Contract
THIS INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE
SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN ANNEX A
ATTACHED HERETO TO THE SENIOR INDEBTEDNESS (AS DEFINED IN ANNEX A
ATTACHED HERETO) OWED BY MAKER (AS DEFINED BELOW) AND THE OTHER
CREDIT PARTIES (AS DEFINED IN THE CREDIT AGREEMENTS REFERRED TO
BELOW) PURSUANT TO (A) THAT CERTAIN FIRST LIEN CREDIT AND GUARANTY
AGREEMENT DATED AS OF May 4, 2018 (THE “FIRST LIEN CREDIT AGREEMENT”)
AMONG MAKER, CERTAIN SUBSIDIARIES OF MAKER, WILMINGTON TRUST,
NATIONAL ASSOCIATION, AS ADMINISTRATIVE AGENT AND COLLATERAL AGENT,
AND THE LENDERS FROM TIME TO TIME PARTY THERETO, AS THE FIRST LIEN
CREDIT AGREEMENT HAS BEEN AND HEREAFTER MAY BE AMENDED, RESTATED,
AMENDED AND RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME
TO TIME, (B) THAT CERTAIN SECOND LIEN CREDIT AND GUARANTY
AGREEMENT DATED AS OF May 4, 2018 (THE “SECOND LIEN CREDIT AGREEMENT”
AND, TOGETHER WITH THE FIRST LIEN CREDIT AGREEMENT, THE
“CREDIT
AGREEMENTS”) AMONG MAKER, CERTAIN SUBSIDIARIES OF
MAKER, WILMINGTON TRUST, NATIONAL ASSOCIATION, AS ADMINISTRATIVE
AGENT AND COLLATERAL AGENT, AND THE LENDERS FROM TIME TO TIME PARTY
THERETO, AS THE SECOND LIEN CREDIT AGREEMENT HAS BEEN AND HEREAFTER
MAY BE AMENDED, RESTATED, AMENDED AND RESTATED, SUPPLEMENTED OR
OTHERWISE MODIFIED FROM TIME TO TIME, AND (C) THE OTHER SENIOR
INDEBTEDNESS (AS DEFINED IN ANNEX A ATTACHED HERETO); AND EACH
HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE HEREOF, IRREVOCABLY
AGREES TO BE BOUND BY THE SUBORDINATION PROVISIONS SET FORTH IN
ANNEX A ATTACHED HERETO.
THIS NOTE IS ISSUED WITH ORIGINAL ISSUE DISCOUNT
(“OID”) AS DEFINED BY SECTION 1273(A)(1) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED. A HOLDER OF THIS NOTE
MAY CONTACT THE CHIEF FINANCIAL OFFICER OF MAKER FOR INFORMATION
CONCERNING THE ISSUE PRICE, AMOUNT OF OID AND YIELD TO MATURITY OF
THIS NOTE.
|
Date: May 4, 2018
|
Amount $10,000,000.00
|
SUBORDINATED PROMISSORY NOTE
FOR VALUE RECEIVED, Fusion Connect, Inc., a
Delaware corporation (“Maker”),
hereby promises to pay to Xxxxxxxx X. Xxxxx, Xx. (together with his
heirs, successors and permitted assigns, the
“Holder”)
at its offices, or at such other place as Holder may from time to
time direct, in lawful money of the United States, the principal
sum of TEN MILLION AND 00/100 DOLLARS ($10,000,000.00), on the date
that is 91 days following the latest applicable Maturity Date under
the Second Lien Credit Agreement, with interest (computed on the
basis of a 360-day year payable for the number of days actually
elapsed) on the unpaid balance thereof at the rate of 13% per annum
until the principal hereof shall have become due and
payable. Subject in all respects to the subordination
provisions set forth in Annex A attached hereto, all interest hereon shall be payable quarterly in
arrears on each Interest Payment Date (as defined
below).
-1-
Subject
in all respects to the subordination provisions set forth in Annex
A attached hereto, accrued and unpaid interest shall be payable on
the last day of each of March, June, September and December of each
year (each an “Interest Payment
Date”) commencing June 30, 2018.
Subject
in all respects to the subordination provisions set forth in Annex
A attached hereto, in the event that on or prior to the date that
is 36 months after the date, hereof all or any portion of the
outstanding principal amount hereof is prepaid, then the Holder
shall be paid a fee equal to (A) if such prepayment occurs on or
prior to the date that is 18 months after the date hereof, the
Yield Maintenance Amount (as defined in the Second Lien Credit
Agreement) with respect to the principal amount so prepaid, (B) if
such prepayment occurs after the date that is 18 months after the
date hereof and on or prior to the date that is 24 months after the
date hereof, 4.00% of the principal amount so prepaid, and (C) if
such prepayment occurs after the date that is 24 months after the
date hereof but on or prior to the date that is 36 months after the
date hereof, 2.00% of the principal amount so prepaid; provided that (i) no such fee
shall be due and payable if such prepayment or amendment or
modification (or such assignment) occurs after the date that is 36
months after the Closing Date and (ii) such fee shall be due a
payable only if a fee shall also be due and payable under Section
2.12(b) of the Second Lien Credit Agreement as a result of such
prepayment.
Events of
Default. Each of the following
shall constitute an “Event of
Default”:
(i)
Maker fails to pay any amount due hereunder within ten (10) days of
demand by Holder therefor;
(ii) Maker
fails to comply with or to perform in accordance with, or otherwise
breaches, any other provision contained in this Note that is not
cured within thirty (30) days after such failure first occurs;
or
(iii) the
execution of an assignment for the benefit of creditors by Maker or
the filing or commencement of any proceedings for relief under any
applicable bankruptcy laws or insolvency laws or any laws relating
to the relief of debtors, readjustment of any indebtedness,
reorganization, composition, extension of debt, or the appointment
of a trustee for, by or against Maker.
Subject
in all respects to the subordination provisions set forth in Annex
A attached hereto, upon and after the occurrence of an Event of
Default, Holder shall have the right, without presentment, notice,
or demand of any kind, to accelerate this Note and to declare all
of the obligations of Maker under this Note due and payable
immediately, and to exercise all of Holder’s rights and
remedies as provided in this Note or under applicable law;
provided that, upon
the occurrence of an Event of Default under clause (iii) above, all
obligations of Maker under this Note shall automatically become due
and payable immediately. Maker hereby waives presentment, demand
for payment, notice of nonpayment, protests, notice of protests,
notice of dishonor and all other notices in connection with this
Note.
-2-
Notwithstanding any
other provision contained in this Note, the aggregate interest rate
per annum charged with respect to this Note (including, without
limitation, all charges and fees deemed to be interest pursuant to
applicable law), shall not exceed the maximum rate per annum
permitted by applicable law. In the event that the aggregate
interest rate per annum payable with respect to this Note
(including, without limitation, all charges and fees deemed to be
interest under applicable laws) exceeds the maximum legal rate, (i)
Maker shall only pay interest at the maximum permitted rate, (ii)
Maker shall continue to make such interest payments at the maximum
permitted rate until all such interest payments and other charges
and fees payable hereunder (in the absence of such legal
limitations) have been paid in full, (iii) any interest in excess
of the maximum permitted rate received by the Holder shall, at the
Holder’s option, be applied to a prepayment of the principal
amount of this Note or refunded to Maker, and (iv) neither
Maker nor any other Person shall have any right of action against
the Holder for any damages or penalties arising out of the payment
or collection of any such excess interest. In determining whether
the interest contracted for, charged, or received with respect to
this Note exceeds the maximum permitted rate, the Holder may, to
the extent permitted by applicable law, (a) characterize any
payment that is not principal as an expense, fee, or premium rather
than interest, (b) exclude voluntary prepayments and the effects
thereof and (c) amortize, prorate, allocate, and spread in equal or
unequal parts the total amount of interest throughout the
contemplated term of this Note.
Payments of
principal of and interest on this Note are to be made in lawful
money of the United States of America at the address shown in the
register maintained by the Holder for such purpose or at such other
place as the Holder shall have designated.
This
Note shall not be assigned, transferred or otherwise disposed of to
any Person (as defined below) other than to a Person majority-owned
and Controlled by (as defined in the First Lien Credit Agreement)
Xxxxxxxx X. Xxxxx, Xx. “Person” means
any natural person, corporation, limited partnership, general
partnership, limited liability company, limited liability
partnership, joint stock company, joint venture, association,
company, trust, bank, trust company, land trust and business trust
or other organization, whether or not a legal entity.
Maker
and Holder each acknowledge and agree that this Note has been
issued by Maker to Holder for an amount equal to 96.0% of the
original face amount hereof.
THIS
NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW
OF THE STATE OF NEW YORK INCLUDING SECTIONS 5-1401 AND 5-1402 OF
THE GENERAL OBLIGATIONS THEREOF, BUT OTHERWISE WITHOUT REFERENCE TO
THE CHOICE-OF-LAW PRINCIPLES OF THE LAW THEREOF.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-3-
IN
WITNESS WHEREOF, the parties have duly executed, or have caused
their duly authorized officer or representative to execute, this
Note as of the date first above written.
MAKER:
By:
/s/ Xxxxx X.
Xxxxx
Name:
Xxxxx X. Xxxxx
Title:
Chief Financial Officer
Address:
000
Xxxxxxxxx Xxx., Xxxxx 0000
Xxx
Xxxx, Xxx Xxxx 00000
[SIGNATURES CONTINUE ON NEXT PAGE]
HOLDER:
/s/ Xxxxxxxx X. Xxxxx,
Xx.
Xxxxxxxx
X. Xxxxx, Xx.
Address:
000
Xxxxxxxxxx Xxxxx Xxxxxxx XX, Xxxxx 000
Xxxxxxx,
Xxxxxxx 00000
Annex
A
to
Subordinated Promissory Note
SUBORDINATION PROVISIONS
1. Definitions.
1.1 General Terms. As used in these
Subordination Provisions, the following terms shall have the
following meanings:
“Bankruptcy
Code” means Title 11 of the United States Code
entitled “Bankruptcy”.
“Collateral”
means, collectively, (a) the “Collateral” as such term
is defined in the First Lien Credit Agreement, (b) the
“Collateral” as such term is defined in the Second Lien
Credit Agreement and (c) any other property (including equity
interests) on which liens are purported to be granted pursuant to
any Senior Indebtedness Agreement as security for any Senior
Indebtedness.
“Distribution”
means any payment, distribution or dividend (whether in respect of
principal, interest, fees or otherwise), whether in cash, in kind,
securities or any other property, or security for any such payment,
distribution or dividend.
“Event” has the
meaning set forth in Section 2.2(c).
“First Lien
Agent” means Wilmington Trust, National Association,
in its capacity as administrative agent and collateral agent under
the First Lien Credit Agreement, and its successors and assigns in
such capacity.
“First Lien Credit
Agreement” means the First Lien Credit and Guaranty
Agreement dated as of May 4, 2018, among Maker, certain
subsidiaries of Maker from time to time party thereto, the lenders
from time to time party thereto and the First Lien Agent, as the
foregoing now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
“Second Lien
Agent” means Wilmington Trust, National Association,
in its capacity as administrative agent and collateral agent under
the Second Lien Credit Agreement, and its successors and assigns in
such capacity.
“Second Lien Credit
Agreement” means the Second Lien Credit and Guaranty
Agreement dated as of May 4, 2018, among Maker, certain
subsidiaries of Maker from time to time party thereto, the lenders
from time to time party thereto and the Second Lien Agent, as the
foregoing now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
“Senior
Creditors” means, collectively, (a) the “Secured
Parties” as such term is defined in the First Lien Credit
Agreement, (b) the “Secured Parties” as such term is
defined in the Second Lien Credit Agreement, (c) any other holders
of Senior Indebtedness and (d) the Senior Representatives of any of
the foregoing.
“Senior
Default” means a Default or an Event of Default (or
any comparable term) under (and as defined in) any Senior
Indebtedness Agreement.
Annex
A-1
“Senior
Indebtedness” means, collectively, (a) all
“Obligations” as such term is defined in the First Lien
Credit Agreement, (b) all “Obligations” as such term is
defined in the Second Lien Credit Agreement and (c) all obligations
of every nature of Maker and each of its subsidiaries under (i) any
“Permitted Second Lien Indebtedness”, “Permitted
Credit Agreement Refinancing Indebtedness” or
“Permitted Incremental Equivalent Indebtedness” in each
case as such term is defined in the First Lien Credit Agreement or
(ii) any “Permitted Section 6.1(e) Indebtedness”,
“Permitted Credit Agreement Refinancing Indebtedness”
or “Permitted Incremental Equivalent Indebtedness” in
each case as such term is defined in the Second Lien Credit
Agreement, whether for principal, interest (including default
interest accruing pursuant to the terms of the Senior Indebtedness
Agreements in respect of such Senior Indebtedness and interest
(including such default interest) that would continue to accrue
pursuant to such Senior Indebtedness Agreements on any such
obligations after the commencement of any proceeding under the
Bankruptcy Code or other applicable law or the occurrence of any
other Event with respect to Maker or such subsidiary, whether or
not such interest is allowed or allowable against Maker or such
subsidiary in any such proceeding), reimbursement obligations, fees
(including prepayment fees), expenses, indemnification or
otherwise; provided
that Senior Indebtedness shall not include any indebtedness of
Maker or any of its subsidiaries described in this clause (c) that
is contractually subordinated in right of payment to any other
indebtedness of Maker or such subsidiary. Senior Indebtedness shall
continue to constitute Senior Indebtedness, notwithstanding the
fact that such Senior Indebtedness or any claim for such Senior
Indebtedness is subordinated, avoided or disallowed under the
Bankruptcy Code or other applicable law.
“Senior Indebtedness
Agreements” means, collectively, (a) the First Lien
Credit Agreement, the other “Credit Documents” as such
term is defined in the First Lien Credit Agreement executed and/or
delivered in connection with the First Lien Credit Agreement as
from time to time in effect, (b) the Second Lien Credit
Agreement and the other “Credit Documents” as such term
is defined in the Second Lien Credit Agreement executed and/or
delivered in connection with the Second Lien Credit Agreement as
from time to time in effect and (c) any other credit agreement,
indenture or other agreement or instrument evidencing or governing
the rights of the holders from time to time of any Senior
Indebtedness, as all of the foregoing now exist or may hereafter be
amended, modified, supplemented, extended, renewed, restated or
replaced.
“Senior
Representatives” means, collectively, (a) the First
Lien Agent, (b) the Second Lien Agent and (c) any other agent,
trustee or other representative of the holders from time to time of
any Senior Indebtedness.
“Subordinated
Indebtedness” means all principal, interest and other
amounts payable or chargeable in connection with the Subordinated
Note and any other Subordinated Lending Agreement.
“Subordinated
Lender” means the Holder and its successors and
assigns.
Annex
A-2
“Subordinated Lending
Agreements” means, collectively, (a) the Subordinated
Note, including the Subordination Provisions, and (b) all
agreements, documents and instruments now or at any time hereafter
executed and/or delivered by Maker or any other Person to, with or
in favor of the Subordinated Lender in connection therewith or
related thereto, as all of the foregoing now exist or may hereafter
be amended, modified, supplemented, extended, renewed, restated or
replaced.
“Subordinated
Note” means the Subordinated Promissory Note, dated as
of May 4, 2018, executed by Maker, payable to the order of the
Subordinated Lender, in an aggregate principal amount of up to
$10,000,000, as may be amended, amended and restated, refinanced,
extended, supplemented and/or otherwise modified from time to time
in accordance with the terms of the Subordinated Note and the
Senior Indebtedness Agreements.
“Subordination
Provisions” means the provisions of this Annex
A.
1.2 Other Terms. Capitalized terms
used but not defined herein shall have the meanings assigned
thereto in the Subordinated Note.
2. Covenants. Each of Maker and
the Subordinated Lender, and any transferee of any Subordinated
Indebtedness, hereby covenants that until the Senior Indebtedness
shall have been indefeasibly paid in full and satisfied in cash or
cash equivalents (other than contingent indemnity obligations which
by their terms survive any termination of the applicable Senior
Indebtedness Agreement) and the Senior Indebtedness Agreements
shall have been irrevocably terminated, all in accordance with the
terms of the Senior Indebtedness Agreements, it will comply with
such of the Subordination Provisions hereof as are applicable to
it:
2.1 Transfers. These Subordination
Provisions constitute a continuing offer to all Persons who, in
reliance upon such provisions, become holders of, or continue to
hold, Senior Indebtedness, and the Senior Representatives thereof,
and such provisions are made for the benefit of the holders of
Senior Indebtedness, and the Senior Representative thereof, and
such holders, and the Senior Representative thereof, are hereby
made obligees and express third party beneficiaries hereunder the
same as if their names were written herein as such, and they and/or
each of them may proceed to enforce such provisions.
2.2 Subordination Provisions.
Notwithstanding any other provision of the Subordinated Lending
Agreements to the contrary, any Distribution with respect to the
Subordinated Indebtedness is and shall be expressly junior and
subordinated in right of payment to all amounts due and owing upon
all Senior Indebtedness outstanding from time to time.
Specifically, but not by way of limitation:
(a) Payments. If a Senior Default
shall have occurred and be continuing, and, other than in the case
of a Senior Default arising in respect of any Event, any Senior
Representative or other Senior Creditor shall have provided prior
written notice to Maker that no Distribution be made, then (i) no
Distribution of any kind or character, whether in cash securities
or other property, and whether directly, by purchase, redemption,
exercise of any right of setoff or otherwise, shall be made by or
on behalf of Maker with respect to the Subordinated Note to the
Subordinated Lender and (ii) no amounts payable under the
Subordinated Note shall be forgiven or otherwise reduced in any
way.
Annex
A-3
(b) Limitation on Remedies. The
Subordinated Lender shall not be entitled to exercise any remedies
as a creditor or commence any other action or proceeding to recover
any amounts due or to become due with respect to the Subordinated
Indebtedness prior to the indefeasible payment in full in cash or
cash equivalents (other than contingent indemnity obligations which
by their terms survive any termination of the applicable Senior
Indebtedness Agreement) of all Senior Indebtedness and the
irrevocable termination of the Senior Indebtedness
Agreements.
(c) Prior Payment of Senior Indebtedness
in Bankruptcy, etc. In the event of any insolvency or
bankruptcy proceedings relative to Maker or its property, or any
receivership, liquidation, reorganization or other similar
proceedings in connection therewith, or, in the event of any
proceedings for voluntary liquidation, dissolution or other winding
up of Maker or distribution or marshalling of its assets or any
composition with creditors of Maker, whether or not involving
insolvency or bankruptcy, or if Maker shall cease its operations,
call a meeting of its creditors or no longer do business as a going
concern (each individually or collectively, an “Event”), then
all Senior Indebtedness shall be indefeasibly paid in full and
satisfied in cash or cash equivalents (other than contingent
indemnity obligations which by their terms survive any termination
of the applicable Senior Indebtedness Agreement) and the Senior
Indebtedness Agreements irrevocably terminated before any
Distribution shall be made on account of any Subordinated
Indebtedness. Any such Distribution which would, but for the
provisions hereof, be payable or deliverable in respect of the
Subordinated Indebtedness, shall be paid or delivered directly to
the Senior Creditors or their respective Senior Representatives,
ratably according to the aggregate amounts remaining unpaid on
account of the Senior Indebtedness held or represented by each,
until amounts owing upon Senior Indebtedness shall have been
indefeasibly paid in full in cash or cash equivalents (other than
contingent indemnity obligations which by their terms survive any
termination of the applicable Senior Indebtedness Agreement) and
the Senior Indebtedness Agreements irrevocably
terminated.
(d) Power of Attorney. To enable
the Senior Creditors to assert and enforce their rights hereunder
in any proceeding referred to in Section 2.2(c) or upon the
happening of any Event, each Senior Representative or any Person
whom it may designate is hereby irrevocably appointed
attorney-in-fact for the Subordinated Lender with full power to act
in the place and stead of the Subordinated Lender, including the
right to make, present, and file and to vote such proofs of claim
against Maker on account of all or any part of the Subordinated
Indebtedness as such Senior Representative may deem advisable and
to receive and collect any and all payments made thereon and to
apply the same on account of the Senior Indebtedness. The
Subordinated Lender will execute and deliver to any Senior
Representative such instruments as may be required by such Senior
Representative to enforce any and all Subordinated Indebtedness, to
effectuate the aforesaid power of attorney and to effect collection
of any and all payments which may be made at any time on account
thereof, and the Subordinated Lender hereby irrevocably appoints
each Senior Representative as the lawful attorney and agent of the
Subordinated Lender to execute such instruments on behalf of the
Subordinated Lender and hereby further authorizes the Senior
Representatives to file such instruments in any appropriate public
office.
Annex
A-4
(e) Payments Held in Trust. Should
any Distribution or the proceeds thereof, in respect of the
Subordinated Indebtedness, be collected or received by the
Subordinated Lender or any Affiliate (as such term is defined in
Rule 405 of Regulation C adopted by the Securities and Exchange
Commission pursuant to the Securities Act of 1933) of the
Subordinated Lender at a time when the Subordinated Lender is not
permitted to receive any such Distribution or proceeds thereof,
including if same is collected or received when there is or would
be after giving effect to such payment a Senior Default, then the
Subordinated Lender will forthwith deliver, or cause to be
delivered, the same to the Senior Representatives, ratably
according to the aggregate amounts remaining unpaid on account of
the Senior Indebtedness held or represented by each, in precisely
the form held by the Subordinated Lender (except for any necessary
endorsement) and until so delivered, the same shall be held in
trust by the Subordinated Lender, or any such Affiliate, as the
property of the Senior Representatives and shall not be commingled
with other property of the Subordinated Lender or any such
Affiliate.
(f) Subrogation.
Subject to the prior indefeasible payment in full in cash or cash
equivalents (other than contingent indemnity obligations which by
their terms survive any termination of the applicable Senior
Indebtedness Agreement) of the Senior Indebtedness and the
irrevocable termination of the Senior Indebtedness Agreements, to
the extent that any Senior Creditor or any Senior Representative
thereof has received any Distribution on the applicable Senior
Indebtedness which, but for the Subordination Provisions hereof,
would have been applied to the Subordinated Indebtedness, the
Subordinated Lender shall be subrogated to then or thereafter
rights of such Senior Creditor or such Senior Representative
thereof, including, without limitation, the right to receive any
Distribution made on the applicable Senior Indebtedness until the
principal of, interest on and other charges due under the
Subordinated Indebtedness shall be indefeasibly paid in full and,
for the purposes of such subrogation, no Distribution to any Senior
Creditor or any Senior Representative thereof to which the
Subordinated Lender would be entitled except for the Subordination
Provisions hereof shall, as between Maker, its creditors (other
than the Senior Creditors and the Senior Representatives) and the
Subordinated Lender, be deemed to be a Distribution by Maker to or
on account of Senior Indebtedness, it being understood that the
provisions hereof are and are intended solely for the purpose of
defining the relative rights of the Subordinated Lender on the one
hand, and the Senior Creditors on the other hand.
(g) Scope
of Subordination. The Subordination Provisions hereof are
solely to define the relative rights of the Subordinated Lender and
the Senior Creditors. Nothing in this Annex A shall impair, as
between Maker and the Subordinated Lender the unconditional and
absolute obligation of Maker to punctually pay the principal,
interest and any other amounts and obligations owing under the
Subordinated Note and the Subordinated Lending Agreements in
accordance with the terms thereof, subject to the rights of the
Senior Creditors hereunder.
2.3 Unsecured Creditor of Maker.
The Subordinated Lender hereby agrees and acknowledges that the
Subordinated Indebtedness is an unsecured obligation of
Maker.
Annex
A-5
3. Miscellaneous.
3.1 Survival of Rights. The rights
of the Senior Creditors to enforce the Subordination Provisions
shall not be prejudiced or impaired by any act or omitted act of
Maker, the Subordinated Lender or any Senior Creditor, including,
without limitation, forbearance, waiver, consent, compromise,
amendment, extension, renewal, or taking or release of security in
respect of any Senior Indebtedness or noncompliance by Maker with
such provisions, regardless of the actual or imputed knowledge of
any Senior Creditor.
3.2 Bankruptcy Financing Issues.
The Subordinated Note shall continue in full force and effect after
the filing of any petition (“Petition”) by or against
Maker under the Bankruptcy Code and all converted or succeeding
cases in respect thereof. All references herein to Maker shall be
deemed to apply to Maker as debtor-in-possession and to a trustee
for Maker. If Maker shall become subject to a proceeding under the
Bankruptcy Code, and if any Senior Creditors shall desire to permit
the use of cash collateral or to provide post-Petition financing
from such Senior Creditors to Maker under the Bankruptcy Code, the
Subordinated Lender agrees as follows: (a) adequate notice to
Subordinated Lender shall be deemed to have been provided for such
consent or post-Petition financing if the Subordinated Lender
receives notice thereof three (3) Business Days (or such shorter
notice as is given to the Senior Creditors or the Senior
Representatives thereof) prior to the earlier of (i) any hearing on
a request to approve such post-petition financing or (ii) the date
of entry of an order approving same and (b) no objection will be
raised by the Subordinated Lender to any such use of cash
collateral or such post-Petition financing from such Senior
Creditors.
3.3 Insurance Proceeds. The Senior
Representatives of any Senior Indebtedness that is secured by any
Collateral, as holders of a senior security interest on the
Collateral insured shall have the sole and exclusive right, as
against the Subordinated Lender, to adjust settlement of insurance
claims in the event of any covered loss, theft or destruction of
such Collateral. All proceeds of such insurance shall inure to the
applicable Senior Representatives, to the extent of the applicable
Senior Creditors’ claim, and the Subordinated Lender shall
cooperate (if necessary) in a reasonable manner in effecting the
payment of insurance proceeds to the applicable Senior Creditors.
In the event the applicable Senior Representatives, in their sole
discretion or pursuant to agreement with Maker, permits Maker to
utilize the proceeds of insurance to replace Collateral, the
consent of such Senior Representatives thereto shall be deemed to
include the consent of the Subordinated Lender.
3.4 Receipt of Agreements. The
Subordinated Lender hereby acknowledges that it has delivered to
each Senior Representative a correct and complete copy of the
Subordinated Lending Agreements as in effect on the date hereof.
The Subordinated Lender, solely for the payment of the Subordinated
Note, hereby acknowledges receipt of a correct and complete copy of
each of the Senior Indebtedness Agreements as in effect on the date
hereof.
3.5 No Amendment of Subordinated Lending
Agreements. So long as any Senior Indebtedness Agreement
remains in effect, neither Maker nor the Subordinated Lender shall
enter into any amendment, waiver or modification of the
Subordinated Lending Agreements, without the prior written consent
of the Senior Representatives.
Annex
A-6
3.6 Amendments to Senior Indebtedness
Agreements. Nothing contained herein shall in any manner
limit or restrict the ability of the Senior Creditors to increase
or change the terms of the Senior Indebtedness under any Senior
Indebtedness Agreements, or to otherwise waive, amend or modify the
terms and conditions of the Senior Indebtedness Agreements, in such
manner as the applicable Senior Creditors and Maker shall mutually
determine. The Subordinated Lender hereby consents to any and all
such waivers, amendments, modifications and compromises, and any
other renewals, extensions, indulgences, releases of collateral or
other accommodations granted by the Senior Creditors to Maker from
time to time, and agrees that none of such actions shall in any
manner affect or impair the subordination established hereby in
respect of the Subordinated Indebtedness.
3.7 Notice of Default and Certain
Events. The Subordinated Lender shall notify the Senior
Representatives of the occurrence of any of the following as
applicable:
(a) the obtaining of
actual knowledge of the occurrence of any Event of Default under
any of the Subordinated Notes;
(b) the acceleration of
any Subordinated Indebtedness by the Subordinated Lender;
or
(c) the granting of any
waiver of any Event of Default by the Subordinated
Lender.
3.8 Binding Effect; Governing Law.
The Subordination Provisions shall be a continuing agreement and
shall be binding upon Maker and the Subordinated Lender and their
respective successors and assigns and inure to the benefit of the
Senior Creditors, Maker and the Subordinated Lender and their
respective successors and assigns, shall be irrevocable and shall
remain in full force and effect until the Senior Indebtedness shall
have been satisfied or indefeasibly paid in full in cash or cash
equivalents (other than contingent indemnity obligations which by
their terms survive any termination of the applicable Senior
Indebtedness Agreement) and the Senior Indebtedness Agreements
shall have been irrevocably terminated, but shall continue to be
effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any amount paid by or on behalf of
Maker with regard to the Senior Indebtedness is rescinded or must
otherwise be restored or returned upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of Maker, or upon or as
a result of the appointment of a receiver, intervenor or
conservator of, or trustee, custodian, or similar officer, for
Maker or any substantial part of its property, or otherwise, all as
though such payments had not been made. No action which any Senior
Creditor or Maker may take or refrain from taking with respect to
the Senior Indebtedness, including any amendments thereto, shall
affect the Subordination Provisions or the obligations of Maker or
the Subordinated Lender hereunder. The headings in the
Subordination Provisions are for convenience of reference only, and
shall not alter or otherwise affect the meaning hereof.
THE SUBORDINATION PROVISIONS SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS AND
OBLIGATIONS OF MAKER, THE SUBORDINATED LENDER AND THE SENIOR
CREDITORS SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK
INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS
THEREOF, BUT OTHERWISE WITHOUT REFERENCE TO THE CHOICE-OF-LAW
PRINCIPLES OF THE LAW THEREOF.
Annex
A-7
3.9 Waiver of Substantive
Consolidation. By its acceptance of the Subordinated Note,
the Subordinated Lender agrees that, in any proceeding under the
Bankruptcy Code or any proceeding under any similar law, it will
not, directly or indirectly, request, join in or support any
request, or provide any assistance or encouragement or solicit any
other Person to make any request, for substantive consolidation of
Maker with any one or more of its subsidiaries or for a
determination that piercing the corporate veil, alter ego or any
similar theory is applicable to Maker and one or more of its
subsidiaries and waive any and all rights they may have to do so.
In the event that Maker is substantively consolidated with any or
more of its subsidiaries or parent entities, the Subordinated
Lender agrees that it will not benefit from such substantive
consolidation and will be treated as if the substantive
consolidation did not occur (and any such benefit that would have
accrued to the Subordinated Lender shall be turned over to the
creditors of the subsidiary or subsidiaries that are so
substantively consolidated). The Subordinated Lender acknowledges
that the Senior Creditors are expressly relying on the separateness
of Maker from its subsidiaries and parent entities, and agrees that
the Senior Creditors may rely on the agreements and waivers in this
paragraph.
4. PROCEEDINGS. SUBJECT TO CLAUSE
(E) BELOW, ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST MAKER, THE
SUBORDINATED LENDER OR ANY SENIOR CREDITOR ARISING OUT OF OR
RELATING HERETO SHALL BE BROUGHT EXCLUSIVELY IN ANY FEDERAL COURT
OF THE UNITED STATES OF AMERICA SITTING IN THE BOROUGH OF MANHATTAN
OR, IF THAT COURT DOES NOT HAVE SUBJECT MATTER JURISDICTION, IN ANY
STATE COURT LOCATED IN THE CITY AND COUNTY OF NEW YORK. BY
EXECUTING AND DELIVERING OR ACCEPTING THE SUBORDINATED NOTE, EACH
OF MAKER AND THE SUBORDINATED LENDER, FOR ITSELF AND IN CONNECTION
WITH ITS PROPERTIES, IRREVOCABLY (A) ACCEPTS GENERALLY AND
UNCONDITIONALLY THE EXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS
(SUBJECT TO CLAUSE (E) BELOW); (B) WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS; (C) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE PARTY AT ITS
ADDRESS PROVIDED IN THE SIGNATURE PAGES TO THE SUBORDINATED NOTE;
(D) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (C) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE
PERSON IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE
CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (E)
AGREES THAT THE SENIOR CREDITORS RETAIN THE RIGHT TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS
AGAINST MAKER OR THE SUBORDINATED LENDER IN THE COURTS OF ANY OTHER
JURISDICTION IN CONNECTION WITH THE EXERCISE OF ANY RIGHTS UNDER
THE SUBORDINATION PROVISIONS, THE SUBORDINATED LENDING AGREEMENTS
OR THE SENIOR INDEBTEDNESS AGREEMENTS OR ANY EXERCISE OF REMEDIES
IN RESPECT OF COLLATERAL OR THE ENFORCEMENT OF ANY JUDGMENT, AND
HEREBY SUBMITS TO THE JURISDICTION OF, AND CONSENTS TO VENUE IN,
ANY SUCH COURT.
Annex
A-8
5. WAIVER OF JURY TRIAL. EACH OF
MAKER AND THE SUBORDINATED LENDER HEREBY AGREES TO WAIVE ITS RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING HEREUNDER OR ANY DEALINGS BETWEEN THEM OR THE SENIOR
CREDITORS RELATING TO THE SUBJECT MATTER HEREOF. THE SCOPE OF THIS
WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER HEREOF, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF
DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH OF
MAKER AND THE SUBORDINATED LENDER ACKNOWLEDGES THAT THIS WAIVER IS
A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT
EACH OF THEM AND THE SENIOR CREDITORS HAS ALREADY RELIED ON THIS
WAIVER IN ENTERING INTO THE SUBORDINATED LENDING AGREEMENTS AND/OR
THE SENIOR INDEBTEDNESS AGREEMENTS, AND THAT EACH OF THEM AND THE
SENIOR CREDITORS WILL CONTINUE TO RELY ON THIS WAIVER IN ITS
RELATED FUTURE DEALINGS. EACH OF MAKER AND THE SUBORDINATED LENDER
FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES
ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER
SPECIFICALLY REFERRING TO THIS SECTION 5 AND EXECUTED BY EACH OF
MAKER AND THE SUBORDINATED LENDER AND CONSENTED TO IN WRITING BY
EACH SENIOR REPRESENTATIVE), AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
HERETO. IN THE EVENT OF LITIGATION, THE SUBORDINATION PROVISIONS
MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
6. Maker Acknowledgement. Maker
agrees that (a) nothing contained in the Subordination Provisions
shall be deemed to amend, modify, supersede or otherwise alter the
terms of the respective agreements between Maker and any Senior
Creditor or between Maker and the Subordinated Lender and (b) the
Subordination Provisions are solely for the benefit of the Senior
Creditors and the Subordinated Lender and shall not give Maker, its
successors or assigns, or any other Person any rights
vis-à-vis any Senior Creditor or the Subordinated
Lender.
Annex
A-9
