SUBORDINATION AGREEMENT
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SUBORDINATION AGREEMENT, dated as of April 15, 1997 (as amended,
supplemented, or otherwise modified from time to time, this "Agreement") made by
FFCA Institutional Advisors, Inc., a Delaware corporation (the "Company") and
Franchise Finance Corporation of America, a Delaware corporation (the
"Subordinated Creditor") for the benefit of the Lenders (each a "Lender") party
to the Credit Agreement (as defined below), the Co-Agents as described in the
Credit Agreement, and NationsBank of Texas, N.A., as the Administrative Agent
(the "Administrative Agent") for itself and the Lenders.
BACKGROUND:
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(1) The Lenders, the Co-Agents, and the Administrative Agent have
entered into an Amended and Restated Credit Agreement dated as of April 15,
1997, with the Subordinated Creditor (as amended, supplemented, or otherwise
modified from time to time, the "Credit Agreement"). Unless otherwise defined
herein, defined terms used herein shall have the meanings ascribed to them in
the Credit Agreement.
(2) The Company is indebted to the Subordinated Creditor in the
principal amount of $350,000,000 or such lesser amount as shall equal the
aggregate unpaid principal amount of Intercompany Loans made by Subordinated
Creditor to the Company evidenced by the promissory note of even date herewith
in such principal amount (as the same may hereafter be amended, supplemented, or
otherwise modified from time to time, the "Debt Agreement"). All such
obligations of the Company now or hereafter existing under the Debt Agreement,
whether for principal, interest (including, without limitation, interest
accruing after the filing of a petition initiating any Proceeding (as defined
below), whether or not such interest accrues after the filing of such petition
for purposes of the Bankruptcy Code of 1978, 11 U.S.C. ss.101 et seq. (the
"Bankruptcy Code") or is an allowed claim in such Proceeding), fees, expenses or
otherwise are hereinafter referred to as "Subordinated Debt". For purposes of
this Agreement, "Proceeding" means any bankruptcy, insolvency, arrangement,
reorganization, receivership, relief or other similar case or proceeding under
any federal or state bankruptcy or similar law or an assignment for the benefit
of creditors or any other marshalling of the assets and liabilities of a Person.
(3) It is a condition precedent to the making of Advances by the
Lenders under the Credit Agreement that the Subordinated Creditor shall have
executed and delivered this Agreement.
NOW, THEREFORE, in consideration of the premises, the Company and the
Subordinated Creditor hereby agree as follows:
SECTION 1. Agreement to Subordinate. Each of the Subordinated Creditor
and the Company agrees that the
Subordinated Debt is and shall be subordinate, to the extent and in the manner
hereinafter set forth, to the prior payment in full of all obligations of the
Company now or hereafter existing under the Credit Agreement and the other Loan
Papers, whether for principal, interest (including, without limitation,
interest, as provided in the Notes, accruing after the filing of a petition
initiating any Proceeding, whether or not such interest accrues after the filing
of such petition for purposes of the Bankruptcy Code or is an allowed claim in
such Proceeding), fees, expenses or otherwise (such obligations and all
Obligations, as defined in the Credit Agreement, being herein collectively
called the "Obligations"). For the purposes of this Agreement, the Obligations
shall not be deemed to have been paid in full until (a) all maturity dates
therefor shall have elapsed, (b) the Commitment shall have been terminated, and
(c) the Lenders shall have received indefeasible payment of the Obligations in
full in cash (such date that the conditions described in (a), (b), and (c)
herein are satisfied shall be the "Credit Agreement Termination Date").
SECTION 2. Events of Subordination. (a) In the event of any
dissolution, winding up, liquidation, arrangement, reorganization, adjustment,
protection, relief or composition of the Company or any Subsidiary of the
Company or any of their respective debts, whether voluntary or involuntary, in
any Proceeding of the Company or any Subsidiary of the Company or otherwise, the
Lenders shall be entitled to receive indefeasible payment in full in cash of the
Obligations before the Subordinated Creditor is entitled to receive any payment
of all or any of the Subordinated Debt, and any payment or distribution of any
kind (whether in cash, property or securities) that otherwise would be payable
or deliverable upon or with respect to the Subordinated Debt in any such
Proceeding (including any payment that may be payable by reason of any other
indebtedness of the Company being subordinated to payment of the Subordinated
Debt) shall, subject to the following sentence, be paid or delivered directly to
the Administrative Agent for the account of the Lenders for application (in the
case of cash) to, or as collateral (in the case of non-cash property or
securities) for, the payment or prepayment of the Obligations until the
Obligations shall have been paid indefeasibly in full in cash and the Credit
Agreement Termination Date to have occurred.
(b) Upon the occurrence of a Default or Event of Default and during the
continuance thereof, no payment (including any payment that may be payable by
reason of any other indebtedness of the Company being subordinated to payment of
the Subordinated Debt) shall be made by the Company for or on account of any
Subordinated Debt, and the Subordinated Creditor shall not take or receive from
the Company or any Subsidiary of the Company, directly or indirectly, in cash or
other property or by set-off or in any other manner, including, without
limitation, from or by way of collateral, any payment of all or any of the
Subordinated Debt, unless and until the Obligations shall have been paid
indefeasibly in full in cash and the Credit Agreement Termination Date has
occurred.
(c) During the continuance of a Default or Event of Default, the
Lenders shall be entitled to receive payment in full of all amounts due or to
become due on or in respect of all Obligations before the Subordinated Creditor
is entitled to receive any payment (including any payment which
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may be payable by reason of the payment of any other indebtedness of the Company
being subordinated to the payment of the Subordinated Debt) by the Company on
account of the Subordinated Debt.
SECTION 3. In Furtherance of Subordination. The Subordinated Creditor
agrees as follows:
(a) All payments or distributions upon or with respect to the
Subordinated Debt which are received by the Subordinated Creditor contrary to
the provisions of this Agreement shall be received in trust for the benefit of
the Lenders, shall be segregated from other funds and property held by the
Subordinated Creditor and shall be forthwith paid over to the Administrative
Agent for the account of the Lenders in the same form as so received (with any
necessary endorsement) to be applied (in the case of cash) to, or held as
collateral (in the case of non-cash property or securities) for, the payment or
prepayment of the Obligations in accordance with the terms of the Credit
Agreement.
(b) The Subordinated Creditor hereby waives and agrees not to assert
against Administrative Agent or any Lender any rights which a guarantor or
surety with respect to any indebtedness of the Company or any obligor could
exercise. The Subordinated Creditor shall not assert, enforce, or otherwise
exercise (a) any right of subrogation to any of the rights or Liens of
Administrative Agent or any Lender or any other Person against the Company or
any of its Subsidiaries or any other obligor on all or any part of the
Obligations or any collateral or other security, or (b) any right of recourse,
reimbursement, contribution, indemnification, or similar right against the
Company or any of its Subsidiaries or any other obligor on all or any part of
the Obligations or any collateral or any security, and the Subordinated Creditor
hereby waives any and all of the foregoing rights and the benefit of, and any
right to participate in, any collateral or other security given to
Administrative Agent or any Lender or any other Person to secure payment of the
Obligations, however any such Rights arise, whether hereunder or any other Loan
Paper or by operation of Law until after the Credit Agreement Termination Date
has occurred.
(c) The Subordinated Creditor hereby irrevocably appoints
Administrative Agent, the Subordinated Creditor's attorney-in-fact, with full
authority in the place and stead of the Subordinated Creditor and in the name of
the Subordinated Creditor or otherwise to, after the occurrence of a Default or
Event of Default and during the continuance thereof, (a) file any claims, proofs
of claim, or other instruments of similar character necessary to enforce the
obligations of the Company and its Subsidiaries with respect to the Subordinated
Debt and (b) collect and receive any and all payments or distributions which may
be payable or deliverable upon or with respect to the Subordinated Debt. Such
power of attorney is coupled with an interest and is irrevocable prior to final
indefeasible payment in full of the Obligations.
(d) The Administrative Agent is hereby authorized to demand specific
performance of this Agreement, whether or not the Company shall have complied
with any of the provisions hereof
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applicable to it, at any time when the Subordinated Creditor shall have failed
to comply with any of the provisions of this Agreement applicable to it. The
Subordinated Creditor hereby irrevocably waives any defense based on the
adequacy of a remedy at law, which might be asserted as a bar to such remedy of
specific performance.
(e) No assets or Properties of the Company or its Subsidiaries shall
secure the Subordinated Debt, except to the extent of Liens which are assigned
to the Administrative Agent on behalf of the Lenders.
SECTION 4. Remedies of the Subordinated Creditor. The Subordinated
Creditor agrees that, so long as the Obligations shall not have been paid
indefeasibly in full in cash and the Credit Agreement Termination Date has
occurred, the Subordinated Creditor will not take, xxx for, ask or demand from
the Company or its Subsidiaries, payment of all or any of the Subordinated Debt,
or exercise any remedy against the Company or its Subsidiaries available
contractually, by law or otherwise, or commence in its capacity as a creditor,
or join with any creditor in commencing, or directly or indirectly cause in its
capacity as creditor to the Company or its Subsidiaries to commence, or assist
the Company or its Subsidiaries in commencing, any Proceeding or any other
remedy against the Company or its Subsidiaries.
SECTION 5. Agreements in Respect of Subordinated Debt.
(a) The Subordinated Creditor will not:
(i) Sell, assign, pledge, encumber or otherwise dispose of any
of the Subordinated Debt; or
(ii) Permit any of the terms of any of the Subordinated Debt
to be changed or amended (or issue any consent, waiver or approval
which has the effect of resulting in any change or amendment) in any
manner which could reasonably be expected to be materially adverse to
the interests of the Lenders.
(b) The Subordinated Creditor shall immediately notify the
Administrative Agent of the occurrence of any breach or default under the
Subordinated Debt beyond any grace period provided with respect thereto.
SECTION 6. Agreement by the Company. The Company agrees that it will
not make any payment of any of the Subordinated Debt (or take any other action)
in contravention of the provisions of this Agreement.
SECTION 7. Obligations Hereunder Not Affected. All rights and interests
of the Administrative Agent and the Lenders hereunder, and all agreements and
obligations of the
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Subordinated Creditor and the Company under this Agreement, shall remain in full
force and effect irrespective of:
(i) any lack of validity or enforceability of the Credit
Agreement, the Notes, the Loan Papers or any other agreement or
instrument relating thereto;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from the Credit
Agreement, the Loan Papers or the Notes, including, without limitation,
any increase in the Obligations resulting from the extension of
additional credit to the Company or otherwise;
(iii) any taking, release or amendment or waiver of or consent
to departure from any guaranty, for all or any of the Obligations; or
(iv) any change, restructuring or termination of the corporate
structure or existence of the Company or its Subsidiaries.
This Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Obligations is rescinded or must
otherwise be returned by the Administrative Agent or any Lender upon the
insolvency, bankruptcy or reorganization of the Company or otherwise, all as
though such payment had not been made.
SECTION 8. Waiver. Each of the Subordinated Creditor and the Company
hereby waives promptness, diligence, notice of acceptance and any other notice
with respect to any of the Obligations and this Agreement and any requirement
that the Administrative Agent or any Lender or exhaust any right or take any
action against the Company, its Subsidiaries or any other Person or entity.
SECTION 9. Representations and Warranties. The Subordinated Creditor
and the Company each hereby represent and warrant as follows:
(a) The Subordinated Debt now outstanding, true and complete copies of
instruments evidencing which have been furnished to the Administrative Agent,
has been duly authorized, issued and delivered by the Company, and constitutes
the legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms. There exists no default in respect of the
Subordinated Debt.
(b) The Subordinated Creditor has, independently and without reliance
upon the Administrative Agent or any Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement.
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SECTION 10. Amendments to this Agreement. No amendment or waiver of any
provision of this Agreement, and no consent to any departure by the Subordinated
Creditor or the Company herefrom, shall in any event be effective unless the
same shall be in writing and signed as provided in the Credit Agreement, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.
SECTION 11. Expenses. Each of the Subordinated Creditor and the Company
agrees, jointly and severally, upon demand to pay to the Administrative Agent
the amount of any and all reasonable out-of-pocket expenses, including the
reasonable fees and expenses of its counsel and of any experts or agents, which
the Administrative Agent or any Lender may incur in connection with the (a) the
administration of this Agreement, (b) the exercise or enforcement of any of the
rights of the Administrative Agent or the Lenders hereunder or (c) the failure
by the Subordinated Creditor to perform or observe any of the provisions hereof.
SECTION 12. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered to it, if to the Subordinated Creditor, at its address
specified in the Credit Agreement, and if to the Administrative Agent or any
Lender, at its address specified in the Credit Agreement, or as to each party,
at such other address as shall be designated by such party in a written notice
to each other party. All such notices and other communications shall, when
mailed, telecopied, telegraphed, telexed or cabled, be effective as provided in
the Credit Agreement.
SECTION 13. No Waiver; Remedies. No failure on the part of the
Administrative Agent or any Lender to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by Law.
SECTION 14. Continuing Agreement; Assignments Under the Credit
Agreement. This Agreement is a continuing agreement and shall (a) remain in full
force and effect until the indefeasible payment in full in cash of the
Obligations and until the Commitment has terminated, (b) be binding upon the
Subordinated Creditor and its successors and assigns, and (c) inure to the
benefit of, and be enforceable by, the Administrative Agent, the Lenders and
their respective permitted successors, transferees and assigns. Without limiting
the generality of the foregoing clause (c), any Lender may assign or otherwise
transfer all or any portion of its rights and obligations under, and in
accordance with the terms of, the Credit Agreement to any other Person, and such
other Person shall thereupon become vested with all the rights in respect
thereof granted to such Lender herein or otherwise. Notwithstanding any other
provision of this Agreement, this Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Obligations is rescinded or must otherwise be returned by the Administrative
Agent or any Lender
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upon the insolvency, bankruptcy or reorganization of the Company or its
Subsidiaries or otherwise, all as though such payment had not been made. In any
such event, all payments and distributions upon or with respect to the
Subordinated Debt which have been theretofore received by the Subordinated
Creditor shall be deemed to have been received in trust for the benefit of the
Lenders, shall be segregated from other funds and property held by the
Subordinated Creditor and shall be forthwith paid over to the Administrative
Agent for the account of the Lenders in the same form as so received (with any
necessary indorsement) to be applied (in the case of cash) to, or held as
collateral (in the case of non-cash property or securities) for, the payment or
prepayment of the Obligations in accordance with the terms of the Credit
Agreement.
SECTION 15. GOVERNING LAW. (a) THIS AGREEMENT AND ALL OTHER LOAN PAPERS
RELATED HERETO SHALL BE DEEMED CONTRACTS MADE UNDER THE LAWS OF TEXAS AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF TEXAS,
EXCEPT TO THE EXTENT FEDERAL LAWS GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT
AND INTERPRETATION OF ALL OR ANY PART OF THIS AGREEMENT AND ALL LOAN PAPERS.
WITHOUT EXCLUDING ANY OTHER JURISDICTION, THE SUBORDINATED CREDITOR AGREES THAT
THE COURTS OF TEXAS WILL HAVE JURISDICTION OVER PROCEEDINGS IN CONNECTION
HEREWITH.
(b) THE COMPANY HEREBY WAIVES PERSONAL SERVICE OF ANY LEGAL PROCESS
UPON IT. IN ADDITION, THE COMPANY AGREES THAT SERVICE OF PROCESS MAY BE MADE
UPON IT BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO THE COMPANY AT
ITS ADDRESS DESIGNATED FOR NOTICE UNDER THIS AGREEMENT AND SERVICE SO MADE SHALL
BE DEEMED TO BE COMPLETED UPON RECEIPT BY THE COMPANY. NOTHING IN THIS SECTION
SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
SECTION 16. WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY
LAW, THE PARTIES HERETO HEREBY WAIVE ANY RIGHT THAT THEY MAY HAVE TO A TRIAL BY
JURY OF ANY DISPUTE (WHETHER A CLAIM IN TORT, CONTRACT, EQUITY, OR OTHERWISE)
ARISING UNDER OR RELATING TO THIS AGREEMENT, THE OTHER LOAN PAPERS, OR ANY
RELATED MATTERS, AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE
SITTING WITHOUT A JURY.
SECTION 17. ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN PAPERS
RELATED HERETO REPRESENT THE FINAL AGREEMENT
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BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
SECTION 18. Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument. In making proof of any such agreement, it shall not be necessary to
produce or account for any counterpart other than one signed by the party
against which enforcement is sought.
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IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
FRANCHISE FINANCE CORPORATION
OF AMERICA
By: /s/ Xxxx X. Xxxxxxxxxxxx
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Xxxx X. Xxxxxxxxxxxx
Executive Vice President and
Chief Financial Officer
FFCA INSTITUTIONAL ADVISORS, INC.
By: /s/ Xxxx X. Xxxxxxxxxxxx
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Name: Xxxx X. Xxxxxxxxxxxx
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Title: Executive Vice President and
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Chief Financial Officer
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