Debt Subordination Agreement
EXHIBIT 10.3
Fifth
Third Bank, as Administrative Agent, and
the
Lenders party to the Credit Agreement
described
below
Fifth
Third Center
000
Xxxxxxxx Xxxxxx Xxxxx
XX
000000
Xxxxxxxxxx,
XX 00000
Ladies
and Gentlemen:
The
undersigned is a creditor of Champion Industries, Inc., a West Virginia
corporation (hereinafter called “Borrower”). In
consideration of loans made or to be made, credit given or to be given, or other
financial accommodations afforded or to be afforded to the Borrower,
concurrently herewith or at any time or from time to time hereafter, on such
terms as may be agreed upon between you and other Lenders party to that Credit
Agreement with the Borrower dated as of September 14, 2007, as the
same has been amended and may be further amended, restated or supplemented from
time to time (collectively, the “Senior Lenders”) and the
Borrower, the undersigned agrees that all indebtedness, obligations and
liabilities of the Borrower to the undersigned now existing or hereafter arising
and howsoever evidenced or acquired (the aggregate principal amount of such
Subordinated Indebtedness as of the date hereof being $3,000,000.00) shall be
and remain junior and subordinate to any and all indebtedness, obligations and
liabilities, including principal and interest, of the Borrower to the Senior
Lenders now existing or hereafter arising, whether direct or indirect, secured
or unsecured, absolute or contingent, joint or several or joint and several, and
howsoever owned, held or acquired, whether through discount, purchase, direct
loan or as collateral or otherwise and all post-petition interest in a
bankruptcy or similar proceeding whether or not allowed (hereinafter
collectively called “Superior
Indebtedness”), all on the terms and conditions contained
herein.
Without
limiting the generality of the foregoing, the undersigned further agrees with
the Senior Lenders as follows:
1.So long as any Superior Indebtedness shall remain outstanding and
unpaid or the Senior Lenders have any obligation to extend credit to the
Borrower, no payment either of principal or interest (notwithstanding the
expressed maturity or any time for the payment of principal of or interest on
any Subordinated Indebtedness) shall be made on Subordinated Indebtedness except
with your prior written consent and the undersigned will take no steps, whether
by suit or otherwise, to compel or enforce the collection of Subordinated
Indebtedness, nor will the undersigned use Subordinated Indebtedness by way of
counterclaim, set-off, recoupment or otherwise so as to diminish, discharge or
otherwise satisfy in whole or in part any indebtedness or liability of the
undersigned to the Borrower, whether now existing or hereafter arising and
howsoever evidenced.
2.In the event of any distribution, dividend, or application,
partial or complete, voluntary or involuntary, by operation of law or otherwise,
of all or any part of the assets of the Borrower or of the proceeds thereof to
the creditors of the Borrower or upon any indebtedness of the Borrower,
occurring by reason of the liquidation, dissolution, or other winding up of the
Borrower, or by reason of any execution sale, or bankruptcy, receivership,
reorganization, arrangement, insolvency, liquidation or foreclosure proceeding
of or for the Borrower or involving its property, no dividend, distribution or
application shall be made, and the undersigned shall not be entitled to receive
or retain any dividend, distribution, or application on or in respect of
principal of or interest on Subordinated Indebtedness, unless and until all
principal of and interest on Superior Indebtedness then outstanding shall have
been paid and satisfied in full, and in any such event any dividend,
distribution or application otherwise payable in respect of Subordinated
Indebtedness shall be paid and applied on Superior Indebtedness until such
Superior Indebtedness has been fully paid and
satisfied.
3.No Senior Lender need at any time give the undersigned notice of
any kind of the creation or existence of any Superior Indebtedness, nor of the
amount or terms thereof, all such notice being hereby expressly
waived. Also, the Senior Lenders may at any time from time to time,
without the consent of or notice to the undersigned, without incurring
responsibility to the undersigned, and without impairing or releasing the
obligation of the undersigned under this agreement (i) renew, refund or
extend the maturity of, or increase or decrease the amount of, any Superior
Indebtedness, or any part thereof, or otherwise revise, amend or alter the terms
and conditions thereof, (ii) sell, exchange, release or otherwise deal with
any property by whomsoever at any time pledged, mortgaged or otherwise
hypothecated or subjected to a lien to secure any Superior Indebtedness, and
(iii) exercise or refrain from exercising any rights against the Borrower
and others, including the undersigned.
4.The undersigned will not sell, assign or otherwise transfer any
Subordinated Indebtedness, or any part thereof, except subject to and in
accordance with the terms hereof and upon the agreement of the transferee or
assignee to abide by and be bound by the terms hereof.
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5.The undersigned represents and warrants that the undersigned has
no lien on or security interest in any assets of the Borrower and will not
accept any such lien or security interest so long as any Superior Indebtedness
shall remain outstanding and unpaid or the Senior Lenders have any obligations
to extend credit to the Borrower. Notwithstanding the foregoing, the
undersigned expressly subordinates all of the undersigned’s rights in any
collateral now or later securing the Subordinated Indebtedness (the "Collateral") to all rights of
Fifth Third Bank, as Administrative Agent for the Senior Lenders, and any and
all of its successors and assigns (collectively, the “Administrative Agent”) now or
later existing in any of the same Collateral to secure the Superior
Indebtedness, and any and every lien or security interest with respect to the
Collateral in favor of or held for the benefit of the Administrative Agent has
and shall have priority over every lien and security interest that the
undersigned now has or may hereafter acquire with respect to the Collateral, all
notwithstanding any statement or provision contained in the instruments
evidencing the Subordinated Indebtedness, or agreements with respect thereto 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 part
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. The undersigned consents to the creation and
continuance of all present and future liens and security interests of the
Administrative Agent in the Collateral to secure the Superior Indebtedness and
to the enforcement of those liens and security interests, including the removal
of the Collateral from the real property of the Borrower. This
subordination as to the Collateral is intended to define the rights and duties
of the Administrative Agent and the undersigned; it is not intended that any
third party shall benefit from it. If the effect of any provision of
this Agreement would be to give any third party a priority status to which that
party would not otherwise be entitled, that provision shall, to the extent
necessary to avoid that priority, be given no effect and the rights and
priorities of the Administrative Agent and the undersigned shall be determined
in accordance with applicable law.
6.The undersigned will cause all Subordinated Indebtedness to be at
all times evidenced by the note or notes of the Borrower (with such maturity
date or dates as you may request which in no event shall be earlier then on
September 14, 2014) and will cause all such notes to bear thereon a
legend substantially as follows:
“The
indebtedness evidenced by this Note is subordinate to any and all indebtedness,
obligations and liabilities of the maker hereof to the Lenders party to that
Credit Agreement with Champion Industries, Inc. dated as of
September 14, 2007, as the same may be amended, modified, restated or
supplemented form time to time, in the manner and to the extent set forth in
that certain Subordination Agreement for the benefit of said Lenders dated as of
December 29, 2009, which reference is hereby made for a more full
statement thereof.”
7.If notwithstanding the provisions of this agreement, the
undersigned shall receive any payment of principal or interest on Subordinated
Indebtedness which the Borrower is not entitled to make pursuant to the terms
hereof, whether or not the undersigned has knowledge that the Borrower is not
entitled to make such payment, the undersigned shall promptly account for such
payment and upon your demand pay over such payment to you for application to the
Superior Indebtedness owing to the Senior Lenders. No payment or any
distribution received by you in respect of Subordinated Indebtedness pursuant to
any of the terms hereof shall entitle the undersigned to any right, whether by
virtue of subrogation or otherwise, in and to any Superior Indebtedness unless
and until all Superior Indebtedness owing to the Senior Lenders has been fully
paid and satisfied and to the Senior Lenders obligations, if any, to extend
credit to the Borrower have expired or otherwise have been
terminated.
8.This agreement shall be continuing and binding until written
notice of its discontinuance shall be actually received by you, and shall remain
in full force and effect until all Superior Indebtedness created or existing or
committed to make available to the Borrower prior to the receipt of such notice
shall have been fully paid and satisfied.
Each and
all of the promises herein contained shall be binding on the undersigned, his or
her heirs, legal representatives and assigns, and shall inure to the benefit of
the Senior Lenders and the benefit of their successors and assigns.
Dated as
of December 29, 2009.
| /s/ Xxxxxxxx X. Xxxxxxxx | |||
| Xx. Xxxxxxxx Xxxxxxxx | |||
| Accepted and Agreed to: | |||
| Fifth Third Bank, as Administrative Agent for the Senior Lenders | |||
| By | /s/ Xxxx X. Xxxxxxxx | ||
| Name | Xxxx X. Xxxxxxxx | ||
| Title | Vice President | ||
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Acknowledgement
Champion
Industries, Inc. hereby acknowledges receipt of a copy of the above and
foregoing Debt Subordination Agreement, agrees to be bound by the terms and
provisions thereof, to make no payment or distribution contrary to the terms
thereof, and to do every other act and thing necessary or appropriate to be done
or performed by it in order to carry out the terms of the agreement as set forth
in said letter.
Dated as
of December 29, 2009.
| Champion Industries, Inc. | ||
| By | /s/ Xxxx X. Xxx | |
| Name | Xxxx X. Xxx | |
| Title | Senior Vice President and Chief Financial Officer | |
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