Exhibit 10.10
SUBORDINATION AGREEMENT
This SUBORDINATION AGREEMENT, dated as of May 17, 2002, is made by TLL
PARTNERS, L.L.C., a Delaware limited liability company (the "Subordinated
Creditor"), for the benefit of ING PRIME RATE TRUST, a Massachusetts business
trust formerly known as PILGRIM AMERICA PRIME RATE TRUST (the "Senior Lender").
TELETOUCH COMMUNICATIONS, INC., a Delaware corporation (the
"Borrower"), is now indebted to the Senior Lender on account of various loans
and other extensions of credit and financial accommodations previously made or
granted by the Senior Lender to or for the benefit of the Borrower. Senior
Lender tentatively has agreed to make certain modifications of such loans,
extensions of credit and financial accommodations, as more fully set forth in
the Loan Modification Agreement, dated as of May 17, 2002, between the Borrower
and the Senior Lender.
The Subordinated Creditor has made or may make loans or grant other
financial accommodations to the Borrower.
As a condition to making the modifications of such loans, extensions of
credit and financial accommodations referred to in the Loan Modification
Agreement, the Senior Lender requires that the Subordinated Creditor fully
subordinate the payment of the Subordinated Creditor's loans and other financial
accommodations to the payment of any and all indebtedness of the Borrower to the
Senior Lender. Assisting the Borrower in obtaining the modifications to such
loans, extensions of credit and financial accommodations from the Senior Lender
to the Borrower and subordinating the Subordinated Creditor's interests pursuant
to the terms of this Agreement are in the Subordinated Creditor's best
interests.
ACCORDINGLY, in consideration of the aforesaid modifications of the
existing loans, extensions of credit and financial accommodations previously
made by the Senior Lender to the Borrower and of any and all future loans,
extensions of credit and financial accommodations that hereafter may be made by
the Senior Lender for the benefit of the Borrower, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Subordinated Creditor hereby agrees as follows:
1. Definitions. As used herein, the following terms have the
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meanings set forth below:
"Borrower Default" means a Default or Event of Default as
defined in any agreement or instrument evidencing, governing, or issued
in connection with Senior Lender Indebtedness, including but not
limited to, the $2,750,000 Promissory Note from the Borrower to the
Senior Lender, the Second Amended
and Restated Credit Agreement between the Borrower and the Senior
Lender, the Guarantee and Security Agreement, the Deed of Trust,
Assignment of Rents, Security Agreement and Fixture Filing, and any and
all other loan documents between the Borrower and the Senior Lender, or
any default under or breach of any such agreement or instrument.
"Collateral" means all collateral now or hereafter securing
payment of the Senior Lender Indebtedness, including all proceeds
thereof.
"Loan Agreement" means that certain Second Amended and
Restated Credit Agreement, dated as of May 17, 2002, by and between the
Borrower and the Senior Lender, as the same may hereafter be amended,
supplemented or restated from time to time.
"Lien" means any security interest, mortgage, deed of trust,
pledge, lien, charge, encumbrance, title retention agreement or
analogous instrument or device, including the interest of each lessor
under any capitalized lease and the interest of any bondsman under any
payment or performance bond, in, of or on any assets or properties of a
Person, whether now owned or hereafter acquired and whether arising by
agreement or operation of law.
"Senior Lender Indebtedness" means each and every debt,
liability and obligation of every type and description which the
Borrower may now or at any time hereafter owe to the Senior Lender,
regardless of whether such debt, liability or obligation now exists or
is hereafter credited or incurred, whether it is or may be direct or
indirect, voluntary or involuntary, due or to become due, absolute or
contingent, secured or unsecured, primary or secondary, liquidated or
unliquidated, or joint, several or joint and several, whether it is for
principal, interest, fees, costs or other charges related thereto
(including all interest, fees, costs and other charges accruing after
the commencement of any case, proceeding or other action relating to
the bankruptcy insolvency or reorganization of the Borrower, whether or
not allowed in such proceeding or other action), and regardless of
whether or not recovery upon any of such debts, liabilities or
obligations may be or hereafter become barred or otherwise
unenforceable, together with any and all renewals, extensions and
modifications thereof and any notes issued in whole or partial
substitution therefor.
"Subordinated Indebtedness" means all obligations arising
under each and every debt, liability and obligation of every type and
description which the Borrower may now or at any time hereafter owe to
the Subordinated Creditor, regardless of whether such debt, liability
or obligation now exists or is hereafter credited or incurred, and
whether it is or may be direct or indirect, voluntary or involuntary,
due or to become due, absolute or contingent, secured or unsecured,
primary or secondary, liquidated or unliquidated, or joint, several or
joint and several or joint and several.
2. Subordination of Lien, Rights, Interests and Payments. The payment
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of all of the Subordinated Indebtedness is hereby expressly subordinated to the
extent and in the manner hereinafter set forth to the payment in full of the
Senior Lender Indebtedness; and regardless of any priority otherwise available
to the Subordinated Creditor by law or by agreement, the Senior Lender shall
hold a first priority Lien in the Collateral, and any Lien or rights or
interests claimed therein by the Subordinated Creditor shall be and remain fully
subordinate for all purposes to the Lien and rights and interests of the Senior
Lender therein for all purposes whatsoever. The Subordinated Indebtedness shall
continue to be subordinated to the Senior Lender Indebtedness even if the Senior
Lender indebtedness is subordinated, avoided or disallowed under the United
States Bankruptcy Code or other applicable law.
3. Payments. Until all of the Senior Lender Indebtedness has been paid
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in full and the Senior Lender has released its Lien in the Collateral, the
Subordinated Creditor shall not, without the Senior Lender's prior written
consent (which may be given, withheld or conditioned in the Senior Lender's sole
and absolute discretion), demand, receive or accept any payment (whether of
principal, interest or otherwise) from the Borrower in respect to the
Subordinated Indebtedness or exercise any right or permit any setoff in respect
of the Subordinated Indebtedness.
4. Receipt of Prohibited Payments. If the Subordinated Creditor
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receives any payment on the Subordinated Indebtedness that the Subordinated
Creditor is not entitled to receive under the provisions of this Agreement, the
Subordinated Creditor will hold the amount so received in trust for the Senior
Lender and will forthwith turn over such payment to the Senior Lender in the
form received (except for the endorsement of the Subordinated Creditor where
necessary) for application to Senior Lender Indebtedness (whether or not due),
in such manner of application as the Senior Lender may deem appropriate. If the
Subordinated Creditor exercises any right of setoff which the Subordinated
Creditor is not permitted to exercise under the provisions of this Agreement,
the Subordinated Creditor will promptly pay over to the Senior Lender, in
immediately available funds, an amount equal to the amount of the claims or
obligations offset. If the Subordinated Creditor fails to make any endorsement
required under this Agreement, the Senior Lender, or any of its officers or
employees or agents on behalf of the Senior Lender, is hereby irrevocably
appointed as the attorney-in-fact (which appointment is coupled with an
interest) for the Subordinated Creditor to make such endorsement in the
Subordinated Creditor's name.
5. Action on Subordinated Indebtedness. The Subordinated Creditor will
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not commence any action or proceeding against the Borrower or all or any portion
of the Collateral to recover all or any part of the Subordinated Indebtedness,
or join with any creditor (unless the Senior Lender shall so join) in bringing
any proceeding against the Borrower or all or any portion of the Collateral,
whether under any bankruptcy, reorganization, readjustment of debt, arrangement
of debt, receivership, liquidation, insolvency or similar law or statute of the
federal or any state government, or otherwise, or take or attempt to take
possession of, sell, or dispose of any Collateral, or exercise or enforce any
right or remedy available to the Subordinated Creditor with respect to any
Collateral, unless and until the Senior Lender Indebtedness has been paid in
full and the Senior Lender has released its Lien in the Collateral.
6. Actions Concerning Collateral.
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(a) Notwithstanding any Lien now held or hereafter acquired by the
Subordinated Creditor, the Senior Lender may take possession of, sell, dispose
of, and otherwise deal with all or any part of the Collateral, and may enforce
any right or remedy available to it with respect to the Borrower or the
Collateral, all without notice to or consent of the Subordinated Creditor. In
liquidating or disposing of the Collateral or any of it, the Senior Lender need
only use its reasonable best judgment with respect thereto and shall not be
liable to Subordinated Creditor for any act or omission with respect to the
liquidation of the Collateral, or the fact that the proceeds realized from a
liquidation of the Collateral might, under any circumstance, have been greater.
(b) In addition, and without limiting the generality of the foregoing,
if (i) a Borrower Default has occurred and is continuing, (ii) the Borrower
intends to sell or otherwise dispose of any Collateral to an unrelated third
party outside the ordinary course of business, (iii) the Senior Lender has given
written notice thereof to the Subordinated Creditor, and (iv) the Subordinated
Creditor has failed, within ten (10) days after receipt of such notice, to
purchase for cash the Senior Lender Indebtedness for the full amount thereof,
the Subordinated Creditor shall be deemed to have consented to such sale or
disposition, to have released any Lien it may have in such Collateral and to
have authorized the Senior Lender or its agents to file partial releases (and
any related financing statements such as "in-lieu" financing statements under
Part 7 of Article 9 of the Uniform Commercial Code) with respect to such
Collateral.
(c) The Senior Lender shall have no duty to preserve, protect, care
for, insure, take possession of, collect, dispose of, or otherwise realize upon
any of the Collateral, and in no event shall the Senior Lender be deemed the
Subordinated Creditor's agent with respect to the Collateral. All proceeds
received by the Senior Lender with respect to any Collateral may be applied,
first, to pay or reimburse the Senior Lender of all costs and expenses
(including reasonable attorneys' fees) incurred by the Senior Lender in
connection with the collection of such proceeds, and second, to any Senior
Lender Indebtedness secured by the Senior Lender's Lien in the Collateral, in
any order that the Senior Lender may choose.
7. Bankruptcy and Insolvency. In the event of any receivership, insolvency,
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bankruptcy, assignment for the benefit of creditors, reorganization or
arrangement with creditors, whether or not pursuant to bankruptcy law, the sale
of all or substantially all of the assets of the Borrower, dissolution,
liquidation or any other marshalling of the assets or liabilities of the
Borrower, the Subordinated Creditor will file all claims, proofs of claim or
other instruments of similar character necessary to enforce the obligations of
the Borrower in respect of the Subordinated Indebtedness and will hold in trust
for the Senior Lender and promptly pay over to the Senior Lender in the form
received (except for the endorsement of the Subordinated Creditor where
necessary) for application to any Senior Lender Indebtedness, any and all
moneys, dividends or other assets received in any such proceedings on account of
the Subordinated Indebtedness, unless and until the Senior Lender Indebtedness
has been paid in full and the
Senior Lender's Lien in the Collateral has been terminated. If the Subordinated
Creditor shall fail to take any such action, the Senior Lender, as
attorney-in-fact for the Subordinated Creditor, may take such action on the
Subordinated Creditor's behalf. The Subordinated Creditor hereby irrevocably
appoints the Senior Lender, or any of its officers or employees on behalf of the
Senior Lender, as the attorney-in-fact for the Subordinated Creditor (which
appointment is coupled with an interest) with the power but not the duty to
demand, xxx for, collect and receive any and all such moneys, dividends or other
assets and give acquittance therefor and to file any claim, proof of claim or
other instrument of similar character, to vote claims comprising Subordinated
Indebtedness to accept or reject any plan of partial or complete liquidation,
reorganization, arrangement, composition or extension and to take such other
action in the Senior Lender's own name or in the name of the Subordinated
Creditor as the Senior Lender may deem necessary or advisable for the
enforcement of the agreements contained herein; and the Subordinated Creditor
will execute and deliver to the Senior Lender such other and further
powers-of-attorney or instruments as the Senior Lender may request in order to
accomplish the foregoing. If the Senior Lender desires to permit the use of cash
collateral or to provide post-petition financing to the Borrower, the
Subordinated Creditor shall not object to the same or assert that its interests
are not being adequately protected.
8. Restrictive Legend; Transfer of Subordinated Indebtedness. The
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Subordinated Creditor will cause all notes, bonds, debentures or other
instruments evidencing the Subordinated Indebtedness or any part thereof to
contain a specific statement thereon to the effect that the indebtedness thereby
evidenced is subject to the provisions of this Agreement, and the Subordinated
Creditor will xxxx its books conspicuously to evidence the subordination
effected hereby. At the request of the Senior Lender, the Subordinated Creditor
shall deposit with the Senior Lender all of the notes, bonds, debentures or
other instruments evidencing the Subordinated Indebtedness, which notes, bonds,
debentures or other instruments may be held by the Senior Lender so long as any
Senior Lender Indebtedness remains outstanding or the Senior Lender's Lien in
the Collateral has not been terminated. The Subordinated Creditor is the lawful
holder of the Subordinated Indebtedness and has not transferred any interest
therein to any other person. Without the prior written consent of the Senior
Lender (which consent may be given, withheld or conditioned in the Senior
Lender's sole and absolute discretion), the Subordinated Creditor will not
assign, transfer or pledge to any other person any of the Subordinated
Indebtedness or agree to a discharge or forgiveness of the same.
9. Continuing Effect. This Agreement shall constitute a continuing
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agreement of subordination, and the Senior Lender may, without notice to or
consent by the Subordinated Creditor, modify any term of the Senior Lender
Indebtedness in reliance upon this Agreement. Without limiting the generality of
the foregoing, the Senior Lender may, at any time and from time to time, without
the consent of or notice to the Subordinated Creditor and without incurring
responsibility to the Subordinated Creditor or impairing or releasing any of the
Senior Lender's rights or any of the Subordinated Creditor's obligations
hereunder:
(a) change the interest rate or change the amount of payment or extend
the time for payment or renew or otherwise alter the terms of any Senior Lender
Indebtedness or any instrument evidencing the same in any manner;
(b) sell, exchange, release or otherwise deal with any property at any
time securing payment of the Senior Lender Indebtedness or any part thereof;
(c) release anyone liable in any manner for the payment or collection
of the Senior Lender Indebtedness or any part thereof;
(d) exercise or refrain from exercising any right against the Borrower
or any other person (including the Subordinated Creditor); and
(e) apply any sums received by the Senior Lender, by whomsoever paid
and howsoever realized, to the Senior Lender Indebtedness in such manner as the
Senior Lender shall deem appropriate.
The Subordinated Creditor hereby waives any and all right to require the
marshalling of assets in connection with the exercise of any of the Senior
Lender's remedies permitted by applicable law or agreement. The obligations of
the Subordinated Creditor under this Agreement shall continue to be effective,
or be reinstated, as the case may be, if at any time any payment in respect of
the Senior Lender Indebtedness is rescinded or must otherwise be restored or
returned by the Senior Lender upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or any substantial part of its property, or otherwise, all as though
such payment had not been made.
10. No Commitment. None of the provisions of this Agreement shall be
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deemed or construed to constitute or imply any commitment or obligation on the
part of the Senior Lender to enter into the modifications of the existing loans,
extensions of credit and financial accommodations to the Borrower referred to
above or to make any future loans or other extensions of credit or financial
accommodations to the Borrower.
11. Notices. All notices and other communications hereunder shall be in
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writing and shall be (a) personally delivered, (b) transmitted by registered
mail, postage prepaid, or (c) transmitted by telecopy, in each case addressed to
the party to whom notice is being given at its address as set forth below:
If to the Senior Lender:
ING PRIME RATE TRUST
0000 Xxxx Xxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xxxxxx Xxxxxx
If to the Subordinated Creditor:
TLL Partners, L.L.C.
000 Xxxxx Xxxxxxx, Xxxxx 000
Xxxxx, Xxxxx 00000
Attention: Xxxxxx X. XxXxxxxx
or at such other address as may hereafter be designated in writing by that
party. All such notices or other communications shall be deemed to have been
given on (i) the date received if delivered personally, (ii) the date of posting
if delivered by mail, or (iii) the date of transmission if delivered by
telecopy.
12. Conflict in Agreements. If the subordination provisions of any
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instrument evidencing the Subordinated Indebtedness conflict with the terms of
this Agreement, the terms of this Agreement shall govern the relationship
between the Senior Lender and the Subordinated Creditor.
13. No Waiver. No waiver shall be deemed to be made by the Senior
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Lender of any of its rights hereunder unless the same shall be in writing signed
on behalf of the Senior Lender; and each such waiver, if any, shall be a waiver
only with respect to the specific matter or matters to which the waiver relates
and shall in no way impair the rights of the Senior Lender or the obligations of
the Subordinated Creditor to the Senior Lender in any other respect at any time.
14. Binding Effect; Acceptance. This Agreement shall be binding upon
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the Subordinated Creditor and the Subordinated Creditor's heirs, legal
representatives, successors and assigns and shall inure to the benefit of the
Senior Lender and its participants, successors and assigns, irrespective of
whether this or any similar agreement is executed by any other subordinated
creditor of the Borrower. Notice of acceptance by the Senior Lender of this
Agreement or of reliance by the Senior Lender upon this Agreement is hereby
waived by the Subordinated Creditor.
15. Miscellaneous. The paragraph headings herein are included for
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convenience of reference only and shall not constitute a part of this Agreement
for any other purpose. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
16. Governing Law; Consent to Jurisdiction and Venue; Waiver of Jury
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Trial. This Agreement shall be governed by and construed in accordance with the
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substantive laws (other than conflict laws) of the State of Arizona. Each party
consents to the personal jurisdiction of the state and federal courts located in
the State of Arizona in connection with any controversy related to this
Agreement, waives any argument that venue in any such forum is not convenient,
and agrees that any litigation initiated by any of them in connection with this
Agreement may be venued in either the state or federal courts located in
Maricopa County, Arizona. THE PARTIES WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING BASED ON OR PERTAINING TO THIS AGREEMENT.
IN WITNESS WHEREOF, the Subordinated Creditor has executed this
Agreement as of the date and year first above-written.
TLL PARTNERS, L.L.C., a Delaware
limited liability company
By:_____________________________
Its:_____________________________
Acknowledgment by Borrower
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The undersigned, being the Borrower referred to in the foregoing
Agreement, hereby (i) acknowledges receipt of a copy thereof, (ii) agrees to all
of the terms and provisions thereof, (iii) agrees to and with the Senior Lender
that it shall make no payment on the Subordinated Indebtedness that the
Subordinated Creditor would not be entitled to receive under the provisions of
the Agreement, notwithstanding anything to the contrary which may be contained
in any agreement, document or indebtedness evidencing, securing or otherwise
relating to the Subordinated Indebtedness, (iv) agrees that any such payment
will constitute a default under the Senior Lender Indebtedness, and (v) agrees
to xxxx its books conspicuously to evidence the subordination of the
Subordinated Indebtedness effected hereby.
TELETOUCH COMMUNICATIONS, INC.,
a Delaware corporation
By:______________________________
Its:______________________________
