Exhibit 10.115
INTERCREDITOR AND SUBORDINATION AGREEMENT
THIS INTERCREDITOR AND SUBORDINATION AGREEMENT (the "Agreement"), dated as
of February 11, 1999 is entered into by and between XXXXXXXX INDUSTRIES, Ltd., a
British Virgin Island corporation ("Subordinating Lender"), and FINOVA CAPITAL
CORPORATION, a Delaware Corporation ("Senior Lender"), with reference to the
following facts:
RECITALS
A. Play Co. Toys & Entertainment Corp., a Delaware corporation
("Borrower"), has entered into the Junior Debt Documents (as defined below) with
Subordinating Lender, pursuant to which subordinating Lender has extended
certain financial accommodations to Borrower on the terms and conditions set
forth in such Junior Debt Documents.
B. Borrower has requested that Senior Lender enter into various agreements
with Borrower, including that certain Loan and Security Agreement and related
agreements, documents and instruments, dated as of January 21, 1998, as amended
or modified from time to time (collectively, the "Senior Loan Agreement"),
pursuant to which Senior Lender would extend certain revolving loans to
Borrower.
C. Senior Lender is unwilling to enter into the Senior Loan Agreement with
Borrower and to extend to Borrower the loans contemplated thereunder unless
Subordinating Lender enters into this Agreement.
D. Subordinating Lender is interested in the financial success of Borrower
and will benefit by the loans which Senior Lender proposes to extend to Borrower
under the Senior Loan Agreement
E. Accordingly, to induce Senior Lender to enter into the Senior Loan
Agreement with Borrower and to extend to Borrower the loans contemplated
thereunder Subordinating Lender is willing to enter into this Agreement with
Senior Lender.
AGREEMENT
NOW, THEREFORE, the parties agree as follows:
1. Certain Defined Terms.
a. General: When used in this Agreement, the following terms have the
following respective meanings:
"Agreement" has the meaning set forth in the introduction hereto.
"Borrower" has the meaning set forth in the recitals of this Agreement.
"Junior Debt" means all present and future indebtedness and other
obligations (direct or indirect) owing by Borrower to Subordinating Lender.
"Junior Debt" includes (without limitation) indebtedness owed under the Junior
Debt Documents and the Debenture (as defined in the Junior Debt Documents) ,
together with any other debts, demands, monies, indebtedness, liabilities, and
obligations now or hereafter owed by Borrower to Subordinating Lender, including
interest, principal, costs, and other charges, together with all claims, rights,
causes of action, judgments, decrees and other obligations
"Junior Debt Documents" means all instruments and agreements evidencing the
Junior Debt, including that certain Subordinated Security Agreement, dated
November ____, 1998 between Borrower and Subordinating Lender, a copy of which
is attached hereto as Exhibit A and incorporated herein by reference.
"Senior Debt" has the meaning set forth in Section 3(a) of this Agreement.
"Senior Lender" has the meaning set forth in the introduction of this
Agreement.
"Senior Loan Agreement" has the meaning set forth in the recitals of this
Agreement.
"Subordinating Lender" has the meaning set forth in the introduction of
this Agreement.
b. Other Terms. Unless otherwise defined in this Agreement, any and all
initially capitalized terms set forth in this Agreement shall have the meaning
ascribed thereto in the Senior Loan Agreement
2. Representations, Warranties, and Covenants. Subordinating Lender and
Borrower represent, warrant, and covenant (jointly and severally) to Senior
Lender that:
a. Junior Debt Documents. Concurrently with the execution hereof, a copy of
all Junior Debt Documents shall be delivered to Senior Lender and all Junior
Debt Documents shall be conspicuously marked with substantially the following
legend:
"Subject to that certain Intercreditor and Subordination Agreement, dated
as of February ___, 1999, between _____________, Xxxxxxxx Industries, Ltd. and
FINOVA Capital Corporation
b. No Default. Borrower is not in default under any Junior Debt Document.
c. Notice of Default. Subordinating Lender and Borrower shall each promptly
notify Senior Lender of all defaults, events of default, and events which with
the giving of notice or the passage of time, or both, would become events of
default ("unmatured events of default") under any Junior Debt Document.
d. Further Action. Upon Senior Lender's request, Subordinating Lender will
promptly take all actions which Senior Lender believes appropriate to carry out
the purposes of this Agreement
3. Subordination.
a. General. As more fully provided in the remainder of this Article 3, the
Junior Debt is hereby subordinated and made junior to all obligations now or
hereafter owing to Senior Lender by Borrower. The obligations referred to in the
preceding sentence as being owing to Senior Lender are referred to in this
Agreement as the "Senior Debt," and include the Obligations, all present and
future representations, warranties, covenants, agreements, indemnities, and
other ------- obligations which Borrower or its successors and assigns may incur
to Senior Lender, including (without limitation) those incurred after the filing
of a bankruptcy petition or commencement of a bankruptcy case by or against
Borrower.
b. No Payments to Subordinating Lender. Borrower and Subordinating Lender
agree (and Subordinating Lender acknowledges such agreement) that Borrower shall
neither: (i) make any payments to Subordinating Lender in respect of the Junior
Debt, nor (ii) without Senior Lender's prior written consent, execute or deliver
any negotiable instruments as evidence of the Junior Debt, until such time as
the Senior Debt shall have been indefeasibly paid in full by Borrower to Senior
Lender. The foregoing notwithstanding, provided there does not at the time of
such payment exist an Event of Default or Incipient Default, Borrower may pay
and Subordinating Lender may accept those payments described on the attached
Exhibit B.
c. Priority of Interests in Collateral. Subordinating Lender holds a
subordinate security interest and lien in the Collateral as security for
Borrower's payment and performance of its obligations to Subordinating Lender
under the Junior Debt Documents. Such security interest, lien, or other right or
interest shall, at all times prior to the indefeasible payment in full of the
Senior Debt, be junior, subordinate and subject to any security interest, lien
or other right or interest Senior Lender now has or may hereafter acquire in the
Collateral. The subordination provided in this Section 3(c) shall apply
irrespective of the time or order of attachment or perfection of any security
interest, irrespective of the time or order of filing of any financing statement
or other document, and irrespective of any statute, rule, law, or court decision
to the contrary.
4. Restrictions on Subordinating Lender's Actions. Unless it shall have
obtained Senior Lender's prior written consent, until the Senior Debt has been
indefeasibly paid in full, Subordinating Lender will not: (i) demand or accept
any payment upon the Junior Debt; (ii) foreclose or realize upon any collateral
hereafter securing the Junior Debt (whether such collateral constitutes part of
the Collateral or consists of other assets of Borrower), or otherwise enforce
any security agreement, mortgage, lien instrument, or other encumbrance
hereafter securing the Junior Debt; or (iii) commence, prosecute, or participate
in any administrative, legal, or equitable action that in Senior Lender's
judgment might adversely affect Borrower's business or Borrower's ability to pay
the Senior Debt.
5. Remedies. If Borrower or Subordinating Lender attempts to violate
Section 3(b) or Clause (i) of Article 4, or if Subordinating Lender in any other
manner receives any funds which by virtue of this Agreement it is precluded from
receiving, Subordinating Lender shall be deemed to hold any payment or
distribution it receives in trust for Senior Lender's benefit. In such case,
Subordinating Lender shall immediately remit such payment or distribution to
Senior Lender. If Subordinating Lender attempts to violate Clause (ii) of
Article 4, Senior Lender (in Senior Lender's or Borrower's name) or Borrower may
seek injunctive or other equitable relief to prevent or stop Subordinating
Lender's actions, it being agreed that legal remedies may be inadequate. If
Subordinating Lender attempts to violate Clause (iii) of Article 4, Borrower may
interpose as a defense or plea the making of this Agreement, and Senior Lender
may intervene and interpose such defense or plea in its own or Borrower's name.
The remedies provided in this Article 5 are not exclusive; Senior Lender shall
be entitled to all other remedies available at law or in equity.
6. No Action to Violate Senior Lender Agreements. Subordinating Lender
shall not take any action which in Senior Lender's judgment might cause Borrower
to violate the Senior Loan Agreement or any other agreement between Borrower and
Senior Lender.
7. No Amendment of Junior Debt Documents. Unless Senior Lender's prior
written consent shall have been obtained, no Junior Debt Document may be amended
or modified.
8. Extensions, Compromises, etc. Without having to obtain either Borrower's
or Subordinating Lender's consent, Senior Lender may grant to Borrower
extensions of the time of payment or performance, and may enter into compromises
(including releases of collateral and settlements) with Borrower with respect to
the Senior Debt.
9. Waiver. Subordinating Lender waives any right it may now or hereafter
have to require Senior Lender to xxxxxxxx assets, to exercise rights or remedies
in a particular manner, or to forbear from exercising such rights and remedies
in any particular manner or order.
10. No Constraint on Senior Lender. Nothing contained in this Agreement
shall preclude Senior Lender from discontinuing its extension of credit to
Borrower (whether under the Senior Loan Agreement or otherwise) or from taking
(without notice to Subordinating Lender, Borrower, or any other individual or
entity) any other action in respect of the Senior Debt or the Collateral which
Senior Lender is otherwise entitled to take with respect to the Senior Debt or
the Collateral. Among the actions which Lender may take accordance with this
Article 10 are: renewing, extending, and increasing the amount of the Senior
Debt; otherwise changing the terms of the Senior Debt; settling, releasing,
compromising, and collecting on the Senior Debt; making (and refraining from
making) other secured and unsecured loans and advances to Borrower; amending any
present or future agreement between Senior Lender and Borrower; and all other
actions which Senior Lender deems advisable.
11. Impact of Bankruptcy. If a voluntary or involuntary bankruptcy petition
shall be filed respecting Borrower: (a) this Agreement (including the
subordination provisions contained in Article 3) shall continue in full force
and effect; (b) Subordinating Lender shall take no action in the bankruptcy
proceeding which might (in Senior Lender's opinion) adversely affect Senior
Lender's rights and interests respecting the Senior Debt; and (c) Subordinating
Lender shall take all actions reasonably requested by Senior Lender to protect
Senior Lender's interests during the course of such bankruptcy proceedings.
12. Miscellaneous.
a. Amendment. No amendment or waiver of this Agreement shall be effective
unless in a writing signed by each party hereto.
b. Binding Effect; Governing Law; Venue. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
assigns. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Arizona. All actions and proceedings arising
in connection with this Agreement shall be tried and litigated only in state or
federal courts located in Maricopa County, Arizona, or (at Senior Lender's sole
option) in any other court in which Senior Lender may initiate legal or
equitable proceedings, so long as such court has subject matter jurisdiction.
Subordinating Lender and Borrower each waive any right it may have to plead
forum non-conveniens or otherwise to object to venue, and hereby consents to any
court-ordered relief.
c. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original and all of which together shall constitute one
agreement.
d. Headings. The headings contained in this Agreement are for convenience
only. They shall not affect the interpretation of this Agreement.
e. Attorneys' Fees; etc. In any suit or action brought by Senior Lender to
enforce this Agreement or to obtain an adjudication (declaratory or otherwise)
of rights or obligations hereunder, the Subordinating Lender shall pay to the
Senior Lender the attorneys' fees and other costs and expenses incurred by the
Senior Lender.
f. Severability. Any provision of this Agreement that is prohibited by law
or unenforceable in any jurisdiction shall be ineffective in that jurisdiction
to the extent of such prohibition or unenforceability, without invalidating the
remaining provisions thereof or affecting the validity or enforceability of such
provision in any other jurisdiction. To the extent permissible, the parties
waive any law that renders this Agreement prohibited or unenforceable.
g. Entire Agreement. This Agreement constitutes the entire agreement
between and among the parties regarding the subject matter hereof. This
Agreement supersedes all prior and contemporaneous agreements between or among
the parties with respect to the subject matter hereof.
h. Notice. All notices or demands by any party hereunder must be in writing
and personally delivered or sent by registered or certified mail, postage
prepaid, return receipt requested, or by a recognized overnight mail service as
follows:
Senior Lender: FINOVA CAPITAL CORPORATION
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Subordinating Lender: XXXXXXXX INDUSTRIES, LTD.
X.X. Xxx 000
Xxxxxx, Xxxxxxxxxxx 0000
Borrower: PLAY CO. TOYS & ENTERTAINMENT CORP.
000 Xxxxxxxxx Xxxxx
Xxx Xxxxxx, Xxxxxxxxxx 00000
Attn.: Chief Financial Officer
with a copy to: TODTMAN, NACHAMIE,
XXXXXXX & SPIZZ, P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn.: Xxxxxx Xxxxxxxx, Esq.
The parties may change the address at which they receive notice by giving
notice to each other in the foregoing manner. Notices or demands sent in
accordance with this Section shall be deemed to be received on the earlier of
the date of actual receipt or five (5) calendar days after deposit in the United
States mail.
i. Termination. This Agreement shall continue in full force and effect
until Borrower has satisfied in full the Senior Debt.
j. Rules of Construction. As used in this Agreement, the singular includes
the plural; the plural includes the singular. References to one gender include
all genders. Unless otherwise specified, references to Articles, Sections,
Exhibits, and parties refer to Articles, Sections, Exhibits, and parties of or
to this Agreement. The words "include", "including" and similar words are not
intended to be limiting.
k. Counterparts. This Agreement may be executed in any number of separate
counterparts, all of which, when taken together, shall constitute one and the
same instrument, admissible into evidence, notwithstanding the fact that all
parties did not sign the same counterpart. Delivery of an executed counterpart
of this Agreement by telefacsimile shall be equally as effective as delivery of
a manually executed counterpart of this Agreement. Any party delivering an
executed counterpart of this Agreement by telefacsimile shall also deliver a
manually executed counterpart of this Agreement, but the failure to deliver a
manually executed counterpart shall not affect the validity, enforceability, and
binding effect of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers, as of the date first above
written.
XXXXXXXX INDUSTRIES, LTD.,
a British Virgin Island corporation
By:
Title:
FINOVA CAPITAL CORPORATION,
a Delaware corporation
By:
Title:
90885-1
BORROWER'S ACKNOWLEDGMENT
The undersigned Borrower hereby approves of, and agrees and consents to,
the foregoing Intercreditor and Subordination Agreement, dated as of February
___, 1999, among Xxxxxxxx Industries, Ltd. and FINOVA Capital Corporation (the
"Subordination Agreement"). Unless otherwise defined in this Acknowledgment,
terms defined in the Subordination Agreement have the same meanings when used in
this Acknowledgment.
Borrower agrees to be bound by the Subordination Agreement. Borrower
further agrees that the Subordination Agreement may be amended by Senior Lender
and Subordinating Lender without notice to, or the consent of, Borrower.
PLAY CO. TOYS & ENTERTAINMENT CORP., a Delaware corporation
By:
Name:
Title:
90885-1
EXHIBIT A-1
TO INTERCREDITOR AND SUBORDINATION AGREEMENT
[Copy of Security Agreement and Debenture]
90885-1
