Exhibit 10.43
SUBORDINATION AGREEMENT
THIS AGREEMENT OF SUBORDINATION is made and entered into this 26th day of
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October, 1995, by and among XXXX X. XXXXXXX, of Woodbridge, Connecticut
("Subordinating Creditor"), INFORMATION MANAGEMENT ASSOCIATES, INC., a
Connecticut corporation, INFORMATION MANAGEMENT ASSOCIATES LIMITED, a
corporation registered under the laws of England (together, "Borrower"), and
PEOPLE'S BANK, a Connecticut banking corporation with an office located at Xxx
Xxxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000-0000 (the "Bank").
WITNESSETH:
WHEREAS, Borrower has requested that the Bank extend to Borrower (i) a
commercial line of credit (the "Line of Credit Loans") in the maximum aggregate
principal amount of up to $6,000,000.00, as evidenced by a Line of Credit
Promissory Note in said amount and of even date herewith, a copy of which is
annexed hereto as Exhibit A (the "Line of Credit Note"), and (ii) a term loan
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(the "Term Loan") in the amount of $2,500,000.00, as evidenced by a Term Loan
Promissory Note in said amount and of even date herewith, a copy of which is
annexed hereto as Exhibit B (the "Term Note"); and
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WHEREAS, to further evidence its obligations to repay the Term Loan and the
Line of Credit Loans (collectively, the "Loans"), Borrower has or shall cause to
be executed, inter alia, a Loan and Security Agreement of even date herewith
(such agreements, together with the Line of Credit Note, the Term Note and any
and all documents, instruments, and agreements executed in connection with or
evidencing the Loans are herein referred to herein as the "Loan Documents"); and
WHEREAS, the Bank has agreed to fund the Loans on the condition, among
others, that Subordinating Creditor agrees to subordinate any and all
indebtedness of Borrower to it to any and all direct and indirect indebtedness
of Borrower to the Bank, pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, for value received and in consideration of the mutual
covenants hereinafter contained, the parties hereto, intending to be legally
bound hereby, do agree as follows:
1. Definitions
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(a) "Senior Debt" means all indebtedness, liabilities, and obligations
whatsoever, of every kind and description, whenever and however arising,
absolute or contingent, due or to become due, now existing or hereafter arising
from, or in any way connected with, any direct or indirect indebtedness of
Borrower to the Bank, including, but not limited to, all principal and interest
due and owing under the Term Note and the Line of Credit Note, together with all
costs, expenses, and attorneys' and other professional fees incurred or any
action to collect the Loans or to enforce or foreclose any of the Loan
Documents.
(b) "Subordinated Debt" means all indebtedness, liabilities, and
obligations whatsoever, of every kind and description, whenever and however
arising, absolute or contingent, due or to become due, from Borrower to
Subordinating Creditor.
2. Subordination. Subordinating Creditor and Borrower do each agree that
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the Subordinated Debt is fully subordinated to the full and complete payment and
satisfaction in full of the Senior Debt, and that no payments may be made on the
Subordinated Debt without the prior written consent of the Bank until such time
as the Senior Debt has been paid in full. Borrower's and Subordinating
Creditor's books shall be marked to evidence the foregoing subordination of all
the Subordinated Debt to the Bank. The Bank is authorized to examine such books
from time to time and to make any notations required by this Agreement.
3. Warranties and Representations. Borrower and Subordinating Creditor do
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each hereby represent and warrant that:
(a) As of the date hereof, Borrower is indebted to Subordinating
Creditor in a total amount which, when combined with amounts owed by Borrower to
other executive officers of Borrower, does not exceed One Hundred Fifty Thousand
and 00/100 Dollars ($l50,000.00);
(b) Subordinating Creditor has not assigned nor will he assign any of
the Subordinated Debt or any interest therein; and
(c) Borrower has not and will not grant, directly or indirectly, to
Subordinating Creditor any security for the repayment of the Subordinated Debt.
4. Negative Covenants. Until all of the Senior Debt has been fully and
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finally paid:
(a) Subordinating Creditor shall take no legal action whatsoever to
collect the Subordinated Debt;
(b) Neither Borrower nor Subordinating Creditor shall take or permit
any action prejudicial to or inconsistent with the Bank's priority position over
Subordinating Creditor that is created by this Agreement; and
(c) Subordinating Creditor shall not ask for, demand, xxx for, take or
receive security for all or any part of the Subordinated Debt.
5. Bankruptcy; Rights of the Bank. Upon any distribution of any assets
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of Borrower, whether by reason of sale, reorganization, liquidation,
dissolution, arrangement, bankruptcy, receivership, assignment for the benefit
of creditors, foreclosure, or otherwise, the Bank shall be entitled to receive
payment in full of the Senior Debt prior to the payment of all or any part of
the Subordinated Debt. To enable the Bank to assert and enforce its rights
hereunder in any such proceeding or upon the happening of any such event, the
Bank or any person whom the Bank may designate are hereby irrevocably appointed
attorney-in-fact for Subordinating Creditor with full power to act in the place
and stead of Subordinating Creditor, including the right to make, present, file,
and vote such proofs of claim against Borrower on account of all or any part of
the Subordinated Debt as you 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 Debt. Subordinating Creditor will execute and deliver to
the Bank such instruments as may be required by the Bank to enforce any and all
of the Senior Debt, to effectuate the aforesaid
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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.
While this instrument remains in effect, Subordinating Creditor will not,
without the Bank's prior written consent, assign to or subordinate in favor of
any other person, firm, or corporation, any right, claim, or interest of any
kind in or to all or any part of the Subordinated Debt, or commence or join with
any other creditor in commencing any bankruptcy, reorganization, or insolvency
proceeding against Borrower.
In furtherance of the foregoing and as collateral security for the payment
and discharge in full of any and all of the Senior Debt, Subordinating Creditor
hereby transfers and assigns to the Bank the Subordinated Debt and all
collateral security therefor to which Subordinating Creditor may at any time be
entitled and all rights under all guarantees thereof and agrees to deliver to
the Bank endorsed in blank all notes or other instruments now or hereafter
evidencing the Subordinated Debt. the Bank may file one or more financing
statements concerning any security interest hereby created without the
signature of Subordinating Creditor appearing thereon.
6. Turnover of Prohibited Transfers. If any payment not permitted hereby
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on account of the Subordinated Debt is received by Subordinating Creditor, such
payment shall be delivered forthwith by Subordinating Creditor to the Bank for
application to the Senior Debt, in the form received except for the addition of
any endorsement or assignment necessary to effect a transfer of all rights
therein to the Bank. The Bank is irrevocably authorized to supply any required
endorsement or assignment which may have been omitted. Until so delivered, any
such payment shall be held by Subordinating Creditor in trust for the Bank and
shall not be commingled with other funds or property of Subordinating Creditor.
7. Waivers. Borrower and Subordinating Creditor each hereby waive any
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defense based on the adequacy of a remedy at law which might be asserted as a
bar to the remedy of specific performance of this Agreement in any action
brought therefor by the Bank. To the fullest extent permitted by law, Borrower
and Subordinating Creditor each hereby further waive presentment, demand,
protest, notice of protest, notice of default of dishonor, notice of payment or
nonpayment, and any and all other notices and demands of any kind by the Bank in
connection with all negotiable instruments evidencing all or any portion of the
Senior Debt or the Subordinated Debt to which Borrower or Subordinating Creditor
may be a party; notice of the acceptance of this Agreement by the Bank; notice
of any loans made, extensions granted or other action taken in reliance hereon
by the Bank; as this is a commercial transaction, notice of any hearing required
under any federal or state law with respect to any prejudgment remedy which the
Bank may desire to use; and all other demands and notices of every kind by the
Bank in connection with this Agreement, the Senior Debt, or the Subordinated
Debt. Subordinating Creditor assents to any release, renewal, extension,
compromise, or postponement of the time of payment of the Senior Debt, to any
substitution, exchange or release of collateral therefor and to the addition or
release of any person primarily or secondarily liable thereon.
8. Indulgences Not Waivers. Neither the failure nor any delay on the part
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of the Bank to exercise any right, remedy, power, or privilege hereunder shall
operate as a waiver thereof or give rise to an estoppel, nor be construed as an
agreement to modify the terms of this Agreement, nor shall any single or partial
exercise of any right, remedy, power, or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver by a party hereunder shall be
effective unless it is in writing and signed by the party making such waiver,
and then only to the extent specifically stated in such writing.
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9. Duration and Termination. This Agreement shall constitute a continuing
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agreement of subordination and shall remain in effect so long as Borrower is
indebted, liable or obligated to the Bank under the Loan Documents.
10. Entire Agreement. This Agreement constitutes and expresses the entire
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understanding between the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements and
understandings, inducements, or conditions, whether express or implied, oral or
written. Neither this Agreement nor any portion or provision hereof may be
changed, waived, or amended orally or in any manner other than by an agreement
in writing signed by the Bank, Borrower and Subordinating Creditor.
11. Expenses. Borrower and Subordinating Creditor jointly and severally
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agree to pay the Bank on demand all expenses of every kind, including reasonable
attorneys' and other professional fees, that the Bank may incur in enforcing any
of its rights under this Agreement.
12. Successors and Assigns. This Agreement shall inure to the benefit of
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the Bank, its successors and assigns, and shall be binding upon Borrower, its
successors and assigns, and Subordinating Creditor, and his respective heirs and
administrators.
13. Governing Law. The validity, construction, and enforcement of this
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Agreement shall be governed by the laws of the State of Connecticut and the
parties consent irrevocably to the jurisdiction of the courts of the State of
Connecticut in resolving any dispute arising from this Agreement.
14. Severability. The provisions of the Agreement are independent of and
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separable from each other. If any provision hereof shall for any reason be held
invalid or unenforceable, it is the intent of the parties that such invalidity
or unenforceability shall not affect the validity or enforceability of any other
provision hereof, and that this Agreement shall be construed as if such invalid
or unenforceable provision had never been contained herein.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed, sealed, and delivered, as of this 26th day of October, 1995.
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/s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
INFORMATION MANAGEMENT ASSOCIATES, INC.
By /s/ Xxxx X. Xxxxxxx
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Its Chairman & CFO
(signatures continued next page)
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INFORMATION MANAGEMENT ASSOCIATES LIMITED
By
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Its President
By /s/ Xxxx X. Xxxxxxx
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Its Director
(SEAL)
PEOPLE'S BANK
By /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
Its Vice President
STATE OF CONNECTICUT
ss.
COUNTY OF
On this 26th day of October, 1995, personally appeared XXXX X. XXXXXXX,
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signer and sealer of the foregoing instrument, and acknowledged the same to be
his free act and deed, before me.
/s/ SIGNATURE APPEARS HERE
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Notary Public
My Commission Expires:
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