INTERCREDITOR AGREEMENT
Exhibit 10.119
This Intercreditor Agreement (this “Agreement”), dated as of December 23, 2008 is made
by and among Xxxx Xxxxxx and Company, Inc., a New Jersey corporation (the “Junior Lender”),
Xxxxx Fargo Bank, National Association (with its participants, successors and assigns, the
“Senior Lender”), acting through its Xxxxx Fargo Business Credit operating division, and
The Xxxx Companies, Inc., a Delaware corporation (“Company”).
Company now is or hereafter may be indebted to Senior Lender on account of loans or other
extensions of credit or financial accommodations from Senior Lender to or for the benefit of
Company and/or certain of its affiliates and has secured its indebtedness by granting a lien on its
personal property in favor of Senior Lender.
Company now is or hereafter may also be indebted to Junior Lender on account of loans or other
extensions of credit or financial accommodations from Junior Lender to Company and has secured its
indebtedness by granting a lien on its personal property in favor of Junior Lender.
As a condition to extending credit to Company, Senior Lender has required the execution and
delivery of this Agreement by Junior Lender.
ACCORDINGLY, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and to induce Senior Lender from time to time to extend credit to Company,
Junior Lender, Senior Lender and Company hereby agree as follows:
1. Definitions. As used herein, the following terms shall have the meanings set forth
below:
“Bankruptcy Code” is defined in Section 6(c).
“Collateral” means all present and future property and assets of Company
wherever located and however described, together, in each case, with all proceeds thereof
pledged to the Senior Lender to secure the Senior Indebtedness and/or to the Junior Lender
to secure the Junior Indebtedness.
“Control Agent” has the meaning given thereto in Section 14 hereof.
“Control Collateral” means any (a) Collateral which is a Certificated Security,
an Instrument, Investment Property, a Deposit Account (each as defined in the UCC), or cash,
(b) any rights to receive payments under any insurance policy that constitutes Collateral
and with respect to which the Senior Lender (or its agent) is named as loss payee, (c) any
other Collateral as to which a Lien may be perfected by possession or control by the secured
party or its agent, and (d) any other Collateral with respect to which a secured party must
be listed on a certificate of title in order to perfect the Lien thereon.
“Distribution” means, with respect to any indebtedness, obligation or security
(a) any payment or distribution of cash, securities or other property, by set-off or
otherwise, on account of such indebtedness, obligation or security, (b) any redemption,
purchase or other acquisition of such indebtedness, obligation or security, or (c) the
granting of any Lien to or for the benefit of the holders of such indebtedness, obligation
or security in or upon any property or interests in property.
“Enforcement Action” means, with respect to the Senior Indebtedness, any demand
for payment or acceleration thereof, the exercise of any rights and remedies with respect to
any Collateral or the commencement or prosecution of enforcement of any of the rights and
remedies under, as applicable, the Senior Loan Documents, or applicable law, including
without limitation the exercise of any rights of set-off or recoupment, and the exercise of
any rights or remedies of the Senior Lender as a secured creditor under the Uniform
Commercial Code of any applicable jurisdiction or under the Bankruptcy Code.
“Junior Indebtedness” means any and all advances, debts, obligations and
liabilities of Company to Junior Lender pursuant to the Note including without limitation
all principal and interest, fees, expenses, reimbursement obligations and other amounts
payable thereunder.
“Junior Loan Documents” means collectively, the Note and all security
agreements and guaranty agreements related thereto.
“Lien” means any security interest, mortgage, deed of trust, pledge, lien,
charge, encumbrance, title retention agreement or analogous instrument or device, including
the interest of each lessor under any capitalized lease and the interest of any bondsman
under any payment or performance bond, in, of or on any assets or properties of a person,
firm, corporation, limited liability company or other entity, whether now owned or hereafter
acquired and whether arising by agreement or operation of law.
“Maximum Senior Lien Financing Amount” means as of any date of determination,
such amount not to exceed $30,000,000.00 in aggregate amount at any one time outstanding
under the Senior Loan Documents minus permanent reductions in revolving loan commitments
from time to time in accordance with the Senior Credit Agreement as in effect as of the date
hereof.
“Note” means that certain Secured Promissory Note made by the Company in favor
of Junior Lender in the original principal amount of $19,000,000.
“Notice of Intent” means a written notice from or on behalf of Junior Lender to
Senior Lender stating that an Event of Default under Section III B of the Note resulting
from Company’s breach of Section VIII (Restricted Payments) of the Note, breach of Section
IX (Limitation on Transactions with Affiliates) of the Note or Section X (Limitations on
Compensation) of the Note, has occurred and is continuing and any applicable cure, notice
and grace periods have expired.
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“Payment in Full” or “Paid in Full” means that (a) the Senior
Indebtedness (other than contingent indemnification obligations not yet due and payable) has
been paid and satisfied in full in cash, and (b) any commitment or agreement of Senior
Lender to extend any financial accommodations to Company under the Senior Loan Documents has
been terminated.
“Reorganization Subordination Securities” shall mean any debt or equity
securities of Company or any other Person that are distributed to Junior Lender in respect
of the Junior Indebtedness that, in the case of debt securities, are subordinate and junior
in right as to liens and payment to the Senior Indebtedness (or subordinated and junior in
right of liens and payment to any debt or equity securities issued in substitution of all or
any portion of the Senior Indebtedness) to at least the same extent as the Junior
Indebtedness is subordinated to the Senior Indebtedness under this Agreement.
“Senior Credit Agreement” means that certain Credit and Security Agreement of
even date herewith between Company and Senior Lender, as the same may be modified, amended,
supplemented or restated from time to time.
“Senior Default” means the occurrence and continuance of any Event of Default
under the Senior Credit Agreement.
“Senior Guaranty Agreement” means that certain Guaranty of even date herewith
by Company in favor of Senior Lender, as the same may be modified, amended, supplemented or
restated from time to time.
“Senior Indebtedness” means any and all advances, debts, obligations and
liabilities of Company to Senior Lender, pursuant to the Senior Credit Agreement and the
other Senior Loan Documents including without limitation all principal and interest, fees,
expenses, reimbursement obligations and other amounts payable thereunder now or hereafter
made, incurred or created, provided, however, that the amount of the Senior Indebtedness for
purposes of this Agreement shall be limited to no more than the Maximum Senior Lien
Financing Amount and no advances, debts, obligations and liabilities of Company to Senior
Lender with respect to a borrowing or other extension of credit made after December 21, 2012
shall constitute Senior Indebtedness without the prior written consent of the Junior
Creditor unless an Enforcement Action has commenced in which case, Senior Lender’s
reasonable out of pocket costs and expenses in connection with such Enforcement Action shall
be Senior Indebtedness.
“Senior Loan Documents” means the “Loan Documents”, as such term is defined in
the Senior Guaranty Agreement.
“Senior Security Agreement” means that certain Collateral Pledge Agreement of
even date herewith by Company in favor of Senior Lender, as the same may be modified,
amended, supplemented or restated from time to time.
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“Standstill Period” means the period beginning when a Notice of Intent is given
and ending on the first Business Day that is at least 180 days after receipt by Senior
Lender of a Notice of Intent, provided however, that upon the commencement of an Enforcement
Action, the Standstill Period shall be extended until the Senior Indebtedness has been Paid
in Full.
“UCC” shall mean the Uniform Commercial Code as in effect from time to time in
the State of New York.
2. Subordination.
(a) The payment of all of the Junior Indebtedness is hereby expressly subordinated and
deferred to the extent and in the manner hereinafter set forth, until Payment in Full of the Senior
Indebtedness; and Junior Lender hereby agrees that (regardless of any priority otherwise available
to Junior Lender by law or by agreement) any Lien which Junior Lender may now hold or may at any
time hereafter acquire in any or all of the Collateral is, shall be and shall remain fully
subordinate for all purposes to any Lien that Senior Lender may now or hereafter hold in the
Collateral. The Junior Indebtedness and any Lien securing the Junior Indebtedness shall continue
to be subordinated to the Senior Indebtedness even if the Senior Indebtedness is deemed unsecured,
under-secured, subordinated, avoided or disallowed under the Bankruptcy Code or other applicable
law.
(b) Notwithstanding anything herein to the contrary, the Company shall be permitted to make
and the Junior Lender shall be permitted to receive and retain annual payments provided they
Company complies with the following conditions;
(i) The payments are made in and applied in accordance with the terms of the Junior Loan
Documents;
(ii) In computing the amount of such payment, it shall be the excess of the Availability, as
such term is defined in the Senior Loan Documents, less the sum of the following, all as of April
30 of each year:
(a) $10,000,000;
(b) all outstanding checks;
(c) all accounts payable outstanding more than 60 days from invoice date; and
(d) expenses and liabilities being paid in the ordinary course of business and without
acceleration of sales and without deterioration of working capital;
(iii) There shall not have occurred prior to or as a result of making such payment, an Event
of Default under the Senior Loan Documents; and
(iv) At least ten (10) business days prior to the making of such payment the Senior Lender
shall have received the Company’s audited financial statements for the prior fiscal year end.
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3. Distributions.
(a) Junior Lender shall not, without Senior Lender’s prior written consent, demand, receive or
accept any payment (whether of principal, interest or otherwise) or Distribution (other than
Reorganization Subordination Securities) in respect of the Junior Indebtedness or exercise any
right of or permit any setoff in respect of the Junior Indebtedness until the Action Date (as
defined in Section 4(a)).
(b) Senior Lender shall not, without Junior Lender’s prior written consent, demand, receive or
accept any payment (whether of principal, interest or otherwise) or Distribution in respect of
indebtedness that is not Senior Indebtedness or exercise any right of or permit any setoff in
respect of indebtedness that is not Senior Indebtedness until the Junior Indebtedness has been paid
and satisfied full in cash.
(c) If Junior Lender receives any Distribution in violation of this Agreement, Junior Lender
will hold the amount so received in trust for Senior Lender and will forthwith turn over such
Distribution to Senior Lender in the form received (except for the endorsement of Junior Lender
where necessary) for application to the Senior Indebtedness (whether or not due), in such order of
application as Senior Lender may deem appropriate. If Junior Lender fails to make any endorsement
required under this Agreement, Senior Lender, or any of its officers or employees or agents on
behalf of Senior Lender, is hereby irrevocably appointed (which appointment is coupled with an
interest) as the attorney-in-fact for Junior Lender (with the right but not the duty) to make such
endorsement in Junior Lender’s name.
(d) If Senior Lender receives any Distribution in violation of this Agreement, Senior Lender
will hold the amount so received in trust for Junior Lender and will forthwith turn over such
Distribution to Junior Lender in the form received (except for the endorsement of Senior Lender
where necessary) for application to the Junior Indebtedness (whether or not due), in such order of
application as Junior Lender may deem appropriate. If Senior Lender fails to make any endorsement
required under this Agreement, Junior Lender, or any of its officers or employees or agents on
behalf of Junior Lender, is hereby irrevocably appointed (which appointment is coupled with an
interest) as the attorney in fact for Senior Lender (with the right but not the duty) to make such
endorsement in Senior Lender’s name.
(e) If all Senior Indebtedness has been Paid In Full, Junior Lender shall be subrogated to the
rights of the holders of such Senior Indebtedness to receive payments and Distributions applicable
to the Senior Indebtedness until all Junior Indebtedness has been paid and satisfied in full in
cash. For purposes of such subrogation, no payments or distribution to Senior Lender as the holder
of Senior Indebtedness of any cash, property or securities or other Distribution to which Junior
Lender would be entitled to except for the provisions of this
Agreement, and no payments pursuant to the provisions of this Agreement to Senior Lender as
the holder of Senior Indebtedness by Junior Lender, shall, as among Company, its creditors other
than Senior Lender as the holder of Senior Indebtedness and Junior Lender, be deemed to be a
payment or Distribution by Company to or on account of the Senior Indebtedness. If any payment or
Distribution to which Junior Lender would otherwise have been entitled but for the provisions of
this Agreement shall have been applied, pursuant to the provisions of this Agreement, to the
payment of all amounts payable under the Senior Indebtedness, then and in such case Junior Lender
shall be entitled to receive from Senior Lender any payments or Distributions received by Senior
Lender in excess of the amount sufficient for the Senior Indebtedness to be Paid In Full.
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4. No Action.
(a) Unless and until the earliest of (i) the date upon which the Senior Indebtedness shall
have been Paid in Full, (ii) December 31, 2012 and (iii) if a Standstill Period shall have
commenced, the termination or expiration of such Standstill Period (such earliest date, the “Action
Date”), Junior Lender will not commence any action or proceeding against Company to recover all or
any part of the Junior Indebtedness, will not commence any action or proceeding with respect to the
Collateral, will not join with any creditor in bringing any proceeding against Company under any
bankruptcy, reorganization, readjustment of debt, arrangement of debt receivership, liquidation or
insolvency law or statute of the federal or any state government, will not take possession of, sell
or dispose of, or otherwise deal with, the Collateral, and will not exercise or enforce any other
right or remedy which may be available to Junior Lender with respect to the Collateral.
Notwithstanding the foregoing in this Section 4(a), in the event that Senior Lender shall have
accelerated the maturity of part or all of the Senior Indebtedness, the Junior Lender shall be
permitted to accelerate the maturity of the Junior Debt (provided that Junior Lender shall
simultaneously give notice of such acceleration to Senior Lender); provided, however, that the
Junior Lender may not take any other action described above in this Section 4(a) until the Action
Date.
(b) Without limiting the generality of the foregoing, if a Senior Default has occurred and is
continuing and Company or Senior Lender intends to sell or otherwise dispose of any Collateral to
an unrelated third party outside the ordinary course of business, Junior Lender shall, upon Senior
Lender’s written request, either (i) purchase for cash the Senior Indebtedness for the full amount
thereof or (ii) execute and deliver such instruments as may reasonably be necessary to terminate
and release any Lien Junior Lender has in the Collateral to be sold or otherwise disposed of, so
long as the proceeds of any such sale shall be applied by Senior Lender to repay and permanently
reduce commitments of the Senior Indebtedness and, to the extent such proceeds exceed the amount
necessary for the Senior Indebtedness to be Paid In Full, are promptly paid over to Junior Lender
for application to the payment of Junior Indebtedness. If Junior Lender fails, within ten (10)
days after receipt of such request, to purchase for cash the Senior Indebtedness for the full
amount thereof or to execute and deliver such instruments as may be reasonably necessary to
terminate and release any Lien Junior Lender has in the Collateral to be sold or otherwise disposed
of, Junior Lender shall be deemed to have consented
to such sale or disposition, to have released any Lien it may have in such Collateral and to
have authorized Senior Lender or its agents to file partial releases and any other amendments to
any financing statements naming Junior Lender as secured party with respect to such Collateral so
long as the proceeds of any such sale shall be applied by Senior Lender to repay and permanently
reduce commitments of the Senior Indebtedness and, to the extent such proceeds exceed the amount
necessary for the Senior Indebtedness to be Paid In Full, are promptly paid over to Junior Lender
for application to the payment of Junior Indebtedness.
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5. No Representations or Warranties. Except as set forth in Section 14, Senior Lender
(a) makes no representation or warranty concerning the Collateral or the validity, perfection or
priority of any Lien therein, and (b) shall have no duty to preserve, protect, care for, insure,
take possession of, collect, dispose of or otherwise realize upon any of the Collateral. Except as
set forth in Section 14, in no event shall Senior Lender be deemed Junior Lender’s agent with
respect to the Collateral.
6. Waiver and Consent; Bankruptcy.
(a) Senior Lender shall have no obligation to Junior Lender with respect to the Collateral
except as set forth in Section 14 or the Senior Indebtedness. Senior Lender may (i) exercise
collection rights, (ii) take possession of, sell or dispose of, and otherwise deal with, all or any
portion of the Collateral, (iii) in Senior Lender’s name or in Company’s name, demand, xxx for,
collect or receive any money or property at any time payable or receivable on account of, or
securing, any right to payment, or grant any extension to, make any compromise or settlement with
or otherwise agree to waive, modify, amend or change the Senior Indebtedness (including collateral
obligations) of any account Company or other obligor of Company; (iv) prosecute, settle and receive
proceeds on any insurance claims relating to the Collateral, and (v) exercise and enforce any right
or remedy available to Senior Lender with respect to Company and/or the Collateral, whether
available before or after the occurrence of any Senior Default; all without consent of Junior
Lender and without notice to Junior Lender except any notice as specifically required by law. To
the extent it is legally permitted to do so, Senior Lender shall apply the proceeds of the
Collateral against the Senior Indebtedness in any order of application it deems appropriate, and to
the extent there is any excess remaining after such application, then promptly to Junior Lender for
payment of the Junior Indebtedness, or to any other party legally entitled to such proceeds. Junior
Lender hereby waives any and all right to require the marshalling of assets in connection with the
exercise of any of the remedies permitted by applicable law or agreement.
(b) In the event of any receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization or arrangement with creditors, whether or not pursuant to bankruptcy law,
the sale of all or substantially all of the assets of Company, dissolution, liquidation or any
other marshalling of the assets or liabilities of Company, Junior Lender will hold in trust for
Senior Lender and promptly pay over to Senior Lender in the form received (except for the
endorsement of Junior Lender where necessary) for application to the then-existing Senior
Indebtedness, any and all moneys, dividends or other assets (other than
Reorganized Subordination Securities) received in any such proceedings on account of the
Junior Indebtedness, unless and until the Senior Indebtedness has been Paid in Full. If Junior
Lender shall fail to take any such action, Senior Lender, as attorney-in-fact for Junior Lender,
may take such action on Junior Lender’s behalf. Junior Lender will execute and deliver to Senior
Lender such other and further powers-of-attorney or instruments as Senior Lender may request in
order to accomplish the foregoing.
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(c) If Company or Company’s estate become the subject of proceedings under Title 11 of the
United States Code (11 U.S.C. § 101 et seq.), as amended, (the “Bankruptcy Code”), and if
Senior Lender desires to permit the use of cash collateral or to provide post-petition financing to
Company and the aggregate amount of such financing and the Senior Indebtedness does not exceed the
Maximum Senior Lien Financing Amount, Junior Lender shall not object to the same or assert that its
interests are not being adequately protected and agrees that adequate notice of such financing to
Junior Lender shall have been provided if Junior Lender receives written notice in accordance with
the Bankruptcy Code. The Junior Lender shall not (i) take any action or vote in any way so as to
directly or indirectly challenge or contest (A) the validity or the enforceability of any of the
Senior Loan Documents or the liens and security interests granted to Senior Lender with respect to
the Senior Indebtedness, (B) the rights and duties of Senior Lender established in the Senior Loan
Documents, or (C) the validity or enforceability of this Agreement; (ii) seek, or acquiesce in any
request, to dismiss any insolvency or other proceeding or to convert an insolvency or other
proceeding under Chapter 11 of the Bankruptcy Code to a case under Chapter 7 of the Bankruptcy
Code; (iii) seek, or acquiesce in any request for, the appointment of a trustee or examiner with
expanded powers for the Company; (iv) propose, vote in favor of or otherwise approve a plan of
reorganization, arrangement or liquidation, or file any motion or pleading in support of any plan
of reorganization, arrangement or liquidation, unless it provides that the Senior Indebtedness is
Paid in Full or unless Senior Lender has approved of the treatment of its claims with respect to
the Senior Indebtedness under such plan; (v) object to the treatment under a plan of reorganization
or arrangement of the claims with respect to the Senior Indebtedness; (vi) seek relief from the
automatic stay of Section 362 of the Bankruptcy Code or any other stay in any insolvency or other
proceeding in respect of any portion of the Collateral, provided, however, that the
Junior Creditor shall be permitted to join in any motion or proceeding filed or commenced by the
Senior Creditor to seek relief from the automatic stay, provided that, notwithstanding the granting
of such relief from the stay as to the Junior Creditor, the Junior Creditor shall be bound by all
of the provisions of this Agreement and shall be prevented from exercising any rights or remedies
with respect to the Collateral, to the extent otherwise provided in this Agreement, until such time
as the Senior Indebtedness has been paid in full; or (vii) directly or indirectly oppose any relief
requested or supported by Senior Lender, including any sale or other disposition of property free
and clear of the liens and security interests of Junior Lender under Section 363(f) of the
Bankruptcy Code or any other similar provision of applicable law. Junior Lender waives any claim it
may now or hereafter have arising out of Senior Lender’s election, in any proceeding instituted
under Chapter 11 of the Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy
Code, and/or any borrowing or a Lien under Section 364 of the Bankruptcy Code by Company, as
debtor-in-possession. To the extent that Senior Lender receives payments on or
proceeds of Collateral which are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law, or equitable cause, then, to the extent
of such payment or proceeds received, the Senior Indebtedness, or part thereof, intended to be
satisfied shall be revived and continue in full force and effect as if such payments or proceeds
had not been received by Senior Lender. Notwithstanding anything in this Subsection 6(c) to the
contrary, as to any matters not provided for in this Subsection 6(c) arising in any proceeding
instituted under Chapter 11 of the Bankruptcy Code by or against the Company, the Junior Lender
shall be permitted to vote its claim.
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7. Restrictive Lender; Transfer of Junior Indebtedness; No Amendments.
(a) Junior Lender shall cause each Junior Loan Document that now or hereafter evidences all or
a portion of the Junior Indebtedness to be conspicuously marked as follows:
“This [agreement] [instrument] is subject to the terms of an Intercreditor Agreement
(the “Intercreditor Agreement”) dated as of December 23, 2008 between Xxxx Xxxxxx and
Company, Inc. (“Junior Lender”) and Xxxxx Fargo Bank, National Association (“Senior
Lender”), acting through its Xxxxx Fargo Business Credit operating division, which
Intercreditor Agreement is incorporated herein by reference. Notwithstanding any statement
to the contrary in this [agreement] [instrument], (i) no payment on account of principal,
interest, fees or other amounts shall become due or be paid except in accordance with the
terms of the Intercreditor Agreement, and (ii) any security interest, lien, pledge or
encumbrance granted to Junior Lender shall be subordinate to the security interest, lien,
pledge or encumbrance granted to Senior Lender and shall be enforceable only in accordance
with the terms of the Intercreditor Agreement.”
(b) Junior Lender is the lawful holder of the Junior Indebtedness and has not transferred any
interest therein to any other person or entity. Without the prior written consent of Senior Lender,
(which shall not be unreasonably withheld or delayed), Junior Lender will not assign, transfer or
pledge to any other person any of the Junior Indebtedness other than an affiliate of Junior Lender
that assumes Junior Lender’s obligations under this agreement.
(c) Junior Lender agrees that none of the Junior Loan Documents or any other document,
instrument, or agreement evidencing all or any part of the Junior Indebtedness may be amended,
restated, supplemented or otherwise modified without the prior written consent of Senior Lender
(which shall not be unreasonably withheld or delayed).
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8. Continuing Effect. This Agreement shall constitute a continuing agreement of
subordination, and Senior Lender may, without notice to or consent by Junior Lender, modify any
term of Senior Indebtedness in reliance upon this Agreement, subject to the proviso and further
proviso to Section 8(a) . Without limiting the generality of the foregoing, Senior Lender may, at
any time and from time to time, without the consent of or notice to Junior
Lender and without incurring responsibility to Junior Lender or impairing or releasing any of
Senior Lender’s rights or any of Junior Lender’s obligations hereunder:
(a) change the interest rate or change the amount of payment or extend the time for payment or
renew or otherwise alter the terms of any Senior Indebtedness or any instrument evidencing the same
in any manner, provided such extension or renewal of the Maturity Date, as such term is defined
in the Senior Loan Documents, is no later than December 31, 2012 and provided, further in no event
shall the aggregate amount outstanding at any time under the Senior Loan Documents exceed the
Maximum Senior Lien Financing Amount;
(b) sell, exchange, release or otherwise deal with any property at any time securing payment
of Senior Indebtedness or any part thereof;
(c) release anyone liable in any manner for the payment or collection of Senior Indebtedness
or any part thereof;
(d) exercise or refrain from exercising any right against Company or any other person
(including Junior Lender); and
(e) apply any sums received by Senior Lender, by whomsoever paid and however realized, to
Senior Indebtedness in such manner as Senior Lender shall deem appropriate.
9. Termination of Subordination. This Agreement shall continue in full force and
effect, and the obligations and agreements of Junior Lender and Company hereunder shall continue to
be fully operative, until all of the Senior Indebtedness shall have been Paid in Full. If at any
time any payment made or value received with respect to any Senior Indebtedness is rescinded or
must otherwise be returned by Senior Lender upon the insolvency, bankruptcy or reorganization of
Company or otherwise, all as though such payment had not been made or value received, then to the
extent necessary to repay in full, in cash, the Senior Indebtedness, Junior Lender will, following
receipt of written notice from Senior Lender, deliver to Senior Lender any amounts previously
received and then held by Junior Lender on account of, or in any way relating to, the Collateral
(a) which Junior Lender would not have been entitled to accept and retain had this Agreement been
in effect at the time such payments were received by Junior Lender and (b) to the extent any such
payments received by Junior Lender are not otherwise rescinded or must not otherwise be returned by
Junior Lender upon the insolvency, bankruptcy or reorganization of Company or otherwise. Further,
to the extent previously terminated, the Lien in the Collateral created by the Senior Loan
Documents, in favor of Senior Lender, and the rights of Senior Lender under this Agreement shall be
reinstated.
10. No Commitment. None of the provisions of this Agreement shall be deemed or
construed to constitute or imply any commitment or obligation on the part of Senior Lender to make
any future loans or other extensions of credit or financial accommodations to Company.
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11. Notice. All notices and other communications hereunder shall be in writing and
shall be (i) personally delivered, (ii) transmitted by registered mail, postage prepaid, or
(iii) transmitted by telecopy, in each case addressed to the party to whom notice is being given at
its address as set forth below:
If to Xxxxx Fargo:
Xxxxx Fargo Bank, National Association
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Relationship Manager for Xxxx Gift Group, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Relationship Manager for Xxxx Gift Group, Inc.
If to Junior Lender:
Xxxx Xxxxxx and Company, Inc.
000 Xxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxx X. Xxxxxxxx, SVP and General Counsel
Telecopier: (000) 000-0000
000 Xxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxx X. Xxxxxxxx, SVP and General Counsel
Telecopier: (000) 000-0000
or at such other address as may hereafter be designated in writing by that party. All such notices
or other communications shall be deemed to have been given on (i) the date received if delivered
personally, (ii) the date of posting if delivered by mail, or (iii) the date of transmission if
delivered by telecopy.
12. Conflict in Agreements. If the subordination provisions of any instrument
evidencing Junior Indebtedness conflict with the terms of this Agreement, the terms of this
Agreement shall govern the relationship between Senior Lender and Junior Lender.
13. No Waiver. No waiver shall be deemed to be made by Senior Lender of any of its
rights hereunder unless the same shall be in writing signed on behalf of Senior Lender, and each
such waiver, if any, shall be a waiver only with respect to the specific matter or matters to which
the waiver relates and shall in no way impair the rights of Senior Lender or the obligations of
Junior Lender to Senior Lender in any other respect at any time.
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14. Limited Agency of Senior Lender for Perfection and Control.
(a) The Junior Lender hereby appoints Senior Lender as its collateral agent (in such capacity,
together with any successor in such capacity appointed by the Senior Lender and the Junior Lender,
the “Control Agent”) for the limited purpose of acting as the agent on behalf of the Senior
Lender and the Junior Lenders with respect to the Control Collateral for purposes of the perfecting
of the liens of such parties on the Control Collateral. The Control Agent accepts such appointment
and agrees to hold the Control Collateral that is part of the Collateral in its possession or
control (or in the possession or control of its agents or bailees) as Control
Agent for the benefit of the Senior Lender and the Junior Lender and any permitted assignee of
any thereof solely for the purpose of perfecting the security interest granted to such parties in
such Control Collateral, subject to the terms and conditions of this Section 14. The
Control Agent, the Senior Lender, and the Junior Lender, hereby agree that, until the Senior
Indebtedness has been Paid in Full, the Senior Lender shall have the sole and exclusive right and
authority to give instructions to, and otherwise direct, the Control Agent in respect of the
Control Collateral or any control agreement with respect to any Control Collateral and the Junior
Lender will not hinder, delay or interfere with the exercise of such rights by the Senior Lender in
any respect. The Company hereby agrees to pay, reimburse, indemnify and hold harmless the Control
Agent, for any losses or claims based on actions taken in its capacity as Control Agent, to the
same extent and on the same terms that it is required to do so for the Senior Lender in accordance
with the Senior Loan Documents. Except as set forth in the next sentence, the Control Agent shall
have no obligation whatsoever to Junior Lenders including, without limitation, any obligation to
assure that the Control Collateral is genuine or owned by Company, any guarantor or one of their
respective subsidiaries or to preserve rights or benefits of any Person except as expressly set
forth in this Section 14. In acting on behalf of the Junior Lender, the duties or
responsibilities of the Control Agent under this Section 14 shall be limited solely (A) to
physically holding the Control Collateral delivered to the Control Agent by Company, or any
subsidiary of such Person as agent for the Junior Lender for purposes of perfecting the lien held
by the Junior Lenders and (B) delivering such collateral, and assigning its interests in the
Landlord Waivers (to the extent permitted under such waivers), as set forth in Section
14(d).
(b) The Senior Lender hereby acknowledges that the Control Agent will obtain “control” under
the UCC over each Deposit Account (as defined in the UCC) as contemplated by the Senior Loan
Documents and the Junior Loan Documents for the benefit of both itself and the Junior Lender
pursuant to the control agreements relating to each respective Deposit Account. The Senior Lender
hereby also acknowledges and agrees that any landlord lien waivers and bailee’s letters obtained by
the Control Agent as contemplated by the Senior Loan Documents (collectively, “Waiver Letters”)
shall also be for the benefit of the Junior Lender. The Junior Lender acknowledges that the Senior
Lender is acting in a similar capacity for the benefit of the Senior Lender under the Senior Loan
Documents.
(c) The Senior Lender and the Control Agent shall not have by reason of the Senior Loan
Documents or this Agreement or any other document a fiduciary relationship in respect of any Junior
Lender.
(d) Upon the Payment in Full of the Senior Indebtedness, the Control Agent shall promptly, (i)
deliver to the Junior Lender the Control Collateral together with any necessary endorsements, (ii)
assign all of its rights under the Waiver Letters to the Junior Lender and (iii) take all actions
and deliver all documents and instruments as may be reasonably requested by the Junior Lender to
effect the foregoing; provided, that if a court of competent jurisdiction otherwise directs, the
Control Agent shall comply with such direction in lieu of the foregoing requirements.
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15. Binding Effect; Miscellaneous. This Agreement shall be binding upon and inure to
the benefit of Junior Lender, Senior Lender, and their respective participants, successors and
assigns, but neither Company nor any other party shall be entitled to rely on or enforce this
Agreement. Junior Lender and Senior Lender each warrant to the other that any purchaser or
transferee of, or successor to, any Lien of the undersigned in any or all of the Collateral will be
given written notice of the subordination effected hereby, before such purchase, transfer or
succession, and that any such purchaser, transferee or successor will be in all respects subject to
and bound by this Agreement. This Agreement cannot be waived or changed or ended, except by a
writing signed by the party to be bound thereby. Section headings herein are included for
convenience of reference only and shall not constitute a part of this Agreement for any other
purpose. This Agreement may be executed in any number of counterparts, each of which shall be an
original, but all of which together shall constitute one instrument. Junior Lender waives notice
of Senior Lender’s acceptance hereof;
16. Governing Law; Consent to Jurisdiction; WAIVER OF JURY TRIAL. This Agreement
shall be governed by and construed in accordance with the substantive laws of the State of New
York. Each party consents to the personal jurisdiction of the state and federal courts located in
the State of New York in connection with any controversy related to this Agreement, waives any
argument that venue in any such forum is not convenient, and agrees that any litigation initiated
by either of them in connection with this Agreement may be venued in either the state or federal
courts located in New York County, New York. THE PARTIES WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING BASED ON OR PERTAINING TO THIS AGREEMENT.
[Signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date written
above.
| XXXX XXXXXX AND COMPANY, INC. |
||||
| By: | /s/ Xxxx Xxxxxxxx | |||
| Name: | Xxxx Xxxxxxxx | |||
| Title: | Senior Vice President | |||
| XXXXX FARGO BANK, NATIONAL ASSOCIATION |
||||
| By: | /s/ Xxxxxxxx X. Xxxxxx | |||
| Name: | Xxxxxxxx X. Xxxxxx | |||
| Title: | Vice President | |||
Acknowledgment and Agreement by Company
The undersigned, being the Company referred to in the foregoing Agreement, hereby
(i) acknowledges receipt of a copy thereof, (ii) agrees to all of the terms and provisions thereof,
(iii) agrees to and with Senior Lender that it shall make no payment on the Junior Indebtedness
that Junior Lender would not be entitled to receive under the provisions of the Agreement,
(iv) agrees that any such payment will constitute a default under the Senior Loan Documents, and
(v) agrees to xxxx its books conspicuously to evidence the subordination of the Junior Indebtedness
effected hereby and (vi) agrees to give The Junior Lender prompt written notice of the acceleration
of the maturity of all or a part of the Senior Indebtedness.
| THE XXXX COMPANIES, INC. |
||||
| By: | /s/ Xxxxxxx Xxxx | |||
| Name: | Xxxxxxx Xxxx | |||
| Title: | President | |||
