EXHIBIT 10.119
INTERCREDITOR AND SUBORDINATION AGREEMENT
THIS INTERCREDITOR AND SUBORDINATION AGREEMENT ("Agreement"), is made
this 5th day of April, 2004, between and among LJH, LTD., a Texas limited
partnership ("Junior Creditor"); THE CIT GROUP/BUSINESS CREDIT, INC., a New York
corporation, in its capacity as agent (in such capacity, together with its
successors and assigns, the "Agent") for the CIT Lenders under the CIT Financing
Agreement, as hereinafter further defined; and HILCO CAPITAL LP, a Delaware
limited partnership (together with its successors and assigns, "Hilco"; the CIT
Lenders and Hilco being collectively called the "Senior Creditors").
WITNESSETH:
WHEREAS, Aircraft Interior Design, Inc., a Florida corporation, Xxxxx
Manufacturing Company, Inc., a California corporation, TIMCO Aviation Services,
Inc., a Delaware corporation (the "Parent"), TIMCO Engine Center, Inc., a
Delaware corporation, TIMCO Engineered Systems, Inc., a Delaware corporation,
and Triad International Maintenance Corporation, a Delaware corporation
(collectively, the "Borrowers" and, individually, a "Borrower"), and Aviation
Sales Distribution Services Company, Aviation Sales Leasing Company, Aviation
Sales Property Management Corp., AVS/M-1, Inc., AVS/M-2, Inc., AVS/M-3, Inc. and
Whitehall Corporation, each a Delaware corporation, AVS/CAI, Inc., a Florida
corporation, AVSRE, L.P., a Delaware limited partnership, Hydroscience, Inc., a
Texas corporation, and TMAS/ASI, Inc., an Arkansas corporation (collectively,
the "Guarantors" and, individually, a "Guarantor" and, together with the
Borrowers, collectively, the "Credit Parties" and, individually, a "Credit
Party"), Agent, and other lenders and financial institutions (the "CIT Lenders")
which are parties from time to time, have each entered into a certain Financing
Agreement, dated of even date herewith (such Financing Agreement, as amended,
modified, supplemented or restated from time to time, being herein called
collectively the "CIT Financing Agreement" as hereinafter further defined),
pursuant to which the CIT Lenders have agreed to make or extend to the Borrowers
a $35.0 million revolving credit loan facility and a $7.0 million term loan
evidenced by the Borrowers' promissory notes, also dated of even date herewith,
in the aggregate original principal amount of up to $35.0 million (the "CIT
Revolving Notes") and in the aggregate original principal amount of $6.4 million
(the "CIT Term Notes"), upon the term and subject to the conditions set forth
therein (the CIT Financing Agreement, the CIT Revolving Notes, the CIT Term
Notes, and all related documentation as in effect from time to time, being
herein referred to as the "CIT Lender Documents");
WHEREAS, the Credit Parties have each entered into a certain Financing
Agreement with Hilco, dated of even date herewith (such Financing Agreement, as
amended, modified, restated or supplemented from time to time, being herein
called the "Hilco Financing Agreement" as hereinafter further defined), pursuant
to which Hilco has agreed to make an $8.0 million term loan to the Borrowers
evidenced by the Borrowers' promissory note, also dated of even date herewith,
in the original principal amount of $8.0 million (the "Hilco Term Note"), upon
the terms and subject to the conditions set forth therein (the Hilco Financing
Agreement, the Hilco Term Note, and all related documentation as in effect from
time to time, being herein referred to as the "Hilco Documents");
WHEREAS, to induce the CIT Lenders and Hilco to enter into the CIT
Lender Documents and the Hilco Documents, respectively, and to make the loans
and extend the credit contemplated thereby, the Guarantors have executed
guaranties as part of the CIT Lender Documents and the Hilco Documents thereby
guaranteeing all of the indebtedness and other obligations owing by the
Borrowers to the Agent and the CIT Lenders and Hilco, respectively, thereunder;
WHEREAS, pursuant to the CIT Lender Documents and the Hilco
Documents, the Credit Parties have granted Liens in substantially all of their
property to the Agent for the benefit of the CIT Lenders and Hilco,
respectively; and
WHEREAS, the Senior Creditors, as a condition to entering into
the CIT Lender Documents and the Hilco Documents require the execution of this
Agreement by the Junior Creditor establishing the relative priorities of the
Senior Creditors' and the Junior Creditor's Liens upon the property of the
Credit Parties and the relative right of payment and claim of the indebtedness
of the Credit Parties owing to the Senior Creditors under the CIT Lender
Documents and the Hilco Documents and the Junior Creditor under the LJH
Documents (as hereinafter defined);
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are expressly acknowledged, and in order to
induce the Senior Creditors to make loans and extend credit and other financial
accommodations to the Credit Parties from time to time and to better secure the
Senior Creditors in respect of the foregoing, the Agent on behalf of the CIT
Lenders, Hilco and Junior Creditor hereby agree as follows:
1. DEFINED TERMS. In addition to the terms defined in the recitals
hereto, the following terms shall have the following meanings for the purposes
of this Agreement:
"Agreement" - shall mean this Intercreditor and Subordination
Agreement, as the same may be modified, amended or supplemented from
time to time.
"Blockage Notice" - shall mean a written notice from Agent or
Hilco to the Junior Creditor that an Event of Default has occurred and
is continuing.
"CIT Financing Agreement" - shall mean the Financing
Agreement, dated of even date herewith, among the Credit Parties, the
Agent and the CIT Lenders that are parties thereto, as in effect on the
date hereof, and as the same may be amended, modified, supplemented or
restated from time to time, and including any agreement with the same
or other lenders extending the maturity of, or restructuring,
refinancing or replacing all or any portion of the indebtedness and
obligations owing to the Agent and the CIT Lenders thereunder.
"Event of Default" - shall mean an Event of Default as defined
in any Senior Credit Document.
"Hilco Financing Agreement" - shall mean the Financing
Agreement, dated of even date herewith, among the Credit Parties and
Hilco, as in effect on the date hereof, and as the same may be amended,
modified, supplemented or restated from
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time to time, and including any agreement with the same or other
lenders extending the maturity of, or restructuring, refinancing or
replacing all or any portion of the indebtedness and obligations owing
to Hilco thereunder.
"Junior Debt" - shall mean all present and future indebtedness
(whether principal, interest (including, without limitation, interest
accruing after the commencement of a bankruptcy proceeding by or
against any Credit Party), fees, collection costs, expenses,
liabilities, obligations, indemnities and other amounts now or
hereafter owed by any Credit Party to the Junior Creditor (including,
without limitation, all of the indebtedness arising under or pursuant
to the LJH Documents), whether direct or indirect, absolute or
contingent, secured or unsecured, due or to become due, liquidated or
unliquidated, whether now existing or hereafter arising, and all
whether arising under contract, in tort, or otherwise.
"Lease Agreement" - shall mean that certain Equipment Lease,
dated April 4, between the Parent, as lessee, and the Junior Creditor,
as lessor.
"Leased Equipment" - shall mean the Equipment owned by LJH and
leased to the Parent pursuant to the Lease Agreement, more particularly
described on EXHIBIT A attached hereto and incorporated by reference.
"Liens" - shall mean the liens and security interests with
respect to the Collateral or any portion thereof granted at any time by
the Credit Parties or any of them to the Junior Creditor or the Agent
for the benefit of the CIT Lenders, or to Hilco, respectively.
"LJH Documents" - shall mean and include the LJH Note, the
Lease Agreement, that certain Amended and Restated Guaranty, dated
March 31, 2004, and that certain Amended and Restated Security
Agreement, dated March 31, 2004, each as amended, modified,
supplemented or restated from time to time, and all other security
agreements, assignments, instruments, documents and agreements now or
hereafter evidencing or security the payment of all or any part of the
Junior Debt.
"LJH Note" - shall mean the Amended and Restated Consolidated
Term Promissory Note, dated March 31, 2004, in the original principal
amount of $14,411,704.00.
"Payment in full" - shall mean, together with the phrase
"prior payment in full", "paid in full", "fully paid" and any other
similar terms or phrases when used herein with respect to any Senior
Debt, the final indefeasible payment in full in cash of all such Senior
Debt (other than contingent indemnity obligations of any Credit Party
that survive payment in full).
"Permitted Junior Securities" - shall have the meaning
ascribed to such term in Section 8 of this Agreement.
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"Permitted Payments" - shall have the meaning ascribed to such
term in Section 4 of this Agreement.
"Person" shall mean an individual, partnership, corporation,
joint stock company, land trust, business or unincorporated
organization, or a government or agency or political subdivision
thereof.
"Senior Creditor Collateral" - shall mean all of the assets,
properties and interests in property of each Credit Party, whether now
owned or hereafter acquired or arising, wherever located.
"Senior Creditor Documents" - shall collectively mean the CIT
Lender Documents and the Hilco Documents.
"Senior Debt" - shall mean all present and future indebtedness
(whether principal, interest (including, without limitation, interest
accruing after the commencement of a bankruptcy proceeding by or
against any Company), fees, collection costs, expenses, liabilities,
obligations (including, without limitation, letter of credit
reimbursement obligations), and other amounts now or hereafter owed by
any Company to the Agent or to the CIT Lenders (including, without
limitation, all of the indebtedness arising under or pursuant to the
CIT Lender Documents), or to Hilco (including, without limitation, all
of the indebtedness arising under or pursuant to the Hilco Documents)
whether direct or indirect, absolute or contingent, secured or
unsecured, due or to become due, liquidated or unliquidated, whether
now existing or hereafter arising, and all whether arising under
contract, in tort, or otherwise.
2. PRIORITY OF SECURITY INTERESTS. The Senior Creditors and the Junior
Creditor agree that at all times, whether before, after or during the pendency
of any bankruptcy, reorganization or other insolvency proceeding with respect to
any Company, and notwithstanding the priorities which would ordinarily result
from the order of execution or granting of any security interest in any
Company's assets or the order of filing of any financing statements related to
the Senior Creditor Documents or the LJH Documents:
(a) Each Senior Creditor's Lien in the Senior Creditor
Collateral shall be a Lien in the Senior Creditor Collateral, superior to any
Lien of the Junior Creditor therein arising pursuant to the LJH Documents or
otherwise, and the Junior Creditor's Lien in the Senior Creditor Collateral
shall be subordinate to the Liens of the Secured Creditors therein.
(b) The Junior Creditor's interest in the Leased Equipment
shall be superior to any Lien of any Senior Creditor arising pursuant to the
Senior Creditor Documents in the Leased Equipment, and the Senior Creditors'
Liens in the Leased Equipment shall be subordinated to the Lien of the Junior
Creditor therein.
(c) The subordinations and priorities specified in this
Section 2 are expressly conditioned upon the validity, perfection and
non-avoidance of the Lien to which the other Lien is subordinated, and, if the
Lien to which the other Lien is subordinated is invalid, unperfected or is
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avoided for any reason, then the subordination and relative priority agreements
provided for herein shall not be effective as to that portion of the Lien which
is the subject of the unperfected, invalid or avoided Lien.
3. DEBT SUBORDINATION.
(a) The Junior Creditor hereby agrees that the Junior Debt is
subordinate, and the payment thereof, directly or indirectly, by any means
whatsoever, is deferred, to the prior payment in full of all of the Senior Debt,
to the extent and in the manner set forth in this Agreement.
(b) Except as set forth in Section 4 below, unless and until
the Senior Debt shall have been fully paid and the Senior Creditor Documents and
all outstanding commitments of each Senior Creditor for the incurring of
additional Senior Debt shall have been irrevocably terminated in writing, the
Junior Creditor will not:
(i) Accelerate, ask, demand, xxx for, take or receive from or
on behalf of any Company, by setoff or in any other manner, the whole
or any part of any monies which may now or hereafter be owing to the
Junior Creditor on the Junior Debt; or
(ii) Initiate or participate with others in any suit, action
or proceeding against any Company, or otherwise take action against any
Company or any of its assets, to enforce payment of or to collect the
whole or any part of the Junior Debt; or
(iii) Commence any bankruptcy, arrangement, reorganization or
insolvency proceeding against any Company; or
(iv) Ask, demand, take or receive any security for any of the
Junior Debt other than that granted pursuant to the LJH Documents.
(c) The provisions of this Agreement shall apply with respect
to all of the Senior Debt, regardless of whether the Senior Debt has already
been incurred or may be incurred in the future by future advances or other
financial accommodations made or extended by a Senior Creditor to a Company
pursuant to the Senior Creditor Documents.
(d) If the Junior Creditor in violation of this Agreement
shall commence, prosecute or participate in any suit, action or proceeding
against any Company or shall attempt to enforce, foreclose or realize upon any
security for the Junior Debt, including, without limitation, the Senior Creditor
Collateral, such Company or any Senior Creditor may interpose as a defense or
plea the making of this Agreement and any Senior Creditor may intervene and
interpose such defense in its name or in the name of such Company, and such
Company or such Senior Creditor may by virtue of this Agreement restrain the
enforcement thereof in the name of such Company or such Senior Creditor.
4. PERMITTED PAYMENTS.
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(a) Notwithstanding the provisions of Section 3 hereof, until the
giving of a Blockage Notice, the Companies may pay to the Junior Creditor, and
the Junior Creditor may demand, accept and retain from the Companies, (i)
periodic payments of interest accruing on the Junior Debt, as and when the same
become due under the terms of the LJH Note and (ii) monthly lease payments not
to exceed $74,076.67 under the Lease Agreement, so long as both immediately
before, and after giving effect to the payment of such interest, (i) no Default
or Event of Default exists, (ii) Availability (as defined in any Senior Credit
Document) is not less than $3,000,000 and (iii) such payment(s) are made in any
year only after Hilco has received payment in full of all Surplus Cash (as
defined in the Hilco Financing Agreement) required to be paid to Hilco for the
Fiscal Year (as defined in the Hilco Financing Agreement) just ended pursuant to
Section 4.3 of the Hilco Financing Agreement (the foregoing payments being
herein called the "Permitted Payments") and no other payments with respect to
the Junior Debt.
(b) Upon the issuance of a Blockage Notice, the subordination
provisions of Section 3 shall govern and control until the earlier to occur of:
(i) The Event of Default giving rise to such Blockage Notice
shall have been cured to the satisfaction of the Senior Creditors or
waived in writing or shall have ceased to exist; or
(ii) All of the Senior Debt shall have been fully paid and the
Senior Creditor Documents and all outstanding commitments of each
Senior Creditor for the incurring of additional Senior Debt shall have
been irrevocably terminated in writing.
5. STANDBY AS TO ENFORCEMENT OF SECURITY INTERESTS. Notwithstanding any
provision of the LJH Documents to the contrary, until all of the Senior Debt
shall have been fully paid and the Senior Creditor Documents and all outstanding
commitments of each Senior Creditor for the incurring of additional Senior Debt
shall have been irrevocably terminated in writing, the Junior Creditor shall not
ask for, demand, xxx for, take, receive, or repossess from any Company, by
setoff or in any other manner, the whole or any part of the Senior Creditor
Collateral, or foreclose or otherwise realize upon the whole or any part of the
Senior Creditor Collateral, whether by judicial action or under power of sale,
by self-help repossession or otherwise.
6. USE OF LEASED EQUIPMENT. If the Senior Creditors desire to exercise
their respective rights and remedies with respect to any portion of the Senior
Creditor Collateral which is located in any premises in respect of which the
Junior Creditor has an ownership or leasehold interest, or in which the Junior
Creditor may have been granted a Lien or in which any Leaded Equipment may be
located, the Junior Creditor agrees that it will do nothing to impede or impair
the rights of the Senior Creditors to enter upon such premises without force or
process of law and without obligation to pay rent or other compensation of any
kind to the Junior Creditor. Junior Creditor further agrees to permit the Senior
Creditors, in the exercise of their rights and remedies under the Senior
Creditor Documents, to use any Leased Equipment, wherever located, without
charge, for a period starting with the date on which the Senior Creditors or
their agents commence using the Leased Equipment and ending one hundred eighty
(180) days thereafter.
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7. TURNOVER OF FUNDS. If any payment, distribution or security or the
proceeds thereof are received by the Junior Creditor with respect to the Senior
Creditor Collateral or in payment of the Junior Debt and such payment (excluding
Permitted Junior Securities) is not a Permitted Payment, then the Junior
Creditor shall hold the same in trust for the benefit of the Senior Creditors
and shall forthwith pay over and deliver the same to Agent or Hilco, as
applicable, in the same form received (except for the endorsement or assignment
of Junior Creditor when necessary for application to the Senior Debt).
8. PRIORITY OF DISTRIBUTION. In the event of (a) any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation, reorganization
or other similar case or proceeding in connection therewith, relative to any
Company or its assets, or (b) any liquidation, dissolution or other winding up
of any Company, whether voluntary or involuntary, and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or
any other marshalling of assets or liabilities of any Company, then (i) in any
such event, the provisions of Section 2 of this Agreement shall continue to
apply, and (ii) in the case of the foregoing clauses (b) and (c) all of the
provisions of this Agreement shall continue to apply (excluding the payment to
Junior Creditor in securities of any Company provided for by a plan of
reorganization or readjustment that are equity securities or are subordinated in
right of payment to all indebtedness of each Company issued to each Senior
Creditor in such plan of reorganization or readjustment to substantially the
same extent as, or to a greater extent than, the Junior Debt is subordinated to
the Senior Debt as provided in this Agreement) (such equity securities or
subordinated securities being herein called the "Permitted Junior Securities").
9. WAIVERS OF THE JUNIOR CREDITOR.
(a) The Junior Creditor waives any and all notice of the
creation, renewal, extension or accrual of any of the Senior Debt and notice of
or proof of reliance by the Agent or any Senior Creditor upon this Agreement.
The Senior Debt shall be deemed conclusively to have been created, contracted or
incurred in reliance upon this Agreement, and all dealings between any Company
and the Agent or any Senior Creditor shall be deemed to have been consummated in
reliance upon this Agreement. The Junior Creditor acknowledges and agrees that
the Agent and each Senior Creditor has relied upon the subordination provided
for herein in making financial accommodations available to the Companies under
the Senior Creditor Documents. The Junior Creditor waives notice of or proof of
reliance on this Agreement and protest, demand for payment and notice of
default.
(b) Neither the Agent nor any Senior Creditor shall have any
liability to the Junior Creditor for, and the Junior Creditor expressly waives
any claim which it may now or hereafter have against the Agent or any Senior
Creditor, arising out of or related to any actions which the Agent or a Senior
Creditor in good faith takes or omits to take with respect to the Senior
Creditor Collateral or the Senior Debt secured thereby, including, without
limitation, actions with respect to the creation, perfection or continuation of
the Liens in the Senior Creditor Collateral, actions with respect to the
occurrence of an Event of Default under the Senior Documents, actions with
respect to the foreclosure upon, sale, disposition, collection or failure to
realize upon, the Senior Creditor Collateral, and actions with respect to the
collection of the Senior Debt. Without limiting the generality of the foregoing,
the Agent and the Senior Creditors may, without regard to the existence
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of any rights the Junior Creditor may now or hereafter have in and to the Senior
Creditor Collateral (other than the rights of the Junior Creditor to notices
under this Agreement or as may be required by applicable law), (i) compromise,
settle, adjust and in general deal in any manner with the Senior Creditor
Collateral, including, without limitation, the account debtors and other
obligors indebted thereon, as the Agent or Hilco may deem appropriate, upon such
terms and conditions (including the length of time incidental thereto) as the
Senior Creditors may deem appropriate, (ii) engage third parties to assist the
Agent or Hilco in the effectuation of the liquidation, collection or foreclosure
of the Senior Creditor Collateral, and (iii) incur such out-of-pocket costs and
expenses incidental thereto as the Agent or Hilco may deem appropriate,
including, without limitation, fees and disbursements of counsel to the Agent or
Hilco and any other third party professionals engaged by either of them. The
Junior Creditor irrevocably waives any right it may have, whether at law or in
equity, to assert any claim or bring any action, suit or proceeding against the
Agent or any of the Senior Creditors or to raise any affirmative defense, claim
or counterclaim in any action brought against it by the Agent or any of the
Senior Creditors, the effect of which is to contest the commercial
reasonableness of the decisions or actions of the Agent or any Senior Creditor
(whether made or taken alone or through any of its agents or representatives)
with respect to the Senior Creditor Collateral.
(c) The Junior Creditor expressly waives any right to require
the Agent or the Senior Creditors to marshal the Senior Creditor Collateral for
the Senior Debt or otherwise to compel the Agent or any of the Senior Creditors
to seek recourse against or satisfaction of the Senior Debt from one source
before seeking recourse or satisfaction from the Senior Creditor Collateral or
any other source.
(d) Nothing contained in this Agreement shall be deemed to
prohibit the Junior Creditor from intervening or participating in any judicial
proceeding to the extent necessary to establish or preserve its Liens in the
Senior Creditor Collateral, so long as such intervention or participation does
not interfere with the foregoing rights of the Agent and Hilco.
10. SUBROGATION. After all of the Senior Debt shall have been fully
paid and the Senior Creditor Documents and all outstanding commitments of each
Senior Creditor for the incurring of additional Senior Debt shall have been
irrevocably terminated in writing and until all of the Junior Debt has been paid
in full, the Junior Creditor shall be subrogated to the rights of the Senior
Creditors to receive payments and distributions of assets with respect to the
Senior Debt, to the extent that distributions otherwise payable to the Junior
Creditor have been applied to the payment of Senior Debt in accordance with the
provisions of this Agreement. For purposes of such subrogation, no payments or
distributions to the Senior Creditors of any cash, property or securities to
which the Junior Creditor would be entitled except for the provisions of this
Agreement, and no payments over pursuant to the provisions of this Agreement to
the Senior Creditors by the Junior Creditor shall, as among the Credit Parties,
their respective creditors other than the Senior Creditors, and the Junior
Creditor, be deemed to be a payment or distribution to the Junior Creditor on
account of the Junior Debt. The provisions of this Agreement are and are
intended solely for the purpose of defining the relative rights of the Junior
Creditor, on the one hand, and the Senior Creditors, on the other hand. Nothing
contained in this Agreement is intended to or shall (a) impair, as between the
Credit Parties and the Junior Creditor, the obligations of the Credit Parties,
which are absolute and unconditional, to pay the Junior Creditor the Junior Debt
in accordance with the provisions of the LJH Documents
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or (b) prevent the Junior Creditor from exercising all remedies otherwise
permitted by the LJH Documents or by applicable law, subject to the provisions
of this Agreement and the rights of the Senior Creditors to receive payments and
distributions otherwise payable to the Junior Creditor under the circumstances
set forth in this Agreement.
11. ASSIGNMENT OF SUBORDINATED DEBT. The Junior Creditor agrees that
until the Senior Debt shall have been fully paid and the Senior Creditor
Documents and all outstanding commitments of each Senior Creditor for the
incurring of additional Senior Debt shall have been irrevocably terminated in
writing, the Junior Creditor will not assign, transfer or otherwise dispose of
the Junior Debt or any portion thereof unless such assignment, transfer or other
disposition is made expressly subject to this Agreement, and the assignee or
transferee expressly acknowledges in an instrument delivered to the Agent and
Hilco that the Junior Debt is being assigned or transferred subject to the terms
of this Agreement.
12. NO WAIVER OF SUBORDINATION PROVISIONS.
(a) No right of the Agent and the Senior Creditors to enforce
the provisions of this Agreement shall at any time or in any way be prejudiced
or impaired by any act or failure to act on the part of the Credit Parties or by
any act or failure to act by the Agent or the Senior Creditors, or by any
non-compliance by the Credit Parties with the terms, provisions and covenants of
any of the LJH Documents, regardless of any knowledge thereof the Agent or any
Senior Creditor may have or be otherwise charged with.
(b) Without in any way limiting the generality of subsection
(a) of this Section 12, the Agent and the Senior Creditors may, at any time and
from time to time, without the consent of or notice to the Junior Creditor,
without incurring responsibility to the Junior Creditor and without impairing or
releasing the subordination provided hereunder or the obligations of the Junior
Creditor hereunder, do any one or more of the following:
(i) Amend, modify, waive or consent to any term or
provision set forth in any of the Senior Creditor Documents;
(ii) Change the manner, place or terms of payment or
extend the time of payment of, or refund or refinance, or
renew or alter, any of the Senior Debt;
(iii) Sell, exchange, release or otherwise deal with
any Senior Creditor Collateral or any other property pledged,
mortgaged or otherwise securing all or any portion of the
Senior Debt;
(iv) Release any Person liable in any manner for the
payment or collection of any of the Senior Debt;
(v) Exercise or refrain from exercising any rights
against the Credit Parties or any other Person; and
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(vi) Take any other action which might otherwise
constitute a defense available to, or a discharge of, the
Junior Creditor in respect of its obligations under this
Agreement.
(c) The provisions of this Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time payment of any
Senior Debt is rescinded or must otherwise be returned by the Agent, the CIT
Lenders or Hilco upon the insolvency, bankruptcy or reorganization of any Credit
Party, or otherwise, all as though such payment had not been made.
(d) Neither the Junior Creditor nor any Credit Party shall
agree to amend or otherwise modify or alter (i) the payment provisions of any
LJH Document if the effect would be to increase the amount of such payments or
shorten the schedule of such payments, or (ii) any provisions other than those
specified in clause (i) if the effect of any such amendment, modification or
alteration shall be, in the Agent's and the Senior Creditors' reasonable
judgment, to make any provision of any LJH Loan Document more restrictive than
that in effect on the date of this Agreement or if such amendment, modification
or alteration shall in the Agent's or the Senior Creditors' reasonable judgment
be in any respect materially adverse to the interests of the Senior Creditors.
13. POST BANKRUPTCY ISSUES.
(a) This Agreement shall continue in full force and effect
during the term set forth herein, notwithstanding the commencement by or against
any Credit Party of an insolvency or bankruptcy case or proceeding or any
receivership, liquidation, reorganization or other similar case or proceeding
during the pendency of which, so long as the Junior Debt has not been fully and
indefeasibly paid and satisfied, and the Senior Debt has not been fully paid and
the Senior Creditor Documents and all outstanding commitments of each Senior
Creditor for the incurring of additional Senior Debt shall not have been
irrevocably terminated in writing, all of the terms and provisions hereof shall
remain and continue in full force and effect.
(b) In an insolvency, bankruptcy case or proceeding, any
receivership, liquidation, reorganization or other similar case or proceeding,
the Junior Creditor shall not contest (or support any other party contesting)
any request of any Credit Party made with the consent of the Agent and Hilco for
use of cash collateral or for approval of any DIP financing to be provided in
good faith by the CIT Lenders or Hilco to such Credit Party, on the grounds of a
failure to provide "adequate protection" for the Liens of the Junior Creditor.
(c) Nothing contained in this Agreement shall in any way limit
the rights of or preclude the Agent, the CIT Lenders or Hilco from seeking to
obtain, in an insolvency, bankruptcy case or proceeding, any receivership,
liquidation, reorganization or other similar case or proceeding of a Credit
Party without the Junior Creditor's consent or over the Junior Creditor's
objection, replacement Liens or post-petition Liens upon any other terms,
including terms establishing that such replacement Liens or post-petition Liens
not be subject to the terms of this Agreement.
(d) Nothing contained in this Agreement shall in any way limit
the rights of or preclude the Junior Creditor from objecting to DIP financing or
use of cash collateral in an
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insolvency, bankruptcy case or proceeding, any receivership, liquidation,
reorganization or other similar case or proceeding of a Credit Party on any
grounds other than the failure to provide "adequate protection" for the Liens of
the Junior Creditor, including, without limitation, objecting to any proposed
terms establishing that replacement Liens or post-petition Liens to be granted
to the Agent for the benefit of the CIT Lenders or to Hilco not be subject to
the terms of this Agreement.
14. RELEASE OF LIEN OF THE JUNIOR CREDITOR. The Junior Creditor agrees,
whether or not a default has occurred under the Junior Debt, to release or
otherwise terminate its Lien in all or any portion of the Senior Creditor
Collateral upon written request of the Credit Parties, the Agent or Hilco to the
extent necessary to permit all or portion of the Senior Creditor Collateral to
be sold or otherwise disposed of by the Credit Parties, the Agent or Hilco,
whether or not in the ordinary course of a Credit Party's business.
15. PROVISIONS CONCERNING INSURANCE. The Agent and the Senior Creditors
agree that the Junior Creditor shall be entitled to obtain loss payee
endorsements and/or additional insured status with respect to any and all
policies of insurance now or hereafter obtained by the Credit Parties insuring
casualty or other loss to any property of the Credit Parties in which the Junior
Creditor may have a Lien. The rights and priorities of any party to any
insurance proceeds shall be as provided this Agreement.
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16. EXPENSES; INDEMNIFICATION.
(a) The Credit Parties shall pay (i) all reasonable out of
pocket expenses incurred by the Agent and the Senior Creditors, including the
reasonable fees, charges, and disbursements of counsel for the Agent and the
Senior Creditors, in connection with the preparation and administration of this
Agreement, and (ii) all reasonable out of pocket expenses incurred by the Agent
and the Senior Creditors, including the reasonable fees, charges and
disbursements of any counsel for the Agent and the Senior Creditors, in
connection with the enforcement or protection of any rights under this
Agreement.
(b) Without limiting the indemnity obligations of the Credit
Parties under the Senior Creditor Documents, the Credit Parties shall pay,
indemnify, and hold the Agent and the Senior Creditors (each such Person, an
"Indemnitee") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions (whether sounding in contract, tort, or on
any other ground), judgments, suits, costs, expenses, or disbursements of any
kind or nature whatsoever (including, without limitation, reasonable fees and
disbursements of any counsel for any Indemnitee) arising out of, in connection
with, or as a result of (i) the execution and delivery of this Agreement by the
Credit Parties, or (ii) any action taken or omitted to be taken by any Credit
Party with respect to this Agreement, provided that such indemnity under clauses
(i) and (ii) above shall not be available to the extent such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, or disbursements are determined by a court of competent jurisdiction
by final and nonappealable judgment to have resulted from the gross negligence
or willful misconduct of such Indemnitee.
17. NO THIRD PARTY BENEFICIARIES. This Agreement is solely for the
benefit of the Agent, the Senior Creditors and the Junior Creditor and their
respective successors, participants and assigns, and no other Person shall have
any right, benefit, priority or interest under, or because of the existence of,
this Agreement.
18. NOTICES. All notices, requests and demands to or upon a party
hereto, to be effective, shall be in writing and shall be sent by certified or
registered mail, return receipt requested, by personal delivery against receipt,
by overnight courier or by facsimile transmission and, unless expressly provided
herein, shall be deemed to have been validly served, given or delivered
immediately when delivered against receipt, three (3) business days after
deposit in the mail, postage prepaid, or, in the case of facsimile transmission,
when received (if on a business day and, if not received on a business say, then
on the next business day after receipt), addressed as follows:
12
(i) If to the Agent or the CIT Lenders:
The CIT Group/Business Credit, Inc.
Two Wachovia Center
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: TIMCO Account Manager
Facsimile No. 000-000-0000
With a copy to:
Xxxxxxxxxx & Xxxx, P.A.
000 Xxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile No. 336-273-7885
(ii) If to Hilco:
Hilco Capital, LP
One Northbrook Place
0 Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Alex Franky, Vice President
Facsimile No. 000-000-0000
With a copy to:
Xxxxxx & Xxxxxxxxxx LLP
0 Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 000000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Facsimile No. 000-000-0000
(iii) If to Junior Creditor:
LJH, Ltd.
000 Xxxx Xxxx
Xxxxxxxx, Xxxxx 00000
Attention: Xx. Xxxx Xxxxxx
Facsimile No. 000-000-0000
or to such other address as each party may designate for itself by notice given
in accordance with this Section 18. Any written notice or demand that is not
sent in conformity with the provisions hereof shall nevertheless be effective on
the date that such notice is actually received by the noticed party.
13
19. GRANT OF AUTHORITY. Until all of the Senior Debt is paid in full
and all outstanding commitments of the Senior Creditors for the incurring of
Senior Debt are terminated in writing, the Junior Creditor hereby irrevocably
authorizes and empowers the Agent or Hilco, in the event any insolvency or
bankruptcy case or proceeding or any receivership, liquidation, reorganization
or other similar case or proceeding, any liquidation, dissolution or other
winding up of a Credit Party, whether voluntary or involuntary and whether or
not involving insolvency or bankruptcy, or any assignment for the benefit of
creditors or any other marshalling of any assets or liabilities of a Credit
Party is commenced by or against a Credit Party, to (a) collect and receive
every payment or distribution on the Senior Debt and the Junior Debt (other than
Permitted Junior Securities) and give acquittance therefor, and (b) file claims
and proofs of claim in any such proceeding in respect of the Junior Debt in the
name of the Agent, the Senior Creditors, Hilco, or in the name of the Junior
Creditor or otherwise, as the Agent or Hilco may deem reasonably necessary or
advisable for the exercise or enforcement of any other rights of the Agent and
the Senior Creditors hereunder, if the Junior Creditor has not filed a claim or
proof of claim necessary to enforce the obligations of such Credit Party in
respect of the Junior Debt at least thirty (30) days before the expiration of
the time to file the same.
20. ADDITIONAL ASSURANCES. The Junior Creditor agrees to execute,
acknowledge and deliver to the Agent or Hilco all other and further documents or
assurances that the Agent or Hilco may reasonably request to give full force and
effect to the provisions of this Agreement.
21. GOVERNING LAW. This Agreement shall be interpreted and the rights
and liabilities of the parties hereto determined, in accordance with the laws
and decisions (exclusive of choice of law provisions) of the State of North
Carolina.
22. SECTION TITLES. The section titles contained in this Agreement are
and shall be without substantive meaning or content of any kind whatsoever and
are not a part of the agreement among the parties hereto.
23. AUTHORITY. Each party represents and warrants to each other party
that it has all necessary right, power and authority to enter into this
Agreement and perform and observe all of its covenants and agreements herein
contained and that this Agreement is valid and binding upon it and enforceable
against it in accordance with its terms, subject to bankruptcy, insolvency and
similar laws affecting enforcement rights generally.
24. ENTIRE AGREEMENT. This Agreement constitutes and expresses the
entire understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, whether express or implied, oral or
written. Neither this Agreement nor any provision hereof may be changed, waived
or amended orally or in any other manner other than by an agreement in writing
signed by the Agent, Hilco and the Junior Creditor.
25. SEVERABILITY. The provisions of this Agreement are independent of
and inseparable from each other. If any provision hereof shall for any reason be
held invalid or unenforceable, it is the intent of the parties that such
invalidity or unenforceability shall not affect the validity or
14
enforceability of any other provision hereof, and that this Agreement shall be
construed as if such invalid or unenforceable provision had never been contained
herein.
26. COUNTERPARTS. This Agreement may be executed by the parties hereto
in one or more counterparts, each of which when so executed shall be an
original. When taken together, such counterparts shall constitute but one and
the same document.
27. CONSENT TO FORUM. THE AGENT, HILCO AND THE JUNIOR CREDITOR EACH
HEREBY CONSENTS AND AGREES THAT THE SUPERIOR COURT OF MECKLENBURG COUNTY, NORTH
CAROLINA, OR THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NORTH
CAROLINA, CHARLOTTE DIVISION, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OR AMONG THE PARTIES HERETO PERTAINING
TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT.
EACH PARTY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION, AND
HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS.
28. WAIVERS OF TRIAL BY JURY. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE AGENT, HILCO AND THE JUNIOR CREDITOR EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO TRIAL BY JURY IT MAY HAVE IN
ANY ACTION OR PROCEEDING, IN LAW OR IN EQUITY, IN CONNECTION WITH THIS
AGREEMENT.
(SIGNATURES BEGIN ON NEXT PAGE)
15
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed under seal on the date first above written.
AGENT:
THE CIT GROUP/BUSINESS CREDIT, INC.,
AS AGENT
By: /s/
-------------------------------------
Title:
------------------------------
HILCO:
HILCO CAPITAL LP
By: /s/
-------------------------------------
Title:
------------------------------
JUNIOR CREDITOR:
LJH, LTD.
By: DLH Management, L.L.C., a Texas limited
liability company, its ______________
By: /s/
-------------------------------------
Title:
------------------------------
16
ACKNOWLEDGMENT AND AGREEMENT
OF THE CREDIT PARTIES
Each of the undersigned Credit Parties each does hereby accept, and
acknowledge receipt of a copy of, the foregoing Intercreditor and Subordination
Agreement, and each agrees that:
(a) It will not pay any of the Junior Debt except as the
foregoing Intercreditor and Subordination Agreement provides;
(b) It will be bound by the subrogation provisions of Section
10 of the foregoing Intercreditor and Subordination Agreement;
(c) Although the undersigned is signing this Acknowledgment
and Agreement, it is not a party to the foregoing Intercreditor and
Subordination Agreement and does not and will not receive any right,
benefit, priority or interest under or because of the existence of the
foregoing Intercreditor and Subordination Agreement;
(d) In the event of a breach by the undersigned or the Junior
Creditor of any of the terms and provisions contained in the foregoing
Intercreditor and Subordination Agreement, such a breach shall
constitute an Event of Default under the CIT Lender Documents and the
Hilco Documents; and
(e) It will execute and deliver such additional documents and
take such additional action as may be deemed necessary or desirable by
the Agent or Hilco to effectuate the provisions and purposes of the
foregoing Intercreditor and Subordination Agreement.
All capitalized terms used in this Acknowledgment and Agreement without
definition shall have the same meanings as set forth in the foregoing
Subordination Agreement.
IN WITNESS WHEREOF, the undersigned have caused this Acknowledgment and
Agreement to be duly executed under seal as of the day and year first above
written.
CREDIT PARTIES:
AIRCRAFT INTERIOR DESIGN, INC.
By: /s/
---------------------------------
Title:
------------------------------
17
XXXXX MANUFACTURING COMPANY, INC.
By: /s/
---------------------------------
Title:
------------------------------
TIMCO ENGINE CENTER, INC.
By: /s/
---------------------------------
Title:
------------------------------
TIMCO ENGINEERED SYSTEMS, INC.
By: /s/
---------------------------------
Title:
------------------------------
TRIAD INTERNATIONAL MAINTENANCE
CORPORATION
By: /s/
---------------------------------
Title:
------------------------------
TIMCO AVIATION SERVICES, INC.
By: /s/
---------------------------------
Title:
------------------------------
AVIATION SALES LEASING COMPANY
By: /s/
---------------------------------
Title:
------------------------------
AVIATION SALES PROPERTY
MANAGEMENT CORP.
By: /s/
---------------------------------
Title:
------------------------------
AVS/CAI, INC.
2
By: /s/
---------------------------------
Title:
------------------------------
AVS/M-1, INC.
By: /s/
---------------------------------
Title:
------------------------------
AVS/M-2, INC.
By: /s/
---------------------------------
Title:
------------------------------
AVS/M-3, INC.
By: /s/
---------------------------------
Title:
------------------------------
AVSRE, L.P.
By: Aviation Sales Property Management Corp.,
its general partner
By: /s/
---------------------------------
Title:
------------------------------
HYDROSCIENCE, INC.
By: /s/
---------------------------------
Title:
------------------------------
3
TMAS/ASI, INC.
By: /s/
---------------------------------
Title:
------------------------------
WHITEHALL CORPORATION
By: /s/
---------------------------------
Title:
------------------------------
4
EXHIBIT A
Leased Equipment
5
