Contract
THIS INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE
SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN ANNEX A
ATTACHED HERETO TO THE SENIOR INDEBTEDNESS (AS DEFINED IN ANNEX A
ATTACHED HERETO) OWED BY MAKER (AS DEFINED BELOW) AND THE OTHER
CREDIT PARTIES (AS DEFINED IN THE CREDIT AGREEMENTS REFERRED TO
BELOW) PURSUANT TO (A) THAT CERTAIN FIRST LIEN CREDIT AND GUARANTY
AGREEMENT DATED AS OF MAY 4, 2018 (THE “FIRST LIEN CREDIT AGREEMENT”)
AMONG FUSION CONNECT, INC. (“PARENT”), MAKER AND CERTAIN OTHER
SUBSIDIARIES OF PARENT, WILMINGTON TRUST, NATIONAL ASSOCIATION, AS
ADMINISTRATIVE AGENT AND COLLATERAL AGENT, AND THE LENDERS FROM
TIME TO TIME PARTY THERETO, AS THE FIRST LIEN CREDIT AGREEMENT HAS
BEEN AND HEREAFTER MAY BE AMENDED, RESTATED, AMENDED AND RESTATED,
SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, (B) THAT
CERTAIN SECOND LIEN CREDIT AND GUARANTY AGREEMENT DATED AS OF MAY
4, 2018 (THE “SECOND LIEN
CREDIT AGREEMENT” AND, TOGETHER WITH THE FIRST LIEN
CREDIT AGREEMENT, THE “CREDIT AGREEMENTS”) AMONG PARENT,
MAKER AND CERTAIN OTHER SUBSIDIARIES OF PARENT, WILMINGTON TRUST,
NATIONAL ASSOCIATION, AS ADMINISTRATIVE AGENT AND COLLATERAL AGENT,
AND THE LENDERS FROM TIME TO TIME PARTY THERETO, AS THE SECOND LIEN
CREDIT AGREEMENT HAS BEEN AND HEREAFTER MAY BE AMENDED, RESTATED,
AMENDED AND RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME
TO TIME, AND (C) THE OTHER SENIOR INDEBTEDNESS (AS DEFINED IN ANNEX
A ATTACHED HERETO); AND EACH HOLDER OF THIS INSTRUMENT, BY ITS
ACCEPTANCE HEREOF, IRREVOCABLY AGREES TO BE BOUND BY THE
SUBORDINATION PROVISIONS SET FORTH IN ANNEX A ATTACHED
HERETO.
|
Date: May 4, 2018
|
Amount $1,276,336.68
|
AMENDED AND RESTATED SUBORDINATED PROMISSORY NOTE
FOR VALUE RECEIVED, Fusion BCHI Acquisition LLC
(as successor in interest by merger to Birch Communications
Holdings, Inc.), a Delaware limited liability company
(“Maker”),
hereby promises to pay to R. Xxxxx Xxxxxx (together with his heirs,
successors and permitted assigns, the “Holder”)
at his offices, or at such other place as Holder may from time to
time direct, in lawful money of the United States, the principal
sum of ONE MILLION TWO HUNDRED SEVENTY SIX THOUSAND THREE HUNDRED
THIRTY-SIX and 68/100 DOLLARS ($1,276,336.68), or such lesser amount as shall then be
outstanding hereunder, on March 31, 2019, with interest (computed
on the basis of a 360-day year payable for the number of days
actually elapsed) on the unpaid balance thereof at the rate of 12%
per annum until the principal hereof shall have become due and
payable. Subject in all respects to the subordination
provisions set forth in Annex A attached hereto, all interest hereon shall be payable quarterly in
arrears on each Interest Payment Date (as defined
below).
Subject
in all respects to the subordination provisions set forth in Annex
A attached hereto, accrued and unpaid interest shall be payable on
the last day of each of March, June, September and December of each
year (each an “Interest Payment
Date”) commencing June 30, 2018.
Subject
in all respects to the subordination provisions set forth in Annex
A attached hereto, the outstanding principal amount hereof will be
due and payable as follows: (i) two consecutive installments of
$425,445.56 shall be due and payable on September 30, 2018 and
December 31, 2018, respectively; and (ii) a final installment of
the entire remaining outstanding principal balance shall be due and
payable in full on March 31, 2019, together with all accrued but
unpaid interest thereon.
Events of
Default. Each of the following
shall constitute an “Event of
Default”:
(i)
Maker fails to pay any amount due hereunder within ten (10) days of
demand by Holder therefor;
(ii) Maker
fails to comply with or to perform in accordance with, or otherwise
breaches, any other provision contained in this Note that is not
cured within thirty (30) days after such failure first occurs;
or
(iii)
the execution of an assignment for the
benefit of creditors by Maker or the filing or commencement of any
proceedings for relief under any applicable bankruptcy laws or
insolvency laws or any laws relating to the relief of debtors,
readjustment of any indebtedness, reorganization, composition,
extension of debt, or the appointment of a trustee for, by or
against Maker.
Subject
in all respects to the subordination provisions set forth in Annex
A attached hereto, upon and after the occurrence of an Event of
Default, Holder shall have the right, without presentment, notice,
or demand of any kind, to accelerate this Note and to declare all
of the obligations of Maker under this Note due and payable
immediately, and to exercise all of Holder’s rights and
remedies as provided in this Note or under applicable law;
provided that, upon
the occurrence of an Event of Default under clause (iii) above, all
obligations of Maker under this Note shall automatically become due
and payable immediately. Maker hereby waives presentment, demand
for payment, notice of nonpayment, protests, notice of protests,
notice of dishonor and all other notices in connection with this
Note.
-2-
Notwithstanding any
other provision contained in this Note, the aggregate interest rate
per annum charged with respect to this Note (including, without
limitation, all charges and fees deemed to be interest pursuant to
applicable law), shall not exceed the maximum rate per annum
permitted by applicable law. In the event that the aggregate
interest rate per annum payable with respect to this Note
(including, without limitation, all charges and fees deemed to be
interest under applicable laws) exceeds the maximum legal rate, (i)
Maker shall only pay interest at the maximum permitted rate, (ii)
Maker shall continue to make such interest payments at the maximum
permitted rate until all such interest payments and other charges
and fees payable hereunder (in the absence of such legal
limitations) have been paid in full, (iii) any interest in excess
of the maximum permitted rate received by the Holder shall, at the
Holder’s option, be applied to a prepayment of the principal
amount of this Note or refunded to Maker, and (iv) neither
Maker nor any other Person shall have any right of action against
the Holder for any damages or penalties arising out of the payment
or collection of any such excess interest. In determining whether
the interest contracted for, charged, or received with respect to
this Note exceeds the maximum permitted rate, the Holder may, to
the extent permitted by applicable law, (a) characterize any
payment that is not principal as an expense, fee, or premium rather
than interest, (b) exclude voluntary prepayments and the effects
thereof and (c) amortize, prorate, allocate, and spread in equal or
unequal parts the total amount of interest throughout the
contemplated term of this Note.
Payments of
principal of and interest on this Note are to be made in lawful
money of the United States of America at the address shown in the
register maintained by the Holder for such purpose or at such other
place as the Holder shall have designated.
This
Note re-evidences certain outstanding obligations previously
evidenced by that certain Subordinated Promissory Note dated
October 28, 2016, in the original face amount of $1,825,000.00
issued by the Maker to Holder (the “Previous
Note”). The face amount of this Note reflects a
principal payment made on the date hereof in the amount of
$912,500. This Note is not in payment or satisfaction of the
Previous Note, nor is this Note in any way intended to constitute a
novation of the Previous Note.
THIS
NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW
OF THE STATE OF NEW YORK INCLUDING SECTIONS 5-1401 AND 5-1402 OF
THE GENERAL OBLIGATIONS THEREOF, BUT OTHERWISE WITHOUT REFERENCE TO
THE CHOICE-OF-LAW PRINCIPLES OF THE LAW THEREOF.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[Bircan
Sub Note – Xxxxxx]
-3-
IN
WITNESS WHEREOF, the parties have duly executed, or have caused
their duly authorized officer or representative to execute, this
Note as of the date first above written.
MAKER:
FUSION
BCHI ACQUISITION LLC
By: /s/ Xxxxx X. Xxxxx
Name:
Xxxxx X. Xxxxx
Title:
Chief Financial Officer
Address:
000
Xxxxxxxxx Xxx., Xxxxx 0000
Xxx
Xxxx, Xxx Xxxx 00000
[SIGNATURES CONTINUE ON NEXT PAGE]
[Bircan
Sub Note – Xxxxxx]
HOLDER:
/s/ X. Xxxxx
Godsey___________________
R.
Xxxxx Xxxxxx
Address:
000
Xxxxxxxxxx Xxxxx Xxxxxxx XX, Xxxxx 000
Xxxxxxx,
Xxxxxxx 00000
[Bircan
Sub Note – Xxxxxx]
Annex
A
to
Subordinated Promissory Note
SUBORDINATION PROVISIONS
1. Definitions.
1.1
General Terms. As
used in these Subordination Provisions, the following terms shall
have the following meanings:
“Bankruptcy
Code” means Title 11 of the United States Code
entitled “Bankruptcy”.
“Collateral”
means, collectively, (a) the “Collateral” as such term
is defined in the First Lien Credit Agreement, (b) the
“Collateral” as such term is defined in the Second Lien
Credit Agreement and (c) any other property (including equity
interests) on which liens are purported to be granted pursuant to
any Senior Indebtedness Agreement as security for any Senior
Indebtedness.
“Distribution”
means any payment, distribution or dividend (whether in respect of
principal, interest, fees or otherwise), whether in cash, in kind,
securities or any other property, or security for any such payment,
distribution or dividend.
“Event” has the
meaning set forth in Section 2.2(c).
“First Lien
Agent” means Wilmington Trust, National Association,
in its capacity as administrative agent and collateral agent under
the First Lien Credit Agreement, and its successors and assigns in
such capacity.
“First Lien Credit
Agreement” means the First Lien Credit and Guaranty
Agreement dated as of May 4, 2018, among Parent, Maker, certain
other subsidiaries of Parent from time to time party thereto, the
lenders from time to time party thereto and the First Lien Agent,
as the foregoing now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
Parent” means
Fusion Connect, Inc., a Delaware corporation, and its successors
and assigns.
“Second Lien
Agent” means Wilmington Trust, National Association,
in its capacity as administrative agent and collateral agent under
the Second Lien Credit Agreement, and its successors and assigns in
such capacity.
“Second Lien Credit
Agreement” means the Second Lien Credit and Guaranty
Agreement dated as of May 4, 2018, among Parent, Maker, certain
other subsidiaries of Parent from time to time party thereto, the
lenders from time to time party thereto and the Second Lien Agent,
as the foregoing now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
“Senior
Creditors” means, collectively, (a) the “Secured
Parties” as such term is defined in the First Lien Credit
Agreement, (b) the “Secured Parties” as such term is
defined in the Second Lien Credit Agreement, (c) any other holders
of Senior Indebtedness and (d) the Senior Representatives of any of
the foregoing.
Annex
A-1
“Senior
Default” means a Default or an Event of Default (or
any comparable term) under (and as defined in) any Senior
Indebtedness Agreement.
“Senior
Indebtedness” means, collectively, (a) all
“Obligations” as such term is defined in the First Lien
Credit Agreement, (b) all “Obligations” as such term is
defined in the Second Lien Credit Agreement and (c) all obligations
of every nature of Parent, Maker and each of Parent’s other
subsidiaries under (i) any “Permitted Second Lien
Indebtedness”, “Permitted Credit Agreement Refinancing
Indebtedness” or “Permitted Incremental Equivalent
Indebtedness” in each case as such term is defined in the
First Lien Credit Agreement or (ii) any “Permitted Section
6.1(e) Indebtedness”, “Permitted Credit Agreement
Refinancing Indebtedness” or “Permitted Incremental
Equivalent Indebtedness” in each case as such term is defined
in the Second Lien Credit Agreement, whether for principal,
interest (including default interest accruing pursuant to the terms
of the Senior Indebtedness Agreements in respect of such Senior
Indebtedness and interest (including such default interest) that
would continue to accrue pursuant to such Senior Indebtedness
Agreements on any such obligations after the commencement of any
proceeding under the Bankruptcy Code or other applicable law or the
occurrence of any other Event with respect to Parent, Maker or such
other subsidiary, whether or not such interest is allowed or
allowable against Parent, Maker or such other subsidiary in any
such proceeding), reimbursement obligations, fees (including
prepayment fees), expenses, indemnification or otherwise;
provided that
Senior Indebtedness shall not include any indebtedness of Parent,
Maker or any of Parent’s other subsidiaries described in this
clause (c) that is contractually subordinated in right of payment
to any other indebtedness of Parent, Maker or such other
subsidiary. Senior Indebtedness shall continue to constitute Senior
Indebtedness, notwithstanding the fact that such Senior
Indebtedness or any claim for such Senior Indebtedness is
subordinated, avoided or disallowed under the Bankruptcy Code or
other applicable law.
“Senior Indebtedness
Agreements” means, collectively, (a) the First Lien
Credit Agreement, the other “Credit Documents” as such
term is defined in the First Lien Credit Agreement executed and/or
delivered in connection with the First Lien Credit Agreement as
from time to time in effect, (b) the Second Lien Credit
Agreement and the other “Credit Documents” as such term
is defined in the Second Lien Credit Agreement executed and/or
delivered in connection with the Second Lien Credit Agreement as
from time to time in effect and (c) any other credit agreement,
indenture or other agreement or instrument evidencing or governing
the rights of the holders from time to time of any Senior
Indebtedness, as all of the foregoing now exist or may hereafter be
amended, modified, supplemented, extended, renewed, restated or
replaced.
“Senior
Representatives” means, collectively, (a) the First
Lien Agent, (b) the Second Lien Agent and (c) any other agent,
trustee or other representative of the holders from time to time of
any Senior Indebtedness.
“Subordinated
Indebtedness” means all principal, interest and other
amounts payable or chargeable in connection with the Subordinated
Note and any other Subordinated Lending Agreement.
“Subordinated
Lender” means the Holder and its heirs, successors and
assigns. References to the Subordinated Lender as “it”
is intended to mean the Subordinated Lender notwithstanding that
the Subordinated Lender is a natural person.
x
A-2
“Subordinated Lending
Agreements” means, collectively, (a) the Subordinated
Note, including the Subordination Provisions, and (b) all
agreements, documents and instruments now or at any time hereafter
executed and/or delivered by Maker or any other Person to, with or
in favor of the Subordinated Lender in connection therewith or
related thereto, as all of the foregoing now exist or may hereafter
be amended, modified, supplemented, extended, renewed, restated or
replaced.
“Subordinated
Note” means the Amended and Restated Subordinated
Promissory Note, dated as of May 4, 2018, executed by Maker,
payable to the order of the Subordinated Lender, in an aggregate
principal amount of up to $1,475,316.78, as may be amended, amended
and restated, refinanced, extended, supplemented and/or otherwise
modified from time to time in accordance with the terms of the
Subordinated Note and the Senior Indebtedness
Agreements.
“Subordination
Provisions” means the provisions of this Annex
A.
1.2 Other
Terms. Capitalized terms used but not defined herein shall
have the meanings assigned thereto in the Subordinated
Note.
2.
Covenants. Each of Maker and
the Subordinated Lender, and any transferee of any Subordinated
Indebtedness, hereby covenants that until the Senior Indebtedness
shall have been indefeasibly paid in full and satisfied in cash or
cash equivalents (other than contingent indemnity obligations which
by their terms survive any termination of the applicable Senior
Indebtedness Agreement) and the Senior Indebtedness Agreements
shall have been irrevocably terminated, all in accordance with the
terms of the Senior Indebtedness Agreements, it will comply with
such of the Subordination Provisions hereof as are applicable to
it:
2.1 Transfers.
These Subordination Provisions constitute a continuing offer to all
Persons who, in reliance upon such provisions, become holders of,
or continue to hold, Senior Indebtedness, and the Senior
Representatives thereof, and such provisions are made for the
benefit of the holders of Senior Indebtedness, and the Senior
Representative thereof, and such holders, and the Senior
Representative thereof, are hereby made obligees and express third
party beneficiaries hereunder the same as if their names were
written herein as such, and they and/or each of them may proceed to
enforce such provisions. The Subordinated Lender covenants that any
transferee from it of any Subordinated Indebtedness shall, prior to
acquiring such interest, execute and deliver a joinder to, or
acknowledgment of, the Subordination Terms in form and substance
reasonably satisfactory to the First Lien Agent and the Second Lien
Agent.
2.2
Subordination
Provisions. Notwithstanding any other provision of the
Subordinated Lending Agreements to the contrary, any Distribution
with respect to the Subordinated Indebtedness is and shall be
expressly junior and subordinated in right of payment to all
amounts due and owing upon all Senior Indebtedness outstanding from
time to time. Specifically, but not by way of
limitation:
x
A-3
(a) Payments.
If a Senior Default shall have occurred and be continuing, and,
other than in the case of a Senior Default arising in respect of
any Event, any Senior Representative or other Senior Creditor shall
have provided prior written notice to Maker that no Distribution be
made, then (i) no Distribution of any kind or character, whether in
cash securities or other property, and whether directly, by
purchase, redemption, exercise of any right of setoff or otherwise,
shall be made by or on behalf of Maker with respect to the
Subordinated Note to the Subordinated Lender and (ii) no amounts
payable under the Subordinated Note shall be forgiven or otherwise
reduced in any way.
(b)
Limitation on
Remedies. The Subordinated Lender shall not be entitled to
exercise any remedies as a creditor or commence any other action or
proceeding to recover any amounts due or to become due with respect
to the Subordinated Indebtedness prior to the indefeasible payment
in full in cash or cash equivalents (other than contingent
indemnity obligations which by their terms survive any termination
of the applicable Senior Indebtedness Agreement) of all Senior
Indebtedness and the irrevocable termination of the Senior
Indebtedness Agreements.
(c) Prior
Payment of Senior Indebtedness in Bankruptcy, etc. In the
event of any insolvency or bankruptcy proceedings relative to Maker
or its property, or any receivership, liquidation, reorganization
or other similar proceedings in connection therewith, or, in the
event of any proceedings for voluntary liquidation, dissolution or
other winding up of Maker or distribution or marshalling of its
assets or any composition with creditors of Maker, whether or not
involving insolvency or bankruptcy, or if Maker shall cease its
operations, call a meeting of its creditors or no longer do
business as a going concern (each individually or collectively, an
“Event”), then
all Senior Indebtedness shall be indefeasibly paid in full and
satisfied in cash or cash equivalents (other than contingent
indemnity obligations which by their terms survive any termination
of the applicable Senior Indebtedness Agreement) and the Senior
Indebtedness Agreements irrevocably terminated before any
Distribution shall be made on account of any Subordinated
Indebtedness. Any such Distribution which would, but for the
provisions hereof, be payable or deliverable in respect of the
Subordinated Indebtedness, shall be paid or delivered directly to
the Senior Creditors or their respective Senior Representatives,
ratably according to the aggregate amounts remaining unpaid on
account of the Senior Indebtedness held or represented by each,
until amounts owing upon Senior Indebtedness shall have been
indefeasibly paid in full in cash or cash equivalents (other than
contingent indemnity obligations which by their terms survive any
termination of the applicable Senior Indebtedness Agreement) and
the Senior Indebtedness Agreements irrevocably
terminated.
(d) Power
of Attorney. To enable the Senior Creditors to assert and
enforce their rights hereunder in any proceeding referred to in
Section 2.2(c) or upon the happening of any Event, each Senior
Representative or any Person whom it may designate is hereby
irrevocably appointed attorney-in-fact for the Subordinated Lender
with full power to act in the place and stead of the Subordinated
Lender, including the right to make, present, and file and to vote
such proofs of claim against Maker on account of all or any part of
the Subordinated Indebtedness as such Senior Representative may
deem advisable and to receive and collect any and all payments made
thereon and to apply the same on account of the Senior
Indebtedness. The Subordinated Lender will execute and deliver to
any Senior Representative such instruments as may be required by
such Senior Representative to enforce any and all Subordinated
Indebtedness, to effectuate the aforesaid power of attorney and to
effect collection of any and all payments which may be made at any
time on account thereof, and the Subordinated Lender hereby
irrevocably appoints each Senior Representative as the lawful
attorney and agent of the Subordinated Lender to execute such
instruments on behalf of the Subordinated Lender and hereby further
authorizes the Senior Representatives to file such instruments in
any appropriate public office.
x
A-4
(e) Payments
Held in Trust. Should any Distribution or the proceeds
thereof, in respect of the Subordinated Indebtedness, be collected
or received by the Subordinated Lender or any Affiliate (as such
term is defined in Rule 405 of Regulation C adopted by the
Securities and Exchange Commission pursuant to the Securities Act
of 1933) of the Subordinated Lender at a time when the Subordinated
Lender is not permitted to receive any such Distribution or
proceeds thereof, including if same is collected or received when
there is or would be after giving effect to such payment a Senior
Default, then the Subordinated Lender will forthwith deliver, or
cause to be delivered, the same to the Senior Representatives,
ratably according to the aggregate amounts remaining unpaid on
account of the Senior Indebtedness held or represented by each, in
precisely the form held by the Subordinated Lender (except for any
necessary endorsement) and until so delivered, the same shall be
held in trust by the Subordinated Lender, or any such Affiliate, as
the property of the Senior Representatives and shall not be
commingled with other property of the Subordinated Lender or any
such Affiliate.
(f) Subrogation.
Subject to the prior indefeasible payment in full in cash or cash
equivalents (other than contingent indemnity obligations which by
their terms survive any termination of the applicable Senior
Indebtedness Agreement) of the Senior Indebtedness and the
irrevocable termination of the Senior Indebtedness Agreements, to
the extent that any Senior Creditor or any Senior Representative
thereof has received any Distribution on the applicable Senior
Indebtedness which, but for the Subordination Provisions hereof,
would have been applied to the Subordinated Indebtedness, the
Subordinated Lender shall be subrogated to then or thereafter
rights of such Senior Creditor or such Senior Representative
thereof, including, without limitation, the right to receive any
Distribution made on the applicable Senior Indebtedness until the
principal of, interest on and other charges due under the
Subordinated Indebtedness shall be indefeasibly paid in full and,
for the purposes of such subrogation, no Distribution to any Senior
Creditor or any Senior Representative thereof to which the
Subordinated Lender would be entitled except for the Subordination
Provisions hereof shall, as between Maker, its creditors (other
than the Senior Creditors and the Senior Representatives) and the
Subordinated Lender, be deemed to be a Distribution by Maker to or
on account of Senior Indebtedness, it being understood that the
provisions hereof are and are intended solely for the purpose of
defining the relative rights of the Subordinated Lender on the one
hand, and the Senior Creditors on the other hand.
(g) Scope
of Subordination. The Subordination Provisions hereof are
solely to define the relative rights of the Subordinated Lender and
the Senior Creditors. Nothing in this Annex A shall impair, as
between Maker and the Subordinated Lender the unconditional and
absolute obligation of Maker to punctually pay the principal,
interest and any other amounts and obligations owing under the
Subordinated Note and the Subordinated Lending Agreements in
accordance with the terms thereof, subject to the rights of the
Senior Creditors hereunder.
x
A-5
2.3 Unsecured
Creditor of Maker. The Subordinated Lender hereby agrees and
acknowledges that the Subordinated Indebtedness is an unsecured
obligation of Maker.
3.
Miscellaneous.
3.1 Survival
of Rights. The rights of the Senior Creditors to enforce the
Subordination Provisions shall not be prejudiced or impaired by any
act or omitted act of Maker, the Subordinated Lender or any Senior
Creditor, including, without limitation, forbearance, waiver,
consent, compromise, amendment, extension, renewal, or taking or
release of security in respect of any Senior Indebtedness or
noncompliance by Maker with such provisions, regardless of the
actual or imputed knowledge of any Senior Creditor.
3.2 Bankruptcy
Financing Issues. The Subordinated Note shall continue in
full force and effect after the filing of any petition
(“Petition”) by or against
Maker under the Bankruptcy Code and all converted or succeeding
cases in respect thereof. All references herein to Maker shall be
deemed to apply to Maker as debtor-in-possession and to a trustee
for Maker. If Maker shall become subject to a proceeding under the
Bankruptcy Code, and if any Senior Creditors shall desire to permit
the use of cash collateral or to provide post-Petition financing
from such Senior Creditors to Maker under the Bankruptcy Code, the
Subordinated Lender agrees as follows: (a) adequate notice to
Subordinated Lender shall be deemed to have been provided for such
consent or post-Petition financing if the Subordinated Lender
receives notice thereof three (3) Business Days (or such shorter
notice as is given to the Senior Creditors or the Senior
Representatives thereof) prior to the earlier of (i) any hearing on
a request to approve such post-petition financing or (ii) the date
of entry of an order approving same and (b) no objection will be
raised by the Subordinated Lender to any such use of cash
collateral or such post-Petition financing from such Senior
Creditors.
3.3 Insurance
Proceeds. The Senior Representatives of any Senior
Indebtedness that is secured by any Collateral, as holders of a
senior security interest on the Collateral insured shall have the
sole and exclusive right, as against the Subordinated Lender, to
adjust settlement of insurance claims in the event of any covered
loss, theft or destruction of such Collateral. All proceeds of such
insurance shall inure to the applicable Senior Representatives, to
the extent of the applicable Senior Creditors’ claim, and the
Subordinated Lender shall cooperate (if necessary) in a reasonable
manner in effecting the payment of insurance proceeds to the
applicable Senior Creditors. In the event the applicable Senior
Representatives, in their sole discretion or pursuant to agreement
with Maker, permits Maker to utilize the proceeds of insurance to
replace Collateral, the consent of such Senior Representatives
thereto shall be deemed to include the consent of the Subordinated
Lender.
3.4 Receipt
of Agreements. The Subordinated Lender hereby acknowledges
that it has delivered to each Senior Representative a correct and
complete copy of the Subordinated Lending Agreements as in effect
on the date hereof. The Subordinated Lender, solely for the payment
of the Subordinated Note, hereby acknowledges receipt of a correct
and complete copy of each of the Senior Indebtedness Agreements as
in effect on the date hereof.
3.5 No
Amendment of Subordinated Lending Agreements. So long as any
Senior Indebtedness Agreement remains in effect, neither Maker nor
the Subordinated Lender shall enter into any amendment, waiver or
modification of the Subordinated Lending Agreements, without the
prior written consent of the Senior Representatives.
x
A-6
3.6 Amendments
to Senior Indebtedness Agreements. Nothing contained herein
shall in any manner limit or restrict the ability of the Senior
Creditors to increase or change the terms of the Senior
Indebtedness under any Senior Indebtedness Agreements, or to
otherwise waive, amend or modify the terms and conditions of the
Senior Indebtedness Agreements, in such manner as the applicable
Senior Creditors and Maker shall mutually determine. The
Subordinated Lender hereby consents to any and all such waivers,
amendments, modifications and compromises, and any other renewals,
extensions, indulgences, releases of collateral or other
accommodations granted by the Senior Creditors to Maker from time
to time, and agrees that none of such actions shall in any manner
affect or impair the subordination established hereby in respect of
the Subordinated Indebtedness.
3.7 Notice
of Default and Certain Events. The Subordinated Lender shall
notify the Senior Representatives of the occurrence of any of the
following as applicable:
(a) the
obtaining of actual knowledge of the occurrence of any Event of
Default under any of the Subordinated Notes;
(b) the
acceleration of any Subordinated Indebtedness by the Subordinated
Lender; or
(c) the
granting of any waiver of any Event of Default by the Subordinated
Lender.
3.8 Binding
Effect; Governing Law. The Subordination Provisions shall be
a continuing agreement and shall be binding upon Maker and the
Subordinated Lender and their respective heirs, successors and
assigns and inure to the benefit of the Senior Creditors, Maker and
the Subordinated Lender and their respective heirs, successors and
assigns, shall be irrevocable and shall remain in full force and
effect until the Senior Indebtedness shall have been satisfied or
indefeasibly paid in full in cash or cash equivalents (other than
contingent indemnity obligations which by their terms survive any
termination of the applicable Senior Indebtedness Agreement) and
the Senior Indebtedness Agreements shall have been irrevocably
terminated, but shall continue to be effective, or be reinstated,
as the case may be, if at any time payment, or any part thereof, of
any amount paid by or on behalf of Maker with regard to the Senior
Indebtedness is rescinded or must otherwise be restored or returned
upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of Maker, or upon or as a result of the appointment
of a receiver, intervenor or conservator of, or trustee, custodian,
or similar officer, for Maker or any substantial part of its
property, or otherwise, all as though such payments had not been
made. No action which any Senior Creditor or Maker may take or
refrain from taking with respect to the Senior Indebtedness,
including any amendments thereto, shall affect the Subordination
Provisions or the obligations of Maker or the Subordinated Lender
hereunder. The headings in the Subordination Provisions are for
convenience of reference only, and shall not alter or otherwise
affect the meaning hereof. THE
SUBORDINATION PROVISIONS SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS AND OBLIGATIONS OF MAKER, THE
SUBORDINATED LENDER AND THE SENIOR CREDITORS SHALL BE GOVERNED BY,
THE LAW OF THE STATE OF NEW YORK INCLUDING SECTIONS 5-1401 AND
5-1402 OF THE GENERAL OBLIGATIONS THEREOF, BUT OTHERWISE WITHOUT
REFERENCE TO THE CHOICE-OF-LAW PRINCIPLES OF THE LAW
THEREOF.
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3.9 Waiver
of Substantive Consolidation. By its acceptance of the
Subordinated Note, the Subordinated Lender agrees that, in any
proceeding under the Bankruptcy Code or any proceeding under any
similar law, it will not, directly or indirectly, request, join in
or support any request, or provide any assistance or encouragement
or solicit any other Person to make any request, for substantive
consolidation of Maker with any one or more of its subsidiaries or
parent entities or for a determination that piercing the corporate
veil, alter ego or any similar theory is applicable to Maker and
one or more of its subsidiaries or parent entities and waive any
and all rights they may have to do so. In the event that Maker is
substantively consolidated with any or more of its subsidiaries or
parent entities, the Subordinated Lender agrees that it will not
benefit from such substantive consolidation and will be treated as
if the substantive consolidation did not occur (and any such
benefit that would have accrued to the Subordinated Lender shall be
turned over to the creditors of the subsidiary or subsidiaries that
are so substantively consolidated). The Subordinated Lender
acknowledges that the Senior Creditors are expressly relying on the
separateness of Maker from its subsidiaries and parent entities,
and agrees that the Senior Creditors may rely on the agreements and
waivers in this paragraph.
4. PROCEEDINGS.
SUBJECT TO CLAUSE (E) BELOW, ALL JUDICIAL PROCEEDINGS BROUGHT
AGAINST MAKER, THE SUBORDINATED LENDER OR ANY SENIOR CREDITOR
ARISING OUT OF OR RELATING HERETO SHALL BE BROUGHT EXCLUSIVELY IN
ANY FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN THE
BOROUGH OF MANHATTAN OR, IF THAT COURT DOES NOT HAVE SUBJECT MATTER
JURISDICTION, IN ANY STATE COURT LOCATED IN THE CITY AND COUNTY OF
NEW YORK. BY EXECUTING AND DELIVERING OR ACCEPTING THE SUBORDINATED
NOTE, EACH OF MAKER AND THE SUBORDINATED LENDER, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (A) ACCEPTS GENERALLY
AND UNCONDITIONALLY THE EXCLUSIVE JURISDICTION AND VENUE OF SUCH
COURTS (SUBJECT TO CLAUSE (E) BELOW); (B) WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS; (C) AGREES THAT SERVICE OF ALL PROCESS
IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED
OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE
PARTY AT ITS ADDRESS PROVIDED IN THE SIGNATURE PAGES TO THE
SUBORDINATED NOTE; (D) AGREES THAT SERVICE AS PROVIDED IN CLAUSE
(C) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE
APPLICABLE PERSON IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND
OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT; AND (E) AGREES THAT THE SENIOR CREDITORS RETAIN THE RIGHT
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING
PROCEEDINGS AGAINST MAKER OR THE SUBORDINATED LENDER IN THE COURTS
OF ANY OTHER JURISDICTION IN CONNECTION WITH THE EXERCISE OF ANY
RIGHTS UNDER THE SUBORDINATION PROVISIONS, THE SUBORDINATED LENDING
AGREEMENTS OR THE SENIOR INDEBTEDNESS AGREEMENTS OR ANY EXERCISE OF
REMEDIES IN RESPECT OF COLLATERAL OR THE ENFORCEMENT OF ANY
JUDGMENT, AND HEREBY SUBMITS TO THE JURISDICTION OF, AND CONSENTS
TO VENUE IN, ANY SUCH COURT.
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5. WAIVER
OF JURY TRIAL. EACH OF MAKER AND THE SUBORDINATED LENDER
HEREBY AGREES TO WAIVE ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR ANY DEALINGS
BETWEEN THEM OR THE SENIOR CREDITORS RELATING TO THE SUBJECT MATTER
HEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING
OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT
RELATE TO THE SUBJECT MATTER HEREOF, INCLUDING CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS. EACH OF MAKER AND THE SUBORDINATED LENDER
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER
INTO A BUSINESS RELATIONSHIP, THAT EACH OF THEM AND THE SENIOR
CREDITORS HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THE
SUBORDINATED LENDING AGREEMENTS AND/OR THE SENIOR INDEBTEDNESS
AGREEMENTS, AND THAT EACH OF THEM AND THE SENIOR CREDITORS WILL
CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS.
EACH OF MAKER AND THE SUBORDINATED LENDER FURTHER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL
AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR
IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SECTION 5 AND EXECUTED BY EACH OF MAKER AND THE
SUBORDINATED LENDER AND CONSENTED TO IN WRITING BY EACH SENIOR
REPRESENTATIVE), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO. IN THE
EVENT OF LITIGATION, THE SUBORDINATION PROVISIONS MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
6. Maker
Acknowledgement. Maker agrees that (a) nothing contained in
the Subordination Provisions shall be deemed to amend, modify,
supersede or otherwise alter the terms of the respective agreements
between Maker and any Senior Creditor or between Maker and the
Subordinated Lender and (b) the Subordination Provisions are solely
for the benefit of the Senior Creditors and the Subordinated Lender
and shall not give Maker, its successors or assigns, or any other
Person any rights vis-à-vis any Senior Creditor or the
Subordinated Lender.
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