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Exhibit 4.5
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SUBORDINATION AGREEMENT
dated as of January 8, 1998 (this "Agreement")
between Speed Graphics, Inc., a New York corporation
("Creditor"), and The Bank of New York,
a New York banking corporation (the "Bank")
In order to induce the Bank at its discretion, to extend or to continue to
extend financial accommodations from time to time to or on account of, or in
reliance on the guaranty of, Xxxx Digital Technologies, Inc., a Delaware
corporation, having offices at 00 Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the
"Borrower"), up to such aggregate principal amount, with such maturity or
maturities, to bear such rate or rates of interest, to be unsecured or secured
by such collateral security, to be direct or indirect, absolute or contingent,
and to contain such other terms and provisions all as may be agreed upon from
time to time between the Bank and the Borrower, including, without limitation,
all obligations of the Borrower to the Bank under that certain Loan Agreement
dated as of January 8, 1998 among the Borrower, certain guarantors and the Bank,
as it may be amended or modified from time to time (the "Loan Agreement") (all
such financial accommodations and extensions of credit and all other
indebtedness, liabilities and obligations of every kind and nature of the
Borrower to the Bank, whether joint, several, or joint and several, direct or
indirect or acquired by assignment or otherwise, absolute or contingent, secured
or unsecured, now or hereafter existing or incurred, due or to become due,
including any indebtedness, liability or obligation arising after payment in
full of any prior indebtedness of the Borrower, together with all extensions,
renewals or modifications thereof, all of which being hereinafter collectively
referred to as the "Superior Indebtedness"), the undersigned, to whom the
Borrower is now indebted (hereinafter called the "Creditor", whether one or more
creditors executes this instrument) under the Note (as defined below), hereby
warrants and represents to and agrees with the Bank, and the Bank hereby agrees
with the Creditor, as follows:
As of the date hereof, the Borrower is indebted to the Creditor in the
principal amount of $2,000,000.00 represented by that certain Subordinated
Promissory Note made by Borrower dated January __, 1998 in the original
principal amount of $2,000,000.00 (the "Note").
The Note is not subject to any counterclaim, defense or offset of any
kind, and no part thereof has previously been assigned, incumbered or disposed
of by the Creditor. Except as disclosed to the Bank, the Note is not in default.
The Creditor hereby subordinates the payment of the principal, interest,
fees and all other amounts owing on the Note (all such principal, interest, fees
and other amounts being hereinafter collectively referred to as the
"Subordinated Indebtedness"), to the prior, final and irrevocable payment in
full of the principal, interest (including interest accruing after the
bankruptcy of Borrower), fees and all other amounts owing on the Superior
Indebtedness. Notwithstanding the subordination of
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the Subordinated Indebtedness, the Bank agrees that the Borrower may make, and
the Creditor may accept, the regularly scheduled payments of principal and
interest on the Subordinated Indebtedness, provided (i) the Borrower remains in
compliance (before and after giving effect to the proposed payment on the
Subordinated Indebtedness) with the provisions of Section 5.03(b) (Fixed Charge
Coverage Ratio) of the Loan Agreement and (ii) no Event of Default (as defined
in the Loan Agreement) exists at the time of, or would result from, the proposed
payment on the Subordinated Indebtedness. The Borrower and the Creditor agree
that they will not amend, modify or change the principal amortization schedule
or the interest rate on the Subordinated Indebtedness without the express
written consent of the Bank.
In order to bring about and accomplish the intent and purpose of this
Subordination Agreement (hereinafter referred to as the "Agreement"), the
Creditor hereby agrees that until the Superior Indebtedness has been irrevocably
repaid in full, and until the Commitment (as defined in the Loan Agreement), or
any other commitment on the part of the Bank to lend to the Borrower, has
terminated, the Subordinated Indebtedness, any notes, instruments or other
writings evidencing the Subordinated Indebtedness and any collateral security at
any time held therefor, will indicate by a notation thereon that they are
subject to this Agreement.
In furtherance of the foregoing, the Creditor hereby grants to the Bank
irrevocable authority in the name, place and stead of the Creditor or in the
Bank's name but for its use, at any time or times after an Event of Default
under the Loan Agreement, in the Bank's absolute discretion to demand, collect,
compromise, file proofs of claim with respect to, receive (by way of dividends
or otherwise) and take any and all legal proceedings for the recovery of any and
all moneys due or to become due on account of the Subordinated Indebtedness, and
to vote, give consents and take any other action with respect thereto. Any and
all moneys collected, received and retained by the Bank after first deducting
the expenses hereinafter authorized shall be applied on account of the
principal, interest, fees and any other amounts then outstanding on the Superior
Indebtedness, provided, however, that upon the payment to the Bank of moneys
collected, received and retained on account of Subordinated Indebtedness and on
account of Superior Indebtedness aggregating an amount equivalent to all
Superior Indebtedness, including principal, interest, fees, any other amounts
owing thereon and the expenses hereinafter authorized, the Bank shall pay over
to the Creditor the excess, if any, of all moneys so received, collected and
retained on the Subordinated Indebtedness and on the Superior Indebtedness over
the amounts due on the Superior Indebtedness and release the balance of the
Subordinated Indebtedness and Superior Indebtedness which is still unpaid, and
deliver to the Creditor any and all writings, without any warranties of any
nature or type whatsoever with respect thereto (endorsed to the Creditor without
recourse in the case of negotiable instruments) evidencing such Subordinated
Indebtedness and Superior Indebtedness. If the Bank receives written notice of
any claim or demand, whether reasonable or unreasonable, adverse to the rights
or interests, as hereinabove set forth, of the Creditor in respect of the
Subordinated Indebtedness, or any moneys received and held by the Bank pursuant
to this paragraph, the Bank shall be entitled to retain any and all such moneys,
and writings evidencing such Subordinated
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Indebtedness and Superior Indebtedness without incurring any liability or debt
to the Creditor, until the adjudication or final settlement of the rights of
such claimant, and the Creditor hereby agrees to pay to the Bank on demand, all
reasonable expenses, including reasonable counsel fees, which the Bank may incur
in enforcing any of its rights hereunder.
The Creditor further agrees that so long as any Superior Indebtedness
remains unpaid, or as long as the Commitment, or any other commitment on the
part of the Bank to lend to the Borrower, has not terminated, and except as
otherwise expressly permitted by this Agreement, the Creditor will not accept
any payment (whether for principal, interest, fees or otherwise) on account of,
or any collateral security for, any Subordinated Indebtedness whether from the
Borrower or any other person liable with respect to the Subordinated
Indebtedness. After the occurrence of an Event of Default, in the event that the
Borrower or any other person liable with respect to the Subordinated
Indebtedness shall offer any payment on account of, or any collateral security
for, any Subordinated Indebtedness, the Creditor will direct that the same be
made or delivered to the Bank, and if any moneys and/or collateral security
shall come into the hands of the Creditor on account of any Subordinated
Indebtedness from any source whatsoever, the Creditor will receive the same
solely as the Bank's agent and will immediately turn the same, in the form
received, except for the endorsement of the Creditor when appropriate, over to
the Bank for application on account of the Superior Indebtedness, and that until
so delivered, the Creditor will hold the same in trust as the Bank's property.
After the occurrence of an Event of Default, if the Creditor shall fail or
refuse to endorse any writing for the payment of money payable to the Creditor
or to the order of the Creditor, which has been delivered to the Bank, the Bank
is hereby irrevocably constituted and appointed attorney-in-fact for the
Creditor with full power to make such endorsement.
The Creditor shall notify the Bank of any default in the Subordinated
Indebtedness (a "Subordinated Default Notice"). The Bank shall use its best
efforts to notify ("Senior Default Notice") the Creditor of the occurrence of
any Event of Default or any other default in the payment of any of the Superior
Indebtedness. Any failure by the Bank to so notify the Creditor shall not affect
the Bank's rights or the Creditor's obligations under this Agreement. The Bank
agrees to respond to any request made by the Creditor in writing (provided that
such a request is not made more than once during each calendar quarter) as to
whether an Event of Default has occurred under the Loan Agreement or whether any
payment default has occurred under any Superior Indebtedness. If any such Event
of Default or other payment default has occurred, the response of Bank with
regard to same shall be deemed a Senior Default Notice. The Creditor shall have
no right to exercise any rights and remedies against the Borrower to enforce or
collect upon the Subordinated Indebtedness, take possession of assets of the
Borrower or foreclose upon any such assets, whether by judicial action or
otherwise, unless and until all of the Senior Indebtedness shall have been fully
and finally paid and satisfied with interest and the Commitment, or any other
commitment on the part of the Bank to lend to the Borrower, terminated;
provided, however, that the Creditor shall be entitled, subject to the right of
the holder of the Senior Indebtedness to receive prior full and final payment in
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accordance with the terms of this Subordination Agreement, to accelerate the
Subordinated Indebtedness upon expiration of the earlier of the following
periods (each such period, a "Standstill Period"):
(a) The Standstill Period commencing from and after receipt by the
Creditor of a Senior Default Notice and ending on the earlier of (x) the date on
which the Event of Default described in the Senior Default Notice shall have
been waived in writing by the Bank or (y) two hundred seventy (270) days after
the date the Senior Default Notice is so given.
(b) The Standstill Period commencing from and after receipt by the
Bank of a Subordinated Default Notice and ending on the earlier of (x) the date
on which such default described in the Subordinated Default Notice shall have
been cured or waived in writing by the Creditor or (y) two hundred seventy (270)
days after the date the Subordinated Default Notice is so given.
Notwithstanding anything to the contrary in this Agreement, no new Standstill
Period shall be effective unless and until (i) ninety (90) days have elapsed
since the last Standstill Period and (ii) all scheduled payments of principal
and interest on the Note that have come due have been paid in full in cash. No
default that existed or was continuing on the date of delivery of any Senior
Default Notice or Subordinated Default Notice shall be, or be made, the basis
for a subsequent Standstill Period unless such default shall have been waived
for a period of not less than ninety (90) days.
After all Superior Indebtedness is paid in full and until the Creditor is
paid in full, to the extent that holders of Superior Indebtedness have received
cash, securities or other property in respect of the repayment of Superior
Indebtedness, which cash, securities or other property, but for the operation of
this Agreement would have been paid to the Creditor, such Creditor shall be
subrogated to any rights of holders of Superior Indebtedness in collecting cash,
securities or other property in satisfaction of the obligations of the Borrower
to the Creditor hereunder and under the Notes.
If requested by the Bank, the Creditor shall (a) give the Bank, upon
request from time to time, and during reasonable business hours, full and free
access to the Creditors' books pertaining to the Subordinated Indebtedness, with
the right to make copies thereof, and (b) furnish the Bank, upon request from
time to time, a statement of the account between the Creditor and the Borrower
with respect to the Subordinated Indebtedness.
This Agreement is a continuing agreement and, unless the Bank shall have
specifically consented in writing to its revocation, shall remain in full force
in all respects whether or not the Borrower shall at any time be indebted to the
Bank until the earlier of (i) the repayment in full of the Superior Indebtedness
and the termination of the Commitment, or any other commitment on the part of
the Bank to lend to the Borrower or (ii) the repayment of the Subordinated
Indebtedness. If after the payment of principal, interest, fees and all other
amounts owing on all Superior Indebtedness and any expenses hereinafter
authorized and provided for, the
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Borrower shall thereafter become liable to the Bank on account of any new
Superior Indebtedness, this Agreement shall thereupon be applicable in all
respects to any such new Superior Indebtedness without the necessity of any
further action, notice, understanding or writing by, between or among the Bank,
the Creditor and/or the Borrower.
If, during the term of this Agreement, the Creditor receives any payment
(other than a payment of regularly scheduled principal or interest) on account
of or any collateral security for any Subordinated Indebtedness at a time when
there is no outstanding Superior Indebtedness, the Creditor shall immediately
notify the Bank in writing of the receipt thereof and such payment or collateral
security shall be subject to the terms of this Agreement. If the Creditor fails
to notify the Bank, and a new Superior Indebtedness is thereafter created, and
if the Borrower defaults with respect to the payment of such new Superior
Indebtedness, in addition to and not in limitation of any other rights or
remedies available to the Bank hereunder, the Bank shall have the right to
receive and the Creditor will immediately pay to the Bank an amount equal to any
such payment or the value of any such security received by the Creditor and not
reported to the Bank.
Except as may otherwise be expressly required by this Agreement, with or
without notice to or further assent from the Creditor, the Bank may at any time
or times, in its absolute discretion, either prior to or after any default on
the part of the Borrower with respect to either the Subordinated Indebtedness or
the Superior Indebtedness: (i) extend, renew or change, refuse to extend, renew
or change any of the Superior Indebtedness, waive any default, modify, rescind
or waive any provision of any related agreement or collateral undertaking,
including, but not by way of limitation, any provision relating to acceleration
of maturity, (ii) fail to set off any deposit balances or any part thereof on
its books in favor of the Borrower and release the same, (iii) release,
exchange, fail to resort to, or realize upon, or apply, any collateral security
or any part thereof held by or available to it for the Superior Indebtedness,
and (iv) generally deal with the Borrower in such manner as the Bank may see
fit, all without impairing or affecting its rights and remedies under this
Agreement. Except as otherwise expressly provided in this Agreement, the
Creditor hereby waives any and all notice of the receipt and acceptance of this
Agreement by the Bank and of the creation, renewal, extension or accrual of any
of the Superior Indebtedness, present or future, in whole or in part, by the
Bank or of the reliance by the Bank on this Agreement at any time or times, and
further waives notice of any default at any time on the part of the Borrower.
The Creditor waives any right to interpose any defense, counterclaim or offset
with respect to the Superior Indebtedness or the Subordinated Indebtedness.
Nothing in this Subordination Agreement shall impair, as between the
Borrower and the Creditor, the obligations of the Borrower in respect of the
Subordinated Indebtedness, which are unconditional and absolute, to pay the
Creditor the principal and interest thereon and any other liabilities
encompassed within the Subordinated Indebtedness, all in accordance with their
respective terms.
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This Agreement shall continue in full force and effect notwithstanding the
death or incapacity of the Creditor (if the Creditor is an individual) or the
dissolution of the Creditor (if the Creditor is a partnership or corporation)
and shall be binding on the Creditor and the Creditor's estate and the personal
representatives, heirs, successors and assigns of the Creditor and the Bank may
continue to act in reliance upon this Agreement until the earlier of the
repayment in full of the Superior Indebtedness or the Subordinated Indebtedness.
Notwithstanding anything herein to the contrary, nothing in this Agreement shall
prohibit, limit or restrict the ability of the Creditor or any shareholder or
affiliate of the Creditor to transfer the Note and the rights and obligations
hereunder to any of its shareholders or affiliates or, after any such transfer,
to the Creditor.
The Creditor agrees to pay to the Bank on demand all reasonable expenses,
including reasonable counsel fees, which it may incur in enforcing its rights
hereunder.
If this Agreement is executed by more than one Creditor, the liability and
obligations of the Creditor hereunder shall be joint and several.
All notices, requests and demands to or upon the respective parties hereto
shall be in writing and shall be deemed to have been duly given or made when
delivered by hand, or if sent by certified mail, three days after the day in
which mailed, or, in the case of telecopier, when evidence of receipt is
obtained, or, in the case of overnight courier service, one business day after
delivery to such courier service, addressed as set forth below, or to such other
address as may be hereafter notified by the respective parties hereto.
The Bank: The Bank of New York
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Digital Technologies,
Inc. Account Officer
The Creditor: Speed Graphics, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
The Creditor waives trial by jury, and the right to interpose any defense,
counterclaim or offset of any nature or description in any litigation arising
out of or in any way connected with this Agreement, and agrees that the venue of
any such litigation shall be the county in which is located the Bank's office
making the loan or Superior Indebtedness to the Borrower.
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No delay on the Bank's part in exercising any right or rights hereunder or
in failing to exercise the same shall operate as a waiver of such right or
rights, and no notice to or demand on the Borrower or the Creditor shall be
deemed a waiver of the Bank's right to take further action without notice or
demand; nor in any event shall any modification, alteration or waiver of any of
the provisions hereof be effective unless in writing and signed for or on behalf
of the Bank and then only in the specific instance for which given.
This Agreement shall be deemed to be a contract made in the State of New
York and entered into under and pursuant to the laws of said State and shall be
governed, construed and enforced and all rights and obligations hereunder shall
be determined in accordance with the laws of said State.
Capitalized terms used but not defined herein shall have the meanings
given such terms in the Loan Agreement.
IN WITNESS WHEREOF, this Agreement has been executed by the Creditor and
the Bank on this 8th day of January, 1998.
SPEED GRAPHICS, INC.
By:_____________________________
Name:
Title:
THE BANK OF NEW YORK
By:_____________________________
Name: Xxxxx X. Xxxxxxxxxxx
Title: Vice President
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XXXXX XX XXX XXXX )
XXXXXX XX XXX X0XX ) ss.:
On the 8th day of January, 1998, before me personally came
___________________, to me known, who, being by me duly sworn, did depose and
say that he maintains an office at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx; that
he is the _____________ of Speed Graphics, Inc., the corporation described in
and which executed the foregoing instrument; and that he signed his name thereto
by order of the board of directors of said corporation.
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Notary Public
STATE OF NEW YORK )
COUNTY OF NEW YORK ) ss.:
On the 8th day of January, 1998, before me personally came Xxxxx X.
Xxxxxxxxxxx, to me known, who, being by me duly sworn, did depose and say that
he maintains an office at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx; that he is a
Vice President of The Bank of New York, Inc., the banking corporation described
in and which executed the foregoing instrument; and that he signed his name
thereto by order of the board of directors of said banking corporation.
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Notary Public
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ACKNOWLEDGEMENT OF BORROWER
The undersigned, the Borrower referred to in the Subordination Agreement
and Assignment to which this Acknowledgment is annexed, hereby agrees to do and
perform all acts necessary to enable the Bank and the Creditor to fulfill all of
their obligations under the Agreement, and agrees to refrain from doing all acts
(including, but without limitation, making payments on the Subordinated
Indebtedness) which would cause Creditor or the Bank to violate such
obligations. Borrower further agrees that if any violation of this Agreement
shall occur, all of the obligations (including the Superior Indebtedness) of
Borrower to the Bank shall become immediately due and payable, any term,
covenant or condition contained in any other agreement or in the instrument
evidencing such obligations to the contrary notwithstanding.
Dated: January 8, 1998 XXXX DIGITAL TECHNOLOGIES, INC.
By____________________________
Name: Xxxx Xxxx
Title: President
