Subordination Agreement
SYS
(“Borrower”)
is indebted to the undersigned (“Creditor”) in the principal sum of
[____________]
Dollars
($[____________])
evidenced by a promissory note which indebtedness is unsecured and Creditor
is
or may become financially interested in Borrower and desires to aid Borrower
in
obtaining or having continued financial accommodations, whether by way of loan,
commitment to loan, discounting of instruments, extensions of credit or the
obtaining of any other financial aid from Comerica
Bank
(“Bank”).
In
order
to induce the Bank to extend or to continue to extend financial accommodations
to Borrower from time to time, whether by way of a loan, commitment to loan,
discounting of instruments, extension of credit or otherwise and in
consideration of any of these financial accommodations. Creditor agrees as
follows:
| 1. |
Any
and all obligations and liabilities of Borrower to Creditor, including,
without limit, principal and interest payments, whether direct or
indirect, absolute or contingent, joint or several, secured or unsecured,
due or to become due, now existing or later arising and whatever
the
amount and however evidenced (the “Subordinated Indebtedness”), are
subordinated in right of payment to any and all obligations and
liabilities of Borrower to the Bank
(the “Bank Indebtedness”),
as well as to any obligations and liabilities of Borrower (“Other Senior
Debt”), to any subsequent lender (“Other Senior Lender”) to Borrower,
which Borrower, in its sole discretion, designates as senior to
the
Subordinated Indebtedness,
including, without limit, principal and interest payments, whether
direct
or indirect, absolute or contingent, joint or several, secured or
unsecured, due or to become due, now existing or later arising and
however
evidenced, together with all other sums due thereon and all costs
of
collecting the same (including, without limit, reasonable attorney
fees)
for which Borrower is liable (Bank Indebtedness and Other Senior
Indebtedness are sometimes hereinafter collectively referred to as
the
“Senior Indebtedness”).
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| 2. |
Except
as set forth in Section 15, Creditor will not ask for, demand, xxx
for, take or receive (by way of voluntary payment, acceleration,
set-off
or counterclaim, foreclosure or other realization on security, dividends
in bankruptcy or otherwise), or offer to make any discharge or release
of,
any of the Subordinated Indebtedness, and Creditor waives any such
rights
with respect to the Subordinated Indebtedness,
nor shall Creditor exercise any rights of subrogation or other similar
rights with respect to the Senior Indebtedness.
Notwithstanding this Section 2, Creditor may declare a default and
accelerate payment with respect to the Subordinated Indebtedness
if Bank
has previously declared a default with respect to, and accelerated
payment
of, the Senior Indebtedness and such declaration and acceleration
have not
been rescinded or otherwise
terminated.
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| 3. |
Creditor
agrees to execute all financing statements deemed necessary by the
Bank to
perfect the Bank’s rights and interests under this Agreement. The Bank is
to have all the rights and remedies of a secured creditor under the
California Uniform Commercial Code, as amended from time to time,
with
respect to such interests.
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| 4. |
This
Agreement constitutes a continuing agreement of subordination, even
though
at times Borrower is not indebted to the Bank
or
any Other Senior Lender. The Bank or any Other Senior Lender may
continue,
in reliance on this Agreement, without notice to Creditor, to lend
monies,
extend credit, modify, renew or make other financial accommodations,
to or
for the account of Borrower.
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| 5. |
Creditor
delivers this Agreement based solely on Creditor’s independent
investigation of
Borrower
(or decision not to investigate) the financial condition of Borrower
and
is not relying on any information furnished by the Bank. Creditor
assumes
full responsibility for obtaining any further information concerning
the
Borrower’s financial condition, the status of the Senior Indebtedness or
any other matter which Creditor may deem necessary or appropriate
now or
later. Creditor waives any duty on the part of the Bank or any Other
Senior Lender,
and agrees that Creditor is not relying upon nor expecting the Bank
or any
Other Senior Lender
to
disclose to Creditor any fact now or later known by the Bank
or
any Other Senior Lender,
whether relating to the operations or condition of Borrower, the
existence, liabilities or financial condition of any guarantor of
the
Senior Indebtedness
or
any Other Senior Debt,
the occurrence of any default with respect to the Senior
Indebtedness,
or any Other Senior Debt
or
otherwise, notwithstanding any effect such fact may have upon Creditor’s
risk or Creditor’s rights against Borrower. Creditor knowingly accepts the
full range of risk encompassed in this Agreement, which risk includes,
without limit, the possibility that Borrower may incur Bank Indebtedness
to the Bank or Other Senior Debt to any Other Senior Lender
after the financial condition of Borrower, or its ability to pay
Borrower’s debts as they mature, has deteriorated. Creditor acknowledges
and agrees that the
rights
of
the Bank or any Other Senior Lender
under this Agreement are not conditioned upon pursuit by the Bank
or any
Other Senior Lender of
any remedy the Bank
or
any Other Senior Lender
may have against Borrower or any other person or any other security.
The
absence of Borrower’s signature at the end of this Agreement shall in no
way impair or affect the validity of this
Agreement.
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| 6. |
The
Bank, in its sole discretion, without notice to Creditor, may release,
exchange, enforce and otherwise deal with any security now or later
held
by the Bank for payment of the Senior Indebtedness or release any
party
now or later liable for payment of the Senior Indebtedness without
affecting in any manner the Bank’s rights under this Agreement. Creditor
acknowledges and agrees that the Bank has no obligation to acquire
or
perfect any lien on or security interest in any asset(s), whether
realty
or personal, to secure payment of the Senior Indebtedness, and Creditor
is
not relying upon assets in which the Bank has or may have a lien
or
security interest for payment of the Bank
Indebtedness.
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| 7. |
Notwithstanding
any prior revocation, termination, surrender, or discharge of this
Agreement in whole or in part, the effectiveness of this Agreement
shall
automatically continue or be reinstated in the event that any payment
received or credit given by the Bank in respect of the Bank
Indebtedness,
or by any Other Senior Lender in respect of any Other Senior
Debt,
is returned, disgorged, or rescinded under any applicable state or
federal
law, including, without limitation, laws pertaining to bankruptcy
or
insolvency, in which case this Agreement, shall be enforceable against
the
Creditor as if the returned, disgorged, or rescinded payment or credit
had
not been received or given by the Bank
or
any Other Senior Lender,
and whether or not the Bank or any Other Senior Lender
relied upon this payment or credit or changed its position as a
consequence of it. In the event of continuation or reinstatement
of this
Agreement, the Creditor agrees upon demand by the Bank or any Other
Senior
Lender
to
execute and deliver to the Bank or any Other Senior Lender
those documents which the Bank determines are appropriate to further
evidence (in the public records or otherwise) this continuation or
reinstatement, although the failure of the Creditor to do so shall
not
affect in any way the reinstatement or
continuation.
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| 8. |
Creditor
waives, to the extent not expressly prohibited by applicable law,
any
right to require the Bank or any Other Senior Lender
to: (a) proceed against any person or property; (b) give notice
of the terms, time and place of any public or private sale of personal
property security held from Borrower or any other person, or otherwise
comply with the provisions of Sections 9611 or 9621 of the California
or other applicable Uniform Commercial Code; or (c) pursue any other
remedy.
Creditor waives notice of acceptance of this Agreement and presentment,
demand, protest, notice of protest, dishonor, notice of dishonor,
notice
of default, notice of intent to accelerate or demand payment of any
Senior
Indebtedness,
any and all other notices to which the undersigned might otherwise
be
entitled, and diligence in collecting any Senior Indebtedness,
and agrees that the Bank or any
Other
Senior Lender
may, once or any number of times, modify the terms of any Senior
Indebtedness,
compromise, extend, increase, accelerate, renew or forbear to enforce
payment of any or all Senior Indebtedness,
or permit the Borrower to incur additional Indebtedness,
all without notice to Creditor and without affecting in any manner
the
unconditional obligations of Creditor under this
Agreement.
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| 9. |
Creditor
acknowledges that the Bank or
any Other Senior Lender shall have
the right to sell, assign, transfer, negotiate or grant participations
or
any interest in, any or all of the Senior Indebtedness and
any related obligations, including without limit this Agreement.
In
connection with the above, but without limiting its ability to make
other
disclosures to the full extent allowable, the Bank and any Other
Senior
Lender
may disclose all documents and information which it now or later
has or
acquires relating to Creditor and this Agreement. Creditor further
agrees
that the Bank or
any Other Senior Lender
may disclose such documents and information to the Borrower. Creditor
further agrees that the Bank and
any Other Senior Lender
may provide information relating to this Agreement or relating to
the
Creditor to the parent,
affiliates, subsidiaries and service providers of the Bank and any
Other
Senior Lender.
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| 10. |
No
waiver or modification of any of its rights under this Agreement
shall be
effective unless the waiver or modification shall be in writing and
signed
by an authorized officer on behalf of the Bank. Each waiver or
modification shall be a waiver or modification only with respect
to the
specific matter to which the waiver or modification relates and shall
in
no way impair the rights of the Bank or the obligations of Creditor
to the
Bank in any other respect.
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| 11. |
This
Agreement shall bind and be for the benefit of Creditor and the Bank
and
their respective successors and assigns, and shall be construed according
to the laws of the State of California without regard to conflict
of laws
principles. If this Agreement is executed by two or more persons,
it shall
bind each of them individually as well as
jointly.
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| 12. |
The
term “Borrower,”
as
used in this Agreement, includes any person, corporation, partnership
or
other entity which succeeds to the interests or business of Borrower
named
above, and the terms “Bank Indebtedness” and “Other Senior
Debt”
include indebtedness of any successor Borrower to the Bank or any
Other Senior Lender, respectively.
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| 13. |
Creditor
waives any defense against the enforceability of this Agreement based
upon
or arising by reason of the application by Borrower of the proceeds
of any
Indebtedness for purposes other than the purposes represented by
Borrower
to the Bank or the Creditor or intended or understood by the Bank
or
Creditor. Creditor waives all rights to require the Bank to xxxxxxxx
the
Collateral or any other property the Bank may at any time have as
security
for the Indebtedness and waives all right to require the Bank to
first
proceed against any guarantor or other person before proceeding against
the Collateral.
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| 14. |
The
relative priorities of the Bank and Creditor in the Collateral as
set
forth in this Agreement control irrespective of the time, method
or order
of attachment or perfection of the liens and security interests acquired
by the parties in the Collateral and irrespective of the priorities
as
would otherwise be determined by reference to the Uniform Commercial
Code
or other applicable laws. Creditor shall not contest the validity,
priority or perfection of the Bank’s security interest in the Collateral
(regardless of whether the Bank’s security interest in the Collateral is
valid or perfected). The priorities of any liens or security interests
of
the parties in any property of the Borrower other than the Collateral
are
not affected by this Agreement and shall be determined by reference
to
applicable law. The Bank’s rights under this Agreement are in addition to,
and not in substitution of, its rights under any other subordination
agreement with Creditor.
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| 15. |
Anything
contained in this Agreement to the contrary notwithstanding, so long
as
Bank and
any Other Senior Lender
has received all payments required under the Senior Indebtedness
and
so
long as no event of default has occurred or is continuing thereunder,
then
Borrower may pay to Creditor, and Creditor may accept and retain
from
Borrower, as and when each becomes due and payable, regularly scheduled
payments of principal and interest on the Subordinated Indebtedness
according to and in the respective amounts set forth in any documents,
instruments or agreements entered into evidencing the Subordinated
Indebtedness, provided, that such payments to Creditor shall not
cause or
result in any default or violation by Borrower of any affirmative
or
negative covenant, term, condition, or other provision of the Senior
Indebtedness.
In no event, however, shall Creditor at any time accept or retain
any such
payment more than 30 days prior to the due date therefore, nor otherwise
accept or retain any payment on or against the Subordinated Indebtedness
except as expressly provided in the documents, instruments or agreements
entered into evidencing the Subordinated
Indebtedness.
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THE
UNDERSIGNED AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING
(OR
HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY
AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY
JURY
IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR
IN
ANY WAY RELATED TO, THIS AGREEMENT.
IN
WITNESS WHEREOF, Creditor has caused this Agreement to be executed as of the
_______ day of ___________________, 2006.
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Creditor's
Address
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Xxxx
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Xxxxx | Xxx | |
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Xx:
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SIGNATURE
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TITLE
(if applicable)
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By:
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SIGNATURE
OF:
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(if applicable)
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BORROWER’S
ACKNOWLEDGEMENT
SYS
(“Borrower”), accepts notice of subordination created by this Agreement and
agrees that it will take no action inconsistent with this Agreement and that,
except with the prior notification by Borrower of compliance with the terms
of
the Senior Indebtedness
and any
Other Senior Debt,
no
payment or distribution shall be made by Borrower on or with respect to the
Subordinated Indebtedness, so long as this Agreement remains in effect. Borrower
agrees that the Bank may, at its option, without notice and without limiting
Bank’s other rights, upon any breach by Creditor of this Agreement, declare all
Senior Indebtedness to be immediately due and payable and/or terminate any
commitments of Bank to Borrower.
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Dated:
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