EXHIBIT 10.25
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMIENT (this "AGREEMENT") is made as of the 30th
day of September, 1996, by and between Bank of America Texas, N.A. ("BOFA") and
Marwit Capital Company, L.P. ("MARWIT") and acknowledged by New West
Communications, Inc., a Delaware corporation ("BORROWER").
RECITALS
WHEREAS, BofA has made, or in the future may make, credit accommodations
available to Borrower, pursuant to the terms and provisions of that certain
Business Loan Agreement (Receivables and Inventory) dated as of September 30,
1996, by and between BofA and Borrower (the "LOAN AGREEMENT").
WHEREAS, Marwit has made credit accommodations available to Borrower,
pursuant to the terms and provisions of that certain Senior Convertible Note,
dated as of September 30, 1996, in the principal amount of $1,250,000.00, by
Borrower for the benefit of Marwit (the "SUBORDINATED NOTE").
WHEREAS, in order to induce BofA to make the credit accommodations
described above available to Borrower, Marwit has agreed to subordinate certain
of its rights and claims now existing or hereafter arising against Borrower to
the rights and claims of BofA now existing or hereafter arising against
Borrower, all in accordance with the terms and provisions of this Agreement.
WHEREAS, but for the agreements of Marwit contained herein BofA would not
make the credit accommodations available to Borrower.
WHEREAS, the parties hereto are entering into this Agreement in order to
set forth their agreements as to payment of the Senior Indebtedness (hereinafter
defined) and the Junior Indebtedness (hereinafter defined) and their agreements
as to certain other matters, including but not limited to lien priorities.
NOW, THEREFORE, for and in consideration of the premises and the mutual
agreements contained herein, the parties hereto hereby agree as follows:
AGREEMEENT
ARTICLE I - DEFINITIONS
As used in this Agreement, the terms defined above shall have their
respective meanings set forth above and the following terms shall have the
following meanings:
"COLLATERAL" shall mean any and all property which now constitutes
or hereafter will constitute collateral or other security for payment of
the Senior Indebtedness or the Junior Indebtedness.
"DISTRIBUTION" by any Person shall mean (a) with respect to any
stock issued by such Person, the retirement, redemption, purchase or other
acquisition for value of any such stock, (b) the declaration or payment of
any dividend or other distribution on or with respect to any such stock,
(c) any loan or advance by such Person to, or other investment by such
Person in, the holder of any such stock, and (d) any other payment (other
than ordinary salaries to employees or advances made in the ordinary
course of business to employees for travel or other expenses incurred in
the ordinary course of business) by such Person to or for the benefit of
the holder of any such stock.
"FEDERAL BANKRUPTCY CODE" shall have the meaning set forth in
Article VIII of this Agreement.
"JUNIOR CREDITOR" shall mean Marwit and its successors and assigns.
"JUNIOR DOCUMENTS" shall mean any and all agreements, documents and
instruments evidencing, governing or executed or delivered in connection
with the Junior Indebtedness, including, without limitation, the
Subordinated Note.
"JUNIOR INDEBTEDNESS" shall mean any and all indebtedness,
obligations and liabilities of every kind and character of Borrower now or
hereafter owing to Junior Creditor, including, without limitation, the
indebtedness evidenced and to be evidenced by the Junior Documents,
whether such indebtedness, obligations and liabilities are direct or
indirect, primary or secondary, joint, several or joint and several, fixed
or contingent and whether incurred by Borrower as maker, endorser,
guarantor or otherwise.
"PERMITTED PAYMENTS" shall have the meaning set forth in Article IV
of this Agreement.
"PERSON" shall mean and include an individual, a partnership, a
corporation, a business trust, a joint stock company, a trust, an
unincorporated association, a joint venture or other entity or a
governmental authority.
"PROCEEDS" shall have the meaning assigned to it under the Uniform
Commercial Code, shall also include "products" (as defined in the Uniform
Commercial Code), and, in any event, shall include, but not be limited to
(a) any and all proceeds of any insurance, indemnity, warranty, letter of
credit or guaranty or collateral security payable to any grantor from time
to time with respect to any of the Collateral, (b) any and all payments
(in any form whatsoever) made or due and payable to the owner of the
Collateral from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of
the Collateral by any
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governmental body, authority, bureau or agency (or any Person acting under
color of governmental authority) and (c) any and all other amounts from
time to time paid or payable under or in connection with any of the
Collateral.
"SENIOR CREDITOR" shall mean BofA and its successors and assigns.
"SENIOR DOCUMENTS" shall mean any and all agreements, documents and
instruments evidencing, governing or executed or delivered in connection
with the Senior Indebtedness or the Senior Creditor's interests in the
Collateral, including, without limitation, the Loan Agreement and that
certain Security Agreement (Receivables, Inventory and Equipment) by and
between Borrower and Senior Creditor.
"SENIOR INDEBTEDNESS" shall mean any and all indebtedness,
obligations and liabilities of every kind and character of Borrower now or
hereafter owing to Senior Creditor pursuant to or evidenced by the Senior
Documents, whether such indebtedness, obligations and liabilities are
direct or indirect, primary or secondary, joint, several or joint and
several, fixed or contingent and whether incurred by Borrower as maker,
endorser, guarantor or otherwise, not to exceed Three Million and No/100
Dollars ($3,000,000.00).
ARTICLE II - RIGHTS IN COLLATERAL
2.1 PRIORITIES REGARDING COLLATERAL. Any and every lien and security
interest in the Collateral in favor of or held for the benefit of the Senior
Creditor has and shall have priority over any lien or security interest that
Junior Creditor might have or acquire in the Collateral notwithstanding any
statement or provision contained in the Junior Documents or otherwise to the
contrary and irrespective of the time or order of filing or recording of
financing statements, deeds of trust, mortgages or other notices of security
interests, liens or assignments granted pursuant thereto, and irrespective of
anything contained in any filing or agreement to which any party hereto or its
respective successors and assigns may now or hereafter be a party, and
irrespective of the ordinary rules for determining priorities under the Uniform
Commercial Code or under any other law governing the relative priorities of
secured creditors. Junior Creditor will note on any and all filings that it
makes pursuant to the Uniform Commercial Code that its interest in the
Collateral is subordinated to the interest held by Senior Creditor.
2.2 MANAGEMENT OF COLLATERAL. Senior Creditor shall have the exclusive
right to manage, perform and enforce the terms of the Senior Documents with
respect to the Collateral, to exercise and enforce all privileges and rights
thereunder according to its discretion and the exercise of its business judgment
including, but not limited to, the exclusive right to take or retake possession
of the Collateral and to hold, prepare for sale, process, sell, lease, dispose
of, or liquidate the Collateral, pursuant to a foreclosure or otherwise.
Notwithstanding any rights or remedies available to Junior Creditor under
applicable law or under any document or instrument evidencing, securing or
otherwise executed in connection with the incurrence of the obligations
contemplated by the Junior Documents, Junior Creditor shall nor foreclose upon
its
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security interest in any of the Collateral, or exercise similar remedies with
respect thereto, so long as any of the Senior Indebtedness shall continue to
exist, and only the Senior Creditor shall have the right to restrict or permit,
or approve or disapprove, the sale, transfer or other disposition of Collateral.
Junior Creditor will not in any manner interfere with Senior Creditor's security
interests in the Collateral unless and until Borrower has satisfied in full the
Senior Indebtedness and Senior Creditor has given Junior Creditor written notice
thereof. Junior Creditor waives notice of, and agrees not to challenge the
method, manner, time, place or terms, of any disposition of the Collateral by
Senior Creditor. Accordingly, should Senior Creditor elect to exercise its
rights and remedies with respect to any of the Collateral, Senior Creditor may
proceed to do so without regard to any interest of Junior Creditor, and Junior
Creditor waives any claims that it may have against Senior Creditor for any
disposition of the Collateral. Junior Creditor agrees, whether or not a default
has occurred in the payment of any indebtedness or the performance of any other
obligations to it, that any liens on and security interests in the Collateral or
any portion thereof that it might have or acquire shall automatically be fully
released ipso facto as to all indebtedness and other obligations secured thereby
owing to Junior Creditor if and when Senior Creditor releases its lien in and
security interest on such Collateral in the event of any sale, disposition or
other realization by Senior Creditor (or any agent therefor) upon such
Collateral.
ARTICLE III - PROCEEDS
3.1 DISTRIBUTION OF PROCEEDS OF COLLATERAL. At any time during which all
or any part of the Senior Indebtedness remains outstanding, and whether or not
the same is then due and payable, the Proceeds of any sale, disposition or other
realization by Senior Creditor (or any agent therefor) upon all or any pan of
the Collateral shall be applied first to the payment in full of all Senior
Indebtedness in such order as Senior Creditor shall determine in its sole
discretion.
3.2 CONTINGENT OBLIGATIONS. For purposes of distributing the Proceeds of
Collateral pursuant to this ARTICLE III, the portion of Senior Indebtedness
consisting of loans or advances not yet made by Senior Creditor to Borrower
under the Senior Documents (including, but not limited to, reimbursement for
fees, costs and expenses) shall be considered Senior Indebtedness then
outstanding, and the Senior Creditor shall have the right to retain, in a cash
collateral account, cash collateral equal to the amount thereof which Senior
Creditor determines, in its sole good faith discretion, may arise or exist from
time to time.
3.3 HOLDING OF PROCEEDS IN TRUST. Except as provided for in Article IV of
this Agreement, in the event Junior Creditor receives Proceeds of the
Collateral, Junior Creditor shall be deemed to hold all of such Proceeds in bust
for the benefit of Senior Creditor until the proper application thereof in
accordance with SECTION 3.1 hereof. Junior Creditor shall not seek to challenge
the validity, enforceability, priority or perfection of any of the Senior
Documents if the purpose or effect thereof would in any manner defeat or delay
the distribution of the Proceeds of any Collateral in the manner set forth in
SECTION 3.1 hereof.
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ARTICLE IV - SUBORDINATION
Junior Creditor covenants and agrees that the Junior Indebtedness,
howsoever evidenced and whether now existing or hereafter incurred, shall be
subordinate and junior in right of payment, to the extent and in the manner
hereinafter set forth, to all Senior Indebtedness:
(a) The holder of the Senior Indebtedness shall first be finally and
irrevocably paid in cash an aggregate amount equal to the principal thereof and
termination fees, if any, interest at the time due thereon, and all other costs,
fees, expenses and/or obligations now or hereafter owing thereunder, before any
payment or Distribution of any character, whether in cash, securities or other
property, shall be made on account of the Junior Indebtedness or otherwise to or
for the benefit of Junior Creditor; and any payment or Distribution of any
character, whether in cash, securities or other property, which would otherwise,
but for the provisions of this ARTICLE IV, be payable or deliverable in respect
of the Junior Indebtedness or otherwise shall be paid or delivered directly to
the holder of the Senior Indebtedness (or its duly authorized representatives),
until all the Senior Indebtedness shall have been paid in full.
(b) Notwithstanding the provisions of SUBPARAGRAPH (A) of this
ARTICLE IV, Borrower may (i) pay interest on the unpaid principal balance of the
Subordinated Note on a monthly basis in arrears; (ii) make regularly scheduled
payments of principal on the terms and conditions set forth in the Subordinated
Note in effect on the date hereof; and (iii) make mandatory prepayments of
principal on the terms and conditions set forth in the Subordinated Note in
effect on the date hereof, but only in the event that the Senior Indebtedness
shall have been paid in fall prior to such time (the "PERMITTED PAYMENTS");
PROVIDED, HOWEVER, that as a condition precedent to Borrower's right to make
(and the Junior Creditor's right to receive) any and all such Permitted
Payments, there shall not have occurred or then exist a default or event of
default under any of the Senior Indebtedness or any of the Senior Documents, or
an event or condition which with notice, lapse of time or the making of such
payment would constitute a default or event of default under any of the
foregoing.
(c) In the event that Junior Creditor exercises its rights under the
Subordinated Note to purchase stock of Borrower and to apply balances on the
Subordinated Note against the purchase price of such stock, Junior Creditor
shall not xxx for, collect or receive any Distribution on account of such stock
in amounts that would exceed payments permitted herein on the principal amount
of the Subordinated Note used to purchase such stock, until such time as the
Senior Indebtedness has been paid in full.
(d) Junior Creditor agrees to promptly notify the Senior Creditor in
writing of any default or event of default on any Junior Indebtedness or
otherwise or under any of the Junior Documents and further agrees not to
exercise any right or remedy or take any enforcement action with respect to any
default or event of default on any of the Junior Indebtedness or otherwise or
under any of the Junior Documents until the earliest of (a) the expiration of
120 days following Senior Creditor's receipt of Junior Creditor's notice of
default, (b) the exercise by Senior Creditor of any acceleration or foreclosure
available to it upon a
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default or event of default with respect to the Senior Indebtedness, or (c) at
such time as the Senior Indebtedness has been paid in full. Without limiting any
of the foregoing, any failure of Borrower to perform any of its obligations to
Junior Creditor as a result of any of the prohibitions, restrictions or
limitations set forth in this Agreement shall not constitute the basis for a
default or event of default on any Junior Indebtedness or under any Junior
Documents.
(e) No reimbursement, payment, direct or indirect, or disbursement
of other property or assets of Borrower shall be made by Borrower on account of
the Junior Indebtedness or otherwise or received, accepted, retained or applied
by Junior Creditor (except for the account and benefit of Senior Creditor, which
shall be held in trust for Senior Creditor or except for Permitted Payments as
allowed in SUBPARAGRAPH (b) of this ARTICLE IV) until such time as the Senior
Indebtedness has been finally and irrevocably paid in full in cash.
(f) Without affecting Junior Creditor's obligations set forth in
this Agreement not to exercise any remedy as set forth in this Agreement, in the
event that Junior Creditor receives any payment of any character, whether in
cash, securities, or other properties, that would, but for the provisions of
this Agreement, be payable or deliverable in respect of the Junior Indebtedness,
such cash, securities or other properties shall be held in trust for the benefit
of the holder of the Senior Indebtedness and shall be paid or delivered to the
holder of the Senior Indebtedness (or its authorized representatives), in the
proportions in which it holds same, until all the Senior Indebtedness shall have
been paid in full.
(g) The provisions of this Agreement are and are intended solely for
the purpose of defining the relative rights of the holder of the Junior
Indebtedness, on the one hand, and the holder of the Senior Indebtedness on the
other hand. Nothing contained in this Agreement is intended to or shall impair,
as between Borrower and its creditors other than the holder of the Senior
Indebtedness and the holder of the Junior Indebtedness, the obligation of
Borrower which is absolute and unconditional, to pay to the holder of the Junior
Indebtedness the principal thereof and interest thereon as and when the same
shall become due and payable in accordance with its terms, or is intended to or
shall affect the relative rights against Borrower of the holder of the Senior
Indebtedness.
(h) No right of any present or future holder of any of the Senior
Indebtedness to enforce the subordination as herein provided shall at any time
in any way be prejudiced or impaired by any act or failure to act on the part of
Borrower or by any act in good faith or failure to act in good faith by any such
holder, or by any noncompliance by Borrower with the covenants, agreements and
conditions of the Junior Indebtedness, regardless of any knowledge thereof any
such holder may have or be otherwise charged with.
(i) Senior Creditor shall have no obligation to preserve the rights
of the Collateral against any prior parties or to marshal any of the Collateral
for the benefit of any Person.
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ARTICLE V - BENEFIT OF AGREEMENT; AMENDMENT
This Agreement shall constitute a continuing offer to all persons who, in
reliance upon such provisions, become a Senior Creditor, and such provisions are
made for the benefit of each Senior Creditor and each of them may enforce such
provisions. Junior Creditor agrees not to assign or transfer, at any time this
Agreement remains in effect, any rights, claim or interest of any kind in or to
any Junior Indebtedness without first notifying Senior Creditor and making such
assignment expressly subject to this Agreement. The provisions of the Junior
Documents as in effect on the date hereof may not be amended or modified in any
respect without the prior written consent of Senior Creditor.
ARTICLE VI - FURTHER ASSURANCES
Each of the parties hereto hereby agrees to promptly execute and deliver
to the other parties hereto any and all such further instruments and documents
and take such further action as such other parties may reasonably request in
order to fully effect the purposes of this Agreement.
ARTICLE VII - REPRESENTATIONS AND WARRANTIES
7.1 AUTHORITY; BINDING OBLIGATION. Each of the parties hereto hereby
represents and warrants to the other party hereto that:
(a) such party has full power, authority and legal right to execute,
deliver and perform this Agreement, and has taken all necessary corporate action
to authorize the execution, delivery and performance of this Agreement; and
(b) this Agreement constitutes a legal, valid and binding obligation
of such party enforceable against it in accordance with its terms except as
enforceability may be limited by applicable bankruptcy, insolvency, moratorium
or other similar laws affecting creditors rights generally and except as
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity).
7.2 TOTAL INDEBTEDNESS. Junior Creditor represents and wan-ants to Senior
Creditor that the Subordinated Note in effect as of the date hereof identifies
all of Borrower's existing indebtedness and obligations to Junior Creditor.
ARTICLE VIII - BANKRUPTCY
Junior Creditor agrees not to commence, or to join with any other creditor
in commencing, any case under Title 11 of the United States Code, as amended
and/or superseded (the "FEDERAL BANKRUPTCY CODE") by or against Borrower or any
of its property without the prior
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written consent of Senior Creditor. The provisions of this Agreement shall
continue in frill and effect, notwithstanding the commencement of a case under
the Federal Bankruptcy Code by or against Borrower. In furtherance of the
foregoing, if Junior Creditor receives any property of, or payments from
Borrower after the commencement of such a case on account of a secured claim
which is subordinated by the terms of this Agreement (whether as "adequate
protection" payments or otherwise), Junior Creditor shall immediately turn such
property or payments over to the Senior Creditor. To the extent that Junior
Creditor has or acquires any rights under Section 363 or Section 364 of the
Federal Bankruptcy Code with respect to the Collateral, Junior Creditor hereby
agrees not to assert such rights without the prior written consent of the Senior
Creditor. The Junior Creditor hereby grants to the Senior Creditor the right,
but Senior Creditor shall not be obligated, to file, prove and vote claims on
account of the Junior Indebtedness in any receivership, bankruptcy, or other
proceeding under the Federal Bankruptcy Code commenced by or against Borrower.
Notwithstanding the foregoing, Senior Creditor's rights to file and prove claims
on account of the Junior Indebtedness shall vest if and only if Junior Creditor
has not elected to file and prove its claim on account of the Junior
Indebtedness within thirty (30) days prior to the bar date for claims or the
date fixed for such filings; however, Senior Creditor shall have the right to
vote the claims on account of the Junior Indebtedness in any event.
ARTICLE IX - MISCELLANEOUS
9.1 NO WAIVER, CUMULATIVE REMEDIES. No failure to exercise, and no delay
in exercising on the part of any party hereto, any right, power or privilege
under this Agreement shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege under this Agreement preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies provided in this Agreement are cumulative
and shall not be exclusive of any rights or remedies provided by law.
9.2 NOTICES. All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by telegraph,
telecopier, or telex) and, unless otherwise expressly provided herein, shall be
deemed to have been duly given or made when delivered by hand, or five days
after being deposited in the mail, postage prepaid, or, in the case of
telegraphic notice, when delivered to the telegraph company, or in the case of
telex notice, when sent, answer back received, addressed as set forth below or
to such address or other address as may be hereafter notified by the respective
parties hereto:
To Senior Creditor Bank of America Texas, N.A.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxx Xxxx
Facsimile: 713/652-3628
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With a copy to Xxxxxx & Xxxx L.L.P.
Three Xxxxx Center
000 Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
ATN: Xxxx X. Xxxxx
Facsimile: 713/754-5206
To Junior Creditor Marwit Capital Company, L.P.
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
ATN: Xxxxxxx X. Xxxxx
Facsimile: 714/720-8077
9.3 GOVERNING LAW. TIES AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
TEXAS AND SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF THE PARTIES HERETO
AND THEIR RESPECTIVE SUCCESSORS, TRANSFEREES AND ASSIGNS.
9.4 AMENDMENTS AND WAIVERS. Neither this Agreement nor any of the terms
hereof may be amended, waived, discharged or terminated unless such amendment,
waiver, discharge or termination is in writing signed by each of the parties
hereto.
9.5 EXCULPATION. Neither the Senior Creditor nor its agents have made to
the other parties hereto nor do any of them hereby or otherwise make any
representations or warranties, express or implied, nor do they assume any
liability with respect to (i) obligors under any instruments of guarantee; (ii)
the enforceability, validity, value or collectibility of the Senior
Indebtedness, any Collateral therefor, or any guarantee or security which may
have been granted to any of them in connection with the Senior Documents; or
(iii) Borrower's title or right to transfer any collateral or security. No party
hereto shall be liable to any other party hereto for any action or failure to
act or any error of judgment, negligence, or mistake or oversight whatsoever on
its part or its respective agents, officers, employees or attorneys with respect
to any transaction relating to the Collateral or this Agreement. To the maximum
extent permitted by law, except as otherwise provided herein, Junior Creditor
waives any claim it might have against Senior Creditor with respect to, or
arising out of, the handling of the Collateral (including, without limitation,
any such claim based upon the timing or method of realizing upon such
Collateral).
9.6 THIRD PARTY RIGHTS. This Agreement is solely for the benefit of the
parties hereto and their respective successors and assigns, and no other Person
shall have any right, benefit, priority or other interest under, or because of
the existence of, this Agreement.
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9.7 TERMINATION. This Agreement shall terminate upon the final and
indefeasible payment in full of all the Senior Indebtedness and the termination
of all of the Senior Documents.
9.8 COUNTERPARTS. This Agreement may be executed by one or more of the
parties hereto in any number of separate counterparts, each of which shall be an
original, but all of which shall constitute but one agreement.
9.9 LEGEND. The Subordinated Note and all other promissory notes issued in
connection with the Junior Indebtedness shall contain a legend substantially in
the form of the following:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY
STATE SECURITIES LAWS AND THUS MAY NOT BE TRANSFERRED UNLESS REGISTERED
UNDER THAT ACT AND SUCH LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION IS
AVAILABLE. THIS NOTE AND THE INDEBTEDNESS EVIDENCED BY THIS NOTE ARE
SUBORDINATED, IN RIGHT OF PAYMENT, TO THE PRIOR PAYMENT IN FULL OF THE
INDEBTEDNESS OF THE COMTANY TO BANK OF AMERICA TEXAS, N.A. AS SENIOR
LENDER ("SENIOR LENDER") IN ACCORDANCE WITH THE TERMS OF THE SUBORDINATION
AGREEMENT, DATED OF EVEN DATE HEREWITH, BETWEEN SENIOR LENDER AND HOLDER."
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their proper and duly authorized officers as of the day and
year first above written.
SENIOR CREDITOR:
BANK OF AMERICA TEXAS, N.A.
By: _______________________
Name: _____________________
Title: ____________________
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JUNIOR CREDITOR:
MARWIT CAPITAL COMPANY, L.P.
By: Marwit Associates, Inc., its general
partner
By: _______________________
Name: _____________________
Title: ____________________
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