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EXHIBIT 99.5
SUBORDINATION AGREEMENT
This SUBORDINATION AGREEMENT (this "Agreement") is made on July 27,
2001, by and among VERSO TECHNOLOGIES, INC., a Minnesota corporation ("Verso");
XXXXXXXX.XXX SOFTWARE, INC., a Georgia corporation ("Junior Creditor"); and PNC
BANK, NATIONAL ASSOCIATION, a national banking association, in its capacity as
collateral and administrative agent (together with its successors in such
capacity, "Agent") for each of the lenders (the "Senior Creditors") now or
hereafter parties to the Credit Agreement (as defined below).
RECITALS:
Agent, Senior Creditors, Verso and the other borrowers from time to
time party thereto (such other borrowers and Verso, jointly and severally the
"Borrowers") are parties to a certain Revolving Credit and Security Agreement
dated March 14, 2000 (as at any time amended, the "Credit Agreement") pursuant
to which Senior Creditors may from time to time make loans to Borrowers secured
by all or substantially all of Borrowers' assets.
Verso has entered into that certain Security Agreement dated as of
July 27, 2001 with Junior Creditor (as at any time amended, the "Security
Agreement"). Pursuant to the Security Agreement, Verso has granted a security
interest to Junior Creditor to secure Verso's obligation to redeem the shares
of Verso's Series B Preferred Stock (the "Series B Preferred Stock") in
accordance with the Statement of Rights with respect to the Series B Preferred
Stock (the "Statement of Rights"). Pursuant to the Statement of Rights and the
Security Agreement, Verso has granted to Junior Creditor a security interest
and lien upon all of the capital stock of NACT Telecommunications, Inc.,
Verso's wholly-owned subsidiary, as security for the performance of Verso's
obligations under the Statement of Rights and the Security Agreement.
A condition precedent to Agent's and Senior Creditors' consent to
Verso's execution and delivery of the Security Agreement and to any continuing
obligation of Agent or any Senior Creditor to make any loans or other
extensions of credit to Verso or any other Borrower under the Credit Agreement
is the execution and delivery of this Agreement by Agent, Junior Creditor,
Verso and the other Borrowers.
The parties hereto desire to enter into this Agreement for the
purposes set forth hereafter.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and conditions herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby expressly
acknowledged, the parties hereto, intending to be bound hereby, agree as
follows:
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1. DEFINITIONS; RULES OF CONSTRUCTION.
(a) Capitalized terms used in this Agreement, unless
otherwise defined, shall have the meanings ascribed to them in the Credit
Agreement. In addition to such other terms as are elsewhere defined herein, the
following terms shall have the following meanings for the purposes of this
Agreement:
"Bankruptcy Case" shall mean any case hereafter commenced by
or against Verso or any other Borrower under any chapter of the
Bankruptcy Code.
"Bankruptcy Code" shall mean title 11 of the United States
Code.
"Business Day" shall mean any day other than a Saturday,
Sunday or day on which banks are authorized or required to be closed
under the laws of the State of Georgia.
"Code" shall mean the Uniform Commercial Code, as in effect
from time to time in the State of Georgia.
"Collateral" shall mean all property included in the
definition of "Collateral" in the Security Agreement, whether any of
such property is acquired prior to, during the pendency of or after
any Insolvency Proceeding.
"Enforcement Action" shall mean and include any remedy
available to Agent or any Senior Creditor under any of the Senior
Creditor Documents or applicable law to enforce collection of any of
the Senior Creditor Obligations following the occurrence of any Event
of Default, and any remedy available to Junior Creditor under any of
the Junior Creditor Documents or applicable law to enforce collection
of any the Junior Creditor Obligations following the occurrence of any
Event of Default, including, in each case, (a) the commencement of any
action, suit or other proceeding against Verso or any other Borrower
to enforce payment of any of the Senior Creditor Obligations or Junior
Creditor Obligations or to repossess or otherwise to realize upon any
of the Collateral; (b) any notification by a party to any account
debtor on any Account to remit payments with respect to such Account
to the notifying party; and (c) any involuntary petition for relief
against Verso or any other Borrower under the Bankruptcy Code or other
petition or suit for the appointment of a receiver or other custodian
for Verso or any other Borrower or any of Verso's or such other
Borrower's assets.
"Event of Default" shall mean an event or condition that
constitutes a default or an event of default under the Senior Credit
Documents or the Junior Creditor Documents.
"Junior Creditor Documents" shall mean and include the
Statement of Rights, the Security Agreement and all other instruments
or agreements now or hereafter evidencing or securing the payment of
the whole or any part of the Junior Creditor Obligations.
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"Junior Creditor Obligations" shall mean and include all
liabilities and obligations of Verso to Junior Creditor under the
Junior Creditor Documents, whether now or hereafter created, incurred
or arising, and however made or incurred, and whether direct or
indirect, absolute or contingent, due or to become due, joint or
several, or secured or unsecured, including (i) all principal and
interest (whether cash or pay in kind), (ii) all fees, charges,
expenses, attorneys' fees, commitment or other fees, indemnity
amounts, collection costs and other amounts owing by Verso to Junior
Creditor under any of the Junior Creditor Documents or otherwise and
(iii) any debt otherwise payable to Junior Creditor as a result of a
conversion of interest to warrants, options, stock or other equity.
"Lien" shall mean any interest in property securing an
obligation owed to, or a claim by, a Person, whether such interest is
based on common law, statute, contract, judgment or court order. The
term "Lien" shall also include reservations, exceptions, covenants,
conditions, restrictions and other title exceptions and encumbrances
affecting property.
"Person" shall mean any natural person, sole proprietorship,
corporation, partnership, limited liability company, joint venture,
business trust, other business entity, or any governmental unit,
agency, bureau or political subdivision.
"Plan" shall mean a plan proposed in any Bankruptcy Case for
the reorganization or rehabilitation of Verso, a composition or
extension of any of Verso's debts or a liquidation in whole or in part
of Verso's assets.
"Reorganization Securities" shall mean and include (a) shares
of common stock (or other equity securities) of Verso and (b) debt
securities of Verso, the payment of which is subordinated to the full
and final payment of all Senior Creditor Obligations at the time
outstanding and to the payment of all debt securities issued in
exchange therefor to Agent or any Senior Creditor, which shares or
other equity or debt securities have been provided for by a Plan that
has been approved by final order of a court and that has been accepted
by Senior Creditors.
"Senior Creditor Documents" shall mean and include the Credit
Agreement and all other instruments or agreements now or hereafter
evidencing or securing the payment of the whole or any part of the
Senior Creditor Obligations.
"Senior Creditor Obligations" shall mean and include all
liabilities and obligations of Verso and the other Borrowers to Agent
and Senior Creditors, whether now or hereafter created, incurred or
arising, and whether direct or indirect, absolute or contingent,
primary or secondary, due or to become due, or joint or several,
including (i) all Advances at any time made and all other Obligations
now or hereafter existing under or with respect to any of the Senior
Creditor Loan Documents, (ii) any and all loans made or other credit
extended by any Senior Creditor to Verso and the other Borrowers
during the pendency of any Bankruptcy Case, (iii) all interest at any
time accrued with respect to any of the foregoing (including any
interest that accrues during the pendency of any Bankruptcy Case,
whether or not any Senior Creditor is authorized under the Bankruptcy
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Code to collect such interest from Verso or any other Borrower), and
(iv) all Enforcement Expenses which Verso or any other Borrower is now
or hereafter becomes liable to pay to Agent or any Senior Creditor
under any agreement or by Applicable Law.
(b) All references to any instrument or agreement,
including any of the Junior Creditor Documents or the Senior Creditor
Documents, shall mean and include all amendments and modifications thereto and
renewals, restatements and replacements thereof; all references to any statute
shall mean and include all amendments thereto and all regulations issued
pursuant thereto; and the words "including" and "include" shall mean
"including, without limitation" and "include, without limitation."
2. CONSENTS TO LIENS. Senior Creditor hereby consents to Verso's
grant of Liens in the Collateral to Junior Creditor as security for the Junior
Creditor Obligations and agrees that the existence of any such Liens (other
than any Lien that may hereafter arise from any judgment obtained against Verso
or any other Borrower) shall not constitute an Event of Default under any of
the Senior Creditor Documents. Junior Creditor hereby acknowledges Verso's (and
each other Borrower's) grant of Liens in the Collateral to Agent as security
for the Senior Creditor Obligations and agrees that the existence of any such
Liens shall not constitute an Event of Default under any of the Junior Creditor
Documents.
3. PRIORITY OF LIENS.
(a) Junior Creditor and Agent agree at all times,
whether before, after or during the pendency of any Bankruptcy Case or other
insolvency proceeding and notwithstanding the priorities which would ordinarily
result from the order of granting or perfection of any Liens, the order of
filing or recording of any financing statements, or the priorities that would
otherwise apply under applicable law, that (i) Agent's Liens in the Collateral
shall constitute first priority Liens in such property to secure the Senior
Creditor Obligations and shall be superior to any Lien or other interest of
Junior Creditor in the same property arising pursuant to the Junior Creditor
Documents, by operation of law or otherwise; and (ii) any Lien or other
interest at any time acquired by Junior Creditor in any of the Collateral shall
be subordinate to the Liens of Agent therein.
(b) If for any reason any Lien granted or conveyed by
Verso or any other Borrower to Agent pursuant to the Senior Creditor Documents
or otherwise is set aside or otherwise declared ineffective, in whole or in
part, by any court of competent jurisdiction, and if as a consequence thereof
Junior Creditor becomes entitled to receive any proceeds from any of the
Collateral or on account of such Junior Creditor's Lien in any of the
Collateral, then any such payments or proceeds received by such Junior Creditor
shall be used by it to purchase a junior participation in the Senior Creditor
Obligations pursuant to a junior participation agreement in form and content
satisfactory to Agent but in all events providing that Agent's retained
interest in the Senior Creditor Obligations (including both principal and
interest) and all costs and expenses incurred by Senior Creditor (including
attorneys' fees) in attempting to collect the Senior Creditor Obligations or to
realize upon any of the Collateral shall be paid in full before such Junior
Creditor shall be entitled to any payment on account of its junior
participation and such Junior Creditor's junior participation will be without
recourse of any kind to Agent except
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for Agent's gross negligence or willful misconduct after the date of such
Junior Creditor's purchase of such junior participation.
(c) In no event shall Junior Creditor institute, or join
as a party in the institution of, or directly or indirectly assist in the
prosecution of, any action, suit or proceeding seeking a determination that the
Lien of Agent in any of the Collateral is invalid, unperfected or avoidable, or
is or should be subordinated to the interests of any other Person. In no event
shall Agent or any Senior Creditor institute, or join as a party in the
institution of, or directly or indirectly assist in the prosecution of, any
action, suit or proceeding seeking a determination that the Lien of Junior
Creditor in any of the Collateral is invalid, unperfected or avoidable, or is
or should be subordinated to the interests of any other Person other than Agent
under the terms hereof.
(d) If, at any time, Agent shall subordinate in whole or
in part its Lien upon any of the Collateral to or in favor of any other Person,
the priority of Agent's Lien in the Collateral vis-a-vis Junior Creditor shall
not be affected thereby, and Agent's Lien shall continue to be superior to
Junior Creditor's Lien in the Collateral as provided in paragraph 3(a) of this
Agreement.
4. DEBT SUBORDINATION/PERMITTED PAYMENTS.
(a) Subject to the provisions of paragraph 4(c) hereof
relating to payments on the Junior Creditor Obligations that are permitted to
be made to the extent and under the circumstances set forth in paragraph 4(c),
Junior Creditor hereby postpones and subordinates all of the Junior Creditor
Obligations to the full and final payment and discharge of all of the Senior
Creditor Obligations.
(b) In the event of any distribution (other than a
distribution of Reorganization Securities), division or application, partial or
complete, voluntary or involuntary, by operation of law or otherwise, of all or
any part of the assets of Verso or any other Borrower or the proceeds thereof
to Junior Creditor or upon any indebtedness of Verso or any other Borrower, by
reason of the liquidation, dissolution or other winding up of Verso or such
Borrower or Verso's or such Borrower's business, or in the event of any sale,
receivership, insolvency or bankruptcy proceeding, or assignment for the
benefit of creditor, or any proceeding by or against Verso or any other
Borrower for any relief under the Bankruptcy Code or other insolvency law
relating to the relief of debtors, readjustment of indebtedness,
reorganization, compositions or extensions, then and in any such event any
payment or distribution of any kind or character, whether in cash, securities
or other property (excluding Reorganization Securities), which shall be payable
or deliverable upon or with respect to any of the Junior Creditor Obligations
shall be paid or delivered directly to Agent for application to the Senior
Creditor Obligations (whether or not the same is then due) until all of the
Senior Creditor Obligations has been fully paid and discharged. Verso's and
Junior Creditor's books shall be marked to evidence the subordination of all of
the Junior Creditor Obligations to the Senior Creditor Obligations. Agent is
authorized to examine such books from time to time and to make any notations
required by this Agreement. The provisions of this paragraph 4 shall remain
effective and binding upon Junior Creditor, to the full extent of the Senior
Creditor Obligations, even if any of the Senior Creditor Obligations is
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avoided, equitably subordinated or nullified in any Bankruptcy Case of Verso or
any other Borrower.
(c) For so long as (i) no Event of Default exists under
any of the Senior Creditor Documents or would exist as a result of any payment
on account of the Security Agreement and (ii) Undrawn Availability at the time
of and after giving effect to any payment on account of the Security Agreement
is not less than the amount required by Section 6.10 of the Credit Agreement,
and except as otherwise provided in paragraph 4(b) hereof, Verso may pay to
Junior Creditor, and Junior Creditor may accept and retain, any regularly
scheduled dividend payments due and owing to Junior Creditor from Verso
pursuant to the Statement of Rights in accordance with its terms, but without
prepayment, whether mandatory or optional. If an Event of Default under any of
the Senior Creditor Documents exists or would result from the making of any
payment under the Junior Creditor Documents, Verso shall not be permitted to
make, and Junior Creditor shall be entitled to accept or retain, any payments
on the Junior Creditor Documents. In no event shall Senior Creditors'
continuing to honor any requests of Verso or any other Borrower for Advances
under the Credit Agreement after the occurrence or existence of any Event of
Default under the Senior Creditor Documents be deemed a waiver thereof, unless
such Event of Default is expressly waived in writing by Senior Creditors.
5. WARRANTIES AND REPRESENTATIONS OF VERSO AND JUNIOR CREDITOR.
Verso and Junior Creditor each hereby represents and warrants (severally and
not jointly) that: (i) it has not relied nor will it rely on any representation
or information of any nature made by or received from Agent or any Senior
Creditor relative to Verso or any other Borrower in deciding to execute this
Agreement; (ii) no part of the Junior Creditor Obligations is evidenced by any
instrument or writing except the Statement of Rights and the Security Agreement
and the other documents contemplated therein; (iii) Junior Creditor is the
lawful owner of the Junior Creditor Obligations; (iv) Junior Creditor has not
heretofore assigned or transferred any of the Junior Creditor Obligations, any
interest therein or any Collateral or security pertaining thereto; and (v)
Junior Creditor has not heretofore given any subordination in respect of the
Junior Creditor Obligations.
6. NEGATIVE COVENANTS. For so long as this Agreement is in
effect: (i) neither Verso nor any other Borrower shall, directly or indirectly,
make any payment (other than a payment permitted by paragraph 4 hereof) on
account of the Junior Creditor Obligations; (ii) Junior Creditor shall not
demand, collect or accept from Verso or any other Person, including any other
Borrower, any payment (other than a payment permitted by paragraph 4 hereof) on
account of the Junior Creditor Obligations or any part thereof, or accelerate
the maturity of any of the Junior Creditor Obligations or realize upon or
enforce any security heretofore granted by any Person, including any other
Borrower, as collateral for any of the Junior Creditor Obligations; (iii)
Junior Creditor shall not exchange, set off, release, convert to equity or
otherwise discharge any part of the Junior Creditor Obligations, except as
contemplated by the Junior Creditor Documents as in existence on the date
hereof; (iv) Junior Creditor shall not hereafter give any subordination in
respect of the Junior Creditor Obligations or transfer or assign any of the
Junior Creditor Obligations to any Person other than Agent unless the
transferee or assignee thereof first agrees in writing with Agent to be bound
by the terms of this Agreement; (v) no Borrower shall hereafter issue any
instrument, security or other writing evidencing any part of the Junior
Creditor Obligations, and Junior Creditor will not receive any
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such writing, except upon the prior written approval of Agent or at the request
of and in the manner requested by Agent; (vi) Verso and Junior Creditor shall
not amend, alter or modify any provision of the Statement of Rights or the
Security Agreement without the prior written consent of Agent (other than to
reduce the rate of interest or extend the time for payment); (vii) Junior
Creditor shall not commence or join with any other creditor of Verso or any
other Borrower in commencing any Bankruptcy Case or reorganization,
receivership or insolvency proceeding against Verso or any other Borrower; and
(viii) none of Verso, any other Borrower or Junior Creditor otherwise shall
take or permit any action prejudicial to or inconsistent with Agent's priority
position over Junior Creditor that is created by this Agreement.
7. STANDBY AS TO CERTAIN ACTIONS. Junior Creditor agrees that it
will not ask for, demand, xxx for, take, receive, or repossess any of the
Collateral from Verso or any other Borrower by setoff or in any other manner,
or otherwise take any Enforcement Action to collect any of the Junior Creditor
Obligations or to realize upon the whole or any part of the Collateral, whether
by judicial action or under power of sale, by self-help repossession or
otherwise, unless and until all of the Senior Creditor Obligations have been
paid finally and in full. If Junior Creditor, in violation hereof, initiates
any Enforcement Action against Verso or any other Borrower or any of the
Collateral, Verso or such other Borrower may interpose this Agreement as a
complete defense, and Agent may intervene and interpose this Agreement as a
defense in Agent's name or in the name of Verso or such other Borrower.
8. SENIOR CREDITOR'S RIGHTS EXCLUSIVE. Agent shall have the
exclusive right to collect, foreclose upon, sell, transfer, liquidate or
otherwise dispose of the Collateral as provided in the Senior Creditor
Documents or by applicable law, in the manner deemed appropriate by Agent,
without regard to any Liens of Junior Creditor therein, and Junior Creditor
will not hinder Agent's actions in enforcing its remedies or taking any
Enforcement Action with respect to the Collateral; provided, however, that
after payment in full of all Senior Creditor Obligations, Agent shall deliver
to Junior Creditor (unless otherwise restricted by law or by any order issued
by a court in the proper exercise of its jurisdiction and subject in all events
to Agent's receipt of an indemnification from Junior Creditor of all
liabilities arising from such delivery) for application to the Junior Creditor
Obligations any proceeds remaining from the sale or other disposition of the
Collateral. To the fullest extent permitted by applicable law, Junior Creditor
waives any requirement on the part of Agent to conduct any sale or other
disposition of any of the Collateral in a commercially reasonable manner, and
Agent shall be fully authorized to sell or otherwise dispose of any or all of
the Collateral in the manner deemed appropriate by Agent, including by the
exercise of any right Agent may have to accept any or all of the Collateral in
total or partial satisfaction of any of the Senior Creditor Obligations in
accordance with the Code or otherwise.
9. RECEIPT OF MONIES BY JUNIOR CREDITOR. Junior Creditor agrees
that should it receive at any time prior to payment in full of all Senior
Creditor Obligations any payment, distribution or security (other than
Reorganization Securities) from Verso or any other Borrower in violation of
this Agreement or any money from the sale, liquidation, casualty or other
disposition of, or as a result of Junior Creditor's Lien in any of the
Collateral, it will (unless otherwise restricted by law) hold the same in trust
for Agent and promptly pay over the same to
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Agent for application to the Senior Creditor Obligations (unless otherwise
restricted by law or by any order issued by a court in the proper exercise of
its jurisdiction).
10. AGREEMENT ON CERTAIN BANKRUPTCY MATTERS.
(a) Without impairing, abrogating or in any way
affecting Agent's rights hereunder, including the relative priorities
established by paragraph 3 hereof, Agent may during any Bankruptcy Case give or
withhold its consent to Verso's, any other Borrower's or any bankruptcy
trustee's use of any Collateral (including cash proceeds of any Collateral) or
may provide financing or otherwise extend credit to Verso, any other Borrower
or any bankruptcy trustee secured by a Lien upon any or all of the Collateral
whether created, acquired or arising prior to or after the commencement of any
such Bankruptcy Case, and by its execution of this Agreement, Junior Creditor
shall be deemed to have consented to Verso's, any other Borrower's or any
bankruptcy trustee's use of Collateral if and to the extent consented to by
Agent and to any financing proposed to be provided by Senior Creditors to any
Borrower or any bankruptcy trustee during the pendency of any such Bankruptcy
Case. Any Lien at any time granted to or otherwise acquired by Junior Creditor
in any of the Collateral, whether such Collateral is created, acquired or
arises prior to or after the commencement of any such Bankruptcy Case, shall be
subject to all of the terms of this Agreement and shall be subordinate in
priority to all Liens granted to or otherwise obtained by Agent with respect to
any such Collateral, including Liens granted to or conferred upon Agent or any
Senior Creditors to secure financings in any such Bankruptcy Case.
(b) If Agent consents to the sale of any of the
Collateral during any Bankruptcy Case (whether such sale is to be made pursuant
to 11 U.S.C. ss. 363, pursuant to a plan of reorganization or otherwise), then
Junior Creditor shall be deemed to have consented to any such sale and shall,
if requested to do so by Agent in connection with any such sale, promptly
execute and deliver to Agent a release of Junior Creditor's Liens with respect
to the Collateral to be sold.
(c) If, in or as a result of any Bankruptcy Case, Agent
returns, refunds or repays to Verso, any other Borrower or any trustee or
committee appointed in the Bankruptcy Case any payment or proceeds of any
Collateral in connection with any action, suit or proceeding alleging that
Agent's receipt of such payments or proceeds was a transfer voidable under
state or federal law, then Agent shall not be deemed ever to have received such
proceeds for purposes of this Agreement in determining whether and when all of
the Senior Creditor Obligations have been paid in full.
(d) If Junior Creditor has any claim against Verso or
any other Borrower in any Bankruptcy Case, assignment for the benefit of Junior
Creditor, receivership proceedings, dissolution proceedings or similar
proceedings, Junior Creditor hereby makes, constitutes and appoints Agent as
Junior Creditor's attorney-in-fact and authorizes Agent to file, in the name of
Junior Creditor, such claim on behalf of Junior Creditor and any sums received
by Agent in connection with such claim shall be applied to the Senior Creditor
Obligations to the extent thereof. Agent shall remit to Junior Creditor any
funds remaining after those sums have been so
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applied, to the extent permitted by applicable laws or the proceedings
governing any such bankruptcy.
11. SUBROGATION. Provided that the Senior Creditor Obligations
have been indefeasibly paid and discharged and the Senior Creditor Documents
have been terminated, Junior Creditor shall be subrogated (without any
representation by or recourse to any Senior Creditor) to the rights of Senior
Creditors to receive payments or distributions of cash, property or securities
payable or distributable on account of the Senior Creditor Obligations, to the
extent of all payments and distributions paid over to or for the benefit of
Senior Creditors pursuant to this Agreement on account of the Junior Creditor
Obligations. In no event, however, shall Junior Creditor have any rights or
claims against any Senior Creditor for any alleged impairment of Junior
Creditor's subrogation rights, Junior Creditor acknowledging that any actions
taken by any Senior Creditor with respect to the Senior Creditor Obligations or
the Collateral are authorized and consented to by Junior Creditor.
12. AGREEMENT TO RELEASE LIENS. Junior Creditor agrees that it
will (if requested to do so by Agent after and during the continuance of an
Event of Default under the Senior Creditor Documents) release its Liens, if
any, in any Collateral in connection with and in order to facilitate any
orderly liquidation sale of such Collateral by Verso or any other Borrower or
any bankruptcy trustee or receiver for any Borrower, and promptly upon the
request of Agent, it will execute and deliver such documents, instruments and
agreements as are necessary to effectuate such release and to evidence such
release in the appropriate public records. Notwithstanding the foregoing, the
Lien, if any, granted to Junior Creditor shall, subject to all of the
provisions of this Agreement, continue in the proceeds of any such Collateral
if such proceeds are not applied to the Senior Creditor Obligations in
accordance with the terms of the Senior Creditor Documents.
13. WAIVER OF MARSHALING; APPLICATION OF PAYMENTS AND PROCEEDS.
Junior Creditor hereby waives any right to require Agent or any Senior Creditor
to xxxxxxxx any security or collateral or otherwise to compel Agent or any
Senior Creditor to seek recourse against or satisfaction of the indebtedness to
it from one source before seeking recourse or satisfaction from another source.
Agent shall be authorized to apply any and all payments, collections and
proceeds of Collateral received by it to such portion of the Senior Creditor
Obligations as Agent may lawfully elect consistent with the provisions of the
Senior Creditor Documents.
14. NOTICES. All notices, requests and demands to or upon a party
hereto shall be in writing and shall be delivered by hand, sent by certified or
registered mail, return receipt requested or by telecopier and shall be deemed
to have been validly served, given or delivered when delivered against receipt
or three (3) Business Days after deposit in the mail, postage prepaid, or, in
the case of telecopy notice, when received at the office of the noticed party,
in each case addressed as follows:
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(A) If to Agent: PNC Bank, National Association, as Agent
Xxx Xxxxx Xxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Telecopier: (000) 000-0000
with a copy to: Parker, Hudson, Rainer & Xxxxx LLP
1500 Marquis Two Tower
000 Xxxxxxxxx Xxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: C. Xxxxxx Xxxxx, Esq.
Telecopier: (000) 000-0000
(B) If to Junior Creditor: Xxxxxxxx.Xxx Software, Inc.
0000 Xxxxxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Chief Financial Officer
Telecopier No.: (000) 000-0000
with a copy to: Xxxxxx, Xxxxxxx & Xxxxxx, LLP
1600 Atlanta Financial Center
0000 Xxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq.
(C) If to Verso or any
other Borrower: Verso Technologies, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
Telecopier No.: (000) 000-0000
with a copy to: Xxxxxx & Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx
0000 Xxxxxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxx, Esq.
Telecopier No.: (000) 000-0000
or to such other address as each party may designate for itself by like notice
given in accordance with this paragraph. Any written notice that is not sent in
conformity with the provisions hereof shall nevertheless be effective on the
date that such notice is actually received by the noticed party. Junior
Creditor hereby agrees that any requirement for the giving of notice by Agent
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under the Code or otherwise in connection with any exercise by Agent of any of
its rights or remedies with respect to the Collateral shall be satisfied by the
giving of written notice at least five (5) days prior to the date on which such
rights or remedies are to be exercised by Agent, provided that nothing herein
shall be deemed to require the giving of any such notice when such notice is
not required by applicable law.
15. AUTHORITY. Agent hereby represents and warrants to Junior
Creditor and Verso that Agent has the right power and authority to execute this
Agreement on behalf of itself and each Senior Creditor and that upon the
execution of this Agreement by Agent, Agent and each Senior Creditor will be
bound by the terms hereof. Junior Creditor hereby represents and warrants to
Agent, that Junior Creditor has the right power and authority to execute this
Agreement on behalf of itself and each Junior Creditor and that upon the
execution of this Agreement by Junior Creditor, Junior Creditor will be bound
by the terms hereof.
16. NO DUTIES IMPOSED UPON SENIOR CREDITOR. The rights granted to
Agent in this Agreement are solely for its protection and nothing herein
contained imposes on Agent any duties with respect to any of the Collateral.
Agent has no duty to preserve rights against prior parties on any instrument or
chattel paper received from Verso or any other Borrower as collateral security
for any of the Senior Creditor Obligations.
17. SPECIFIC ENFORCEMENT. If Junior Creditor fails to comply with
any provision of this Agreement that is applicable to it, Agent may demand
specific performance of this Agreement and may exercise any other remedy
available at law or equity.
18. ADDITIONAL CREDIT EXTENSIONS. Junior Creditor acknowledges,
understands and agrees that Senior Creditors may make Advances to Verso and the
other Borrowers from time to time, pursuant to the Senior Creditor Documents or
otherwise, and all such Advances shall constitute part of the Senior Creditor
Obligations and shall be secured by all of the Collateral, and nothing herein
shall restrict in any manner or in any way the right of any Borrower to obtain
additional credit from Senior Creditors or the right of any Senior Creditors to
make available such additional credit to any Borrower as Senior Creditors in
their sole discretion may elect.
19. INDEMNITY. Junior Creditor agrees to indemnify, defend and
hold Agent and each Senior Creditor harmless from and against any loss, damage,
cost, claim or expense, including court costs and attorneys' fees, incurred or
sustained by Agent or any Senior Creditor in connection with any remittances of
proceeds of any Collateral made pursuant to the terms hereof from Agent to
Junior Creditor, to the extent that such remittance of proceeds subsequently is
determined by a court of competent jurisdiction to have been prohibited by
applicable law, avoidable under any insolvency law (including the Bankruptcy
Code), or in violation of the rights of any other creditor of any Borrower when
made. The foregoing indemnity shall survive any termination of this Agreement.
20. INDEPENDENT CREDIT INVESTIGATIONS. None of the parties hereto
nor any of their respective directors, officers, agents, employees, successors
or assigns shall be responsible to the others or to any other Person for any
Borrower's solvency, financial condition or ability to repay any of the Junior
Creditor Obligations or any of the Senior Creditor Obligations, or for
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statements of any Borrower, oral or written, or for the validity, sufficiency
or enforceability of any of the Junior Creditor Documents or any of the Senior
Creditor Documents, or the validity or priority of any Liens granted by any
Borrower to either party in connection with any of the Junior Creditor
Documents or any of the Senior Creditor Documents. Each party hereto has
entered into its agreements with Verso and the other Borrowers based upon its
own independent investigation, and makes no warranty or representation to the
other party nor does it rely upon any representation of the other party with
respect to matters identified or referred to in this paragraph.
21. NO ADDITIONAL RIGHTS OF BORROWERS HEREUNDER. Nothing herein
shall be construed to confer additional rights upon Verso or any other
Borrower. Without limiting the generality of the foregoing, if any party hereto
shall enforce its rights or remedies in violation of this Agreement, no
Borrower shall be authorized to use such violation as a defense to any right or
remedy exercised by such party, nor assert such violation as a counterclaim or
basis of setoff or recoupment against such party, unless the other party hereto
consents in writing and itself asserts that the exercise of right or remedy is
in violation of this Agreement.
22. TERM OF AGREEMENT. This Agreement shall continue in full
force and effect and shall be irrevocable by any party hereto until the
earliest to occur of the following: (i) the parties hereto in writing mutually
agree to terminate this Agreement; (ii) the Junior Creditor Obligations are
fully discharged and the Junior Creditor Documents are terminated; or (iii) the
Senior Creditor Obligations are fully paid and discharged and the Senior
Creditor Documents are terminated.
23. GOVERNING LAW. This Agreement shall be interpreted, and the
rights and obligations of the parties hereto determined, in accordance with the
internal laws of the State of Georgia.
24. NO THIRD PARTY BENEFICIARIES. Nothing contained in this
Agreement shall be deemed to indicate that this Agreement has been entered into
for the benefit of any Person other than the parties hereto.
25. CONFLICT WITH DOCUMENTS. The provisions of this Agreement are
intended by the parties to control any conflicting provisions in the Senior
Creditor Documents or the Junior Creditor Documents, including any covenants
prohibiting further borrowing or encumbrances of Collateral.
26. COUNTERPARTS; TELECOPIED SIGNATURES. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which counterparts taken together shall
constitute but one and the same instrument. Any signature delivered by a party
by facsimile transmission shall be deemed to be an original signature hereto.
27. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns. In no event, however, shall either party hereto
transfer or assign any Lien that it may have in any of the
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Collateral to any Person unless the transferee or assignee thereof shall first
agree in writing to be bound by the terms of this Agreement the same as if an
original signatory hereto. Notwithstanding the immediately preceding sentence,
any Person(s) whose loans or advances to any Borrowers hereafter are used to
refinance and pay in full the Senior Creditor Obligations shall be deemed for
all purposes hereof to be the successor to Agent and Senior Creditors, and from
and after the date of any such refinancing in satisfaction in full of the
Senior Creditor Obligations such Person(s) shall be deemed a party hereto in
the place and stead of Agent and Senior Creditors as if such Person(s) had been
the original signatories hereto, and all loans, advances, liabilities, debit
balances, covenants and duties at any time or times owed by Verso and any other
Borrowers to such successor to Agent and Senior Creditors, whether direct or
indirect, absolute or contingent, secured or unsecured, due or to become due,
then existing or thereafter arising, including any renewals, extensions,
modifications, or replacements of any of the foregoing, shall be deemed for all
purposes hereunder to constitute and be Senior Creditor Obligations.
28. FURTHER ASSURANCES. Each of the parties hereto agrees to
execute such amendments to financing statements and other documents as may be
necessary to reflect of record the existence of this Agreement and the relative
priorities established pursuant to paragraph 3 hereof.
29. SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
30. ENTIRE AGREEMENT; AMENDMENTS. This Agreement expresses the
entire understanding and agreement of the parties hereto with respect to the
subject matter hereof and supersedes all prior understandings and agreements of
the parties regarding the same subject matter. This Agreement may not be
amended or modified except by a writing signed by the parties hereto.
31. JURY TRIAL WAIVER. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, EACH PARTY HERETO HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY
IN CONNECTION WITH ANY ACTION, SUIT OR OTHER PROCEEDING ARISING OUT OF OR
RELATED TO THIS AGREEMENT.
[Signatures Next Page]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by its duly authorized representative on the day and
year first above written.
PNC BANK, NATIONAL ASSOCIATION,
as Agent ("Agent")""
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
VERSO TECHNOLOGIES, INC.
("Verso")
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President and Chief
Financial Officer
XXXXXXXX.XXX SOFTWARE, INC.
("Junior Creditor")
By: /s/ Xxxxx Xxx Xxxx
-------------------------------------------------
Name: Xxxxx Xxx Xxxx
Title: Chief Financial Officer
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