Exhibit 10.28(A)
SUBORDINATION AGREEMENT
October 22, 1998
To: Fleet Capital Corporation ("Lender")
000 Xxxxxxxxxxx Xxxx., Xxxxx 000
Xxxxxxxxxxx, XX 00000
To induce the Lender to make a credit facility available to and for the
benefit of MSI/Eagle Supply, Inc. ("Borrower") pursuant to the terms of that
certain Loan and Security Agreement between Borrower and Lender, of even date
herewith (as hereafter amended, supplemented or replaced from time to time, the
"Loan Agreement"), the undersigned hereby agrees as follows:
1. The payment of any and all Subordinated Debt is expressly subordinated
to the Senior Debt to the extent and in the manner set forth in this
Subordination Agreement. The term "Subordinated Debt" means all indebtedness,
liabilities, and obligations of Borrower, now existing or hereafter arising, to
the undersigned including but not limited to (i) management fees and
distributions, (ii) indebtedness of Borrower to the undersigned evidenced by
that certain promissory note dated October 22, 1998 ("Note") in the original
principal amount of One Million Dollars ($1,000,000) and (iii) any other
obligations owing by the Borrower, now or hereafter to the undersigned. The
term "Senior Debt" means any and all Obligations of Borrower to Lender under the
Loan Agreement.
2. Until the Senior Debt is paid in full, Borrower shall not pay, and
undersigned shall not accept, any payments of any kind (including prepayments)
associated with Subordinated Debt, provided however, that so long as: (i) the
undersigned has not received notice from Lender that an Event of Default or a
Default under the Loan Agreement has occurred; (ii) the outstanding principal
balance under the Term Note (as defined in the Loan Agreement) does not exceed
the market value of Borrower's equipment that is not subject to any Liens other
than Liens in favor of Lender; and (iii) no Event of Default or Default would
result from the making of any such payment(s), Borrower may pay and the
undersigned may accept management fees and distributions and scheduled (and
accrued but unpaid) interest and principal under the Note. Notwithstanding the
foregoing, upon notice from Lender to the undersigned of the occurrence of an
Event of Default, or a Default, under the Loan Agreement, Borrower shall not
make and the undersigned shall not receive, any payments of interest or
principal, or otherwise, on the Subordinated Debt, without Lender's prior
written consent. Notwithstanding anything herein to the contrary, Borrower shall
be permitted to make payments to the undersigned of an amount equal to the
federal and state income taxes accrued on the Interim Earnings (as such term is
defined in the Asset Purchase Agreement, as defined in the Loan Agreement).
3. Any payments on the Subordinated Debt received by the undersigned,
other than as permitted in paragraph 2 above, shall be held in trust for Lender
and the undersigned will forthwith turn over any such payments in the form
received, properly endorsed, to Lender to be applied to the Senior Debt as
determined by Lender.
4. Borrower shall not grant to the undersigned and the undersigned shall
not take any lien on or security interest in any of Borrower's property, now
owned or hereafter acquired or created, without Lender's prior written consent.
5. The undersigned agrees that it will not make any assertion or claim in
any action, suit or proceeding of any nature whatsoever in any way challenging
the priority, validity or effectiveness of the liens and security interests
granted to Lender under and in connection with the Loan Agreement, or any
amendment, extension, replacement thereof or related agreement between Lender
and Borrower.
6. The undersigned will not commence any action or proceeding against
Borrower to recover all or any part of the Subordinated Debt not paid when due,
and shall at no time join with any creditor, in bringing any proceeding against
Borrower under any liquidation, conservatorship, bankruptcy, reorganization,
rearrangement, or other insolvency law now or hereafter existing, unless and
until the Senior Debt shall be paid in full. Subject to the foregoing, the
undersigned may accelerate the amount of the Subordinated Debt upon the
occurrence of (i) the acceleration of the Senior Debt; and (ii) the filing of a
petition under the Bankruptcy Code by Borrower.
7. In the event of any liquidation, conservatorship, bankruptcy,
reorganization, rearrangement, or other insolvency proceeding of Borrower, the
undersigned will at Lender's request file any claims, proofs of claim, or other
instruments of similar character necessary to enforce the obligations of
Borrower in respect of the Subordinated Debt and will hold in trust for Lender
and pay over to Lender in the same form received, to be applied on the Senior
Debt as determined by Lender, any and all money, dividends or other assets
received in any such proceedings on account of the Subordinated Debt, unless and
until the Senior Debt shall be paid in full, including without limitation,
interest owing to Lender after the commencement of a bankruptcy proceeding at
the rate specified in the Loan Agreement, whether or not such interest is an
allowable claim in such proceeding. Lender may, as attorney-in-fact for the
undersigned, take such action on behalf of the undersigned and the undersigned
hereby appoints Lender as attorney-in-fact for the undersigned to demand, xxx
for, collect, and receive any and all such money, dividends or other assets and
give acquittance therefore and to file any claim, proof of claim or other
instrument of similar character and to take such other proceedings in Lender's
name or in the name of the undersigned, as Lender may deem necessary or
advisable for the enforcement of this Agreement. The undersigned will execute
and deliver to Lender such other and further powers of attorney or other
instruments as either reasonably may request in order to accomplish the
foregoing.
8. Lender may at any time and from time to time, without the consent of
or notice to the undersigned, without incurring responsibility to the
undersigned and without impairing or releasing any of Lender's rights, or any of
the obligations of the undersigned hereunder:
(a) Change the amount, manner, place or terms of payment or change or
extend the time of payment of or renew or alter the Senior Debt, or any part
thereof, or amend, supplement
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or replace the Loan Agreement and/or any notes or surety or guaranty agreements
executed in connection therewith in any manner or enter into or amend,
supplement or replace in any manner any other agreement relating to the Senior
Debt;
(b) Sell, exchange, release or otherwise deal with all or any part of
any property at any time pledged or mortgaged by any party to secure or securing
the Senior Debt or any part thereof;
(c) Release anyone liable in any manner for the payment or collection
of the Senior Debt;
(d) Exercise or refrain from exercising any rights against Borrower,
or others (including the undersigned); and
(e) Apply sums paid by any party to the Senior Debt in any order or
manner as determined by Lender.
9. The undersigned will advise each future holder of all or any part of
the Subordinated Debt that the Subordinated Debt is subordinated to the Senior
Debt in the manner and to the extent provided herein. The undersigned
represents that no part of the Subordinated Debt or any instrument evidencing
the same has been transferred or assigned and the undersigned will not transfer
or assign, except to Lender, any part of the Subordinated Debt while any Senior
Debt remains outstanding, unless such transfer or assignment is made expressly
subject to this Agreement. Upon Lender's request, the undersigned will in the
case of any Subordinated Debt which is not evidenced by any instrument cause the
same to be evidenced by an appropriate instrument or instruments, and place
thereon and on any and all instruments evidencing the Subordinated Debt a legend
in such form as Lender may determine to the effect that the indebtedness
evidenced thereby is subordinated and subject to the prior payment in full of
all Senior Debt pursuant to this Subordination Agreement, as well as deliver all
such instruments to Lender.
10. This Subordination Agreement contains the entire agreement between the
parties regarding the subject matter hereof and may be amended, supplemented or
modified only by written instrument executed by Lender and the undersigned.
This Subordination Agreement, and the rights of Lender hereunder shall terminate
upon indefeasible payment in full of all Senior Debt.
11. The undersigned represents and warrants that neither the execution or
delivery of this Subordination Agreement nor fulfillment of nor compliance with
the terms and provisions hereof will conflict with, or result in a breach of the
terms, conditions, or provisions of or constitute a default under any agreement
or instrument to which the undersigned or any of the undersigned's assets is now
subject.
12. Any notice of acceptance of this Subordination Agreement is hereby
waived.
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13. This Subordination Agreement may be assigned by Lender, in whole or in
part in connection with any assignment or transfer of any portion of the Senior
Debt.
14. This Subordination Agreement shall be binding upon the undersigned,
and the undersigned's successors, representatives and assigns.
15. Except as provided in paragraph 2 above, Borrower agrees that it will
not make any payment on any of the Subordinated Debt, or take any other action
in contravention of the provisions of this Subordination Agreement.
16. This Subordination Agreement shall in all respects be interpreted,
construed and governed by the substantive laws of the State of New York. The
undersigned and Lender, each (i) submits to the jurisdiction of the Supreme
Court of the State of New York, or the United States District Court for the
Southern District of New York for the purposes of resolving any controversy
relating thereto and (ii) WAIVES THE RIGHT TO A JURY TRIAL FOR THE PURPOSE OF
RESOLVING ANY CONTROVERSY HEREUNDER OR ENFORCING OR DEFENDING ANY RIGHTS OR
CLAIM HEREUNDER OR IN CONNECTION HEREWITH, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE.
TDA INDUSTRIES, INC.
BY: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
NAME: Xxxxxxx X. Xxxxxx
TITLE: Chief Executive Officer
Consented and agreed to as of the date first above written:
BORROWER:
MSI/EAGLE SUPPLY, INC.
BY: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
NAME: Xxxxxxx X. Xxxxxx
TITLE: Chief Executive Officer
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LENDER:
FLEET CAPITAL CORPORATION
By: /s/ Xxx Xxxxxxx
------------------------------
Name: Xxx Xxxxxxx
Title: Vice President
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Exhibit 10.28(B)
SUBORDINATION AGREEMENT
Dated: October 22, 1998
To: Fleet Capital Corporation ("Lender")
000 Xxxxxxxxxxx Xxxx., Xxxxx 000
Xxxxxxxxxxx, XX 00000
To induce the Lender to make a credit facility available to and for the
benefit of MSI/Eagle Supply, Inc. ("Borrower") pursuant to the terms of that
certain Loan and Security Agreement between Borrower and Lender, dated the date
hereof (as hereafter amended, supplemented or replaced from time to time, the
"Loan Agreement"), the undersigned hereby agrees as follows:
1. The payment of any and all Subordinated Debt is expressly subordinated
to the Senior Debt to the extent and in the manner set forth in this
Subordination Agreement. The term "Subordinated Debt" means the principal of
and interest on all indebtedness, liabilities, and obligations of Borrower, now
existing or hereafter arising, to the undersigned including but not limited to:
(i) the indebtedness of Borrower evidenced by that certain Secured
Non-Negotiable Promissory Note dated the date hereof ("Note"), payable to the
order of the undersigned in the original principal amount of $2,045,972 and all
other amounts owed by Borrower to undersigned pursuant to Section 2.4 of that
certain Asset Purchase Agreement of even date herewith between Borrower and the
undersigned ("Asset Purchase Agreement"), and (ii) any other obligations owing
by the Borrower, now or hereafter to the undersigned. The term "Senior Debt"
means any and all Obligations of Borrower to Lender under the Loan Agreement.
2. Until the Senior Debt is paid in full, Borrower shall not pay, and
undersigned shall not accept, any payments of any kind (including prepayments)
associated with Subordinated Debt, provided however, that so long as the
undersigned has not received notice from Lender that an Event of Default or a
Default under the Loan Agreement has occurred, and if no Event of Default would
result from the making of any such payment(s), Borrower may pay and the
undersigned may accept scheduled interest payments on the Note and the payments
described in Sections 1.6, 2.1, 2.3 and 2.4 of the Asset Purchase Agreement.
Notwithstanding the foregoing, upon notice from Lender to the undersigned of the
occurrence of an Event of Default, or a Default, under the Loan Agreement,
Borrower shall not make and the undersigned shall not receive, any payments of
interest or principal, or otherwise, on the Subordinated Debt, without Lender's
prior written consent.
3. Any payments on the Subordinated Debt received by the undersigned,
other than as permitted in paragraph 2 above, shall be held in trust for Lender
and the undersigned will forthwith turn over any such payments in the form
received, properly endorsed, to Lender to be applied to the Senior Debt as
determined by Lender.
4. Borrower shall not grant to the undersigned and the undersigned shall
not take any lien on or security interest in any of Borrower's property, now
owned or hereafter acquired or created, without Lender's prior written consent,
except with respect to the security interest granted pursuant to that certain
Subordinate Security Agreement from Borrower to undersigned of even date
herewith (the terms of which are incorporated herein by reference).
5. a. The undersigned agrees that it will not make any assertion or
claim in any action, suit or proceeding of any nature whatsoever in any way
challenging the priority, validity or effectiveness of the liens and security
interests granted to Lender under and in connection with the Loan Agreement, or
any amendment, extension, replacement thereof or related agreement between
Lender and Borrower, and further agrees that Lender's lien and security interest
in the Collateral (as defined in the Loan Agreement) shall at all times while
the Obligations are owing from Borrower to Lender be superior and prior to the
liens and security interests granted to the undersigned pursuant to the
Subordinate Security Agreement (which liens and security interest of the
undersigned shall be subject and inferior to those of Lender) in the Borrower's
assets, irrespective of the time, order or method of attachment or perfection of
the Lender's and the undersigned's liens and security interests, or the filing
of financing statements or the taking of possession of the collateral, or any
portion thereof.
b. Notwithstanding anything to the contrary contained herein or in
the Subordinate Security Agreement, undersigned agrees that in the event that
any Collateral (as defined in the Loan Agreement) or other property of Borrower
that is subject to the liens of the undersigned is sold, transferred, conveyed
or otherwise disposed of (i) as permitted under the Loan Agreement or (ii) as
otherwise consented to by Lender and Borrower, undersigned shall release all
rights to and interests in such property (including its lien), and such property
shall be transferred free and clear of all liens and security interests
(including the lien of the undersigned). Undersigned shall execute such
termination and release documents as Lender may request to effectuate the terms
hereof.
6. The undersigned will not commence any action or proceeding against
Borrower to recover all or any part of the Subordinated Debt not paid when due,
and shall at no time join with any creditor, in bringing any proceeding against
Borrower under any liquidation, conservatorship, bankruptcy, reorganization,
rearrangement, or other insolvency law now or hereafter existing, unless and
until the Senior Debt shall be paid in full. Subject to the foregoing, the
undersigned may accelerate the amount of the Subordinated Debt upon the
occurrence of (i) the acceleration of the Senior Debt; and (ii) the filing of a
petition under the Bankruptcy Code by Borrower.
7. In the event of any liquidation, conservatorship, bankruptcy,
reorganization, rearrangement, or other insolvency proceeding of Borrower, the
undersigned will at Lender's request file any claims, proofs of claim, or other
instruments of similar character necessary to enforce the obligations of
Borrower in respect of the Subordinated Debt and will hold in trust for Lender
and pay over to Lender in the same form received, to be applied on the Senior
Debt as determined by
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Lender, any and all money, dividends or other assets received in any such
proceedings on account of the Subordinated Debt, unless and until the Senior
Debt shall be paid in full. Lender may, as attorney-in-fact for the
undersigned, take such action on behalf of the undersigned and the undersigned
hereby appoints Lender as attorney-in-fact for the undersigned to demand, xxx
for, collect, and receive any and all such money, dividends or other assets and
give acquittance therefore and to file any claim, proof of claim or other
instrument of similar character and to take such other proceedings in Lender's
name or in the name of the undersigned, as Lender may deem necessary or
advisable for the enforcement of this Agreement. The undersigned will execute
and deliver to Lender such other and further powers of attorney or other
instruments as either reasonably may request in order to accomplish the
foregoing.
8. Lender may at any time and from time to time, without the consent of
or notice to the undersigned, without incurring responsibility to the
undersigned and without impairing or releasing any of Lender's rights, or any of
the obligations of the undersigned hereunder:
(a) Change the amount, manner, place or terms of payment or change or
extend the time of payment of or renew or alter the Senior Debt, or any part
thereof, or amend, supplement or replace the Loan Agreement and/or any notes or
surety or guaranty agreements executed in connection therewith in any manner or
enter into or amend, supplement or replace in any manner any other agreement
relating to the Senior Debt;
(b) Sell, exchange, release or otherwise deal with all or any part of
any property at any time pledged or mortgaged by any party to secure or securing
the Senior Debt or any part thereof;
(c) Release anyone liable in any manner for the payment or collection
of the Senior Debt;
(d) Exercise or refrain from exercising any rights against Borrower,
or others (including the undersigned); and
(e) Apply sums paid by any party to the Senior Debt in any order or
manner as determined by Lender.
9. The undersigned will advise each future holder of all or any part of
the Subordinated Debt that the Subordinated Debt is subordinated to the Senior
Debt in the manner and to the extent provided herein. The undersigned
represents that no part of the Subordinated Debt or any instrument evidencing
the same has been transferred or assigned and the undersigned will not transfer
or assign, except to Lender, any part of the Subordinated Debt while any Senior
Debt remains outstanding, unless such transfer or assignment is made expressly
subject to this Agreement. Upon Lender's request, the undersigned will in the
case of any Subordinated Debt which is not evidenced by any instrument cause the
same to be evidenced by an appropriate instrument or instruments, and place
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thereon and on any and all instruments evidencing the Subordinated Debt a legend
in such form as Lender may determine to the effect that the indebtedness
evidenced thereby is subordinated and subject to the prior payment in full of
all Senior Debt pursuant to this Subordination Agreement, as well as deliver all
such instruments to Lender.
10. This Subordination Agreement contains the entire agreement between the
parties regarding the subject matter hereof and may be amended, supplemented or
modified only by written instrument executed by Lender and the undersigned.
This Subordination Agreement, and the rights of Lender hereunder shall terminate
upon indefeasible payment in full of all Senior Debt.
11. The undersigned represents and warrants that neither the execution or
delivery of this Subordination Agreement nor fulfillment of nor compliance with
the terms and provisions hereof will conflict with, or result in a breach of the
terms, conditions, or provisions of or constitute a default under any agreement
or instrument to which the undersigned or any of the undersigned's assets is now
subject.
12. Any notice of acceptance of this Subordination Agreement is hereby
waived.
13. This Subordination Agreement may be assigned by Lender, in whole or in
part in connection with any assignment or transfer of any portion of the Senior
Debt.
14. This Subordination Agreement shall be binding upon the undersigned,
and the undersigned's successors, representatives and assigns.
15. Except as provided in paragraph 2 above, Borrower agrees that it will
not make any payment on any of the Subordinated Debt, or take any other action
in contravention of the provisions of this Subordination Agreement.
16. This Subordination Agreement shall in all respects be interpreted,
construed and governed by the substantive laws of the State of New York. The
undersigned and Lender, each (i) submits to the jurisdiction of the Supreme
Court of the State of New York, or the United States District Court for the
Southern District of New York for the purposes of resolving any controversy
relating thereto and (ii) WAIVES THE RIGHT TO A JURY TRIAL FOR THE PURPOSE OF
RESOLVING ANY CONTROVERSY HEREUNDER OR ENFORCING OR DEFENDING ANY RIGHTS OR
CLAIM HEREUNDER OR IN CONNECTION HEREWITH, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE.
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MASONRY SUPPLY, INC.
BY: /s/ Xxxx X. Xxxxxx
-------------------------------
XXXX X. XXXXXX, PRESIDENT
Consented and agreed to as of the date first above written:
BORROWER:
MSI/EAGLE SUPPLY, INC.
BY: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
LENDER:
FLEET CAPITAL CORPORATION
BY:/s/ Xxx Xxxxxxx
---------------------------------
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