordinate Lender hereby acknowledges that Senior Lender has
been granted a security interest in certain of the assets of Borrower.
(c) Borrower and Subordinate Lender hereby represent and warrant
to Senior Lender that: (i) attached hereto as Exhibit A is a true, accurate and
complete copy of all Subordinate Loan Documents, and (ii) the Subordinate Debt
has been fully funded and the proceeds thereof delivered to Borrower in cash or
certified funds on _____________, 1997. .
(d) Subordinate Lender agrees, for itself and each future holder
of the Subordinate Obligations, that: (i) the Subordinate Debt is and shall be
expressly subordinate and junior in right of payment to all Senior Secured
Obligations until the Senior Secured Obligations have been Paid in Full; (ii)
Subordinate Lender shall not accept security or collateral for the payment or
performance of the Subordinate Debt; and (iii) Senior Lender has advanced funds
and may from time to time advance additional funds in reliance upon the
subordination of the Subordinate Debt to the Senior Secured Obligation.
2.2. Standby; Non-Interference.
(a) At any time prior to the date the Senior Secured Obligations
are Paid in Full, Subordinate Lender shall not, without Senior Lender's prior
consent (which consent may be withheld in Senior Lender's sole and absolute
discretion): (i) except as expressly provided in Sections 2.2(d), (e) or (f),
exercise any rights or remedies it may have under the Subordinate Loan
Documents or otherwise; (ii) commence or join with any other creditors of
Borrower in commencing any bankruptcy, reorganization, receivership or
insolvency proceeding against Borrower; or (iii) commence any action or
proceeding against Borrower to enforce or collect any Subordinate Obligation,
to obtain possession of property of Borrower, to exercise control over property
of Borrower or to create, perfect or enforce any lien against property of
Borrower.
(b) If any insolvency, bankruptcy, receivership, liquidation,
reorganization or other similar proceedings are commenced by or against
Borrower or its property, if any proceedings for involuntary liquidation,
dissolution or other winding up of Borrower whether or not involving insolvency
or bankruptcy are commenced by or against Borrower, then Senior Lender shall be
entitled in any such proceeding to receive Payment in Full of all Senior
Secured Obligations before Subordinate Lender is entitled in any such
proceedings to receive any payment on account of the Subordinate Obligations,
and to that end, in any such proceedings, any payment or distribution of any
kind or character, whether in cash or in property to which Subordinate Lender
would be entitled on account of the Subordinate
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Obligations but for the provisions hereof, shall be delivered to Senior Lender
to the extent necessary to make Payment in Full of all Senior Secured
Obligations remaining unpaid, after giving effect to any concurrent payment or
distribution to or for Senior Lender in respect thereof.
(c) Upon the occurrence of a default under the terms of the
Subordinate Loan Documents, Subordinate Lender may accelerate payments due
pursuant to the Subordinate Loan Documents, may make demand for payment from
Borrower and may obtain a judgment against Borrower; provided that Subordinate
Lender shall not seek to enforce any judgment against the assets of Borrower
and, except as permitted pursuant to Section 2.4, shall not accept or retain
any payment.
(d) Subject to the provisions of Section 2.4, Subordinate Lender
may, in any proceedings described in Section 2.2 (c), in the name of
Subordinate Lender, file claims, proofs of claims and other instruments of
similar character necessary to enforce the obligations of Borrower in respect
of the Subordinate Obligations. Neither this Section 2.2(d) nor any other
provision hereof shall be construed to give Subordinate Lender any right to
vote any Borrower Obligation held by Senior Lender, any related claim or any
portion of such claim, whether in connection with any resolution, arrangement,
plan or reorganization, compromise, settlement, election of trustees or
otherwise.
(e) Nothing in this Agreement shall restrict the ability of Senior
Lender to declare a default or accelerate all or any portion of the Senior
Secured Obligations. Senior Lender shall have the sole and exclusive right to
enforce the Senior Loan Documents, to exercise any right or remedy thereunder,
to grant any waiver or forbearance thereunder, and to compel performance by
Borrower thereunder, in any manner whatsoever, which Senior Lender deems (in
its sole and absolute discretion) advisable, including without limitation the
right to take control of, sell, lease, dispose, or liquidate any collateral,
without notice to or consultation with Subordinate Lender or regard for the
rights or interests of Subordinate Lender.
2.3. Marshaling Waiver. Subordinate Lender hereby waives any rights
it has or may have in the future to require Senior Lender to marshal Senior
Lender's collateral, and agrees that, in addition to Senior Lender's other
rights hereunder, Senior Lender may proceed against Senior Lender's collateral
in any order that Senior Lender deems appropriate in the exercise of Senior
Lender's absolute discretion. Subordinate Lender also waives any right to be
subrogated to the Senior Secured Obligations unless and until the Senior
Secured Obligations are Paid in Full.
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2.4. Payments of Borrower Obligations.
(a) The following provisions shall govern Subordinate Lender's
right to receive and Borrower's right to pay any amount due and owing under the
Subordinate Loan Documents:
(i) Provided no Default or Unmatured Default shall have
occurred and be continuing or would be created thereby under
the terms of the Senior Loan Documents, Subordinate Lender may
receive and Borrower may pay monthly installments of interest
only at the interest rate set forth in the Subordinate Loan
Documents, when due and owing on an unaccelerated basis and
not at a rate applicable upon default.
(ii) Except as expressly permitted pursuant to Section
2.4(a)(i), Subordinate Lender shall not be entitled to receive
or retain any direct or indirect payment (in cash, cash-
equivalents, property, by set-off or otherwise) of or on
account of any Subordinate Obligation at any time prior to
Payment in Full of the Senior Secured Obligations. At any time
that any Senior Secured Obligation is outstanding, Borrower
shall not make and Subordinate Lender shall not receive or
accept any payment (in cash, cash-equivalents, property, by
set-off or otherwise) of any kind or nature with respect to
the Subordinate Obligations.
(b) If Subordinate Lender receives any payment with respect to the
Subordinate Obligations which Subordinate Lender is not permitted to receive
and retain pursuant to this Agreement, then such payment shall be held in trust
for the benefit of, and shall be paid over promptly to Senior Lender, for
application to the payment of the Senior Secured Obligations, in such order of
priority as Senior Lender shall determine, in its sole and exclusive
discretion. If Subordinate Lender pays over any payment or distribution as
provided above, then such payment or distribution shall be deemed to have been
made by Borrower directly to Senior Lender and not to Subordinate Lender and no
Subordinate Obligation shall be discharged by reason of its receipt of any
payment or distribution which is so paid over to Senior Lender.
(c) In the event of any distribution, division, or application
(partial or complete, voluntary or involuntary, by operation of law or
otherwise) of all or any part of the assets of Borrower or the proceeds thereof
to the creditors of Borrower or readjustment of the obligations and
indebtedness of Borrower, whether by reason of liquidation, bankruptcy,
arrangement, receivership, assignment for the benefit of creditors, marshaling
of assets of Borrower or any other action or proceeding involving the
readjustment of all or any part of the indebtedness or other obligations of
Borrower or the application of the assets of Borrower to the payment or
liquidation thereof, or upon the dissolution or other winding up of Borrower's
business, or upon the sale of all or substantially all of Borrower's assets,
then, and in any such event, (i) Senior Lender shall first receive Payment in
Full in cash of all of the Senior Secured Obligations prior
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to the payment of all or any part of the Subordinated Obligations, and (ii)
until Payment in Full of the Subordinate Obligations, Senior Lender shall be
entitled to receive any payment or distribution of any kind or character,
whether in cash, securities or other property, which is payable or deliverable
in respect of any or all of the Subordinate Obligations.
(d) In order to enable Senior Lender to enforce its rights under
Section 2.4(c), Senior Lender is hereby irrevocably authorized and empowered
(in its own name or in the name of Subordinate Lender or otherwise), but shall
have no obligation to, enforce claims comprising any of the Subordinate
Obligations by proof of debt, proof of claim, suit or otherwise and take
generally any action which Subordinate Lender may deem necessary or advisable
for the enforcement of its rights or interests hereunder.
(e) To the extent necessary for Senior Lender to realize the
benefits of the subordination of the Subordinate Obligations provided for
herein (including the right to receive any payment and distributions which
might otherwise be payable or deliverable in respect of the Subordinate
Obligations in any proceeding described in Section 2.4(c) or otherwise),
Subordinate Lender shall execute and deliver to Senior Lender such instruments
or documents (together with such assignments or endorsements as Senior Lender
shall deem necessary), as may be reasonably requested by Senior Lender.
(f) In the event Subordinate Lender at any time incurs any
obligation to pay money to Borrower, Subordinate Lender hereby irrevocably
agrees that it shall pay such obligation in cash or cash equivalents in
accordance with the terms of the document or instrument governing such
obligation without deduction or set-off against the Subordinate Obligations.
2.5. DIP Facility.
(a) This Agreement shall be applicable both before and after the
filing of any petition by or against Borrower under the U.S. Bankruptcy Code
and all converted or succeeding cases in respect thereof, and all references
herein to Borrower shall be deemed to apply to a trustee for Borrower as
debtor-in-possession. The relative rights of Senior Lender and Subordinate
Lender to repayment of the Borrower Obligations, and in or to any distributions
from or in respect of Borrower or any collateral or proceeds of collateral,
shall continue after the filing thereof on the same basis as prior to the date
of the petition, subject to any court order approving the financing of, or use
of cash collateral by, Borrower as debtor-in-possession.
(b) References herein to Borrower shall include any successor to,
or assign of, Borrower, including without limitation any debtor-in-possession
or trustee for Borrower in any proceeding under the United States Bankruptcy
Code.
(c) If Borrower shall become subject to a proceeding under the
United States Bankruptcy Code and Senior Lender shall desire to permit the use
of cash collateral by
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Borrower or to provide financing to Borrower on substantially similar terms as
the Senior Loan Documents under either Section 363 or 364 of the United States
Bankruptcy Code, with or without obtaining a priority lien under Section 364(d)
thereof (the "DIP FACILITY"), Subordinate Lender hereby agrees as follows: (a)
adequate notice to Subordinate Lender shall have been given for the DIP
Facility if Subordinate Lender receives notice thereof at least two (2)
business days prior to the hearing on the motion requesting the DIP Facility;
and (b) if Senior Lender proposes to provide a DIP Facility, Subordinate Lender
may seek adequate protection of its interest under the Subordinate Obligations
by demanding the same treatment as provided in the Subordinate Loan Documents,
provided, however, that failure by Subordinate Lender to obtain such adequate
protection shall not be grounds for objecting to the DIP Facility. Senior
Lender and Borrower agree to use their best efforts to obtain the treatment
provided in the Subordinate Loan Documents as adequate protection for
Subordinate Lender. For purposes hereof, notice of a proposed financing or use
of cash collateral shall be deemed received by Subordinate Lender upon the
sending of notice by overnight delivery service, telecopy or hand delivery by
Subordinate Lender. Senior Lender is irrevocably authorized and empowered to
receive and collect any and all dividends, payments and distributions made on
account of any proof of claim relating to the Subordinate Debt in whatever form
the same may be paid or issued until the Senior Secured Obligations are Paid in
Full. Subordinate Lender agrees to file a proof of claim in respect of the
Subordinate Debt and to execute and deliver to Senior Lender such assignments
or other instruments as Senior Lender may reasonably require to enable Senior
Lender to collect all dividends, payments and distributions which may be made
at any time on account of the Subordinated Debt until the Senior Secured
Obligations are Paid in Full. Nothing contained herein shall prohibit
Subordinate Lender from objecting to or demanding additional adequate
protection if such financing is provided by a lender other than Senior Lender.
2.6. Borrower's Obligations Absolute. The provisions of this
Agreement are solely for the benefit of Borrower, Senior Lender and Subordinate
Lender for the purpose of defining the relative rights of the parties thereto.
Nothing herein shall impair, as between Borrower and any other party hereto,
the obligations of Borrower, which are unconditional and absolute, to Senior
Lender and to Subordinate Lender, respectively.
2.7. Transfers. Subordinate Lender shall not sell, assign or
otherwise transfer, in whole or in part, any of the Borrower Obligations or any
interest therein to any other person or entity without Senior Lender's prior
written consent, which consent shall be granted or withheld in Senior Lender's
sole discretion. If Senior Lender grants such consent, the transferee of the
Subordinate Obligations shall expressly acknowledge to the other parties to
this Agreement, in writing, that it agrees to be bound by all of the terms
hereof. Senior Lender and Subordinate Lender each hereby represents and
warrants to the others that as of the execution date hereof neither Senior
Lender nor Subordinate Lender has transferred or entered into any agreement
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or understanding with a proposed transferee that it will transfer any of the
Borrower Obligations.
2.8. Modification of Documents.
(a) Senior Lender may amend, modify or otherwise alter any Senior
Loan Document in any manner whatsoever, without notice to or consent of
Subordinated Lender. Senior Lender shall have the right to exercise any and all
rights and remedies granted to Senior Lender pursuant to the Senior Loan
Documents, without notice to or consent of Subordinate Lender.
(b) At any time prior to the time the Senior Secured Obligations
are Paid in Full, Subordinate Lender shall not: (i) amend, modify or otherwise
alter any Subordinate Loan Document in any manner whatsoever, including but not
limited to modifications of the interest rate, payment terms, time for
payments, or events of default; (ii) accept, retain, request or take any
security or collateral for the Subordinated Debt; (iii) transfer, assign or
sell any portion of the Subordinate Obligations provided that, Subordinate
Lender may assign the Subordinate Obligations in accordance with Section 2.7,
(iv) increase the Subordinated Debt; (v) except as expressly permitted pursuant
to Section 2.4(a)(i), accept payment of, demand payment of, xxx for or receive
all or any part of the Subordinated Debt; (vi) except as expressly permitted in
Section 2.2 hereof, commence any action or proceeding to enforce or collect any
Subordinate Obligation; (vii) exercise any control over or power to direct the
use or distribution of insurance proceeds, condemnation proceeds, or any other
property of Borrower; or (viii) commence any action to obtain possession of the
property of Borrower, to exercise control over the property of Borrower, or to
create, perfect or enforce any lien against any property of Borrower.
(c) Any instrument at any time evidencing the Subordinate
Obligations, or any portion thereof, shall be permanently marked on its face
with a legend conspicuously indicating that payment thereof is subordinate in
right of payment to the Senior Obligations and subject to the terms and
conditions of this Agreement, and after being so marked certified copies
thereof shall be delivered to Senior Lender. In the event any legend or
endorsement is omitted, Senior Lender or any of its officers or employees are
hereby irrevocably authorized on behalf of Subordinate Lender to make the same.
No specific legend, further assignment or endorsement or delivery of notes,
guarantees or instruments shall be necessary to subject any Subordinate
Obligations to the subordination thereof contained in this Agreement.
2.9. Additional Representations and Warranties. Subordinate Lender
and Borrower represent and warrant to Senior Lender that:
(a) as of the date hereof, the total principal amount of the
Subordinate Obligations is $500,000 plus accrued but unpaid interest for a
period not to exceed one (1) month;
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(b) as of the date hereof, no default or event of default, or
event which with notice or passage of time or both would constitute an event of
default exists or has occurred under the Subordinate Loan Documents;
(c) Subordinate Lender is the exclusive legal and beneficial owner
of all of the Subordinate Obligations;
(d) none of the Subordinate Obligations is subject to any lien,
security interest, financing statements, subordination, assignment or other
claim, except in favor of Senior Lender; and
(e) this Agreement constitutes the legal, valid and binding
obligations of Subordinate Lender, enforceable in accordance with its terms.
3. AGREEMENT BY BORROWER.
(a) Borrower hereby acknowledges and agrees to the foregoing terms
and provisions, and agrees that it will, together with its successors and
assigns, be bound by the provisions hereof. In the event of a conflict or
inconsistencies between the terms of this Agreement and the Senior Loan
Documents or the Subordinate Loan Documents, the terms of the Senior Loan
Documents or the Subordinate Loan Documents, as applicable, shall govern as
between the applicable lender and Borrower.
(b) Borrower acknowledges and agrees that: (i) although it may
sign this Agreement it is not a party hereto and does not and will not receive
any right, benefit, priority or interest under or because of the existence of
the foregoing Agreement; (ii) in the event of a breach by Borrower or
Subordinate Lender of any of the terms and provisions contained in this
Agreement, such a breach shall constitute an Event of Default, as defined in
and under the Senior Loan Documents; and (iii) it will execute and deliver such
additional documents and take such additional action as may be necessary or
desirable in the opinion of either Subordinate Lender or Senior Lender to
effectuate the provisions and purposes of this Agreement.
4. MISCELLANEOUS.
4.1. Notices. Any and all notices given in connection with this
Agreement shall be deemed adequately given only if in writing and addressed to
the party for whom such notices are intended at the address set forth below.
All notices shall be sent by personal delivery, Federal Express or other over-
night messenger service, first class registered or certified mail, postage
prepaid, return receipt requested or by other means at least as fast and
reliable as first class mail. A written notice shall be deemed to have been
given to the recipient party on the earlier of (a) the date it shall be
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delivered to the address required by this Agreement; (b) the date delivery
shall have been refused at the address required by this Agreement; or (c) with
respect to notices sent by mail, the date as of which the postal service shall
have indicated such notice to be undeliverable at the address required by this
Agreement. Any and all notices referred to in this Agreement, or which either
party desires to give to the other, shall be addressed as follows:
if to Borrower: Solo Serve Corporation
0000 Xxxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxx
with a copy to: Xxx and Xxxxx
000 Xxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000-0000
Attn: Xxxx Xxxxxxxxx, Esq.
if to Senior Lender: Sanwa Business Credit
Corporation
Xxx Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: First Vice
President,
Commercial Finance
Division
with a copy to: Xxxxxxxx & Xxxxxx, Ltd.
00 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxx, Esq.
if to Subordinate Lender: % Xxxxxxx X. Xxxxxx
0000 Xxxxxxx Xxxx
Xxx Xxxxxxx, Xxxxx 00000
The above addresses may be changed by notice of such change, mailed as
provided herein, to the last address designated.
4.2. No Fiduciary Duty. Nothing in this Agreement shall be
construed to create or impose upon Senior Lender any fiduciary duty to
Subordinate Lender, or any other implied obligation to act or refrain from
acting with respect to Borrower or the Senior Secured Obligations or the
collateral security securing the Senior Secured Obligations in any manner
contrary to what Senior Lender may determine is in its own best interests.
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4.3. Notice of Default. In addition to any other notices which may
be required hereunder, Subordinate Lender shall use its best efforts to give
written notice to Senior Lender, promptly upon the occurrence of: (a) an event
of default under the terms of the Subordinate Loan Documents, (b) the cure of
any such event of default, (c) the payment in full of the Subordinate Debt.
4.4. Successors; Continuing Effect.
(a) This Agreement is being entered into for the benefit of, and
shall be binding upon, Borrower, Senior Lender and Subordinate Lender and their
respective successors and assigns, including each subsequent or additional
holder of Senior Secured Obligations, or Subordinate Debt, and any participant
(whether now existing or hereafter arising) in the Senior Secured Obligations.
The terms "SENIOR LENDER" and "SUBORDINATE LENDER" shall include, respectively,
any such subsequent or additional holder of or participant in Senior Secured
Obligations or Subordinate Obligations whenever the context permits. This
Agreement shall inure to the benefit of and be enforceable by any future holder
or holders of the Borrower Obligations or any part of any of the same; provided
that, nothing contained in this Section 4.4 shall be deemed to permit the
transfer of the Subordinate Obligations in violation of the provisions of
Section 2.7.
(b) Senior Lender reserves the right to grant participations in,
or otherwise sell, assign, transfer or negotiate all or any part of, or any
interest in, the Senior Secured Obligations and the Collateral securing same.
In connection with any participation or other transfer or assignment, Senior
Lender (i) may disclose to such assignee, participant or other transferee or
assignee all documents and information which Senior Lender now or hereafter may
have relating to the Senior Secured Obligations or the Collateral, and (ii)
shall disclose to such participant or other transferee or assignee the
existence and terms and conditions of this Agreement.
4.5. Amendments. This Agreement may be amended only by a written
instrument executed by Senior Lender and Subordinate Lender and, if such
amendment affects Borrower, by Borrower.
4.6. Term. This Agreement shall remain in full force and effect
until the Payment in Full of the Senior Secured Obligations.
4.7. Waivers. No waiver shall be deemed to be made by any party of
any of its rights hereunder unless the same shall be in writing and then only
with respect to the specific instance involved, and no such waiver shall impair
or offset the rights of the waiving party or the obligations of the party
benefited by such waiver in any other respect or at any other time.
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4.8. Governing Law. This Agreement, including the validity hereof
and the rights and obligations of the parties hereunder, shall be governed by
and construed and enforced in accordance with the laws of the State of
Illinois.
4.9. Subordination May Not Be Impaired by the Borrower. No right of
Senior Lender or Subordinate Lender to enforce the subordination created hereby
shall be impaired by any act or failure to act by Borrower or by the failure by
Borrower to comply with this Agreement, regardless of any knowledge which
Senior Lender or Subordinate Lender may have or be otherwise charged with.
4.10. Specific Performance. The parties hereto acknowledge that
legal remedies may be inadequate and therefore Senior Lender and Subordinate
Lender are hereby authorized to demand specific performance of the provisions
of this Agreement at any time when Borrower, Senior Lender or Subordinate
Lender shall have failed to comply with any provision hereof. Each party hereto
hereby irrevocably waives any defense based on the adequacy of a remedy at law
that might be asserted as a bar to such remedy of specific performance.
4.11. Further Actions. After the execution of this Agreement each
party will execute and deliver all such documents and instruments and do all
such other acts and things as may be reasonably necessary to carry out the
provisions of this Agreement.
4.12. Agreement to Control. If any provision in any document or
instrument relating to the Senior Secured Obligations or the Subordinate Debt
differs with the terms of this Agreement regarding the same or any similar
matter, the provisions of this Agreement shall control and each other provision
shall be interpreted so as to give effect to the provisions of this Agreement.
4.13. Entire Agreement. This Agreement contains the entire agreement
of the parties with respect to the subject matter hereof and supersedes all
prior written and oral agreements, and all contemporaneous oral agreements,
relating to such matters.
4.14. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
4.15. Facsimile. For purposes of negotiating and finalizing this
Agreement (including any subsequent amendments thereto), any signed document
transmitted by facsimile machine ("FAX") shall be treated in all manner and
respects as an original document. The signature of any party by FAX shall be
considered for these purposes as an original signature. Any such FAX document
shall be considered to have the same binding legal effect as an original
document, provided that an original of the faxed document was mailed by first
class U.S. Mail or personally delivered to the
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recipient, on the date of its transmission with proof of the fax transmission.
At the request of any party, any FAX document subject to this Agreement shall
be re-executed by both parties in an original form. The undersigned parties
hereby agree that neither shall raise the use of the FAX or the fact that any
signature or document was transmitted or communicated through the use of a FAX
as a defense to the formation of this Agreement. This Agreement may be signed
in one or more counterparts, each of which shall be an original, but all of
which together shall constitute one agreement, binding on all of the parties
hereto notwithstanding that all of the parties hereto are not signatories to
the same counterpart. Each of the undersigned parties authorizes the assembly
of one or more original copies of this Agreement through the combination of the
several executed counterpart signature pages with one or more copies of this
Agreement, including the Exhibits, if any, to this Agreement. Each such
compilation of this Agreement shall constitute one original of this Agreement.
4.16. Effect on Other Documents. No provision of the Senior Loan
Documents limiting the liability of any limited partner of the Borrower shall
amend, modify or impair any obligation of Subordinate Lender as a party to this
Agreement.
4.17. Consent to Jurisdiction; Waiver of Jury Trial.
(a) BORROWER, SUBORDINATE LENDER AND SENIOR LENDER EACH HEREBY (i)
TO THE EXTENT PERMITTED BY APPLICABLE LAW, IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN CHICAGO, ILLINOIS, OVER
ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY MATTER ARISING FROM OR
RELATED TO THIS AGREEMENT; (ii) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
BORROWER, SUBORDINATE LENDER AND SENIOR LENDER MAY EFFECTIVELY DO SO, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT; (iii) AGREES THAT, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION BY SUIT
ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW; AND (iv) TO THE EXTENT
PERMITTED BY APPLICABLE LAW, AGREES NOT TO INSTITUTE ANY LEGAL ACTION OR
PROCEEDING AGAINST ANY PARTY HERETO OR ANY OF PARTY'S DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS OR PROPERTY, CONCERNING ANY MATTER ARISING OUT OF OR RELATING
TO THIS AGREEMENT IN ANY COURT OTHER THAN ONE LOCATED IN XXXX COUNTY, ILLINOIS.
(b) NOTHING IN THIS SECTION SHALL AFFECT OR IMPAIR SENIOR LENDER'S
RIGHT TO SERVE LEGAL PROCESS ON BORROWER IN ANY MANNER PERMITTED BY LAW OR
SENIOR LENDER'S RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR
BORROWER'S PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
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(c) Waiver of Jury Trial. BORROWER, SENIOR LENDER AND SUBORDINATE
LENDER EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT TO
A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY
COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN)
OR ACTIONS OF EITHER PARTY. EACH PARTY HERETO HEREBY EXPRESSLY ACKNOWLEDGES
THIS WAIVER IS A MATERIAL INDUCEMENT FOR SENIOR LENDER TO ENTER INTO THIS
AGREEMENT AND TO MAKE THE LOAN EVIDENCED BY THE SENIOR LOAN DOCUMENTS.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Subordination Agreement as of the day, month and year first above written.
SOLO SERVICE CORPORATION
By: /s/ Xxxx X. Xxxxx
---------------------------------------
Name: Xxxx X. Xxxxx
Title: Executive Vice President and
Chief Financial Officer
SANWA BUSINESS CREDIT CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Vice President
XXXXXX FAMILY TRUST
By: /s/ Xxxx Xxx Xxxxx
----------------------------------------
Xxxx Xxx Riebak, as Trustee under the
Xxxx Xxx Riebak Trust
By: /s/ Xxxxx Xxxxx Xxxxx
---------------------------------------
Xxxxx Xxxxx Xxxxx, as Trustee under
the Xxxxx Xxxxx Xxxxx Trust
/s/ Xxxxxxx X. Xxxxxx
----------------------------------
Xxxxxxx X Xxxxxx
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