SUBORDINATION AND INTER-CREDITOR AGREEMENT
Exhibit
10.4
This
Subordination and Inter-Creditor Agreement ("Agreement") is entered into as
of
the 17th
day of
April, 2008, between PNC BANK, NATIONAL ASSOCIATION, as Agent for Lenders
("PNC"), 00 Xxxx 00xx
Xxxxxx,
Xxx Xxxx, XX 00000, and SIGMA OPPORTUNITY FUND, LLC ("Sigma"), maintaining
an
address at 000 Xxxxx Xxxxxx, XX, XX 00000 and SIGMA BERLINER, LLC, maintaining
an address at 000 Xxxxx Xxxxxx, XX, XX 00000 ("Sigma LLC"), and OPERIS PARTNERS
I LLC,
maintaining an address at 0000 Xxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx
00000 ("Operis"), and, PACIFIC ASSET PARTNERS, maintaining an address at 000
Xxxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxxxxxx,
Xxxxxxxxxx 00000 ("Pacific," and together with Sigma, Sigma LLC and Operis,
the
"Subordinate Investors").
WHEREAS,
the Subordinate Investors maintain a security interest in certain assets (the
"Sigma Collateral") of Berliner Communications, Inc., f/k/a Novo Networks,
Inc.
and BCI Communications, Inc. (collectively, the "Obligor"), as security for
those obligations and indebtedness of Obligor to the Subordinate Investors
(the
"Sigma Financing"), under and pursuant to certain convertible promissory notes
and warrants, and other documents and agreements between Obligor and the
Subordinate Investors (the "Sigma Documents"). A listing of such documents
and
agreements, and amendments thereto, are set forth on Schedule A attached hereto,
copies of which have been previously delivered to PNC.
WHEREAS,
the Subordinate Investors have filed UCC-l financing statements (the "Sigma
Financing Statements"), in order to perfect their security interests in the
Sigma Collateral;
WHEREAS,
PNC, as Agent for certain other Lenders, is creating a credit facility (the
"PNC
Financing") to BCI Communication, Inc. (“Borrower”), and guaranteed by Berliner
Communications, Inc. (“Guarantor”), evidenced by a promissory note, guaranty and
other documents between Obligor, PNC and the other Lenders, as the same may
hereafter be amended and modified (collectively, the ''PNC Documents"), and
secured by a security interest from Obligor to PNC in substantially all of
Obligor's assets, including, but not limited to, Obligor's present and future
accounts receivable, contract rights, inventory, machinery, equipment, general
intangibles and all forms of proceeds, products and replacements thereof
(collectively, the "PNC Collateral");
WHEREAS,
the PNC Financing shall include all amounts due to PNC by Obligor under the
PNC
Documents, together with any additional financing PNC, as Agent for the Lenders,
may provide to Obligor, up to the sum of $15,000,000.00 in the aggregate, or
such higher
amount as the parties may subsequently agree to in writing signed by PNC and
Obligor, subject to prior written consent of the Subordinate Investors;
WHEREAS,
PNC has filed, and may in the future file, UCC-l and other financing statements
(the "PNC Financing Statements"), in order to perfect its security interests
in
the PNC Collateral; and
WHEREAS,
the Subordinate Investors have agreed to subordinate their security interests
in
the Sigma Collateral, and to subordinate the Sigma Financing Statements and
to
subordinate the Sigma Financing (inclusive of all additional financing from
the
Subordinate Investors) up to $15,000,000 in the aggregate, to the security
interests of PNC in the PNC Collateral and to the PNC Financing Statements
and
to the PNC Financing, in accordance with the terms herein.
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NOW,
THEREFORE, the undersigned parties, intending to be legally and mutually bound
by the terms hereof, agree as follows:
1. The
foregoing recital paragraphs are incorporated herein by reference and agreed
to
by the PNC and the Subordinate Investors herein as if fully set forth.
2. The
Subordinate Investors agree that until such time as all amounts owing to PNC
on
the PNC Financing are paid in full in accordance with the PNC Documents, and
PNC
terminates the PNC Financing Statements (which PNC agrees to do promptly after
payment in full of the PNC Financing), the security interests maintained by
the
Subordinate Investors in the Sigma Collateral and the Sigma Financing Statements
and the Sigma Financing, shall at all times be subordinate and junior in
interest, priority, and in every other respect to the security interests
maintained by PNC in the PNC Collateral and to the PNC Financing Statements
and
to the PNC Financing.
3. The
Subordinate Investors further agree that, subject to the exceptions set forth
in
the next sentence and in Section 5, at any time when the PNC Financing is
outstanding, the Subordinate Investors shall not be entitled to receive any
proceeds from, or on account of the PNC Collateral or the Sigma Collateral
or
any other payments of any nature from Obligor except for director fees or other
administrative fees or expenses expressly permitted by the Sigma Financing
documents, including any sums due and payable by virtue of a bankruptcy,
receivership, insolvency or similar proceeding(s) of Obligor. Notwithstanding
the foregoing, the Subordinate Investors shall be entitled to receive,
provided
that
Obligor is not then in default on the PNC Financing, (a) regular quarterly
payments from Obligor (including a payment of principal upon maturity so long
as
(i) the aggregate amount of such principal payment upon maturity does not exceed
$6,000,000, and (ii) at the time of such repayment the Borrower has a minimum
Undrawn Availability of at least $2,000,000 for the period commencing seven
(7)
days prior to making such repayment through and including the date of such
repayment after giving effect to such repayment), as and when due by Obligor
to
the Subordinate Investors under the Sigma Financing and Sigma Documents, and
(b)
liquidated damages payments upon the occurrence of a Registration Event (as
defined in the Sigma Documents) so long as the total amount of any such
liquidated damages payment does not exceed $120,000 during any calendar month
and the total amount of all such liquidated damages payments does not exceed
$720,000 at any time. Subject to the foregoing exceptions, and in all events
when Obligor is in default of the PNC Financing, in the event the Subordinate
Investors should receive any type of payment from the Obligor or proceeds from
the PNC Collateral
or Sigma Collateral from any source on account of the Sigma Financing, at any
time when the PNC Financing is outstanding, the Subordinate Investors agree
to
turn over all such payments and proceeds to PNC within two (2) business days
of
the receipt thereof by the Subordinate Investors. Proceeds as used herein shall
mean all proceeds of the PNC Collateral and Sigma Collateral, including
payments, collections, sale proceeds and other proceeds however generated or
realized from the PNC Collateral and Sigma Collateral. Except as specifically
set forth in this paragraph, all proceeds of the PNC Collateral and Sigma
Collateral received by the Subordinate Investors, at any time when the PNC
Financing is outstanding, shall be segregated by the Subordinate Investors,
who
shall hold same in trust for PNC pending turnover of such proceeds to PNC.
Notwithstanding anything in this Agreement to the contrary, nothing herein
shall
preclude the Subordinate Investors from converting amounts owing to them
pursuant to the Sigma Financing into equity of Obligor.
4. PNC
and
the Subordinate Investors agree to provide each other with written notice of
default by Obligor on the PNC Financing and/or Sigma Financing (each a “Notice
of Default”). Any notices required or which may be given under this Agreement
shall be in writing and deemed received one day after mailing by overnight
mail
to the intended recipient at the address for such recipient first set forth
above, and if to Sigma, to the attention of Xxxx Xxxx, and if to Sigma LLC
to
the attention of Xxxx Xxxx, and if to Operis, to the attention of Lior Averni,
and if to Pacific, to the attention of Xxxxxx X. Xxxxxxx and if to PNC, to
the
attention of Xxxx Xxxxx.
5. The
Subordinate Investors agree that until such time as the PNC Financing is fully
paid in accordance with the PNC Documents, and PNC terminates the PNC Financing
Statements (which PNC agrees to do promptly after the PNC Financing is fully
repaid), the Subordinate Investors will not take any action, whether by legal
process or otherwise, with respect to the PNC Collateral or Sigma Collateral
at
any time unless (a) a Notice of Default has been delivered by the Subordinate
Investors to PNC, and (b) it is beyond one hundred eighty (180) days from the
delivery of the Notice of Default.
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6. The
Subordinate Investors agree that their subordination and other agreements herein
shall be effective upon their execution hereof, without PNC being required
to
advance any sums to Obligor on the PNC Financing or take any other actions,
and
irrespective of whether or not PNC has perfected its security interests in
the
PNC Collateral.
7. In
the
event the security interests of the Subordinate Investors in the Sigma
Collateral are deemed prior to the liens, claims or interests of any other
creditor or claimant of Obligor, such priority shall not in any manner modify
the subordination and agreements of the Subordinate Investors herein, or elevate
their position as to PNC, including, but not limited to, the agreed lien and
other subordinations of the Subordinate Investors herein to the liens and
interests of PNC as set forth herein.
8. In
the
event of a bankruptcy proceeding, receivership or any similar or other
proceeding of or against Obligor, or in the event of any proceeding which seeks
to challenge in any manner the PNC Financing, or the security interests of
PNC
in the PNC Collateral, or the PNC Collateral, or the PNC Financing Statements,
or other proceedings which might in any manner jeopardize or adversely affect
PNC's rights and interests as to the Obligor and/or in the PNC Collateral and/or
Financing, this Agreement shall remain in full force and effect and shall be
automatically re-instated, in full force and effect, in the event anyone or
any
entity should seek to recover from PNC or challenge, or otherwise assert
interests adverse to PNC, in or with respect to any of the PNC Collateral or
as
to the PNC Financing or as to the PNC Financing Statements, including, but
not
limited to, proceedings seeking to recover any of the proceeds of the PNC
Collateral or payments made or recovered by PNC on the PNC Financing and/or
PNC
Collateral, and otherwise, all irrespective of whether the PNC Financing has
been previously satisfied and/or the PNC Financing Statements terminated.
9. This
Agreement shall remain in full force and effect until such time as the PNC
Financing is fully satisfied, and PNC terminates the PNC Financing Statements.
This Agreement shall be automatically re-instated in full force and effect
as
set forth in paragraph eight (8) above.
10. With
respect to the subject matter of this Agreement, there are no other agreements
between the parties, oral or written, other than as specifically set forth
herein. This Agreement cannot be modified in any respect except pursuant to
a
written agreement executed by authorized representatives of PNC and the
Subordinate Investors. This Agreement shall be governed by the laws of New
Jersey and subject to the jurisdiction of the Federal and State courts of that
State.
11. The
Obligor and the Subordinate Investors agree to place a legend on all documents
evidencing the Sigma Financing specifying that the Sigma Financing is subject
to
the terms and conditions of this Agreement and to make proper notations in
their
respective books, records or other statements which evidence or record any
Sigma
Financing, specifically indicating that the Sigma Financing is subject to this
Agreement.
12. All
capitalized terms not specifically defined herein shall have the meaning ascribe
therein in the PNC Documents.
13. THE
PARTIES HEREIN KNOWINGLY AND VOLUNTARILY WAIVE ANY RIGHT THEY MAY HAVE TO A
TRIAL BY JURY WITH RESPECT TO ANY DISPUTES ARISING UNDER THIS AGREEMENT, OR
AS
OTHERWISE MAY ARISE BETWEEN THE PARTIES HERETO, AND FURTHER AGREE THAT EITHER
PARTY MAY INTRODUCE THIS WAIVER INTO THE RECORD OF ANY COURT, OR IN ANY OTHER
PROCEEDING, AS EVIDENCE OF THE OTHER PARTY'S KNOWING AND VOLUNTARY WAIVER OF
ANY
RIGHT IT MAY OTHERWISE HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY DISPUTES
ARISING HEREUNDER, OR AS MAY OTHERWISE ARISE BETWEEN THE PARTIES HERETO.
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14. This
Agreement may be executed in any number of counterparts, each of which will,
for
all purposes, be deemed an original, and all of which are identical.
IN
WITNESS WHEREOF, the undersigned parties have executed this Agreement as of
the
date first set forth above.
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ATTEST:
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PNC
BANK, NATIONAL ASSOCIATION,
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as
Agent for Lenders
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BY:
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Name:
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Name:
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Title:
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Title:
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WITNESS:
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SIGMA
OPPORTUNITY FUND, LLC,
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By
its Managing Member,
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SIGMA
CAPITAL ADVISORS, LLC
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BY:
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Name:
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Name:
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XXXX
XXXX
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Title:
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Title:
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Manager
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WITNESS:
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SIGMA
BERLINER, LLC,
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a
Delaware limited liability company
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By
its Managing Member,
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SIGMA
CAPITAL ADVISORS, LLC
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BY:
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Name:
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Name:
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XXXX
XXXX
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Title:
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Title:
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Manager
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WITNESS:
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OPERIS
PARTNERS I LLC,
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a
Delaware limited liability company
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BY:
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Name:
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Name:
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XXXX
XXXXXX
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Title:
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Title:
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Managing
Member
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WITNESS:
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PACIFIC
ASSET PARTNERS,
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A
California Limited Partnership
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BY:
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Name:
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Name:
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XXXXXX
X. XXXXXXXX
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Title:
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Title:
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General
Partner
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BERLINER
COMMUNICATIONS, INC. AND BCI COMMUNICATIONS, INC. ACKNOWLEDGE AND CONSENT
TO THE
TERMS OF THE AGREEMENT SET FORTH ABOVE.
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ATTEST:
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BERLINER
COMMUNICATIONS, INC.
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f/k/a
Novo Networks, Inc.
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BY:
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Name:
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XXXXXXXX
XXX
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Name:
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XXXXXXX
XXXXXXXX
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Title:
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General
Counsel & Secretary
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Title:
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Chief
Executive Officer &
President
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ATTEST:
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BCI
COMMUNICATIONS, INC.
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BY:
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Name:
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XXXXXXXX
XXX
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Name:
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XXXXXXX
XXXXXXXX
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Title:
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General
Counsel & Secretary
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Title:
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Chief
Executive Officer &
President
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5
Schedule
A
to
Documents
From December 29, 2006 Closing:
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1.
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Note
Purchase Agreement, dated December 29, 2006 by and between Berliner
Communications, Inc. (“Berliner”) and Sigma Opportunity Fund, LLC
(“Sigma”).
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2.
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7%
Senior Subordinated Secured Convertible Note Due 2008, dated December
29,
2006, with a principal amount of $3,000,000 in favor of
Sigma.
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3.
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Common
Stock Purchase Warrant, dated December 29, 2006, for 1,500,000
shares of
common stock of Berliner for
Sigma.
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4.
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Common
Stock Purchase Warrant, dated December 29, 2006, for 150,000 shares
of
common stock of Berliner for Sigma Capital Advisors, LLC (“Sigma
Advisors”).
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5.
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Advisory
Services Agreement, dated December 29, 2006, between Berliner and
Sigma
Advisors.
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6.
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Security
Agreement, dated December 29, 2006, from Berliner and BCI Communications,
Inc. to Sigma.
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7.
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Letter
of Disclosure, dated December 29, 2006, from Sigma to
Berliner.
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8.
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Guaranty,
dated December 29, 2006, from BCI Communications, Inc. (“BCI”) to
Sigma.
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9.
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Subordination
and Inter-Creditor Agreement, dated December 29, 2006, between
Presidential Financial Corporation of Delaware Valley and
Sigma.
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Documents
from February 2, 2007 Closing:
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10.
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Joinder
Agreement to Note Purchase Agreement, dated February 2, 2007 by
and
between Berliner and Pacific Asset Partners
(“Pacific”).
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11.
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7%
Senior Subordinated Secured Convertible Note Due 2008, dated February
2,
2007, with a principal amount of $1,000,000 in favor of
Pacific.
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12.
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Common
Stock Purchase Warrant, dated February 2, 2007, for 500,000 shares
of
common stock of Berliner for Pacific. This warrant was exercised
in
February 2008.
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13.
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Letter
of Disclosure, dated February 2, 2007, from Pacific to
Berliner.
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14.
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Joinder
Agreement to Note Purchase Agreement, dated February 2, 2007 by
and
between Berliner and Operis Partners I LLC
(“Operis”).
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15.
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7%
Senior Subordinated Secured Convertible Note Due 2008, dated February
2,
2007, with a principal amount of $500,000 in favor of
Operis.
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16.
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Common
Stock Purchase Warrant, dated February 2, 2007, for 250,000 shares
of
common stock of Berliner for Operis. This warrant was exercised
in March
2008.
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17.
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Letter
of Disclosure, dated February 2, 2007, from Operis to
Berliner.
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Documents
from February 15, 2007 Closing:
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18.
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Joinder
Agreement to Note Purchase Agreement, dated February 15, 2007 by
and
between Berliner and Sigma
Berliner.
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19.
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7%
Senior Subordinated Secured Convertible Note Due 2008, dated February
15,
2007, with a principal amount of $1,500,000 in favor of Sigma
Berliner.
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20.
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Common
Stock Purchase Warrant, dated February 15, 2007, for 750,000 shares
of
common stock of Berliner for Sigma
Berliner.
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21.
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Common
Stock Purchase Warrant, dated February 15, 2007, for 25,000 shares
of
common stock of Berliner for Sigma
Advisors.
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22.
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Letter
of Disclosure, dated February 15, 2007, from Sigma Berliner to
Berliner.
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Waiver
and Amendments
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23.
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Waiver
Letter, dated May 14, 2007 from Sigma and Sigma Berliner to
Berliner.
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24.
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Amendment
and Waiver Agreement, dated September 27, 2007 among Berliner,
Sigma,
Sigma Berliner, Pacific and
Operis.
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