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Exhibit 2.6
SUBORDINATION AND INTERCREDITOR AGREEMENT
AGREEMENT, made this day of October, 1996 by and among FINOVA CAPITAL
CORPORATION, having an office at 00 Xxxxx XxxxX 00 Xxxxx, Xxxxxxx, Xxx
Xxxxxx 00000 ("FINOVA") ; United Payphone Services, Inc., a Nevada
corporation, (the "Subordinated Lender"); and Tru-Tel Communications LLC a
Nevada Limited Liability Co. (the "Borrowers");
W I T N E S S E T H :
WHEREAS FINOVA and the Borrower are parties to a certain Loan and
Security Agreement dated ,1996 (as the same may from
time to time be amended so modified or supplemented hereinafter referred
to as the "FINOVA Loan Agreement"), pursuant to which FINOVA has agreed
to make a loan to the Borrower, upon and subject to the terms of the Loan
Agreement (the "Loan");
WHEREAS, pursuant to the FINOVA Loan Agreement, the Loan shall be
evidenced by a promissory note executed by the Borrower (as the same may
from time to time be amended, modified, supplemented, restated, replaced
or substituted, the "FINOVA Note");
WHEREAS the FINOVA Loan Agreement and the FINOVA Note together with all
other agreements instruments and documents now and hereafter executed
and delivered in connection therewith (as amended, modified or
supplemented from time to time) are hereinafter referred to as the "FINOVA
Loan Documents";
WHEREAS, the Loan and all interest charges (including, without limitation,
late and default charges), costs and expenses (including, without
limitation, attorney fees and costs) whether now existing or hereafter
arisinq, under or in connection with the Loan xxx the FINOVA Loan
Documents (including, without limitation, the negotiation and
documentation thereof and the enforcement of FINOVA's rights and remedies
thereunder) is hereinafter referred to as the "FINOVA Debt";
WHEREAS all of the FINOVA Debt in or will be secured by the grant by the
Borrower to FINOVA of liens on and security interests in the equipment
described an Schedule A annexed hereto and all additions, substitutions
and accessions thereto and the proceeds thereof including insurance
proceeds (the "Collateral");
WHEREAS the Subordinated Lender has, an or about the date hereof, made a
loan to the Borrower in the principal sum of Eight Hundred Thousand
Dollars ($800,000.00) evidenced by and payable in accordance with the
terms of a Promissory Note executed by the Borrower payable to the
Subordinated Lender (as the same may from time to time be amended,
modified or supplemented, hereinafter referred to as the "Subordinated
Lender Note");
WHEREAS, all the indebtedness, liabilities and obligations of the Borrower
to the Subordinated Lender evidenced by, under or related to the
Subordinated Lender Note or otherwise, are hereinafter referred to as
the "Subordinated Debt";
WHEREAS, the Subordinated Lender Note, together with all other agreements,
instruments and documents now and hereafter executed in connection
therewith or the Subordinated Debt or otherwise (as amended modified or
supplemented from time to time) are hereinafter referred to as the
"Subordinated Lender Loan Documents", copies of which are annexed hereto
as Schedule B;
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WHEREAS, pursuant to the Subordinated Lender Loan Documents, the Borrower
is presently indebted to the Subordinated Lender in the aggregate
principal sum of Eight Hundred Thousand Dollars ($800,000);
WHEREAS all of the Subordinated Debt also is or will be secured by the
grant by the Borrower to the Subordinated Lender of liens on and security
interests in the Collateral;
WHEREAS, it iS a condition precedent to the obligation of FINOVA to
execute the FINOVA Loan Documents and make the Loan, that the Subordinated
Lander shall execute and deliver this Agreement to and with FINOVA; and
WHEREAS, the Subordinated Lender acknowledges that it is in the best
interests of the Subordinated Lender that FINOVA execute and deliver the
FINOVA Loan Documents and make the Loan provided for therein to the
Borrower, in accordance with the terms of the FINOVA Loan Documents;
NOW THEREFORE, in order to induce FINOVA to execute and deliver the FINOVA
Loan Documents and make the Loan and extend the credit provided for
therein and in consideration therefor, the parties hereto hereby agree
as follows:
1. Consent. Notwithstanding any prohibition, restriction or provisions
to the contrary contained in the Subordinated Lender Loan Documents or
otherwise, the Subordinated Lender hereby consents to and approves of the
execution, delivery and performance by the Borrower of the FINOVA Loan
Agreement, the FINOVA Note and all of the other FINOVA Loan Documents and
the consummation of the transactions contemplated thereby, including,
without limitation, the grant of liens covering the Borrower's assets.
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2. Subordination.
(a) The payments of any and all of the principal amount of and
interest on the Subordinated Debt (and all other obligations
thereunder) is hereby expressly subordinated and made junior to the
payment of the principal amount, redemption premium, if any, all
interest and any other amounts due on the FINOVA Debt, to the extent
and in the manner set forth herein. Notwithstanding the foregoing
and subject to the provisions of subsection (b) through (a) hereof,
unless and until Borrower shall default in the payment or
performance of any terms, conditions or obligations of the FINOVA
Loan Documents Subordinated Lender shall be entitled to receive
scheduled payments of the principal of and interest on the
subordinated Debt but only upon, subject and pursuant to the terms
and provisions, including the dates, amounts and rates of principal
and interest payments as are set forth in the Subordinated Lender
Note as in effect on the date of this Agreement.
(b) in the event of (i) any insolvency, bankruptcy, receivership,
custodianship liquidation, reorganization, readjustment of debt,
arrangement, composition, assignment for the benefit of creditors,
or other similar proceeding relative to the Borrower or its
creditors, as such, or its property or (ii) any proceeding for
voluntary liquidation dissolution or other winding up or bankruptcy
proceedings, then and in any such event:
(A) All of the FINOVA Debt shall first be paid in full
before any payment or distribution of any character, whether
in cash, securities, obligations or other property shall be
made in respect of the Subordinated Debt with the exception of
any adequate protection payments to the Subordinated Lender
which may be ordered by a Court of competent jurisdiction;
(B) Any payment or distribution of any character which would
otherwise (but for the terms hereof) be payable or deliverable
in respect of the Subordinated Debt (including any payment or
distribution of any other indebtedness of the Borrower being
subordinated to the Subordinated Debt), shall be paid or
delivered directly to FINOVA, or unrepresentative, until all
of the FINOVA Debt shall have been paid in full, and the
subordinated Lender or any other holder of the Subordinated
Debt irrevocably authorizes, empowers and directs all
receivers custodians, trustees, liquidators, conservators and
others having authority to effect all such payments and
deliveries;
(C) The Subordinated Lender will, upon the written request
of FINOVA, prove, enforce and endeavor to obtain payment of
the aggregate outstanding amount of all unpaid Subordinated
Debt payments due and payable, or thereafter becoming due and
payable from the Borrower to the Subordinated Lender and will
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turn over to FINOVA in precisely the form received any payment
of any kind or character on account of such Subordinated Debt
for application to the payment of any indebtedness,
liabilities or obligations of the Borrower to FINOVA then
existing. In the event that the Subordinated Lender shall
fail to take any such action requested by FINOVA, FINOVA may,
as attorney-in-fact for the Subordinated Lender, take such
action on behalf of the Subordinated Lender but for the use
and benefit of FINOVA, and the subordinated Lender hereby
appoints FINOVA as its attorney-in-fact for the Subordinated
Lender to demand, xxx for, collect and receive every such
payment and distribution and give acquittance therefor and to
file claims and to take such other proceedings in FINOVA's own
name or in the name of the Subordinated Lander or otherwise
and to vote, give consent and take any other steps with regard
thereto, all as FINOVA may deem necessary or advisable for the
enforcement of this Agreement; and
(D) The Subordinated Lender or any other holder of the
Subordinated Debt shall execute and deliver to FINOVA or its
representative all such further instruments confirming the
authorization referred to in the foregoing clauses (B) and (C),
and any powers of attorney specifically confirming the rights of
FINOVA arising hereunder, and all such proofs of claim,
assignment of claim and other instruments and shall take all
such other actions as may be requested by FINOVA or its
representative in order to enable FINOVA or its representative
to enforce any and all claims upon or in respect of such
Subordinated Debt and to collect and give any and all payments
or distributions which may be payable or deliverable at any time
upon or with respect to such Subordinated Debt.
(c) If, notwithstanding the provisions of this Agreement, any payment
or distribution of any character (whether in cash, securities or other
property) or any security shall be received by the Subordinated Lender
in contravention of the terms of this Agreement, And before all FINOVA
Debt shall have been paid in full, such payment, distribution or
security shall not be commingled with any asset of the Subordinated
Lender, shall be held in trust for the benefit of, and shall be paid
over or delivered and transferred to, FINOVA, or its representative in
the exact same form, for application to the payment of all FINOVA Debt
remaining unpaid until all of the FINOVA Debt shall have been paid in
full.
(d) This Agreement, without further reference, shall pass to and may
be relied on and enforced by any transferee or subsequent holder of
any FINOVA Debt. No sale, assignment, disposition or other transfer
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of the Subordinated Debt, any of the Subordinated Lender Loan
Documents or any lien or security interest now or hereafter held by
Subordinated Lender in the Collateral shall be permitted or become
effective unless and until the Subordinated Lender causes the
transferee thereof to execute and deliver to FINOVA an acknowledgment
by such transferee of receipt of a copy of this Agreement accompanied
by an agreement (substantially identical with this Agreement or
otherwise in form and substance satisfactory to FINOVA) of such
transferee to be bound by the terms of this Agreement as if it
were the original Subordinated Lender hereunder.
(e) Notwithstanding any status, including, without limitation, the
Bankruptcy Code, any rule of law or bankruptcy procedures to the
contrary, and the right of FINOVA hereunder to have all of the
FINOVA Debt paid and satisfied in full prior to the payment of any
of the Subordinated Debt (except as expressly permitted pursuant to
Clause (a) of Section 2 of this Agreement) shall include, without
limitation, the right of FINOVA to be paid in full all interest
accruing on the FINOVA Debt due to it after the filing of any
petition by or against the Borrower in connection with any
bankruptcy or similar proceeding or any other payment of any amounts
in respect of the Subordinated Debt, including, without limitation,
any interest due to the Subordinated Lender accruing after such date.
3. Priority of Liens.
(a) Notwithstanding anything to the contrary contained in the
Subordinated Lender Loan Documents or any other agreement, intrustment
or document executed and delivered pursuant to or in connection with the
Subordinated Debt or the FINOVA Loan Documents, and notwithstanding any
prior perfection of a security interest or lien undr theprovisions of
the Uniform Commercial Code or any other law of any jurisdiction which
is applicable or statements under the Uniform Commercial Code or any
other law of any jurisdiction which is applicable or any other
recordation or filing of any documents, and further notwithstanding any
pledge to the Subordinated Lender or possession by the Subordinated
Lender of the Collateral, as between FINOVA and the Subordinated Lender,
the security interests and liens now or hereafter held by FINOVA in and
to the Collateral shall be first and prior to the security interests and
liens now or hereafter held by the Subordinated Lender in the
Collateral.
(b) If the Subordinated Lender shall at any time have possession or
control of any of the Collateral, it shall hold or control the
Collateral for the benefit of FINOVA ecept as otherwise expressly
permitted pursuant to Clause (b) of Section 6 of this Agreement. So
long as any of the FINOVA Debt shall remain unpaid to FINOVA, FINOVA may
at all times, in its sole discretion, exercise any and all the powers
and rights, including, without limitation, the right to foreclose or
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otherwise realize upon the Collateral, whether or not in its
possession, all without the necessity of obtaining any consent or
approval of the Subordinated Lender, nor shall it have any liability to
the Subordinated Lender for any action taken or failure to act with
respect to any Collateral in its possession beyond the exercse of
reasonable care to assure the safe custody thereof. Upon payment in
full of the FINOVA Debt, FINOVA shall assign and deliver to the
Subordinated Lender all of the Collateral then in its possession (if
any), but without recourse and without any representation or warranty
whatsoever.
(c) With respect to the collection of the proceeds of any policy of
insurance, the proceeds of which are assigned to FINOVA or the
Subordinated Lender pursuant to any security agreement executed and
delivered by the Borrower with FINOVA or the Subordinated Lender,
FINOVA and the Subordinated Lender shall join in any instructions to
the insurance companies involved so that the proceeds will be delivered
to the party entitled thereto pursuant to the terms of this Agreement,
the first proceeds thereof being paid to FINOVA.
4. Continued Effectiveness of this Agreement. The terms of this Agreement,
the subordination effected hereby, and the rights of FINOVA and the
obligations of the Subordinated Lender arising hereunder, shall not be
affected, modified, or impaired in any manner or to any extent by: (i) any
amendment, modification or termination of or supplement to the FINOVA Loan
Documents, or any agreement, instrument, or document executed or delivered
pursuant thereto; (ii) the validity or enforceability of any such doucments;
(iii) the release, sale, exchange, or surrender in whole or in part, of any
collateral security, now or hereafter existing, for any of the FINOVA Debt;
(iv) any exercise or nonexercise of any right, power or remedy under or in
respect to the FINOVA Debt or any of such instruments and documents referred
to in clause (i) above or arising at law; (v) any waiver, consent, release,
indulgency, extension, renewal, modification, delay or other action,
inaction or omission in respect of the FINOVA Debt or any of the agreements,
instruments or documents referred to in clause (i) above or in respect of
any collateral security for the FINOVA Debt, all whether or not the
Subordinated Lender shall have had notice or knowledge of any of the
foregoing and whether or not it shall have consented thereto; or (vi) any
action taken by any trustee in bankruptcy includng any debtor under the
Bankruptcy Code or any other party pursuant to Sections 510, 547, 548, 549,
550 and 553 of the Bankruptcy Code.
5. Legend on Note. The Subordinated Letter shall, simultaneously with the
execution and delivery hereof, cause a conspicuous legend to be placed on
the Subordinated Lender Note to the followng effect:
"This note and the indebtedness evidenced hereby is subordinated, in
the manner and to the extent set forth in a Subordination Agreement
dated , 1996 (as sucn agreement may from time to time be amended,
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modified or supplemented, the "Subordination Agreement") by the maker and
payee of this Note in favor of FINOVA Capital Corporation ("FINOVA") to
all indebtedness (including interest) at any time owed by the maker of
this Note to FINOVA, and each holder of this Note, by its acceptance
hereof, shall be bound by the Subordination Agreement."
6. Restrictions on Subordinated Lender. Prior to the payment of the FINOVA
Debt and notwithstanding anything contained in the Subordinated Lender Loan
Documents or any agreement, instrument or document executed in connection with
the Subordinated Debt to the contrary, the Subordinated Lender shall not,
without the prior written consent of FINOVA do any of the following:
(a) Amend, modify or supplement or agree to any amendment, modification
or supplement of, or to, the Subordinated Debt or any of the
Subordianted Lender Loan Documents in any manner;
(b) Unless and until (i) FINOVA has exercised its remedies as a secured
lender pursuant to the FINOVA Loan Documents; or (ii) Subordinated
Lender (x) has notified FINOVA of the occurrence of an event of default
pursuant to the Subordinated Lender Loan Documents and its intention to
exercise its remedies as a secured lender thereunder ("Default
Notification") and (y) thirty days has passed from the date of receipt
by FINOVA of the Default Notification; accelerate the maturity of all or
any portion of the Subordinated Debt, or take any action towards
collection of all or any portion of the Subordinated Debt or enforcement
of any rights, powers or remedies under the Subordinated Lender Loan
Documents or other agreements entered into pursuant thereto, or
applicable law or against the Collateral (including, without limitation,
any foreclosure action) wheter uupon the occurrence of any event of
default, default or breach under the Subordinated Lender Loan Documents
or otherwise.
7. Bankruptcy. Until the FINOVA Debt shall have been indefeasibly paid in
full, the Subordinated Lender will not, without the prior written consent of
FINOVA, commence, or join with any personi n commencing, any proceeding
against any reorganization, readjustment of debt, dissolution, receivership,
liquidation or insolvency law or statute now or herafter in effect in any
jurisdiction.
8. Waivers. The Subordianted Lender herby waives, and agrees not to assert
any right, now or herafter existing, to require FINOVA to proceed against
or exhaust any collateral at any time securing the FINOVA Debt, or to
marshal any assets in favor of the Subordinated Lender or any other holder
of Subordinated Debt.
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9. Reinstatement. Upon payment in full of the FINOVA Debt, the Subordinated
Lender shall have all of its rights reinstated in respect of the Subordinated
Debt, and, until such time, the Subordinatd Lender irrevocably waives any and
all rights of subrogation.
10. Representations and Warranties. The Subordinated Lender hereby represents
and warrants that: (a) the execution and delivery of this Agreement and the
performance by the Subordinated Lender of its obligations hereunder have
received all necessary approvals, corporate or otherwise, and do not and will
not contravene or conflict with any provision of law or any provision of any
indenture, instrument or other agreement ot which the Subordinated Lender is a
party or by which it or its property may be bound or affected; (b) the
Subordinated Lender has full power, authority and legal right to make and
perform this Agreement; (c) the Subordinated Lender has not assigned or
transferred any indebtedness owing by the Borrower; and (d) this Agreement is
legal, valid and binding obligation of the Subordinated Lender in accordance
with its terms.
11. Miscellaneous
(a) The Subordinated Lender shall execute and deliver such additional
documents and take such further action as shall be reasonably
necessary to effectuate the purposes this Agreement.
(b) In the event of any conflict between any term, covenant or
condition of this Agreement and any term, convenant or condition of
the Subordinated Lender Loan Documents, or the indebtedness evidenced
thereby, the provisions of this Agreement shall control and govern.
(c) Any notice required or permitted to be given hereunder shall be
validly given if set forth in writing and delivered by hand against
receipt or mailed, by certified mail, return receipt requested,
addressed to the parties hereto at their may designate any other address
to which any notices shall be given by notice duly given hereunder.
(d) This Agreement is intended to establish relatie rights and
priorities between FINOVA and the Subordinated Lender, only, and is not
intended to give or confer any rights to any person other than the
holders of FINOVA Debt. No party, including the Borrower, is intended
to be a third party beneficiary of this Agreement.
(e) This Agreement may not be amended or modified orally, but may be
amended or modified only in writing, signed by FINOVA and the
Subordinated Lender. No waiver of any term or provision of this
Agreement shall be effective unless it is in writing, making specific
reference to this Agreement and signed by the party against whom such
waiver is sought to be enforced. This Agreement constitutes the entire
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agreement between the parties hereto with respect to the subject matter
hereof. This Agreement shall be bindng upon the Subordinated Lender and
its successors and assigns and shall inure to the benefit of FINOVA and
its successors and assigns.
(f) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEVADA. EACH PARTY HEREBY IRREVOCABLY
CONSENTS TO THE JURISDICTION OF ANY COURT OF THE STATE OF NEVADA
LOCATED IN XXXXX COUNTY, NEVADA AND OF THE UNITED STATES DISTRICT
COURT FOR THE DISTRICT OF NEVADA FOR ALL PURPOSES IN CONNECTION WITH
THIS AGREEMENT. ANY PROCESS OR NOTICE OF MOTION OR OTHER APPLICATION
TO EITHER OF SAID COURTS OR A JUDGE THEREOF, OR ANY NOTICE IN
CONNECTION WITH ANY PROCEEDINGS HEREUNDER, MAY BE SERVED INSIDE OR
OUTSIDE THE STATE OF NEVADA BY REGISTERED OR CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, OR BY PERSONAL SERVICE, PROVIDED A REASONABLE TIME
FOR APPEARANCE IS ALLOWED, OR IN SUCH OTHER MANNER AS MAY BE
PERMISSABLE UNDER THE RULES OF SAID COURTS.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
SUBORDINATED LENDER:
UNITED PAYPHONE SERVICES, INC.
By:
Name: Xxxxx X. Xxxxxxxx
Title: President
BORROWER:
TRU-TEL COMMUNICATIONS, LLC
By:
Name: Quaid X. Xxxxxx
Title: President/Manager
FINOVA CAPITAL CORPORATION
By:
Name:
Title:
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SCHEDULE A
Equipment
See Attached
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SCHEDULE B
Subordinated Lender Loan Documents
See Attached
