Exhibit 10.9
SUBORDINATION AGREEMENT
This Subordination Agreement (this "Agreement") is entered into as of
the 20th day of January, 2006, by and among Xxxxx X. Xxxxxx and Xxxxx X.
Xxxxxx are collectively referred to herein as the "Subordinated Lenders" and
each, a "Subordinated Lender"), and Laurus Master Fund, Ltd. (the "Senior
Lender"). Unless otherwise defined herein, capitalized terms used herein
shall have the meaning provided such terms in the Securities Purchase
Agreement referred to below.
BACKGROUND
WHEREAS, the Senior Lender has made a loan to DataLogic International,
Inc., a Delaware corporation (the "Company") pursuant to, and in accordance
with (i) that certain Securities Purchase Agreement, dated as of January 20,
2006 (as amended, modified or supplemented from time to time, the "Securities
Purchase Agreement"), by and between the Company and the Senior Lender and
(ii) the Related Agreements referred to in the Securities Purchase Agreement.
WHEREAS, the Subordinated Lenders are officers and directors of the
Company and have made loans to the Company.
NOW, THEREFORE, each Subordinated Lender and the Senior Lender agree as
follows:
TERMS
1. All obligations of each the Company and/or any of its Subsidiaries
to the Senior Lender, howsoever created, arising or evidenced, whether direct
or indirect, absolute or contingent or now or hereafter existing, or due or to
become due are referred to as "Senior Liabilities". Any and all loans made by
the Subordinated Lenders to the Company and/or any of its Subsidiaries,
together with all other obligations of the Company and/or any of its
Subsidiaries to any Subordinated Lender (in each case, including any interest,
fees or penalties related thereto), howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent or now or hereafter
existing, or due or to become due are referred to as "Junior Liabilities". It
is expressly understood and agreed that the term "Senior Liabilities", as used
in this Agreement, shall include, without limitation, any and all interest,
fees and penalties accruing on any of the Senior Liabilities after the
commencement of any proceedings referred to in paragraph 4 of this Agreement,
notwithstanding any provision or rule of law which might restrict the rights
of the Senior Lender, as against the Company, its Subsidiaries or anyone else,
to collect such interest, fees or penalties, as the case may be.
2. Except as expressly otherwise provided in this Agreement or as the
Senior Lender may otherwise expressly consent in writing, the payment of the
Junior Liabilities shall be postponed and subordinated to the payment in full
of all Senior Liabilities. Furthermore, no payments or other distributions
whatsoever in respect of any Junior Liabilities shall be made, nor shall any
property or assets of the Company or any of its Subsidiaries be applied to the
purchase or other acquisition or retirement of any Junior Liability.
Notwithstanding anything to the contrary contained in this paragraph 2 or
elsewhere in this Agreement, the Company and its Subsidiaries may make
regularly scheduled principal and interest payments, as the case may be, to
the Subordinated Lenders with respect to the Junior Liabilities, so long as
(i) no Event of Default has occurred and is continuing at the time of any such
payment and (ii) the amount of such regularly scheduled principal payments and
the rate of interest, in each case, with respect to the Junior Liabilities is
not increased from that in effect on the date hereof.
3. Each Subordinated Lender hereby subordinates all security
interests that have been, or may be, granted by the Company and/or any of its
Subsidiaries to such Subordinated Lender in respect of the Junior Liabilities,
to the security interests granted by the Company and/or any of its
Subsidiaries to the Senior Lender in respect of the Senior Liabilities.
4. In the event of any dissolution, winding up, liquidation,
readjustment, reorganization or other similar proceedings relating to the
Company and/or any of its Subsidiaries or to its creditors, as such, or to its
property (whether voluntary or involuntary, partial or complete, and whether
in bankruptcy, insolvency or receivership, or upon an assignment for the
benefit of creditors, or any other marshalling of the assets and liabilities
of the Company and/or any of its Subsidiaries, or any sale of all or
substantially all of the assets of the Company and/or any of its Subsidiaries,
or otherwise), the Senior Liabilities shall first be paid in full before any
Subordinated Lender shall be entitled to receive and to retain any payment or
distribution in respect of any Junior Liability.
5. Each Subordinated Lender will xxxx his books and records so as to
clearly indicate that their respective Junior Liabilities are subordinated in
accordance with the terms of this Agreement. Each Subordinated Lender will
execute such further documents or instruments and take such further action as
the Senior Lender may reasonably request from time to time request to carry
out the intent of this Agreement.
6. Each Subordinated Lender hereby waives all diligence in collection
or protection of or realization upon the Senior Liabilities or any security
for the Senior Liabilities.
7. No Subordinated Lender will without the prior written consent of
the Senior Lender: (a) attempt to enforce or collect any Junior Liability or
any rights in respect of any Junior Liability; or (b) commence, or join with
any other creditor in commencing, any bankruptcy, reorganization or insolvency
proceedings with respect to the Company and/or any of its Subsidiaries.
8. The Senior Lender may, from time to time, at its sole discretion
and without notice to any Subordinated Lender, take any or all of the
following actions: (a) retain or obtain a security interest in any property
to secure any of the Senior Liabilities; (b) retain or obtain the primary or
secondary obligation of any other obligor or obligors with respect to any of
the Senior Liabilities; (c) extend or renew for one or more periods (whether
or not longer than the original period), alter or exchange any of the Senior
Liabilities, or release or compromise any obligation of any nature of any
obligor with respect to any of the Senior Liabilities; and (d) release their
security interest in, or surrender, release or permit any substitution or
exchange for, all or any part of any property securing any of the Senior
Liabilities, or extend or renew for one or more periods (whether or not longer
than the original period) or release, compromise, alter or exchange any
obligations of any nature of any obligor with respect to any such property.
9. The Senior Lender may, from time to time, whether before or after
any discontinuance of this Agreement, without notice to any Subordinated
Lender, assign or transfer any or all of the Senior Liabilities or any
interest in the Senior Liabilities; and, notwithstanding any such assignment
or transfer or any subsequent assignment or transfer of the Senior
Liabilities, such Senior Liabilities shall be and remain Senior Liabilities
for the purposes of this Agreement, and every immediate and successive
assignee or transferee of any of the Senior Liabilities or of any interest in
the Senior Liabilities shall, to the extent of the interest of such assignee
or transferee in the Senior Liabilities, be entitled to the benefits of this
Agreement to the same extent as if such assignee or transferee were the Senior
Lender, as applicable; provided, however, that, unless the Senior Lender shall
otherwise consent in writing, the Senior Lender shall have an unimpaired
right, prior and superior to that of any such assignee or transferee, to
enforce this Agreement, for the benefit of the Senior Lender, as to those of
the Senior Liabilities which the Senior Lender has not assigned or
transferred.
10. The Senior Lender shall not be prejudiced in its rights under this
Agreement by any act or failure to act of any Subordinated Lender, or any
noncompliance of any Subordinated Lender with any agreement or obligation,
regardless of any knowledge thereof which the Senior Lender may have or with
which the Senior Lender may be charged; and no action of the Senior Lender
permitted under this Agreement shall in any way affect or impair the rights of
the Senior Lender and the obligations of any Subordinated Lender under this
Agreement.
11. No delay on the part of the Senior Lender in the exercise of any
right or remedy shall operate as a waiver of such right or remedy, and no
single or partial exercise by the Senior Lender of any right or remedy shall
preclude other or further exercise of such right or remedy or the exercise of
any other right or remedy; nor shall any modification or waiver of any of the
provisions of this Agreement be binding upon the Senior Lender except as
expressly set forth in a writing duly signed and delivered on behalf of the
Senior Lender. For the purposes of this Agreement, Senior Liabilities shall
have the meaning set forth in Section 1 above, notwithstanding any right or
power of any Subordinated Lender or anyone else to assert any claim or defense
as to the invalidity or unenforceability of any such obligation, and no such
claim or defense shall affect or impair the agreements and obligations of any
Subordinated Lender under this Agreement.
12. This Agreement shall be binding upon each Subordinated Lender and
upon the heirs, legal representatives, successors and assigns of each
Subordinated Lender and the successors and assigns of any Subordinated Lender.
13. This Agreement shall be construed in accordance with and governed
by the laws of New York without regard to conflict of laws provisions.
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 such law,
such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
[signature page follows]
IN WITNESS WHEREOF, this Agreement has been made and delivered this
20th day of January, 2006.
By: /s/Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: CIO
By: /s/Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: CFO
LAURUS MASTER FUND, LTD.
By: /s/Xxxxxx Grin
Name: Xxxxxx Grin
Title: Director
Acknowledged and Agreed to by:
DATALOGIC INTERNATIONAL, INC.
By:/s/Xxxxx Xxxxx
Name: Xxxxx Xxxxx
Title: CEO
