Exhibit 10.20
SUBORDINATION AND INTERCREDITOR AGREEMENT
This Subordination and Intercreditor Agreement (this "Agreement") dated as
of April 3, 2003 among IIG Equity Opportunities Fund Ltd. ("Senior Lender"), Xxx
X. Xxxxx ("AMS"), Xxxxxx Xxxxxxx ("RS"), Xxxxxxx Xxxxx ("AR"), Xxxxxxx X. Xxxx
("XXX"), Irrevocable Trust of Xxxxxxx X. Xxxxxx ("ITBJM"), Xxxxx Xxxxxxxx
("NF"), Xxxx Xxxxx ("GK"), Xxxxx Xxxxxxxxx ("JN" together with AMS, RS, AR, XXX,
ITBJM, NF and GK, collectively, "Subordinated Lender") and Frontline
Communications Corporation ("Company").
BACKGROUND
As an inducement for Senior Lender to provide a secured credit facility in
favor of Company and Proyecciones y Ventas Organizadas, S.A. de C.V.
(collectively, "Borrowers"), Subordinated Lender has agreed to enter into this
Agreement to provide for the subordination of (i) the "Subordinated
Indebtedness" to the "Senior Indebtedness" and (ii) the "Liens" in the assets of
Company granted to Subordinated Lender to the "Liens" in the assets of Company
granted to Senior Lender.
AGREEMENTS
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto agree as follows:
1. Definitions.
(a) General Terms. For purposes of this Agreement, the following
terms shall have the following meanings:
"Collateral" shall mean all of the property and interests in
property, tangible or intangible, real or personal, now owned or hereafter
acquired by Company, in or upon which Senior Lender at any time has a Lien, and
including, without limitation, all proceeds and products of such property and
interests in property.
"Company" shall mean Company and its successors and assigns.
"Creditor Agreements" shall mean, collectively, the Senior
Lending Agreements and the Subordinated Lending Agreements.
"Creditors" shall mean, collectively, Senior Lender and
Subordinated Lender and their respective heirs, administrators, executors,
successors and assigns.
"Distribution" shall mean any payment, whether in cash, in kind,
securities or any other property, or security for any such Distribution.
"Documents" shall have the meaning given to the term "Loan
Documents" in the Loan Agreement.
"Event" shall have the meaning set forth in Section 2(b)(iii)
hereof.
"Holder of Subordinated Indebtedness" or "Subordinated Lender"
shall mean Xxx X. Xxxxx, Xxxxxx Xxxxxxx, Xxxxxxx Xxxxx, Xxxxxxx X. Xxxx,
Irrevocable Trust of Xxxxxxx X. Xxxxxx, Xxxxx Xxxxxxxx, Xxxx Xxxxx, Xxxxx
Xxxxxxxxx, and any other Person(s) at any time or in any manner acquiring any
right or interest in any of the Subordinated Indebtedness, and any heirs,
administrators, executors, successors and assigns of such Person(s).
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, security interest, encumbrance
(including, but not limited to, easements, rights of way and the like), lien
(statutory or other), security agreement or transfer intended as security
including, without limitation, any conditional sale or other title retention
agreement, the interest of a lessor under a capital lease or any financing lease
having substantially the same economic effect as any of the foregoing.
"Loan Agreement" shall mean that certain Term Loan and Security
Agreement dated as of the date hereof among Borrowers and Senior Lender, as the
same may be amended, supplemented, modified or restated from time to time.
"Person" shall mean an individual, a partnership, a corporation
(including a business trust), a joint stock company, a trust, an unincorporated
association, a joint venture, a limited liability company, a limited liability
partnership or other entity, or a government or any agency, instrumentality or
political subdivision thereof.
"Secured Lender Remedies" shall mean any action which results in
the sale, foreclosure, realization upon, or a liquidation of any of the
Collateral including, without limitation, the exercise or any of the rights or
remedies of a "secured party" under Article 9 of the UCC, such as, without
limitation, the notification of account debtors.
"Senior Indebtedness" shall mean all Obligations of any kind owed
by Borrowers to Senior Lender from time to time under or pursuant to any of the
Senior Lending Agreements including, without limitation, all principal, interest
accruing thereon, charges, expenses, fees and other sums (including all
interest, charges, expenses, fees and other sums accruing after commencement of
any case, proceeding or other action relating to the bankruptcy, insolvency or
reorganization of any Borrower) chargeable to Borrowers by Senior Lender, and
reimbursement, indemnity or other obligations due and payable to Senior Lender.
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 federal
Bankruptcy Code or other applicable law. Senior Indebtedness shall also include
any indebtedness of Borrowers incurred in connection with a refinancing of the
Senior Indebtedness under the Senior Lending Agreements if the terms and
conditions of the agreements, documents and instruments related to such
refinancing, taken as a whole, are not materially more onerous to the Holder of
Subordinated Indebtedness than those set forth in the Senior Lending Agreements,
as in effect on the date hereof.
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"Senior Lender" shall have the meaning set forth in the
introductory paragraph of this Agreement and shall include its successors and
assigns.
"Senior Lending Agreements" shall mean collectively the Loan
Agreement, the Notes and the other Documents, each as from time to time in
effect.
"Subordinated Indebtedness" shall mean all principal, interest
and other amounts payable or chargeable in connection with the Subordinated
Lending Agreements.
"Subordinated Lender Collateral" shall mean the assets of Company
in which Company granted Subordinated Lender, and Subordinated Lender has, an
enforceable and perfected security interest under the Subordinated Lending
Agreements.
"Subordinated Lending Agreements" shall mean, collectively, the
Subordinated Notes and all promissory notes, agreements, documents and
instruments now or at any time hereafter executed and/or delivered by Company or
any other person to, with or in favor of 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 Notes" shall mean collectively, each Senior Secured
Promissory Note issued by Company to a Subordinated Lender in the original
principal amount of $25,000 dated April 7, 2002 together with any extensions
thereof, securities issued in exchange therefor or modifications or amendments
thereto or replacements and substitutions therefor.
"UCC" means the Uniform Commercial Code of the State of New York
as in effect from time to time.
(b) Other Terms. Capitalized terms not otherwise defined herein shall
have the meanings given to them in the Loan Agreement.
(c) Certain Matters of Construction. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. Wherever appropriate in the context, terms
used herein in the singular also include the plural and vice versa. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. Except as expressly set forth
herein, all references to any instruments or agreements, including, without
limitation, references to any of the Creditor Agreements shall include any and
all modifications or amendments thereto and any and all extensions or renewals
thereof.
2. Covenants. Company and each Holder of Subordinated Indebtedness hereby
covenant that until the Senior Indebtedness shall have been paid in full and
satisfied in cash and the Senior Lending Agreements shall have been irrevocably
terminated, all in accordance with the terms of the Senior Lending Agreements,
each will comply with such of the following provisions as are applicable to it:
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(a) Transfers. Each Holder of Subordinated Indebtedness covenants that
any transferee from it of any Subordinated Indebtedness shall, prior to
acquiring such interest, execute and deliver a counterpart of this Agreement to
each other party hereto.
(b) Subordination Provisions. To induce Senior Lender to enter into
the Loan Agreement and to make loans and advances thereunder, notwithstanding
any other provision of the Subordinated Indebtedness 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:
(i) Payments. Company shall make no Distribution on the
Subordinated Indebtedness until such time as the Senior Indebtedness shall have
been paid in full in cash and the Senior Lending Agreements shall have been
irrevocably terminated.
(ii) Limitation on Acceleration. No Holder of Subordinated
Indebtedness shall be entitled to accelerate the maturity of the Subordinated
Indebtedness, exercise any remedies or commence any action or proceeding to
recover any amounts due or to become due with respect to Subordinated
Indebtedness, provided, however, the foregoing limitation on acceleration shall
not be applicable following the maturity or acceleration of all Senior
Indebtedness.
(iii) Prior Payment of Senior Indebtedness in Bankruptcy, etc. In
the event of any insolvency or bankruptcy proceedings relative to Company 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 Company or
distribution or marshalling of its assets or any composition with creditors of
Company, whether or not involving insolvency or bankruptcy, or if Company 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 paid in full and satisfied in cash and the Senior
Lending Agreements irrevocably terminated before any Distribution shall be made
on account of any Subordinated Indebtedness. Any such Distribution (except
equity securities or securities which are subordinated and junior in right of
payment to the payment in full in cash of all Senior Indebtedness) which would,
but for the provisions hereof, be payable or deliverable in respect of the
Subordinated Indebtedness, shall be paid or delivered directly to Senior Lender
or its representatives, in the proportions in which they hold the same, until
amounts owing upon Senior Indebtedness shall have been paid in full in cash and
the Senior Lending Agreements irrevocably terminated.
(iv) Power of Attorney. To enable Senior Lender to assert and
enforce its rights hereunder in any proceeding referred to in Section 2(b)(iii)
or upon the happening of any Event, Senior Lender or any person whom it may
designate is hereby irrevocably appointed attorney in fact for Subordinated
Lender with full power to act in the place and stead of Subordinated Lender
including the right to make, present, file and vote such proofs of claim against
Company on account of all or any part of the Subordinated Indebtedness as Senior
Lender may deem advisable and to receive and collect any and all dividends or
other payments made thereon and to apply the same on account of the Senior
Indebtedness. Subordinated
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Lender will execute and deliver to Senior Lender such instruments as may be
required by Senior Lender to enforce any and all Subordinated Indebtedness, to
effectuate the aforesaid power of attorney and to effect collection of any and
all dividends or other payments which may be made at any time on account
thereof, and Subordinated Lender hereby irrevocably appoints Senior Lender as
the lawful attorney and agent of Subordinated Lender to execute financing
statements on behalf of Subordinated Lender and hereby further authorizes Senior
Lender to file such financing statements in any appropriate public office.
(v) Payments Held in Trust. Should any Distribution or the
proceeds thereof, in respect of the Subordinated Indebtedness, be collected or
received by 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 Subordinated Lender at a time when
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 Default or an Event of Default
under the Loan Agreement, then Subordinated Lender will forthwith deliver, or
cause to be delivered, the same to Senior Lender in precisely the form held by
Subordinated Lender (except for any necessary endorsement) and until so
delivered, the same shall be held in trust by Subordinated Lender, or any such
Affiliate, as the property of Senior Lender and shall not be commingled with
other property of the Subordinated Lender or any such Affiliate.
(vi) Subrogation. Subject to the prior payment in full in cash of
the Senior Indebtedness and the irrevocable termination of the Senior Lending
Agreements, to the extent that Senior Lender has received any Distribution on
the Senior Indebtedness which, but for this Agreement, would have been applied
to the Subordinated Indebtedness, Subordinated Lender shall be subrogated to the
then or thereafter rights of Senior Lender including, without limitation, the
right to receive any Distribution made on the Senior Indebtedness until the
principal of, interest on and other charges due under the Subordinated
Indebtedness shall be paid in full; and, for the purposes of such subrogation,
no Distribution to Senior Lender to which Subordinated Lender would be entitled
except for the provisions of this Agreement shall, as between Company, its
creditors (other than Senior Lender) and Subordinated Lender, be deemed to be a
Distribution by Company 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 Subordinated Lender on the one hand,
and Senior Lender on the other hand.
(vii) Scope of Subordination. The provisions of this Agreement
are solely to define the relative rights of any Holder of Subordinated
Indebtedness and Senior Lender. Nothing in this Agreement shall impair, as
between Company and Subordinated Lender the unconditional and absolute
obligation of Company to punctually pay the principal, interest and any other
amounts and obligations owing under the Subordinated Note and Subordinated
Lending Agreements in accordance with the terms thereof, subject to the rights
of Senior Lender under this Agreement.
3. Security.
(a) Acknowledgment of Lien. Subordinated Lender hereby agrees and
acknowledges that Senior Lender has been granted a Lien upon the Collateral.
Senior Lender
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hereby agrees and acknowledges that Subordinated Lender has been granted a Lien
upon the Subordinated Lender Collateral.
(b) Priority. Notwithstanding the order or time of attachment, or the
order, time or manner of perfection, or the order or time of filing or
recordation of any document or instrument, or other method of perfecting a Lien
in favor of each Creditor in any Collateral and notwithstanding any conflicting
terms or conditions which may be contained in any of the Creditor Agreements,
the Liens upon the Collateral of Senior Lender have and shall have priority over
the Liens upon the Collateral of Subordinated Lender and such Liens of
Subordinated Lender are and shall be, in all respects, subject and subordinate
to the Liens of Senior Lender therein to the full extent of the Senior
Indebtedness outstanding from time to time. Subordinated Lender shall not take
any action to foreclose or realize upon any of the Collateral until such time as
the Senior Indebtedness shall have been paid in full in cash and the Lending
Agreements irrevocably terminated.
(c) No Alteration of Priority. The Lien priorities provided in Section
3(b) hereof shall not be altered or otherwise affected by any amendment,
modification, supplement, extension, renewal, restatement or refinancing of any
Senior Indebtedness or the Subordinated Indebtedness, nor by any action or
inaction which either Creditor may take or fail to take in respect of the
Collateral.
(d) Perfection. Each Creditor shall be solely responsible for
perfecting and maintaining the perfection of its Lien in and to each item
constituting the Collateral in which such Creditor has been granted a Lien. The
foregoing provisions of this Agreement are intended solely to govern the
respective lien priorities as between the Creditors and shall not impose on
Senior Lender any obligations in respect of the disposition of proceeds of
foreclosure on any Collateral which would conflict with prior perfected claims
therein in favor of any other Person. Subordinated Lender agrees that it will
not contest the validity, perfection, priority or enforceability of the Liens of
Senior Lender in the Collateral and that as between Senior Lender and
Subordinated Lender, the terms of this Agreement shall govern even if part or
all of the Senior Indebtedness or the Liens of Senior Lender securing payment
and performance thereof are avoided, disallowed, set aside or otherwise
invalidated in any judicial proceeding or otherwise.
(e) Management of Collateral. Senior Lender shall have the exclusive
right to manage, perform and enforce the terms of the Senior Lending Agreements
with respect to the Collateral and to exercise and enforce all privileges and
rights thereunder according to its discretion and exercise of its business
judgment, including, without limitation, the exclusive right to enforce or
settle insurance claims, take or retake control or possession of the Collateral
and to hold, prepare for sale, process, sell, lease, dispose of, or liquidate
the Collateral. In connection therewith, Subordinated Lender waives any and all
rights to affect the method or challenge the appropriateness of any action by
Senior Lender.
(f) Sale of Collateral. Notwithstanding anything to the contrary
contained in any of the Creditor Agreements only Senior Lender shall have the
right to restrict or permit, or approve or disapprove, the sale, transfer or
other disposition of Collateral. Subordinated Lender will, immediately upon the
request of Senior Lender, release or otherwise terminate its Liens
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upon any Collateral, to the extent such Collateral is sold or otherwise disposed
of either by Senior Lender, its agents, or Company with the consent of Senior
Lender, and Subordinated Lender will immediately deliver such release documents
as Senior Lender may require in connection therewith.
(g) Secured Lender Remedies. In no event shall Subordinated Lender
exercise any Secured Lender Remedies until such time as the Senior Indebtedness
shall have been paid in full in cash and the Senior Lending Agreements
irrevocably terminated; nor shall Subordinated Lender join in, solicit any other
person to, or act to cause the commencement of, any case involving Company under
any state or federal bankruptcy or insolvency laws or seek the appointment of a
receiver for the affairs or property of the Company until such time as the
Senior Indebtedness shall have been paid in full in cash and the Senior Lending
Agreements shall have been irrevocably terminated. In the event Subordinated
Lender shall receive any payment or distribution of any kind representing
proceeds of any Collateral as to which its Lien in the Collateral is or is
required to be subordinated to the Lien of Senior Lender before the Obligations
shall have been paid in full in cash and the Senior Lending Agreements
irrevocably terminated, such sums shall be held in trust by Subordinated Lender
for the benefit and on account of Senior Lender and such amounts shall be paid
to Senior Lender for application to the then unpaid Obligations under the Senior
Lending Agreements.
(h) Section 0-000 Xxxxxx and Waiver of Marshaling. Subordinated Lender
and Senior Lender acknowledge that this Agreement shall constitute notice of
their respective interests in the Collateral as provided by Section 9-611 of the
UCC and each hereby waive any right to compel any marshaling of any of the
Collateral.
4. Miscellaneous.
(a) Provisions of Subordinated Note. From and after the date hereof,
Company and Subordinated Lender shall cause each Subordinated Lending Agreement
or any other evidence of Subordinated Indebtedness to contain a provision to the
following effect:
"This Note is subject to the Subordination and Intercreditor
Agreement, dated as of April ___, 2003, Frontline Communications
Corporation ("Maker"), Xxx X. Xxxxx, Xxxxxx Xxxxxxx, Xxxxxxx Xxxxx,
Xxxxxxx X. Xxxx, Irrevocable Trust of Xxxxxxx X. Xxxxxx, Xxxxx
Xxxxxxxx, Xxxx Xxxxx, Xxxxx Xxxxxxxxx and IIG Equity Opportunities
Fund Ltd., as Senior Lender, under which this Note and the Maker's
obligations hereunder are subordinated in the manner set forth therein
to the prior payment of certain obligations to the holders of Senior
Indebtedness as defined therein."
Proof of compliance with the foregoing shall be promptly given to
Senior Lender.
(b) Additional Agreements. In the event that the Senior Indebtedness
is refinanced in full, Subordinated Lender agrees at the request of such
refinancing party to enter
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into a subordination and intercreditor agreement on terms substantially similar
to this Agreement.
(c) Survival of Rights. The right of Senior Lender to enforce the
provisions of this Agreement shall not be prejudiced or impaired by any act or
omitted act of Company or Senior Lender including forbearance, waiver, consent,
compromise, amendment, extension, renewal, or taking or release of security in
respect of any Senior Indebtedness or noncompliance by Company with such
provisions, regardless of the actual or imputed knowledge of Senior Lender.
(d) Bankruptcy Financing Issues. (i) This Agreement shall continue in
full force and effect after the filing of any petition ("Petition") by or
against Company under the United States Bankruptcy Code (the "Code") and all
converted or succeeding cases in respect thereof. All references herein to
Company shall be deemed to apply to Company as debtor-in-possession and to a
trustee for Company. If Company shall become subject to a proceeding under the
Code, and if Senior Lender shall desire to permit the use of cash collateral or
to provide post-Petition financing from Senior Lender to Company under the Code,
Subordinated Lender agrees as follows: (1) adequate notice to Subordinated
Lender shall be deemed to have been provided for such consent or post-Petition
financing if Subordinated Lender receives notice thereof three (3) Business Days
(or such shorter notice as is given to Senior Lender) prior to the earlier of
(a) any hearing on a request to approve such post-petition financing or (b) the
date of entry of an order approving same and (2) no objection will be raised by
Subordinated Lender to (a) any such use of cash collateral or such post-Petition
financing from Senior Lender and (b) Senior Lender declaring a default and/or
exercising any of its rights and remedies under any agreement evidencing such
post-Petition financing from Senior Lender.
(ii) Subordinated Lender shall not join in, solicit any other person
to, or act to cause the commencement of, any case involving Company under any
state or federal bankruptcy or insolvency laws or seek the appointment of a
receiver for the affairs or property of Company until such time as the Senior
Indebtedness shall have been paid in full in cash and the Senior Lending
Agreements shall have been irrevocably terminated.
(e) Insurance Proceeds. Proceeds of the Collateral include insurance
proceeds, and therefore, notwithstanding the terms set forth in the Senior
Lending Agreements or Subordinated Lender Agreements, the priorities set forth
in Section 3(b) govern the ultimate disposition of casualty insurance proceeds.
Senior Lender, as the holder of a senior security interest on the Collateral
insured shall have the sole and exclusive right, as against 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
Senior Lender, to the extent Senior Lender's claim, and Subordinated Lender
shall cooperate (if necessary) in a reasonable manner in effecting the payment
of insurance proceeds to Senior Lender. In the event Senior Lender, in its sole
discretion or pursuant to agreement with Company, permits Company to utilize the
proceeds of insurance to replace Collateral, the consent of Senior Lender
thereto shall be deemed to include the consent of Subordinated Lender.
(f) Receipt of Agreements. Subordinated Lender hereby acknowledges
that it has delivered to Senior Lender a correct and complete copy of the
Subordinated Lending
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Agreements as in effect on the date hereof. Subordinated Lender, solely for the
purposes of this Agreement, hereby acknowledges receipt of a correct and
complete copy of each of the Senior Lending Agreements as in effect on the date
hereof.
(g) No Amendment of Subordinated Lending Agreements. So long as the
Loan Agreement remains in effect, neither Company nor any Holder of Subordinated
Indebtedness shall enter into any amendment to or modification of any
Subordinated Lending Agreements which relates to or affects the principal
amount, interest rate, payment terms, or any other material covenant or
agreement of Company thereunder or in respect thereof, without the prior written
consent of Senior Lender.
(h) Amendments to Senior Lending Agreements. Nothing contained in this
Agreement, or in any other agreement or instrument binding upon any of the
parties hereto, shall in any manner limit or restrict the ability of Senior
Lender from increasing or changing the terms of the loans under the Senior
Lending Agreements, or to otherwise waive, amend or modify the terms and
conditions of the Senior Lending Agreements, in such manner as Senior Lender and
Company shall mutually determine. Each Holder of Subordinated Indebtedness
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 Senior Lender to Company from time
to time, and agrees that none of such actions shall in any manner affect or
impair the subordination established by this Agreement in respect of the
Subordinated Indebtedness.
(i) Notice of Default and Certain Events. Senior Lender and the
Holders of Subordinated Indebtedness shall undertake in good faith to notify the
other of the occurrence of any of the following as applicable:
(i) the obtaining of actual knowledge of the occurrence of any
default under any of the Subordinated Lending Agreements;
(ii) the acceleration of any Senior Indebtedness by Senior Lender
or of any Subordinated Indebtedness by any Holder of Subordinated
Indebtedness;
(iii) the granting by Senior Lender of any waiver of any Event of
Default under the Loan Agreement or the granting by any Holder of
Subordinated Indebtedness of any waiver of any "default" or "event of
default" under any of the Subordinated Lending Agreements;
(iv) the payment in full by Company (whether as a result of
refinancing or otherwise) of all Senior Indebtedness; or
(v) the sale or liquidation by Senior Lender of, or realization
upon, any of the Subordinated Lender Collateral.
The failure of any party to give such notice shall not affect the
subordination of the Subordinated Indebtedness or the relative Lien priorities
as provided in this Agreement.
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(j) Notices. Any notice or other communication required or permitted
pursuant to this Agreement shall be deemed given (i) when personally delivered
to any officer of the party to whom it is addressed, (ii) on the earlier of
actual receipt thereof or three (3) days following posting thereof by certified
or registered mail, postage prepaid, (iii) upon actual receipt thereof when sent
by a recognized overnight delivery service or (iv) upon actual receipt thereof
when sent by telecopier to the number set forth below with electronic
confirmation of receipt, in each case addressed to each party at its address or
telecopier number set forth below or at such other address or telecopier number
as has been furnished in writing by a party to the other by like notice:
If to Senior Lender: IIG Capital LLC
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Subordinated
Lenders: Frontline Communications Corporation
Xxx Xxxx Xxxx Xxxxx
Xxxxx Xxxxx, Xxx Xxxx 00000
Attention: Xxx Xxxxxx-Xxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Company: Frontline Communications Corporation
Xxx Xxxx Xxxx Xxxxx
Xxxxx Xxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxx-Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(k) Books and Records. Subordinated Lender shall (a) make notations on
the books of Subordinated Lender beside all accounts or on other statements
evidencing or recording any Subordinated Indebtedness to the effect that such
Subordinated Indebtedness is subject to the provisions of this Agreement, (b)
furnish Senior Lender, upon request from time to time, a statement of the
account between Subordinated Lender and Company and (c) give Senior Lender, upon
its request, full and free access to Subordinated Lender's books pertaining only
to such accounts with the right to make copies thereof.
(l) Binding Effect; Other. This Agreement shall be a continuing
agreement, shall be binding upon and shall inure to the benefit of the parties
hereto from time to time 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 paid in full in cash and the Senior
Lending 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 Company with regard to
the Senior Indebtedness is rescinded or must
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otherwise be restored or returned upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of Company, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee, custodian,
or similar officer, for Company or any substantial part of its property, or
otherwise, all as though such payments had not been made. No action which Senior
Lender or Company may take or refrain from taking with respect to the Senior
Indebtedness, including any amendments thereto, shall affect the provisions of
this Agreement or the obligations of Subordinated Lender hereunder. Any waiver
or amendment hereunder must be evidenced by a signed writing of the party to be
bound thereby, and shall only be effective in the specific instance. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York. The headings in this Agreement are for convenience of
reference only, and shall not alter or otherwise affect the meaning hereof.
(m) Security. Until the Senior Indebtedness shall have been paid in
full in cash and the Senior Lending Agreements shall have been irrevocably
terminated, the Subordinated Lender hereby disclaims any and all Liens on any
property (personal or real) of the Company other than Subordinated Lender's Lien
on the Subordinated Lender Collateral.
(n) No Challenge to Validity, Etc. of Liens. Notwithstanding anything
to the contrary expressed or implied in this Agreement, each Holder of
Subordinated Indebtedness agrees that it will not at any time contest the
validity, perfection, priority or enforceability of any security interest or
lien granted to Senior Lender by Company securing all or any part of the
Obligations, or the Senior Lender's right to foreclosure, realization upon, levy
upon, or liquidation of any of the Collateral.
5. Representations and Warranties.
(a) Subordinated Lender represents and warrants to Senior Lender that
Subordinated Lender is the holder of the Subordinated Indebtedness and Liens
which secure or will secure the Subordinated Indebtedness. Subordinated Lender
agrees that it shall not assign or transfer any of the Subordinated Indebtedness
or Liens without (i) prior notice being given to Senior Lender and (ii) such
assignment or transfer being made expressly subject to the terms of this
Agreement. Subordinated Lender authorizes Senior Lender to file an amendment to
any financing statement or mortgage, trust deed or other encumbrance now on file
which covers Collateral to the effect that the same is subject to the terms of
this Agreement, and agrees to so xxxx any extension of such financing
statements, or any financing statement or mortgage, trust deed or other
encumbrance filed by Subordinated Lender on Collateral in the future.
Subordinated Lender further warrants to Senior Lender that it has full right,
power and authority to enter into this Agreement and, to the extent Subordinated
Lender is an agent or trustee for other parties, that this Agreement shall fully
bind all such other parties.
(b) Senior Lender represents and warrants to Subordinated Lender that
Senior Lender is the holder of the Senior Indebtedness and Liens which secure or
will secure the Senior Indebtedness. Senior Lender agrees that it shall not
assign or transfer any of the Senior Indebtedness or Liens without (i) prior
notice being given to Subordinated Lender and (ii) such assignment or transfer
being made expressly subject to the terms and provisions of this Agreement.
Senior Lender further warrants to Subordinated Lender that it has full right,
power
11
and authority to enter into this Agreement and, to the extent Senior
Lender is an agent or trustee for other parties, that this Agreement shall fully
bind all such other parties.
6. Proceedings. ANY JUDICIAL PROCEEDING BROUGHT BY OR AGAINST SUBORDINATED
LENDER OR COMPANY WITH RESPECT TO THIS AGREEMENT OR ANY RELATED AGREEMENT MAY BE
BROUGHT IN ANY COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK, UNITED
STATES OF AMERICA, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT EACH PARTY
THERETO ACCEPTS FOR THEMSELVES AND IN CONNECTION WITH THEIR PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS, AND IRREVOCABLY AGREE TO BE BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY
IN CONNECTION WITH THIS AGREEMENT. NOTHING HEREIN SHALL AFFECT THE RIGHT TO
SERVE PROCESS IN ANY MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF LENDER
TO BRING PROCEEDINGS AGAINST SUBORDINATED LENDER OR COMPANY IN ANY COURTS OF ANY
OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY SUBORDINATED LENDER OR COMPANY
AGAINST LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER OR CLAIM IN ANY WAY
ARISING OUT OF, RELATED TO OR CONNECTED WITH THIS AGREEMENT OR ANY RELATED
AGREEMENT, SHALL BE BROUGHT ONLY IN A COURT LOCATED IN THE STATE OF NEW YORK;
PROVIDED THAT NOTWITHSTANDING THE FOREGOING, IF IN ANY JUDICIAL PROCEEDING BY OR
AGAINST SUBORDINATED LENDER OR COMPANY THAT IS BROUGHT IN ANY OTHER COURT SUCH
COURT DETERMINES THAT SENIOR LENDER IS AN INDISPENSABLE PARTY, SUBORDINATED
LENDER OR COMPANY SHALL BE ENTITLED TO JOIN OR INCLUDE EACH PARTY HERETO IN SUCH
PROCEEDINGS IN SUCH OTHER COURT. SUBORDINATED LENDER AND COMPANY WAIVE ANY
OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED HEREUNDER AND SHALL
NOT ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE OR BASED UPON
FORUM NON CONVENIENS.
7. Waiver Of Jury Trial. EACH PARTY HERETO HEREBY EXPRESSLY WAIVES ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF ANY CREDITOR OR COMPANY OR ANY OF
THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENTS OR
AGREEMENT EXECUTED OR DELIVERED BY THEM IN CONNECTION HEREWITH, OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND
EACH PARTY HERETO HEREBY AGREES AND CONSENTS THAT ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT JURY, AND THAT ANY OF
THEM MAY FILE AN ORIGINAL COUNTERPART OR A
12
COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THEIR CONSENT TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
8. Company Acknowledgement. Company agrees that (a) nothing contained in
this Agreement shall be deemed to amend, modify, supercede or otherwise alter
the terms of the respective agreements between Company and each Creditor and (b)
this Agreement is solely for the benefit of the Creditors and shall not give
Company, its successors or assigns or any other person any rights vis-a-vis any
Creditor.
9. Counterparts; Facsimile. This Agreement may be executed by the parties
hereto in one or more counterparts, each of which shall be deemed an original
and all of which when taken together shall constitute one and the same
agreement. Any signature delivered by a party by facsimile transmission shall be
deemed to be an original signature hereto.
[Signature Page to Follow]
13
IN WITNESS WHEREOF, the undersigned have entered into this Agreement
as of this 3 day of April, 2003.
IIG EQUITY OPPORTUNITIES FUND LTD., as
Senior Lender
By:
----------------------------------------
Name:
Title:
/s/
-------------------------------------------
Xxx X. Xxxxx, as a Subordinated Lender
/s/
-------------------------------------------
Xxxxxx Xxxxxxx, as a Subordinated Lender
-------------------------------------------
Xxxxxxx Xxxxx, as a Subordinated Lender
/s/
-------------------------------------------
Xxxxxxx X. Xxxx, as a Subordinated Lender
/s/
-------------------------------------------
Xxxxx Xxxxxxxx, as a Subordinated Lender
-------------------------------------------
Xxxx Xxxxx, as a Subordinated Lender
/s/
-------------------------------------------
Xxxxx Xxxxxxxxx, as a Subordinated Lender
[Additional Signature Page to Follow]
14
IRREVOCABLE TRUST OF XXXXXXX X.
XXXXXX, as a Subordinated Lender
By:
-----------------------------
Name:
Title: Trustee
FRONTLINE COMMUNICATIONS
CORPORATION, as Company
By:
-----------------------------
Name:
Title:
00
XXXXX XX XXX XXXX )
: ss.:
COUNTY OF ____________)
On the _______ day of April, 2003, before me personally came __________ to
me known, who, being by me duly sworn did depose and say that s/he is the
________________ of IIG Equity Opportunities Fund Ltd., the company described in
and which executed the above instrument; and that s/he was authorized to sign
her/his name thereto.
---------------------------
Notary Public
STATE OF _____________)
: ss.:
COUNTY OF ____________)
On the _____ day of April 2003, before me personally came Xxx X. Xxxxx, to
me known to be the individual described in and who executed the foregoing
instrument, and acknowledged to me that she executed the same.
---------------------------
Notary Public
STATE OF _____________)
: ss.:
COUNTY OF ____________)
On the _____ day of April 2003, before me personally came Xxxxxx Xxxxxxx,
to me known to be the individual described in and who executed the foregoing
instrument, and acknowledged to me that he executed the same.
---------------------------
Notary Public
16
STATE OF _____________)
: ss.:
COUNTY OF ____________)
On the _____ day of April 2003, before me personally came Xxxxxxx Xxxxx, to
me known to be the individual described in and who executed the foregoing
instrument, and acknowledged to me that he executed the same.
---------------------------
Notary Public
STATE OF _____________)
: ss.:
COUNTY OF ____________)
On the _____ day of April 2003, before me personally came Xxxxxxx X. Xxxx,
to me known to be the individual described in and who executed the foregoing
instrument, and acknowledged to me that he executed the same.
--------------------------
Notary Public
STATE OF _____________)
: ss.:
COUNTY OF ____________)
On the _____ day of April 2003, before me personally came Xxxxx Xxxxxxxx,
to me known to be the individual described in and who executed the foregoing
instrument, and acknowledged to me that he executed the same.
---------------------------
Notary Public
17
STATE OF _____________)
: ss.:
COUNTY OF ____________)
On the _____ day of April 2003, before me personally came Xxxx Xxxxx, to me
known to be the individual described in and who executed the foregoing
instrument, and acknowledged to me that he executed the same.
---------------------------
Notary Public
STATE OF _____________)
: ss.:
COUNTY OF ____________)
On the _____ day of April 2003, before me personally came Xxxxx Xxxxxxxxx,
to me known to be the individual described in and who executed the foregoing
instrument, and acknowledged to me that he executed the same.
---------------------------
Notary Public
STATE OF _____________)
: ss.:
COUNTY OF ____________)
On the _______ day of April, 2003, before me personally came
_______________ to me known, who, being by me duly sworn did depose and say that
s/he is the trustee of Irrevocable Trust of Xxxxxxx X. Xxxxxx, the trust
described in and which executed the above instrument; and that s/he signed
her/his name thereto.
---------------------------
Notary Public
18
STATE OF _____________)
: ss.:
COUNTY OF ____________)
On the _______ day of April, 2003, before me personally came
_______________ to me known, who, being by me duly sworn did depose and say that
s/he is the ________________ of Frontline Communications Corporation, the
corporation described in and which executed the above instrument; and that s/he
signed her/his name thereto by order of the board of directors of said
corporation.
---------------------------
Notary Public
19
