Exhibit 2.4
SUBORDINATION AGREEMENT
(All Indebtedness and Liens)
Holcroft L.L.C., a Delaware limited liability company of
Livonia, Michigan ("Borrower") is indebted to the undersigned
("Creditor") in the principal sum of Two Million Two Hundred
Eighteen Thousand Dollars ($2,218,000) evidenced by a promissory
note dated October 10, 1997 which indebtedness is secured by a
security interest in the property described in attached Exhibit
"A", and Creditor is or may become financially interested in
Borrower and desires to aid Borrower in obtaining or having
continued financial accommodations, whether by way of loan,
commitment to loan, discounting of instruments, extensions of
credit or the obtaining of any other financial aid from Comerica
Bank (the "Bank"), a Michigan banking corporation of 000 Xxxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxx 00000.
In order to induce the Bank to extend or to continue to
extend financial accommodations to Borrower from time to time,
whether by way of a loan, commitment to loan, discounting of
instruments, extension of credit or otherwise and in
consideration of any of these financial accommodations, Creditor
agrees as follows:
1. Any and all obligations and liabilities of Borrower to
Creditor, including, without limit, principal and interest,
whether direct or indirect, absolute or contingent, joint or
several, secured or unsecured, due or to become due, now
existing or later arising and whatever the amount and
however evidenced including, without limit, the debt
described above but excluding the Receivable Note executed
by Borrower in favor of Creditor dated as of the date hereof
in the original principal amount of $657,532.51 (the
"Subordinated Indebtedness"), are subordinated in right of
payment to any and all obligations and liabilities of
Borrower to the Bank, including, without limit, principal
and interest, whether accrued before or after the filing of
a petition in bankruptcy or similar insolvency proceeding,
and whether direct or indirect, absolute or contingent,
joint or several, secured or unsecured, due or to become
due, now existing or later arising and however evidenced,
together with all other sums due thereon and all costs of
collecting the same (including, without limit, reasonable
attorney fees) for which Borrower is liable (the "Senior
Indebtedness").
2.(a)Borrower may not make and Creditor may not receive (by way
of voluntary payment, set-off, counterclaim or otherwise)
any payment of principal, interest or any other any other
amount due with respect to the Subordinated Indebtedness, if
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at the time of such payment Creditor shall have received a
notice from Bank of the occurrence of a default with respect
to the Senior Indebtedness ("Default Notice"). Borrower may
resume payments (and may make any payments missed due to
application of the foregoing) and Creditor may receive such
payments in respect of the Subordinated Indebtedness upon
the earlier of (a) the cure or written waiver by Bank of
such default or (b) 180 days shall have elapsed since the
date the Default Notice was received by Creditor. In no
event may Borrower make or Creditor receive any prepayment
of the Subordinated Indebtedness without the consent of
Bank, which consent may be withheld in the Bank's sole
discretion.
(b) Until the Senior Indebtedness is paid in full, Creditor
shall not, without the prior written consent of Bank, take
any Collection Action (as defined below) with respect to the
Subordinated Indebtedness, except as permitted in the
following sentence. After the passage of one hundred eighty
(180) days from the occurrence of any payment default with
respect to the Subordinated Indebtedness if such default
shall not have been cured or waived within such period, then
the Creditor may, upon five (5) business days' prior written
notice to Bank accelerate the Subordinated Indebtedness or
take other Collection Action. Such five-day notice may be
given during the 180-day period described in the preceding
sentence. Notwithstanding the foregoing, Creditor may file
proofs of claim against the Borrower in any Proceeding
involving the Borrower.
"Collection Action" shall mean (a) to demand, xxx for,
take or receive from or on behalf of the Borrower, by
set-off or in any other manner, the whole or any part
of any moneys which may now or hereafter be owing by
the Borrower with respect to the Subordinated
Indebtedness, (b) to initiate or participate with
others in any suit, action or proceeding against the
Borrower to (i) enforce payment of or to collect the
whole or any part of the Subordinated Indebtedness or
(ii) commence judicial enforcement of any of the rights
and remedies under the documents executed with respect
to the Subordinated Indebtedness or applicable law
with respect to the Subordinated Indebtedness or the
documents executed in connection with the Subordinated
Indebtedness, or (c) to accelerate any Subordinated
Indebtedness.
(c) Creditor shall not amend or modify any of the documents
evidencing or relating to the Subordinated Indebtedness
without the consent of Bank.
3. All rights of Creditor in any collateral now or later
securing the Subordinated Indebtedness are subordinated to
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all rights of the Bank now or later existing in any of the
same collateral securing the Senior Indebtedness. Creditor
waives all rights to require the Bank to xxxxxxxx the
collateral for the Senior Indebtedness or any other property
the Bank may at any time have as security for the Senior
Indebtedness and waives all right to require the Bank to
first proceed against any guarantor or other person before
proceeding against such collateral. Creditor shall not
contest the validity, priority or perfection of the Bank's
security interest in any collateral in which the Creditor
may also have an interest. The priorities of the Bank and
the Creditor in such collateral shall be in accordance with
this Agreement, regardless of whether the Bank's security
interest or lien in such collateral is valid or perfected.
Bank may take action to foreclose or otherwise realize upon,
or protect its interest in, the collateral, in accordance
with its agreements with the Borrower, at any time, without
the consent of Creditor, and Creditor agrees not to
interfere in a manner which would defeat the purpose of this
Agreement in connection therewith. Bank agrees to provide
Creditor with notice of such foreclosure or other
realization upon its collateral. So long as any part of the
Senior Indebtedness is outstanding, if Bank has agreed to
release its security interest in any of the collateral in
connection with the realization of any of its rights with
respect to such collateral, Bank is hereby authorized as
Creditor's attorney in fact to execute releases and
discharges of Creditor's liens and security interests in
such collateral provided that Bank is releasing or
discharging Bank's security interest in such collateral as
part of the same transaction and provided that Bank gives
Creditor five days prior written notice of such release
during which such five day period Creditor does not sign and
deliver to Bank any such releases or discharges.
4. In the event of any Proceeding (as defined below) involving
the Borrower, (a) all Senior Indebtedness first shall be
paid in full before any payment of or with respect to the
Subordinated Indebtedness shall be paid; (b) any payment or
distribution, whether in cash, property or securities which,
but for the terms hereof, otherwise would be payable or
deliverable in respect of the Subordinated Indebtedness,
shall be paid or delivered directly to Bank (to be held
and/or applied by Bank in accordance with the terms of the
Senior Indebtedness) until all Senior Indebtedness is paid
in full; (c) Creditor agrees to execute and deliver to Bank
or its representative all such further instruments
reasonable requested by Bank confirming the authorization
referred to in the foregoing clause (b); and (d) Creditor
agrees to execute, verify, deliver and file any proofs of
claim in respect of the Subordinated Indebtedness in
connection with any such Proceeding and hereby irrevocably
authorizes, empowers and appoints Bank its agent and
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attorney-in-fact to (i) execute, verify, deliver and file
such proofs of claim upon the failure of Creditor promptly
to do so (and, in any event, prior to 10 days before the
expiration of the time to file any such proof) and (ii) vote
such claim in any such Proceeding upon the failure of
Creditor to do so prior to 10 days before the expiration of
the time to vote and such claim; provided, however, that
Bank shall have no obligation to execute, verify, deliver,
file and/or vote any such proof of claim. In the event that
Bank votes any claim in accordance with the authority
granted hereby, Creditor shall not be entitled to change or
withdraw such vote.
"Proceeding" shall mean any voluntary or involuntary
insolvency, bankruptcy, receivership, custodianship,
liquidation, dissolution, reorganization, assignment
for the benefit of creditors, appointment of a
custodian, receiver, trustee or other officer with
similar powers or any other proceeding for the
liquidation, dissolution or other winding up of
Borrower.
5. Should any payment, distribution or security or proceeds
from these be received by Creditor upon or with respect to
the Subordinated Indebtedness prior to the satisfaction in
full of the Senior Indebtedness which is not permitted by
the terms of this Agreement, Creditor shall immediately
deliver same to the Bank in the form received (except for
endorsement or assignment by Creditor where required by the
Bank), for application on the Senior Indebtedness (whether
or not then due and in such order of maturity as Bank
elects) and, until so delivered, the same shall be held in
trust by Creditor as the property of the Bank. In the event
of the failure of Creditor to make this endorsement or
assignment and if such failure remains uncured for fifteen
(15) days following written notice thereof from Bank to
Creditor, the Bank or any Bank employee is irrevocably
authorized and appointed as attorney-in-fact for Creditor to
make the same.
6. Creditor represents and warrants that it has not made or
permitted to be made any assignment or transfer, for
collateral purposes or otherwise, of the Subordinated
Indebtedness or any collateral or other security for the
Subordinated Indebtedness. Creditor shall not make or permit
any assignment, transfer, pledge or disposition of all or
any part of the Subordinated Indebtedness or any collateral
or other security for the Subordinated Indebtedness while
any Senior Indebtedness remains unpaid except upon five (5)
days prior written notice to Bank and unless the assignee or
transferee has agreed in a writing acceptable to the Bank to
be bound by the terms of this Agreement. Until the Senior
Indebtedness is paid in full, each instrument evidencing any
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Subordinated Indebtedness shall at all times contain in a
conspicuous manner the following legend:
"This Note and the indebtedness evidenced hereby are
subordinate in the manner and extent set forth in that
certain Subordination Agreement dated as of October 10,
1997 among Thermo Terratech, Inc., Comerica Bank and
Holcroft L.L.C. to the indebtedness owed by Holcroft
L.L.C. to Comerica Bank and each holder of this Note,
by its acceptance hereof, shall be bound by the
provisions of the Subordination Agreement."
7. Possession by the Bank of any note or other evidence of
indebtedness made, endorsed or guaranteed by Borrower shall
be conclusive evidence (but not the only means of
establishing) that Borrower is indebted to the Bank and that
this indebtedness is covered by this Agreement.
8. This Agreement constitutes a continuing agreement of
subordination and shall remain in full force and effect
until such time as all of the Senior Indebtedness has been
paid in full, each commitment on the part of Bank to extend
credit to Borrower has been terminated and all letters of
credit issued by Bank for the account of Borrower have
expired.
9. Creditor waives notice of acceptance of this Agreement and
presentment, demand, protest, notice of protest, dishonor,
notice of dishonor, notice of default and diligence in
collecting any Senior Indebtedness, and agrees that the Bank
may modify the terms of borrowing, compromise, extend,
increase, accelerate, renew or forbear to enforce payment of
any part or all of any Senior Indebtedness, or permit
Borrower to incur additional Senior Indebtedness, all
without notice to Creditor and without affecting in any
manner the Bank's rights or Creditor's obligations under
this Agreement. Creditor further waives any and all other
notices to which Creditor might otherwise be entitled.
Creditor acknowledges and agrees that the Bank's rights
under this Agreement are not conditioned upon pursuit by the
Bank of any remedy the Bank may have against the Borrower or
any other person or any other security. The absence of
Borrower's signature at the end of this Agreement shall in
no way impair or affect the validity of this Agreement.
10. Creditor delivers this Agreement based solely on Creditor's
independent investigation of (or decision not to
investigate) the financial condition of the Borrower and is
not relying on any information furnished by the Bank.
Creditor assumes full responsibility for obtaining any
further information concerning the Borrower's financial
condition, the status of the Senior Indebtedness or any
other matter which Creditor may deem necessary or
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appropriate now or later. Creditor waives any duty on the
part of the Bank, and agrees that Creditor is not relying
upon nor expecting the Bank to disclose to Creditor any fact
now or later known by the Bank, whether relating to the
operations or condition of the Borrower, the existence,
liabilities or financial condition of any guarantor of the
Senior Indebtedness, the occurrence of any default with
respect to the Senior Indebtedness, or otherwise,
notwithstanding any effect such fact may have upon
Creditor's risk or Creditor's rights against the Borrower.
Creditor knowingly accepts the full range of risk
encompassed in this Agreement, which risk includes, without
limit, the possibility that the Borrower may incur Senior
Indebtedness to the Bank after the financial condition of
the Borrower, or its ability to pay Borrower's debts as they
mature, has deteriorated.
11. Creditor represents that: (a) the Bank has made no
representation to Creditor as to the creditworthiness of the
Borrower; and (b) Creditor has established adequate means of
obtaining from the Borrower on a continuing basis financial
and other information pertaining to the Borrower's financial
condition. Creditor agrees to keep adequately informed of
any facts, events, or circumstances which might in any way
affect the risks of Creditor under this Agreement.
12. The Bank, in its sole discretion, without notice to
Creditor, may release, exchange, enforce and otherwise deal
with any security now or later held by the Bank for payment
of the Senior Indebtedness or release any party now or later
liable for payment of the Senior Indebtedness without
affecting in any manner the Bank's rights under this
Agreement. Creditor acknowledges and agrees that the Bank
has no obligation to acquire or perfect any lien on or
security interest in any asset(s), whether realty or
personalty, to secure payment of the Senior Indebtedness.
13. If after receipt of any payment of all or any part of the
Senior Indebtedness, the Bank is for any reason compelled to
surrender the payment to any person or entity, because the
payment is determined to be void or voidable as a
preference, impermissible setoff, diversion of trust funds
or for any other reason, then to the extent of that payment,
the Senior Indebtedness shall be automatically revived and
the Bank's rights under this Agreement shall be
automatically continued in effect without reduction or
discharge for that payment, and this Agreement shall
automatically continue in full force notwithstanding any
contrary action which may have been taken by the Bank in
reliance upon that payment (including, without limit,
surrender or termination of this Agreement) and any contrary
action so taken shall be without prejudice to the Bank's
rights under this Agreement and shall be deemed to have been
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conditioned upon that payment having become final and
irrevocable.
14. Creditor waives any right to require the Bank to: (a)
proceed against any person, including without limit the
Borrower; (b) proceed against or exhaust any security held
from the Borrower or any other person; (c) pursue any other
remedy in the Bank's power; or (d) make any presentments or
demands for performance, or give any notices of
nonperformance, protests, notices of protest or notices of
dishonor in connection with any obligations or evidences of
Senior Indebtedness held by the Bank as security, in
connection with any other obligations or evidences of Senior
Indebtedness which continues in whole or in part as the
Senior Indebtedness, or in connection with the creation of
new or additional Senior Indebtedness.
15. Creditor acknowledges that the Bank has the right to sell,
assign, transfer, negotiate or grant participations or any
interest in, any or all of the Senior Indebtedness and any
related obligations, including without limit this Agreement.
16. No waiver or modification of any of its rights under this
Agreement shall be effective unless the waiver or
modification shall be in writing and signed by an authorized
officer on behalf of the Bank, and each waiver or
modification shall be a waiver or modification only with
respect to the specific matter to which the waiver or
modification relates and shall in no way impair the rights
of the Bank or the obligations of Creditor to the Bank in
any other respect.
17. Creditor waives notice of acceptance by the Bank of this
Agreement and this Agreement is immediately binding upon
Creditor.
18. This Agreement shall bind and be for the benefit of Creditor
and the Bank and their respective successors and assigns,
and shall be construed according to the laws of the State of
Michigan.
19. The term "Borrower", as used in this Agreement, includes any
person, corporation, partnership or business entity which
succeeds to the interests or business of the Borrower named
above, and the terms "Senior Indebtedness" and "Subordinated
Indebtedness" include indebtedness of any successor Borrower
to the Bank and Creditor.
20. If this Agreement is executed by two or more persons, it
shall bind each of them individually as well as jointly.
21. Creditor agrees to reimburse the Bank for any and all costs
and expenses (including, without limit, court costs, legal
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fees, and reasonable attorney fees whether inside or outside
counsel is used, whether or not suit is instituted and, if
instituted, whether at the trial or appellate level, in a
bankruptcy, probate or administrative proceeding, or
otherwise) incurred in enforcing any of the duties and
obligations of Creditor under this Agreement but only to the
extent such costs or expenses are incurred as a result of a
breach by Creditor of the terms and provisions of this
Agreement which breach remains uncured for fifteen (15) days
after written notice thereof by Bank to Creditor.
THE UNDERSIGNED AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO
TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED.
EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO
CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY,
AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY
IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT.
IN WITNESS WHEREOF, Creditor has caused this Agreement to be
executed as of the 10th day of October, 1997.
CREDITOR:
WITNESS(ES): THERMO TERRATECH INC.
/s/ Xxxxxx Xxxxxx /s/ Xxxx X. Xxxxxxxx
/s/ Xxxxxxxxx Xxxxxxx Chief Executive Officer
CREDITOR'S ADDRESS:
00 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
COMERICA BANK:
/s/ Xxxxxxx Xxxxxxxxx
Vice President
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Borrower's Acknowledgment
Holcroft L.L.C. ("Borrower"), accepts notice of
subordination created by this Agreement and agrees that it will
take no action inconsistent with this Agreement and that, except
with the prior written approval of Bank, no payment or
distribution shall be made by Borrower on or with respect to the
Subordinated Indebtedness, so long as this Agreement remains in
effect. Borrower agrees that the Bank may, at its option, without
notice and without limiting Bank's other rights, upon any breach
by Creditor of, or purported termination by the Creditor of, this
Agreement, declare all Senior Indebtedness to be immediately due
and payable and/or terminate any commitments of Bank to Borrower.
BORROWER:
HOLCROFT L.L.C.
By: Holcroft Technologies
L.P., Sole Member of
Holcroft L.L.C.
By: Holcroft Management,
Inc., General Partner of
Holcroft Technologies
L.P.
By: /s/ Xxxxx X. Xxxxxx
Its: President
Dated: October 10, 1997
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EXHIBIT A
All of the Debtor's now owned or hereafter acquired: (i)
inventory; (ii) accounts, contract rights, chattel paper,
documents and instruments; (iii) technology or know-how; (iv)
other general intangibles, including but not limited to
trademarks, patent rights, copyrights, goodwill, records,
computer programs and rights in premises used in the conduct of
Debtor's business; (v) equipment, including but not limited to
all vehicles, machinery, tools, furniture and fixtures; and (vi)
other personal property of every kind, including tax refunds or
interests in the claims under policies of insurance; and all
products and proceeds of the foregoing, including insurance
proceeds.
