SUBORDINATION AGREEMENT
Execution Copy
THIS
SUBORDINATION AGREEMENT (this “Agreement”), dated as of July 15,2005, is executed by and
between Xxxxx Fargo Foothill, Inc., a California corporation, in its
capacity as agent (in such
capacity, together with its successors and assigns in such capacity,
the “Agent”) for the financial
institutions party to the Credit Agreement (as hereinafter defined), Xxxxx Fargo Bank and its
affiliates (together with their respective successors and assigns,
collectively, the “Lenders”)
and AgfaPhoto USA Corporation, a Delaware corporation and assignee of Agfa Corporation (“Creditor”)
with respect to the following facts:
RECITALS
WHEREAS,
PCA LLC, a Delaware limited liability company (“PCA”), each of PCA’s Subsidiaries
identified on the signature pages to the Credit Agreement (as hereinafter defined) (such
Subsidiaries, together with PCA, are referred to hereinafter each
individually as a “Borrower”,
and individually and collectively, jointly and severally, as the
“Borrowers”) has requested that
Agent and the Lenders enter into that certain Credit Agreement (the
“Credit Agreement”), the Loan
Documents (as defined in the Credit Agreement) and other related supplements, agreements, documents
and instruments, pursuant to which the Lenders would extend certain loans and other financial
accommodations to the Borrowers, to be secured by a continuing, first-priority security interest
in the Collateral (as hereinafter defined); and
WHEREAS, Creditor has extended or may extend credit to Borrowers secured by the Creditor
Junior Collateral (as hereinafter defined) for the purpose of purchasing certain goods supplied to
Borrowers by Creditor:
WHEREAS, Creditor and the Borrowers intend to, from time to time, amend, supplement, modify or
restate the existing supply agreement with Creditor; and
WHEREAS, Agent and Creditor desire to agree to the relative priority of their respective
security interests in, and liens on, the Collateral and certain other rights, priorities and
interests as between themselves.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual covenunts herein
contained, and for other good and valuable consideration hereby acknowledged, it is hereby agreed
as follows:
I. DEFINITIONS. All capitalized terms used herein (including, without limitation, in this preamble
and recitals hereof) without definition shall have the meanings ascribed thereto in the Credit
Agreement. In addition to those terms defined elsewhere in this Agreement, as used in this
Agreement, the following terms shall have the following meanings.
“Collateral” means all personal and real property of each Obligor in which Agent or Creditor
may now or hereafter have a Lien, including without limitation all accounts, chattel paper, general
intangibles, deposit accounts, instruments, documents, investment property, inventory, equipment,
fixtures and real property, wherever located, whether such Obligor now has or hereafter acquires
any rights therein.
“Creditor Junior Collateral” means (a) inventory supplied by or purchased through Creditor,
and all Proceeds of the foregoing, and (b) any other assets of any Obligor provided by such Obligor
as security for the Subordinated Indebtedness.
“Default Notice” means a written notice from or on behalf of Agent to Creditor of the
existence of an Event of Default.
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“Discharge of Senior Indebtedness” means indefeasible payment in full in cash of the
Senior Indebtedness (other than Senior Indebtedness consisting solely of contingent indemnification
obligations under the Loan Documents) including, with respect to amounts available to be drawn
under outstanding letters of credit issued thereunder (or indemnities issued pursuant thereto in
respect of outstanding letters of credit), delivery of cash collateral or backstop letters of credit
in respect thereof in compliance with the terms of the Credit Agreement in each case, after or
concurrently with termination of all commitments to extend credit thereunder.
“Event of Default” means, individually and collectively, (a) an “Event of Default” under and
as defined in the Credit Agreement resulting solely from the failure of the Borrowers to make any
payment of principal, interest, fees or reimbursement obligations in respect of any Senior
Indebtedness when due, and (b) the commencement of any Insolvency Proceeding against any Obligor.
“Exercise
Any Secured Creditor Remedies” or “Exercise of Secured Creditor Remedies” means (a)
the taking of any action to enforce or realize upon any Lien, including the institution of any
foreclosure proceedings or the noticing of any public or private disposition pursuant to Article 9
of the UCC, (b) the exercise of any right or remedy provided to a secured creditor or otherwise on
account of a Lien under the Loan Documents (as applicable to Agent and the Lenders), any
Subordinated Debt Document, applicable law, in an Insolvency Proceeding or otherwise, including the
election to retain any collateral in satisfaction of a Lien, (c) the taking of any action or the
exercise of any right or remedy in respect of the collection on, set off against, marshaling of, or
foreclosure on the Collateral or the Proceeds of Collateral, (d) the sale, lease, license, or other
disposition of all or any portion of the Collateral by or on behalf of Agent or Creditor, as
applicable, by private or public sale or other disposition or any other means permissible under
applicable law, and (e) the exercise of any other right relating to any Collateral (including the
exercise of any voting rights relating to any Stock and including any right of recoupment or
set-off) whether under the Loan Documents (as applicable to Agent and the Lenders), any
Subordinated Debt Document, applicable law, in an Insolvency Proceeding or otherwise.
“Indebtedness” means all indebtedness, obligations and liabilities of any Obligor,
whether now existing or hereafter incurred, of every kind or nature, direct or indirect, due
or not due, liquidated or unliquidated, absolute or contingent, and disputed or undisputed.
“Insolvency Proceeding” means any proceeding commenced by or against any Person under any
provision of the Bankruptcy Code or under any other state, provincial, federal or foreign
bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal
moratoria, compositions, extensions generally with creditors, or proceedings seeking
reorganization, arrangement, or other similar relief.
“Obligor” and “Obligors” means each individually, and collectively, each of the Borrowers,
Parent and each of their respective Subsidiaries.
“Parent”
means Portrait Corporation of America, Inc., a Delaware corporation.
“Proceeds” means (a) all “proceeds” as defined in Article 9 of the UCC, each with
respect to the Collateral, and (b) whatever is recoverable or recovered when Collateral is
sold, exchanged, collected, or disposed of, whether voluntarily or involuntarily.
“Senior Indebtedness” means the Obligations (as defined in the Credit Agreement) and all other
amounts owing, due or secured under the terms of the Credit Agreement or the Loan Documents,
including, without limitation, all Lender Group Expenses (as that term is defined in the Credit
Agreement), all amounts payable to any Lender or any Issuing Lender, all principal, premium,
interest, fees, attorneys’ fees, costs, charges, expenses, reimbursement obligations, any obligation
to post cash collateral in respect of letters of credit or indemnities in respect thereof,
indemnities, guaranties, and all other amounts payable thereunder or in respect thereof (including,
in each case, all amounts accruing on or after the commencement of any Insolvency
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Proceeding relating to any Obligor) irrespective of whether a claim for all or any portion of
such amounts is allowable or allowed in any Insolvency Proceeding. For all purposes hereunder,
Senior Indebtedness shall also include all indebtedness, obligations and liabilities of the
Borrowers to repay any amounts previously paid by any Borrower pursuant to the Credit Agreement or
the Loan Documents, which amounts have been returned to any Borrower or to a trustee by any Lender
pursuant to Sections 547 or 548 of the Bankruptcy Code or otherwise under other applicable
legislation.
“Standstill
Period” means the period from and including the date of receipt by Creditor of a
Default Notice unlit the first to occur of the date on which Agent, on behalf of the Lenders, shall
have expressly waived or acknowledged the cure of the Event of Default giving rise to such Default
Notice, in each case in writing and immediately upon the occurrence of such waiver or
acknowledgment.
“Subordinated Debt Documents” means, collectively, each and every document, instrument, or
agreement evidencing the Subordinated Indebtedness, as each such document, instrument or agreement
may from time to time, be amended, supplemented, modified or restated.
“Subordinated
Indebtedness’’ means any Indebtedness owed to Creditor by any Obligor (whether
by reason of subrogation rights of Creditor or otherwise).
2. INTERCREDITOR AND SUBORDINATION AGREEMENT. (a) Lien Subordination and Release.
Notwithstanding the date, manner or order of perfection of the Liens on the Collateral granted
to Agent or Creditor by any Obligor, and notwithstanding any provision of the UCC, or any
applicable law or decision, as between Agent and Creditor, the following shall be the relative
priority of the Liens of Agent and Creditor in the Collateral:
(i) Agent shall have a first and prior Lien on the Collateral:
(ii) In the event Creditor hereafter acquires any security interest, lien, or other
right or interest in the Collateral, such security interest, lien, or other right or interest shall
at all times prior to the Discharge of Senior Indebtedness be junior, subordinate and subject to
any security interest, lien or other right or interest the Lenders or Agent now have or may
hereafter acquire in the Collateral. The subordination provided in this Section 2(a) shall apply
irrespective of the time or order of attachment or perfection of any security interest,
irrespective of the time or order of filing of any financing statement or other document, and
irrespective of any statute, rule, law, or court decision to the contrary;
(iii) Agent shall have a first and prior Lien on the Creditor Junior Collateral and
Creditor shall have a second and subordinate Lien on the Creditor Junior Collateral.
(b) Payment Subordination.
(i) Except
as set forth, in Section 2(b)(ii) of this Agreement, unless and
until the Discharge of Senior Indebtedness shall have occurred,
Creditor shall not accept, take or
receive, by payment, in cash or in kind by way of setoff, or In any other manner, from any Obligor,
the whole or any part of any sums which may now or hereafter be owing to Creditor on account of the
Subordinated Indebtedness (including, without limitation, in any Insolvency Proceeding).
(ii) So long as no Standstill Period is then in effect, subject to Section 6.7 of the
Credit Agreement in effect as of the date hereof, Obligors may pay to Creditor and Creditor may
receive payments in respect of the Subordinated Obligations in accordance with the terms of the
Subordinated Debt Documents.
(iii) Except as set forth in Section 2(b)(ii), Creditor agrees that it shall not take,
accept or receive any other direct or indirect payment or distributions of any kind or character
(whether in cash, securities, assets, by set-off, or otherwise) from any Obligor.
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(c) Payments Received by Creditor. Except as permitted in Section 2(b)(ii)
hereof, if any payment or distribution of any kind or character, whether in cash, properly or
securities, from or of any assets of Obligors, (irrespective of whether such payment or
distribution was of Collateral, or Proceeds thereof) in respect of the Subordinated Indebtedness is
received by Creditor prior to the Discharge of Senior Indebtedness, Creditor shall receive and hold
the same in trust as trustee for the benefit of Agent and Lenders and shall forthwith deliver such
payment, distribution, or Proceeds to Agent and Lenders in precisely the form received (except for
the endorsement or assignment by Creditor where necessary), for application on any of the Senior
Indebtedness, whether then due or not due. In the event of the failure of Creditor to make any such
endorsement or assignment to Agent and Lenders, Agent and any of its officers or agents are hereby
irrevocably authorized to make such endorsement or assignment.
(d) Distribution
of Proceeds of Collateral.
(i) Proceeds of the Collateral shall be applied to the Senior Indebtedness. Except as
such Proceeds arise from or constitute Creditor Junior Collateral, Agent shall have no obligation
to pay any remaining Proceeds of the Collateral to Creditor but shall instead apply such Proceeds
as otherwise required by applicable law; and
(ii) Proceeds of the Creditor Junior Collateral shall first be applied to the Senior
Indebtedness. After the Discharge of the Senior Indebtedness, any remaining Proceeds of the
Creditor Junior Collateral shall be applied to the Subordinated Indebtedness or as otherwise
required by applicable law.
(e) Enforcement Action.
(i) Unless and until the Discharge of Senior Indebtedness shall have occurred, and
irrespective of whether an Event of Default has occurred, Creditor shall not, without the prior
written consent of Agent:
(1) Exercise Any Secured Creditor Remedies.
(2) request or obtain collateral or security in respect of the Subordinated
Indebtedness, unless the same is first provided to Agent as collateral or security in respect
of the Senior Indebtedness and subject to Section 2(a)(ii).
(3) send any notice to or otherwise seek to obtain payment directly from any account
debtor of any Obligor in respect of the Collateral.
(ii) Agent and Creditor agree that (i) Agent shall have the exclusive right to sell,
transfer or otherwise dispose of the Creditor Junior Collateral in the manner deemed appropriate by
Agent without regard to any Lien of Creditor therein, without any duty to xxxxxxxx assets and (ii)
Creditor shall have no right to sell, transfer or otherwise dispose of the Creditor Junior
Collateral without prior written consent from Agent. Nothing contained in this Agreement shall
preclude Agent from taking any action in respect of the Senior Indebtedness or the Collateral which
Agent is otherwise entitled to take, nor shall Agent be required to give notice to Creditor prior
to taking such actions, except where such notice is specifically required by law.
(iii) In the event of any sale or disposition of the Creditor Junior Collateral, whether
by Agent or Borrowers, Creditor agrees to execute and deliver all consents, releases, assignments,
and other instruments with respect to the Creditor Junior Collateral, including, without
limitation, UCC-3 releases or termination statements or mortgage satisfactions, as Agent may
request in order to effect such sale or disposition.
(f) Waiver
of Right to Contest Senior Indebtedness. Creditor agrees that it shall not,
and hereby waives any right to, take any action to contest or challenge (or assist or support any
other Person in contesting
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or challenging), directly or indirectly, whether or not in any proceeding (including in any
Insolvency Proceeding), the validity, priority, enforceability, or perfection of the Liens of Agent
for the benefit of the Lenders in any Collateral, the validity, priority, enforceability or
allowance of the Senior Indebtedness or any of the claims of Agent or Lenders or any holder of
Senior Indebtedness against any Obligor or the validity or enforceability of this Agreement or any
of the provisions hereof. Creditor agrees that it will not take any action that would hinder any
Exercise of Secured Creditor Remedies undertaken by Agent, on behalf of the Lenders, under the Loan
Documents, including, without limitation, any public or private sale, lease, exchange, transfer, or
other disposition of any Collateral, whether by foreclosure or otherwise. Creditor hereby waives
any and all rights it may have as a junior lien creditor or otherwise to contest, protest, object
to, interfere with the manner in which Agent, on behalf of the Lenders, seeks to enforce the its
Liens in any Collateral (if being understood and agreed that the terms of this Agreement shall
govern with respect to the Collateral even if any portion of the Liens securing the Senior
Indebtedness are avoided, disallowed, set aside, or otherwise invalidated in any Insolvency
Proceeding, judicial proceeding or otherwise).
(g) Acknowledgement
of Liens. Creditor acknowledges and agrees that, concurrently
herewith, Agent, for the benefit of the Lenders, has been granted Liens upon all of the
Collateral, including the Credit Junior Collateral in which Creditor has been granted Liens and
Creditor hereby consents thereto. Creditor agrees that it shall not
obtain a Lien on any asset or
Collateral to secure all or any portion of the Subordinated Indebtedness unless concurrently
therewith, Agent obtains a Lien on such asset or Collateral and the parties hereby agree that all
such Liens are and will be subject to this Agreement.
(h) Additional Credit Extensions. Each of Agent and Creditor shall have the right,
without the consent of the other, to extend credit to any Borrower in excess of their existing or
proposed credit lines, secured by the Collateral or Creditor Junior Collateral (as the case may
be), and otherwise having the same priorities as herein contained.
3.
INSOLVENCY PROCEEDING. (a) Continuing Priority. This Agreement is intended to be
enforceable as a subordination agreement under the Bankruptcy Code
(including, without limitation,
Section 510 of Title II of the United States Code) notwithstanding the commencement of any
Insolvency Proceeding. In the event of any Insolvency Proceeding relative to any Obligor or any
arrangement, adjustment, composition or relief of any Obligor or such Obligor’s debts or any
marshaling of the assets of any Obligor, then, in each case, (i) all Senior Indebtedness shall
first be paid in full in cash before any payment is made on the Subordinated Indebtedness; and (ii)
any payment or distribution of any kind or character (whether in cash, securities, assets, by
set-off, or otherwise) to which Creditor would be entitled but for the provisions of this
Section 3(a) (including, without limitation, any payment or distribution which may be payable or
deliverable to Creditor by reason of the payment of any other Indebtedness of such Obligor or its
Subsidiaries being subordinated to payment of the Subordinated Indebtedness) shall be paid or
delivered by the Person making such payment or distribution, whether a trustee in bankruptcy, a
receiver, a liquidating trustee, or otherwise, directly to Agent to the extent necessary to make
payment in full of all Senior Indebtedness remaining unpaid. In the event that, in the
circumstances contemplated by this Section 3(a), and
notwithstanding the foregoing provisions of
this Section 3 (a), Creditor shall have received any payment or distribution of any kind or
character (whether in cash, securities, assets, by setoff, or otherwise) that it is not entitled to
receive by the foregoing provisions, then and in such event such payment or distribution shall be
segregated and held in trust for the benefit of and immediately shall be paid over to Agent, for the
benefit of the Lenders, in accordance with Section 2.
(b) Proof of Claim. If Agent believes that any statements or assertions in a proof of
claim filed by Creditor are not consistent with the terms and conditions hereof; then Agent shall
have the right (but not the obligation and any failure of Agent to file such proof of claim shall
not be deemed to be a waiver by Agent of Lenders of any rights and benefits granted herein
by Creditor) in such proceeding, and hereby irrevocably is appointed lawful attorney of Creditor
for the purpose of enabling Agent to file and prove all claims therefor and to execute and deliver
all documents in such proceeding in the name of Creditor or otherwise in respect of such claims, as
Agent reasonably may determine to be necessary or appropriate. The Creditor shall provide
the
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Agent with a copy of any proof of claim filed by the Creditor in any Insolvency Proceeding. The
Creditor shall provide to the Agent all information and documents necessary to present claims as
described herein. The Creditor hereby agrees that, while it shall retain the right to vote its
claims and, except as otherwise provided in this Agreement, otherwise act in any Insolvency
Proceeding relative to Obligors (including, without limitation, the right to vote to accept or
reject any plan of partial or complete liquidation, reorganization, arrangement, composition, or
extension), the Creditor shall not; (i) take any action or vote in any way so as to directly or
indirectly challenge or contest (A) the validity or the enforceability of the Credit Agreement, the
other Loan Documents, or the liens and security interests granted to the Lenders with respect to
the Senior Indebtedness, or (B) the validity or enforceability of this Agreement; (ii) seek relief
from the automatic stay of Section 362 of the Bankruptcy Code or any other stay in any Insolvency
Proceeding in respect of any portion of the Collateral; or (iii) directly or indirectly
oppose any sale or disposition of the Collateral, including any sale or other disposition of the
Collateral free and clear of the liens and security interests of the Creditor under Sections 363 or
365 of the Bankruptcy Code or any other similar provision of applicable law.
(c) DIP Financing. If any Obligor shall be subject to any Insolvency Proceeding and the
Agent shall desire, prior to the Discharge of Senior Indebtedness, to permit the use of cash
collateral or to permit such Obligor to obtain financing under Section 363 or Section 364 of Title
II of the Bankruptcy Code or any similar provision under the law applicable to any Insolvency
Proceeding (“DIP Financing”) to be secured by all or any portion of the Collateral, then the
Creditor agrees that it will raise no objection to such use of cash collateral or DIP Financing and
will not request adequate protection or any other relief in connection with its or their interest
in any Collateral so long as (i) the pricing terms of the DIP Financing, including interest rate,
fees, advance rates, lending limits and sublimits are commercially reasonable under the
circumstances, (ii) Creditor retains a Lien on the Creditor Junior Collateral (including Proceeds
thereof arising after the commencement of such proceeding) with the same priority as existed prior
to the commencement of the case under applicable insolvency laws, (iv) Creditor receives a
replacement lien on post-petition inventory supplied by or purchased through Creditor, and all
Proceeds of the foregoing, to the same extent granted to Senior Agent, with the same priority as
existed prior to the commencement of the case under applicable insolvency laws, and (v)
such use of collateral or DIP Financing is subject to the terms of this Agreement. Until the
Discharge of Senior Indebtedness has occurred, the Creditor agrees that it shall not provide or
offer to provide any DIP Financing secured by a Lien senior to or pari passu with the Liens
securing the Senior Indebtedness unless the Agent otherwise has provided its express written
consent.
(d) Reinstatement. If Agent or any Lender is required in any Insolvency Proceeding or
otherwise to turn over or otherwise pay any amount to the estate or to any creditor or
representative of any Obligor or any other Person (a “Recovery”), then the Senior Indebtedness
shall be reinstated to the extent of such Recovery. If this Agreement shall have been terminated
prior to such Recovery, this Agreement shall be reinstated in full force and effect, and such prior
termination shall not diminish, release, discharge, impair, or otherwise affect the obligations of
the parties hereto from such date of reinstatement. All rights, interests, agreements, and
obligations of Agent, Lenders, and Creditor under this Agreement shall remain in full force and
effect and shall continue irrespective of the commencement of or any discharge, confirmation,
conversion, or dismissal of any Insolvency Proceeding by or against any Obligor and irrespective of
any other circumstance which otherwise might constitute a defense available to, or a discharge of
any Obligor or any other Person in respect of the Senior Indebtedness. No priority or right of
Agent or Lender shall at any time be prejudiced or impaired in any way by any act or failure to act
on the part of any Obligor or by the noncompliance by any Person with the terms, provisions, or
covenants of the Loan Documents or any Subordinated Debt Document, regardless of any knowledge
thereof which Agent or Lender may have.
4.
MODIFICATIONS OF INDEBTEDNESS. (a) Senior Indebtedness. All Senior Indebtedness at any
time incurred by any Borrower shall be deemed to have been incurred, and all Senior Indebtedness
held by any holder of Senior Indebtedness shall be deemed to have been extended, acquired or
obtained as applicable, in reliance upon this Agreement, and Creditor hereby waives (i) notice of
acceptance of, or proof of reliance by Agent on, this Agreement, and (ii) notice of the existence,
renewal, extension, accrual, creation, or non-payment of all or any part of the Senior Indebtedness.
Nothing contained in this Agreement shall preclude
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Agent or any Lender from discontinuing the extension of credit to any Borrower (whether under the
Credit Agreement or otherwise) or from taking (without notice to Creditor, Obligors, or any other
person) any other action in respect of the Senior Indebtedness or the Collateral which Agent is
otherwise entitled to take with respect to the Senior Indebtedness or the Collateral. Agent, on
behalf of the Lenders, shall have the right, without notice to or consent from Creditor, to amend,
supplement or modify the Senior Indebtedness, in any manner whatsoever, including, without
limitation, any renewals, extensions or shortening of time of payments (even if such shortening
causes any Senior Indebtedness to be due on demand or otherwise), any revision of any amortization
schedule with respect thereto, and any increase in the amount of the Senior Indebtedness, and
Creditor consents and agrees to any such amendment, supplement or modification. Creditor waives
notice of any such amendment, supplement, or modification, and agrees that no such amendment,
supplement, or modification shall affect, release, or impair the subordinations contained herein.
(b) Notice of Acceptance and Other Waivers.
(1) To the fullest extent permitted by applicable low, Creditor hereby waives:
(i) notice of acceptance hereof; (ii) notice of any loans or other financial accommodations
made or extended
under the Credit Agreement, or the creation or existence of any Senior Indebtedness; (iii)
notice of the amount
of the Senior Indebtedness; (iv) notice of any adverse change in the financial condition of
any Obligor or of
any other fact that might increase such Creditor’s risk hereunder; (v) notice of presentment
for payment,
demand, protest, and notice thereof as to any instrument among the Loan Documents; (vi) notice
of any
Default or Event of Default under the Loan Documents or otherwise relating to the Senior
Indebtedness
(except if such notice is specifically required to be given to Creditor under this Agreement);
(vii) all other
notices (except if such notice is specifically required to be given to Creditor under this
Agreement) and
demands to which Creditor might otherwise be entitled.
(2) To the fullest extent permitted by applicable law, Creditor waives the
right
by statute or otherwise to require Agent to exhaust any rights and remedies with respect to the
Creditor Junior Collateral which Agent or any Lender has or may have against any Obligor. Creditor
further waives any defense arising by reason of any disability or other defense (other than the
defense that the Discharge of Senior Indebtedness has occurred (subject to the provisions of
Section 3(b)) of any Obligor or by reason of the cessation from any cause whatsoever of the
liability of such Obligor in respect thereof.
(3) To the fullest extent permitted by applicable law, Creditor hereby waives:
(i) any defense, set-off, counterclaim, or claim, of any kind or nature, arising directly or
indirectly from the
present or future lack of perfection, sufficiency, validity, or enforceability of any Lien on
the Creditor Junior
Collateral securing any Senior Indebtedness or any Subordinated Indebtedness; and (ii) any
defense arising by
reason of any claim or defense based upon an election of remedies by Agent or any Lender with
respect to the
Creditor Junior Collateral.
(4) Until such time as the Discharge of Senior Indebtedness shall have occurred
(subject to the provisions of Section 3(b); (i) Creditor hereby postpones any right of
subrogation Creditor has
or may have as against any Obligor with respect to any Senior Indebtedness: and (ii) in
addition, Creditor
hereby postpones any right to proceed against any Obligor or any other Person, now or
hereafter, for
contribution, indemnity, reimbursement, or any other suretyship rights and claims
(irrespective of whether
direct or indirect, liquidated or contingent), with respect to any Senior indebtedness.
(5) Neither Lenders, Agent nor any of their respective affiliates,
directors, officers, employees, or agents shall be liable for failure to demand, collect or realize upon any
of the Creditor Junior Collateral or any Proceeds or for any delay in doing so or shall be under
any obligation to sell or otherwise dispose of any Creditor Junior Collateral or Proceeds
thereof or to take any other action whatsoever with regard to the Creditor Junior Collateral or any
part or Proceeds thereof. If Agent or Lenders honor (or fail to honor) a request by Borrowers for
an extension of credit pursuant to the Credit Agreement or any of the other Loan Documents, whether
Agent or Lenders have knowledge that the honoring of (or failure to honor)
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any such
request would constitute a default under the terms of any Subordinated Debt Document
or an act, condition, or event that, with the giving of notice or the passage of time, or both,
would constitute such a default, or if Agent or Lenders otherwise should exercise any of its
contractual rights or remedies under the Loan Documents (subject to the express terms and
conditions hereof), Agent and Lenders shall have no liability whatsoever to Creditor as a result of
such action, omission, or exercise. Lenders will be entitled to manage and supervise their
respective loans and extensions of credit under the Loan Documents as any Lender may, in its sole
discretion, deem appropriate, and any Lender may manage its loans and extensions of credit without
regard to any rights or interests that Creditor may have in the Collateral or otherwise except as
otherwise expressly set forth in this Agreement. Creditor agrees that Agent and Lenders shall incur
no liability as a result of a sale, lease, license, application or other disposition of all or any
portion of the Creditor Junior Collateral or any part or Proceeds thereof in accordance with this
Agreement. Agent and Lenders may, from time to time, enter into agreements and settlements with any
Obligor as it may determine in its sole discretion without impairing any of the subordinations,
priorities, rights or obligations of the parties under this Agreement, including, without
limitation, substituting Collateral, releasing any Lien and releasing such Obligor. Creditor waives
any and all rights it may have to require Agent or Lenders to marshal assets, to exercises rights
or remedies in a particular manner, or to forbear from exercising such rights and remedies in any
particular manner or order.
b. Modifications of Senior Indebtedness. Creditor hereby agrees that, without
affecting the obligations of Creditor hereunder, Agent, on behalf of the Lenders, may, at any time
and from time to time, in its sole discretion without the consent of or notice to Creditor (except
to the extent such notice or consent is required pursuant to the express provisions of this
Agreement), and without incurring any liability to Creditor or
impairing or releasing the
subordination provided for herein, amend, restate, supplement, replace, refinance, extend,
consolidate, restructure, or otherwise modify the Credit Agreement or any of the Loan Documents in
a manner that would be adverse to any Borrower (as reasonably determined by Agent and Lenders),
including to:
(1) change the manner, place, time or terms of payment or renew or alter, all or any
of the Senior Indebtedness or otherwise amend, restate, supplement, or otherwise modify in any
manner, or grant any waiver or release with respect to, all or any part of the Senior Indebtedness
or any of the Loan Documents,
(2) retain
or obtain a Lien on any property of any Person to secure any of the
Senior Indebtedness, and in that connection to enter into any
additional Loan Documents,
(3) amend,
or grant any waiver, compromise or release with respect to, or
consent to any departure from, any guaranty or other obligations of any Person obligated in any
manner under or in respect of the Senior Indebtedness,
(4) release its Lien on any Collateral or other property,
(5) exercise or refrain from exercising any rights against any Obligor or any
other Person.
(6) retain or obtain the primary or secondary obligation of any Person with
respect to any of the Senior Indebtedness and
(7) otherwise manage and supervise the Senior Indebtedness as Agent shall
deem appropriate.
(c) Modifications of Subordinated Indebtedness. Agent, on behalf of Lenders, hereby
agrees that, without affecting the right or obligations of Agent hereunder, Creditor may, at any
time and from time to
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time, in its sole discretion without the consent of or notice to Agent or Lenders (except to the
extent such
notice or consent is required pursuant to the express provisions of this Agreement), and without
incurring any
liability to Agent or Lenders or impairing or affecting the subordination provided for herein,
Creditor may:
(1) change
the manner, place, time, or terms of payment or renew or alter, all or
any of the Subordinated Indebtedness or otherwise amend, restate, supplement, or otherwise modify
in any
manner, or grant any waiver or release with respect to, all or any part of the Subordinated
Indebtedness or
any of the Subordinated Debt Documents,
(2) subject
to Section 2(c)(i)(2) retain or obtain a Lien on any property of
any
Person to secure any of the Subordinated Indebtedness, and in that connection to enter into any
additional Subordinated Debt Documents,
(3) amend, or grant any waiver, compromise or release with respect to, or consent
to any departure from, any guaranty or other obligations of any Person obligated in any
manner under or in
respect of the Subordinated Debt Indebtedness,
(4) release
its Lien on any Collateral or other property,
(5) exercise or refrain from exercising any rights against any Obligor or any other
Person (except as otherwise provided in this Agreement with respect
to any Exercise of
Secured Creditor
Remedies against any Creditor Junior Collateral),
(6) retain or obtain the primary or secondary obligation of any Person with respect
to any of the Subordinated Indebtedness, and
e. otherwise manage and supervise the Subordinated Indebtedness as Creditor shall
deem appropriate.
5.
SUBORDINATED INDEBTEDNESS OWED ONLY TO CREDITOR. Creditor warrants and
represents that Creditor has not previously assigned any interest in the Subordinated Indebtedness,
that no
other party owns an interest in any of the Subordinated Indebtedness (whether as joint holders,
participants, or
otherwise), and that the entire Subordinated Indebtedness is owing only to Creditor. Creditor may
not sell,
assign, pledge, hypothecate or otherwise transfer any part of its interest in the Subordinated
Indebtedness or
the Collateral without Agent’s prior written consent, which consent may not be unreasonably
withheld or
delayed; provided, however, that Creditor may sell, assign, pledge, hypothecate or otherwise
transfer any part
of its interest in the Subordinated Indebtedness to (a) an affiliate of Creditor, or (b) a Person
that is engaged in
the same line of business as Creditor.
6. REPRESENTATIONS AND WARRANTIES. Agent represents and warrants to Creditor that it has
the requisite power and authority to enter into, execute, deliver, and carry out the terms of this
Agreement.
Creditor represents and warrants that it has the requisite power and authority to enter into,
execute, deliver, and
carry out the terms of this Agreement.
7.
MISCELLANEOUS. (a) No Additional Rights for Any Parties Hereunder. Except as expressly
provided for herein, all of the agreements contained herein are solely for the benefit of the
parties hereto and
there are no other third parties (including without limitation
Obligors) who are intended to be
benefited in any
way by this Agreement, Except as expressly provided for herein, nothing contained herein is
intended to affect
or limit in any way the Liens that each of the parties has in any and all of the assets of any
Obligor, whether
tangible or intangible, insofar as any Obligor and third parties are concerned, and the parties
hereto reserve all
of their respective Liens, and the rights to assert such interests against any Obligor and third
parties.
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(b) Termination. This Agreement shall remain in full force and effect until all of
the Discharge of Senior Indebtedness.
(c) Independent Credit Investigation. Neither party nor any of its respective
directors, officers, agents or employees shall be responsible to the other for an Obligor’s
solvency, financial condition or ability to repay the Senior Indebtedness or Creditor, or for
statements of any Obligor, oral or written, or for the validity, priority, sufficiency or
enforceability of the claims of Agent or Creditor, or any Lien granted by any Obligor to the
parties, Each party has entered into its respective financing agreements or arrangements with any
Obligor based upon its own independent investigation, and makes no warranty or representation to
the other party nor does it rely upon any representation of the other party with respect to
matters identified or referred to in this paragraph.
(d) Limitation
on Liability of Parties to Each Other. Except as provided in this
Agreement,
neither party shall have any liability to the other party.
(e) Notices. All notices or demands by any party hereunder must be in writing and
personally
delivered or sent by registered or certified mail, postage prepaid, return receipt requested,
or by prepaid telex,
facsimile, telecopy, telegram (with messenger delivery specified), or other method of electronic
communication as follows:
| Agent: | XXXXX FARGO FOOTHILL, INC. | |||
| 000 Xxxxxxxxx Xxxx Center | ||||
| 0000 Xxxxxxxxx Xxxx, Xxxxx 0000 | ||||
| Xxxxxxx, XX 00000 | ||||
| Attn: Business Finance Division Manager | ||||
| Fax No.: (000) 000-0000 | ||||
| Creditor: | AGFAPHOTO USA CORPORATION | |||
| 000 Xxxxxxxxxx Xxxx | ||||
| Xxxxxxxxxx Xxxx, Xxx Xxxxxx 00000 | ||||
| Attn: Xxxx Xxxx, Chief Executive Officer | ||||
| Facsimile: (000) 000-0000 | ||||
| With a copy to: | TRAFLET & FABIAN | |||
| 000 Xxxxx Xxxxxx | ||||
| Xxxxxxxxxx, Xxx Xxxxxx 00000 | ||||
| Attn: Xxxxxxx X. Xxxxxxx, Esq. | ||||
| Facsimile: (000) 000-0000 |
The parties may change the address at which they receive notice by giving notice to each other in
the foregoing manner. Notices or demands sent in accordance with this Section shall be deemed to
be received on the earlier of the date of actual receipt or five (5) calendar days after deposit
in the United States mail.
(f) Attorneys’ Fees; etc. In any suit or action brought to enforce this Agreement or
to obtain an
adjudication (declaratory or otherwise) of rights or obligations hereunder, the losing party
shall pay to the
prevailing party reasonable attorneys’ fees and other costs and expenses incurred by the
prevailing party.
(g) Amendment. No amendment or waiver of this Agreement shall be effective unless in writing
signed by each party hereto.
(h) Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the respective successors and assigns of each of the parties hereto.
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(i) Governing
Law; Venue; Waiver of Jury Trial.
(i) THE
VALIDITY OF THIS AGREEMENT, THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND
THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED
HERETO SHALL BE, DETERMINED
UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
(ii)
THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND TO THE
EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE BOROUGH OF MANHATTAN, COUNTY OF
NEW YORK, STATE OF NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION. IN THE COURTS OF ANY JURISDICTION
WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR
OTHER PROPERTY MAY BE FOUND.
CREDITOR WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO ASSERT THE
DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS
BROUGHT IN ACCORDANCE WITH THIS SECTION.
(iii) EACH
OF THE PARTIES HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS,
AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH OF THE PARTIES
HERETO REPRESENTS THAT EACH HAS
REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED
AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
(j) Further
Action. Upon Agent’s request, Creditor will promptly take all actions
reasonably deemed appropriate by Agent to carry out the purposes of
this Agreement.
(k) Integrated Agreement. This Agreement shall constitute the entire agreement between
the parties with respect to the subject matter hereof, shall supersede all prior agreements,
representations or understandings between the parties and may not be
amended except by a writing
signed by both parties.
(l) Additional Remedies. If Creditor violates any of the terms of this Agreement, in
addition to any remedies in law, equity, or otherwise. Agent and Lenders may restrain such
violation in any court of law and may, in its own or any of the Obligor’s name, interpose this
Agreement as a defense in any action by Creditor.
(m) Subrogation. After the Discharge of Senior Indebtedness shall have occurred,
Creditor shall be subrogated to the rights of Agent and Lenders to the extent that distributions
otherwise payable to Creditor have been applied to the payment of the Senior Indebtedness in
accordance with the provisions of this Agreement. Neither Agent nor Lenders shall have any
obligation or duly to protect Creditor’s rights of subrogation arising pursuant to this Agreement
or under any applicable law, nor shall Agent or Lenders be liable for
any loss to, or impairment
of any subrogation rights held by Creditor.
(n) Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original and all of which together shall
constitute one agreement.
[Signatures follow on next page,]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year
first above written.
| XXXXX FARGO FOOTHILL, INC., | ||||||
| a California corporation, as Agent | ||||||
| By: | /s/ [ILLEGIBLE]
|
|||||
| Name: | [ILLEGIBLE] | |||||
| Title: | V.P. | |||||
| AGFAPHOTO USA CORPORATION. | ||||||
| a Delaware corporation as assignee of AGFA CORPORATION | ||||||
| By: | /s/ [ILLEGIBLE]
|
|||||
| Name: | [ILLEGIBLE] | |||||
| Title: | President & CEO | |||||
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ACKNOWLEDGMENT
Each Obligor signatory hereto approves of and agrees and consents to, the foregoing
Subordination Agreement, dated as of July 14, 2005. between AgfaPhoto USA Corporation, a Delaware
corporation, and Xxxxx Fargo Foothill, Inc. a California corporation
(the “Agreement”). Unless
otherwise defined in this Acknowledgment, terms defined in the Agreement have the same meanings
when used in this Acknowledgment.
Each
Obligor signatory hereto agrees to be bound by the terms of the Agreement, and to do
every act or thing necessary or appropriate to carry out such terms. Each Obligor signatory hereto
further agree that the Agreement may be amended by Agent and Creditor without notice to, or the
consent of, such Obligor, except to the extent such amendment directly affects any rights or
obligations of the Obligors under the Agreement. No Obligor is a party to or a third party
beneficiary of the Agreement.
| PORTRAIT CORPORATION OF AMERICA, INC., | ||||||
| a Delaware corporation | ||||||
| By: | /s/ Xxxxxx Xxxxxxxxxx
|
|||||
| Its: | EVP | |||||
| PCA LLC, | ||||||
| a Delaware limited liability company | ||||||
| By: | /s/ Xxxxxx Xxxxxxxxxx
|
|||||
| Its: | EVP | |||||
| AMERICAN STUDIOS, INC., | ||||||
| a North Carolina corporation | ||||||
| By: | /s/ Xxxxxx Xxxxxxxxxx
|
|||||
| Its: | EVP | |||||
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| PCA PHOTO CORPORATION OF CANADA, INC., | ||||||
| a North Carolina corporation | ||||||
| By: | /s/ Xxxxxx Xxxxxxxxxx
|
|||||
| Its: | EVP | |||||
| PCA NATIONAL LLC, | ||||||
| a Delaware limited liability company | ||||||
| By: | /s/ Xxxxxx Xxxxxxxxxx
|
|||||
| Its: | EVP | |||||
| HOMETOWN THREADS LLC, | ||||||
| a Delaware limited liability company | ||||||
| By: | /s/ Xxxxxx Xxxxxxxxxx
|
|||||
| Its: | EVP | |||||
| PCA NATIONAL OF TEXAS L.P., | ||||||
| a Texas limited partnership | ||||||
| By: | PCA NATIONAL LLC, a Delaware limited liability company |
|||||
| Its: | General Partner | |||||
| By: | /s/ Xxxxxx Xxxxxxxxxx
|
|||||
| Its: | EVP |
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| PHOTO CORPORATION OF AMERICA, a North Carolina corporation |
||||||
| By: | /s/ Xxxxxx Xxxxxxxxxx
|
|||||
| Its: | EVP | |||||
| PCA FINANCE CORP., | ||||||
| a Delaware corporation | ||||||
| By: | /s/ Xxxxxx Xxxxxxxxxx
|
|||||
| Its: | EVP | |||||
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