SUBORDINATION AGREEMENT
THIS
SUBORDINATION AGREEMENT (this “Agreement” which term shall include all
amendments and modifications thereto) is made as of this ____ day of October,
2007 by TIMET FINANCE MANAGEMENT COMPANY, a Delaware corporation (the
“Subordinate Lender”) and WACHOVIA BANK, NATIONAL ASSOCIATION, as administrative
agent (in such capacity, together with any successor agent, the “Administrative
Agent”) for the benefit of the Lenders (including, without limitation, the
Issuing Lender, the Swing Line Lender and the Alternative Currency Lender)
(as
defined in the Credit Agreement). Unless otherwise defined herein,
all capitalized terms used herein shall have the meanings ascribed to them
in
the Credit Agreement referred to below.
Recitals:
A. CompX
International, Inc., a Delaware corporation (the “Borrower”), CompX Security
Products, Inc., CompX Precision Slides, Inc., CompX Marine, Inc., Custom Marine,
Inc. (f/k/a Custom Marine Acquisition, Inc.), and Livorsi Marine, Inc.
(collectively, the “Guarantors”), the Administrative Agent and the Lenders have
entered into a certain Credit Agreement dated as of December 23, 2005, as
amended by that First Amendment to Credit Agreement dated October, 2007 (as
amended, the “Credit Agreement” which term shall include all amendments and
modifications thereto). As used in this Agreement, (i) the term
“Senior Obligations” means all past, present, and future indebtedness,
liabilities, and obligations of any nature whatsoever of the Borrower to the
Lenders in connection with or arising from the Credit Agreement, and the Loan
Documents (including, without limitation, the Obligations (as defined in the
Credit Agreement)); and (ii) the term “Subordinated Debt” means all past,
present, and future indebtedness, liabilities, and obligations of any nature
whatsoever of the Borrower to the Subordinate Lender, including, without
limitation, any and all indebtedness, liabilities, and obligations of the
Borrower to the Subordinate Lender evidenced by that certain Subordinated Term
Loan Promissory Note dated October ___, 2007 made by Borrower and payable to
Subordinate Lender in the principal amount of $52,580,190.00 (the “Subordinate
Note”).
B. The
Subordinate Lender has requested the Required Lenders to consent to Subordinate
Lender making a term loan to the Borrower evidenced by the Subordinate
Note.
C. The
Required Lenders have required, as a condition to the granting of their consent,
the execution of this Agreement by the Subordinate Lender.
NOW,
THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
Subordinate Lender hereby agrees with the Administrative Agent (for the benefit
of the Lenders) as follows:
1. Amount
of Subordinated Debt and Recitals. The Subordinate Lender
represents and warrants that (a) the outstanding principal amount of the
Subordinated Debt shall not at any time exceed $52,580,190.00; (b) the above
Recitals are true, accurate, and correct and are incorporated in this Agreement
by reference; (c) the Subordinate Lender is the lawful owner of the Subordinated
Debt, free and clear of all liens, assignments, security interests and other
encumbrances; and (d) the Subordinate Lender has not previously subordinated
the
Subordinated Debt.
2. Subordination
to Senior Obligations. The Subordinate Lender hereby
subordinates and postpones the payment and the time of payment of the
Subordinated Debt to and in favor of the payment and the time of payment of
the
Senior Obligations. So long as all or any part of the Senior
Obligations remain unpaid, the Subordinate Lender shall not, without the prior
written consent of the Required Lenders, ask, demand, xxx for, set off, accept,
or receive any payment of all or any part of the Subordinated Debt; provided,
that until the occurrence of an Event of Default (as defined in the Credit
Agreement), the Subordinate Lender may receive payment of that portion of the
Subordinated Debt consisting of scheduled principal payments (including
prepayments) and accrued unpaid interest in accordance with the terms of the
Subordinate Note as in effect on the date hereof, if, after giving pro forma
effect to such payment or prepayment, an Event of Default would not
exist. The Subordinate Lender agrees not to subordinate, grant a
security interest or lien on, assign, or transfer all or any part of the
Subordinated Debt to any other person without the prior written consent of
the
Required Lenders. Subordinate Lender will not, without the prior
written consent of the Required Lenders: (a) commence, or join with any other
creditor in commencing, any bankruptcy, reorganization, insolvency or similar
proceedings with respect to Borrower or any Guarantor; or (b) extend, amend,
modify or renew any of the Borrower's obligations under the Subordinated Debt
or
the documents evidencing or executed or delivered in connection with the
Subordinated Debt, or release any surety or security for such obligations or
obtain collateral security or exercise any other right under the Subordinated
Debt, or the documents evidencing or executed or delivered in connection with
the Subordinated Debt.
3. Distributions,
etc. In the event of any distribution, division, or application,
partial or complete, voluntary or involuntary, by operation of law or otherwise,
of all or any part of the assets of the Borrower or any Guarantor or the
proceeds thereof to creditors of the Borrower or any Guarantor or to any
indebtedness, liabilities, and obligations of the Borrower or any Guarantor
by
reason of the liquidation, dissolution, or other winding up of the Borrower
or
any Guarantor or the business of the Borrower or any Guarantor or in the event
of any sale, receivership, insolvency, or bankruptcy proceeding, or assignment
for the benefit of creditors, or any proceeding by or against the Borrower
or
any Guarantor for any relief under the Bankruptcy Code or any insolvency law
or
other laws relating to the relief of debtors, readjustment of indebtedness,
reorganizations, compositions, or extensions, then and in any such event,
Lenders shall first be entitled to receive payment in full of all amounts due
and owing under the Senior Obligations before the Subordinate Lender shall
be
entitled to receive any payment in respect of the Subordinated
Debt.
4. Receipt
of Payments by Subordinate Lender. Should any payment or
distribution not permitted by the provisions of this Agreement be received
by
the Subordinate Lender upon or with respect to all or any part of the
Subordinated Debt, the Subordinate Lender will deliver the same to the
Administrative Agent in precisely the form received (except for the endorsement
or assignment of the Subordinate Lender where necessary) for application to
the
Senior Obligations (whether due or not due and in such order and manner as
the
Required Lenders may elect) and, until so delivered, the same shall be held
in
trust by the Subordinate Lender as property of the Administrative Agent (on
behalf of the Lenders). In the event of the failure of the Subordinate Lender
to
make any such endorsement or assignment, the Administrative Agent, or any of
its
officers or employees on behalf of the Lenders, is hereby irrevocably authorized
to make the same.
5. Endorsement,
etc. So as to secure the performance by the Subordinate Lender
of the provisions of this Agreement and the payment of the Senior Obligations,
the Subordinate Lender assigns, pledges, and grants to the Administrative Agent
(on behalf of the Lenders) a security interest in the Subordinated Note to
the
extent of outstanding principal and accrued interest due
thereon. Upon the request of the Required Lenders, the Subordinate
Lender shall endorse, assign, and deliver to the Administrative Agent in a
manner acceptable to the Administrative Agent all notes, instruments, and
agreements evidencing, securing, guaranteeing, or made in connection with the
Subordinated Note. Subordinate Lender will endorse on any and all
instruments evidencing the Subordinated Note a statement satisfactory to
Administrative Agent stating that the obligations evidenced by such instrument
and the rights of the holders thereof are subordinated to the claims of Lenders
as provided in this Agreement. The Subordinate Lender and the
Borrower each will further xxxx their books of account in such a manner as
shall
be effective to give proper notice of the effect of this
Agreement. Upon the occurrence of an Event of Default under the
Senior Obligations, Lenders shall be entitled to collect and receive payments
of
outstanding principal and accrued interest then due and payable under the
Subordinated Note until such time as all outstanding principal and accrued
interest due and payable to the Lenders under the Senior Obligations has been
repaid. Other than the grant to the Administrative Agent (on behalf
of the Lenders) of a security interest in the Subordinated Note as provided
herein, nothing in this Agreement shall be construed to provide that the
Subordinate Lender is responsible for, or has guaranteed the payment of, the
Senior Obligations.
6. Consents,
Waivers, etc. The Subordinate Lender hereby consents that at any
time and from time to time and with or without consideration, the Administrative
Agent and Lenders may, without further consent of or notice to the Subordinate
Lender and without in any manner affecting, impairing, lessening, or releasing
any of the provisions of this Agreement, renew, extend, change the manner,
time,
place, and terms of payment of, sell, exchange, release, substitute, surrender,
realize upon, modify, waive, grant indulgences with respect to, and otherwise
deal with in any manner: (a) all or any part of the Senior Obligations; (b)
all
or any of the Loan Documents; (c) all or any part of any property at any time
securing all or any part of the Senior Obligations; and (d) any person at any
time primarily or secondarily liable for all or any part of the Senior
Obligations and/or any collateral and security therefor. The Subordinate Lender
hereby waives demand, presentment for payment, protest, notice of dishonor
and
of protest with respect to the Subordinated Debt, notice of acceptance of this
Agreement by the Administrative Agent and Lenders, notice of the making of
any
of the Senior Obligations, and notice of the occurrence of an event of default
under any of the Loan Documents.
7. Notices
and Communications. All notices and other communications
hereunder shall be in writing and shall be effective when sent by certified
mail, return receipt requested: (a) if to the Subordinate Lender at 0000 Xxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxxxxxx 00000, or at such other address as
the
Subordinate Lender shall have furnished in writing to the Administrative Agent
or Lender, or (b) if to the Administrative Agent or Lenders, addressed to such
address as set forth in the Credit Agreement.
8. Transfer
or Assignment of Obligations. If any of the Senior Obligations
should be transferred or assigned by the Lenders, this Agreement will inure
to
the benefit of the Lenders’ transferee or assignee to the extent of such
transfer or assignment, provided that the Lenders shall continue to have the
unimpaired right to enforce this Agreement as to any of the Senior Obligations
not so transferred or assigned.
9. Miscellaneous. This
Agreement shall not be affected, impaired, or released by the delay or failure
of the Administrative Agent or any of the Lenders to exercise any of their
respective rights and remedies against the Borrower or any Guarantor or under
any of the Loan Documents or against any collateral or security for the Senior
Obligations. No delay or failure on the part of the Administrative Agent or
any
of the Lenders to exercise any of its rights or remedies hereunder or now or
hereafter existing at law or in equity or by statute or otherwise, or any
partial or single exercise thereof, shall constitute a waiver thereof. All
such
rights and remedies are cumulative and may be exercised singly or concurrently
and the exercise of any one or more of them will not be a waiver of any
other. No waiver of any of its rights and remedies hereunder and no
modification or amendment of this Agreement shall be deemed to be made by the
Administrative Agent and Lenders unless the same shall be in writing, duly
signed by the Administrative Agent on behalf of the Lenders, and each such
waiver, if any, shall apply only with respect to the specific instance involved
and shall in no way impair the rights and remedies of the Administrative Agent
and Lenders hereunder in any other respect at any other time. The Administrative
Agent and Lenders shall have the right to grant participations in the Senior
Obligations to others at any time and from time to time, and the Administrative
Agent and Lenders may divulge to any such participant or potential participant
all information, reports, financial statements, and documents obtained in
connection with this Agreement, any of the Loan Documents, or otherwise. If
any
term of this Agreement or any obligation thereunder shall be held to be invalid,
illegal, or unenforceable, the remainder of this Agreement and any other
application of such term shall not be affected thereby. This
Agreement may be executed in duplicate originals or in several counterparts,
each of which shall be deemed an original but all of which together shall
constitute one instrument, and it shall not be necessary in making proof hereof
to produce or account for more than one such duplicate, original, or
counterpart. This Agreement shall be binding upon the heirs, personal
representatives, successors, and assigns of the Subordinate Lender and shall
inure to the benefit of the successors and assigns of the Administrative Agent
and Lenders. As used herein, the singular number shall include the plural,
the
plural the singular, and the use of the masculine, feminine, or neuter gender
shall include all genders, as the context may require, and the term “person”
shall include an individual, a corporation, an association, a partnership,
a
trust, and an organization. The paragraph headings of this Agreement are for
convenience only and shall not limit or otherwise affect any of the terms
hereof. This Agreement shall be governed by and construed in accordance with
the
laws of the State of North Carolina and shall be deemed to be executed,
delivered, and accepted in the State of North Carolina.
[SIGNATURE
PAGES FOLLOW]
IN
WITNESS WHEREOF, the Subordinate Lender has caused this Agreement to be
signed, sealed, and delivered on the day and year first written
above.
SUBORDINATE
LENDER:
TIMET
FINANCE MANAGEMENT COMPANY,
a
Delaware corporation
[CORPORATE
SEAL}
By: (SEAL)
Name:
Title:
[ADDITIONAL
SIGNATURE PAGES FOLLOW]
The
Borrower and the Guarantors join in the execution of this Agreement so as to
signify their acceptance of and agreement and consent to the provisions of
this
Agreement.
BORROWER:
COMPX
INTERNATIONAL, INC.,
a
Delaware corporation
[CORPORATE
SEAL}
By: (SEAL)
Name:
Title:
GUARANTORS:
COMPX
SECURITY PRODUCTS, INC.
[CORPORATE
SEAL}
By: (SEAL)
Name:
Title:
COMPX
PRECISION SLIDES, INC.
[CORPORATE
SEAL}
By: (SEAL)
Name:
Title:
COMPX
MARINE, INC.
[CORPORATE
SEAL}
By: (SEAL)
Name:
Title:
CUSTOM
MARINE, INC.
[CORPORATE
SEAL}
By: (SEAL)
Name:
Title:
LIVORSI
MARINE, INC.
[CORPORATE
SEAL}
By: (SEAL)
Name:
Title:
ACCEPTED
BY: ADMINISTRATIVE
AGENT:
WACHOVIA
BANK, NATIONAL
ASSOCIATION,
a
national banking
association
By:
Name:
Title:
