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EXHIBIT 10.5.5
DEBT SUBORDINATION
AND
INTERCREDITOR AGREEMENT
This DEBT SUBORDINATION AND INTERCREDITOR AGREEMENT (the "Agreement")
is entered into as of December 31, 1996, by and between the PAGES, INC. (the
"Subordinated Creditor"), a Delaware corporation and THE HUNTINGTON NATIONAL
BANK, a national banking association ("Senior Creditor").
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are
hereby acknowledged, and in consideration of the loans, leases, advances,
renewals or extensions, or other accommodations now or hereafter made by Senior
Creditor, directly or indirectly, to or for the benefit of CA Short Company
(the "Debtor"), Subordinated Creditor and Senior Creditor agree as follows:
1. Description of Subordinated Debt. Subordinated Creditor represents
and warrants to Senior Creditor that (a) Debtor is indebted to Subordinated
Creditor in the principal sum of $5,000,000.00, evidenced by a certain
Subordinated Debenture from Debtor dated December 31, 1996, which is attached
to this Agreement as Exhibit A (the "Subordinated Debenture"); (b) Subordinated
Creditor holds no collateral, guarantees, assurances, or security for the
Subordinated Debt, except for a subordinated and junior security interest and
deed of trust on the following property of Debtor: accounts, inventory,
equipment, and fixtures and certain real estate owned by Debtor located in
Cleveland County, North Carolina, as evidenced by the agreements attached
hereto as Exhibits B, C, And D (the "Subordinated Collateral"); (c) the
Subordinated Debt has not been subordinated in favor of or sold, assigned,
pledged or otherwise transferred or encumbered, in whole or in part, to any
other person, entity or corporation; (d) the only indebtedness or obligations
the Subordinated Collateral secures is the Subordinated Debt; and (e)
Subordinated Creditor has the full right, power and authority to enter into
this Agreement.
2. Subordination. Subordinated Creditor hereby subordinates all
indebtedness, obligations, and liabilities now or hereafter owing by Debtor to
Subordinated Creditor, including without limitation, all principal, interest,
fees, expenses, and other charges (the "Subordinated Debt"), to the payment of
any and all indebtedness, obligations and liabilities now or hereafter owing
by Debtor to Senior Creditor, plus all principal, interest, fees, expenses, and
other charges accruing on such principal sum (the "Senior Debt"), to the extent
and in the manner set forth below, and Subordinated Creditor agrees not to
demand, accept or receive, directly or indirectly, any payment or repayment
of principal, interest or other amount on the Subordinated Debt, or from any
property of Debtor or guarantor or any third party, or any rights in connection
with any security interests, liens, mortgages in the Subordinated Collateral,
in contravention hereof or in violation of the terms hereof. Nothing contained
in this Agreement shall be construed to constitute consent or acquiescence in
the granting of any security interest, lien, mortgage, assignment, pledge,
chattel mortgage, guaranty, surety, hypothecation or any other property or
security for the Subordinated Debt by Debtor.
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(a) Permitted Payments. Subject to the provisions of paragraphs 2(b)
and 2(c) below, the Debtor may pay to Subordinated Creditor the following
payments in connection with the Subordinated Debt (the "Permitted Payments" or
a "Permitted Payment"): (1) accrued interest not to exceed 7% per annum in
connection with the Subordinated Debenture, on a quarterly basis; and (2)
payments of principal in connection with the Subordinated Note not to exceed
the aggregate sum of the following amounts for the years specified below:
January 1, 1998, $100,000.00; January 1, 1999, $100,000.00; January 1, 2000,
$100,000.00; January 1, 2001, $100,000.00; and January 1, 2002, $4,600,000.00,
as set forth in the Subordinated Note. No prepayment of principal or interest
or any other distribution of any kind shall be made pursuant to the
Subordinated Debt.
(b) No Payments Upon Default. No amount, in respect of the
Subordinated Debt, including, without limitation, the Permitted Payments, shall
be paid by Debtor or accepted by Subordinated Creditor, whether in cash,
property, securities or otherwise, if (i) there exists, or would exist after
giving effect to such proposed payment, any "Event of Default" or default as
defined or provided in any loan and security agreement, loan agreement,
promissory note or other agreement of Debtor with Senior Creditor (a "Default")
and (ii) Subordinated Creditor shall (A) have received written notice of such
Default from Senior Creditor or (B) have knowledge of a Default under the
Senior Debt. Subordinated Creditor acknowledges and agrees that a "default" or
"event of default" under the terms of the Subordinated Debt shall automatically
constitute a Default (and Subordinated Creditor's knowledge of the same) under
the Senior Debt; provided, however, that notwithstanding the foregoing
restrictions, Subordinated Creditor may receive any payment which was suspended
hereunder upon the earlier of (i) the cure by Debtor, acknowledged by the
Senior Creditor in writing or written waiver by Senior Creditor of the then
existing Defaults, or (ii) the payment in full in cash of Senior Debt and the
irrevocable termination of the loan documents relating thereto.
(c) No Payments Upon Bankruptcy. In the event of any insolvency or
bankruptcy proceedings, or any receivership, liquidation, reorganization, sale
or transfer of any material asset or interest in Debtor, or other similar
proceedings or transactions in connection therewith, relative to the same, to
creditors of the same, or to properties of the same, or in the event of any
proceedings for voluntary liquidation, dissolution or other winding up of
either such entity, whether or not involving insolvency or bankruptcy, Senior
Creditor shall be entitled to receive payment in full of all principal and
interest, fees, expenses, and other charges on the Senior Debt including,
without limitation, interest, fees, or expenses accruing subsequent to the
filing of a petition in any such insolvency or bankruptcy proceeding,
notwithstanding any law, rule or regulation that would otherwise limit Senior
Creditor's right to receive such "post-petition" interest, fees, or expense
before Subordinated Creditor is entitled to receive any payment of any
principal, interest, fee, charge, or expense on account of the Subordinated
Debt, and Senior Creditor shall be entitled to receive for application in
payment thereof any payment, distribution, or dividend or any kind or character,
whether in cash or property or securities, which may be payable or deliverable
in any such proceedings in respect of the Subordinated Debt, except securities
which are subordinate and junior in right of payment to the payment of all the
Senior Debt then outstanding.
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3. Legend and Grant of Security Interest. Subordinated Creditor
shall cause all debentures, promissory notes, security agreements, mortgages,
financing statements and other instruments and agreements evidencing any
Subordinated Debt or any Subordinated Collateral to bear an appropriate legend
referring to this Agreement and reciting that the payment of the Subordinated
Debt evidenced thereby is subject to the provisions hereof, and agrees to cause
any extension of any such instrument to bear such legend. As security for the
Senior Debt and for the covenants and agreements contained herein, and in order
to effectuate the foregoing subordination, Subordinated Creditor hereby
transfers and assigns and grants a security interest and grants the full right
and power to Senior Creditor in all debentures, notes, claims or demands, and
all monies due or to become due thereon of Subordinated Creditor against
Debtor, with full right on the part of Senior Creditor, in its own name or in
its name as attorney in fact for Subordinated Creditor, to enforce and collect
said debentures, notes, claims or demands by suit, proof of debt in bankruptcy
or other liquidation, reorganization or insolvency proceedings or otherwise.
If requested by Senior Creditor after the occurrence of a Default, Subordinated
Creditor will deliver or cause to be delivered to Senior Creditor the
Subordinated Debenture or any promissory notes and other instruments and
agreements evidencing the Subordinated Debt, all mortgages, security
agreements, instruments and other writings and property evidencing or
constituting the Subordinated Collateral, and all records, documents and
information necessary or convenient to permit Senior Creditor to enforce and
collect said claims.
4. Turnover of Payments. If, prior to the satisfaction of the
Senior Debt, Subordinated Creditor receives from any source whatsoever
including, but not limited to, receipt resulting from the exercise by any court
of its legal or equitable powers, any payment (except for a Permitted Payment)
with respect to any of the Subordinated Debt or the Subordinated Collateral,
Subordinated Creditor shall forthwith deliver such payment or security to
Senior Creditor, in precisely the form received, except for Subordinated
Creditor's indorsement when necessary, for application on account of the Senior
Debt and until so delivered, such payment or security shall be held in trust by
Subordinated Creditor as the property of Senior Creditor. In the event of the
failure of any Subordinated Creditor to indorse any instrument for the payment
of money so received by such Subordinated Creditor, Senior Creditor is
irrevocably appointed attorney for such Subordinated Creditor with full power
to make such indorsement and with full power of substitution. The provisions
of this Section 4 are not intended to and shall not be construed to constitute
consent by Senior Creditor to the acceptance of payments by Subordinated
Creditor.
5. Standstill. Subordinated Creditor, and Subordinated
Creditor's successors and assigns, agree for the benefit of the holders of the
Senior Debt that, so long as any part of the Senior Debt remains outstanding,
Subordinated Creditor will not, prior to 180 days after providing written
notice to Senior Creditor of a default or Event of Default by Debtor relating
to the failure to make payment of any scheduled installment of principal or
interest on the Subordinated Debt, which is not thereafter waived or cured by
Subordinated Creditor(a) take any action to accelerate or demand the payment of
the Subordinated Debt, (b) take any action against any property of Debtor or
any guarantor or any third party, or any rights in connection with any security
interests, liens, mortgages, assignments, pledges, chattel mortgages,
guarantees, sureties, hypothecations, subordinations, or any
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other property or security, whether now existing or acquired hereafter, held by
Senior Creditor to secure or assure the payment of the Senior Debt
(collectively the "Senior Collateral") or in the Subordinated Collateral, or
delay, impede or otherwise interfere with the efforts of Senior Creditor in
connection with the realization of the Senior Collateral, the Subordinated
Collateral, or application of the proceeds thereof.
6. Mutual Consent. Notwithstanding any provision in any
promissory notes, security agreements, mortgages, financing statements and
other instruments and agreements evidencing any indebtedness owed to Senior
Creditor, the Senior Creditor hereby consents to the Debtor granting a
subordinate security interest or mortgage interest in the Subordinated
Collateral to the Subordinated Creditor. Notwithstanding any provision in any
debenture, security agreements, mortgages, financing statements and other
instruments and agreements evidencing any indebtedness owed to Subordinated
Creditor, the Subordinated Creditor hereby consents to the Debtor granting a
senior security interest in the Senior Collateral to the Senior Creditor.
7. Further Assurances. In order to carry out the terms and
intent of this Agreement more effectively, Subordinated Creditor will do all
acts and execute all further instruments deemed by Senior Creditor to be
reasonably necessary or convenient to preserve for Senior Creditor the benefits
of this Agreement.
8. No Waiver, No Offset. No action which Senior Creditor may
take or refrain from taking with respect to any Senior Debt, or any note or
notes representing the same, or any collateral therefor, including a waiver or
release thereof, or any agreement or agreements (including guaranties) in
connection therewith, shall affect this Agreement or the obligations of
Subordinated Creditor hereunder. Without limitation, the subordination of
Subordinated Creditor shall in no way be affected or impaired by, and
Subordinated Creditor hereby irrevocably consents to: (a) any amendment,
restatement, alteration, extension, renewal, waiver, indulgence or other
modification of the documents evidencing the Senior Debt; (b) any settlement or
compromise in connection with the Senior Debt; (c) any substitution, exchange,
release or other disposition of all or any part of the Senior Debt or the
Senior Collateral; (d) any failure, delay, neglect, act or omission by the
Senior Creditor to act in connection with the Senior Debt or the Senior
Collateral; or (e) any advances for the purpose of performing or curing any
term or covenant contained in the documents or agreements evidencing the Senior
Debt to which Debtor shall be or would otherwise be in default. The
obligations and agreements of the Subordinated Creditor shall be unconditional
and continuing, notwithstanding any defect in the genuineness, validity,
regularity or enforceability of the documents or agreements evidencing the
Senior Debt or the Senior Collateral or any other circumstances whether or not
referred to herein, which might otherwise constitute a legal or equitable
discharge or a defense of the Subordinated Creditor.
9. Collateral Priority Cooperation. Subordinated Creditor hereby
acknowledges and agrees that the security, assignment, mortgage or other
interest of Senior Creditor in the Senior Collateral shall have priority to the
extent of the Senior Debt secured thereby over any right, security interest,
lien or claim Subordinated Creditor may now have or hereafter have therein or
thereto,
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including, without limitation, any rights with respect to the Subordinated
Collateral. The priorities established hereby shall be irrespective of the
time or order of attachment or perfection of security interests, liens or
claims or the time or order of filing of financing statements or the giving of
or failure to give notices of purchase money security interests or otherwise.
Except with respect to the application of proceeds of disposition of the Senior
Collateral remaining after (a) payment of the expense of retaking, holding,
preparing for sale or lease, selling, or leasing the Senior Collateral and (b)
satisfaction of the Senior Debt, Senior Creditor shall not have any liability
or obligation, expressed or implied, to Subordinated Creditor for any act
(whether of omission or commission and whether based upon any error of judgment
or mistake of law or fact) with respect to the collectibility, enforceability,
or validity of the Senior Debt or with respect to the handling, disposition or
release of the Senior Collateral, other than gross negligence or wilful
misconduct, nor shall anything contained herein, or in any prior agreement or
understanding, be deemed to create any duty on the part of Senior Creditor to
extend or continue to extend financial accommodations to Debtor. Subordinated
Creditor further agrees to release its lien, security interest, mortgage or
other lien or encumbrance against the Senior Collateral upon the request of
Senior Creditor to the extent necessary or desirable to permit Senior Creditor
to repossess or sell the Senior Collateral or any portion thereof or to permit
the Debtor to transfer the Senior Collateral, or any portion thereof, to any
third party pursuant to a workout arrangement, provided, however, that
Subordinated Creditor shall be afforded a lien on the proceeds thereof to the
extent that any excess proceeds over and above the Senior Debt remain after the
sale of the Senior Collateral. In the event of forbearance or workout
arrangements, or any insolvency or bankruptcy proceedings relative to Debtor,
Subordinated Creditor agrees that it will fully cooperate with Senior Creditor
and will not take any action to delay, impede, oppose, or otherwise interfere
with efforts or actions taken by Senior Creditor with respect to any actions,
proceedings, motions, orders, agreements or other matters arising in or related
to such insolvency or bankruptcy proceedings, including but not limited to, any
actions, proceedings, motions, orders, agreements or other matters relating to
relief from any automatic stay provisions, abandonment of property, use of cash
collateral, sale of the Senior Collateral free and clear of liens, the recovery
of fees and expenses in connection with such proceedings, voting on any plan of
reorganization either with respect to a claim in respect of the Senior Debt or
the Subordinated Debt, filing and prosecution of claims, or making any election
permitted by the Bankruptcy Code, Xxxxx 00, Xxxxxx Xxxxxx Code, or otherwise.
10. Bankruptcy. With respect to any security interest or mortgage
with respect to the Senior Collateral, Subordinated Creditor, agrees not to
assert any right it may have to "adequate protection" of its interest in such
property in any Bankruptcy Proceeding, or to initiate proceedings to enforce
any "secured claims" under Section 506 of Title 11 of the United States Code,
11 U.S.C. Section 101, et seq. (the "Bankruptcy Code"), without the prior
written consent of the Senior Creditor. Subordinated Creditor waives any claim
that it may now or hereafter have against the Senior Creditor arising out of
any proceeding instituted under Chapter 11 of the Bankruptcy Code related to
the Senior Creditor's election of the application of Section 1111(b)(2) of the
Bankruptcy Code or Senior Creditor's right to adequate protection in connection
with any borrowing or grant of a security interest under Section 364 of the
Bankruptcy Code by Debtor as debtor in possession. To the extent that the
Senior Creditor receives payments on, or proceeds of the Senior Collateral
which
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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 laws, common law or equitable cause,
then, to the extent of such payment or proceeds received, the Senior Debt, or
part thereof, intended to be satisfied shall be revived and the Senior
Creditor's security interest in the Senior Collateral shall continue in full
force and effect as if such payments or proceeds had not been received by the
Senior Creditor.
11. No Waiver. No waiver shall be deemed to be made by Senior
Creditor of any of its rights hereunder unless the same shall be in writing and
then only with respect to the specific instance involved, and shall in no way
impair or offset the rights of Senior Creditor or the obligations of
Subordinated Creditor in any other respect or at any other time.
12. Successors and Assigns. This Agreement shall be binding upon
Subordinated Creditor and Debtor and their respective successors and assigns
and shall inure to the benefit of Senior Creditor and its successors and
assigns (including without limitation any transferee of any Senior Debt).
References herein to the binding effect of this Agreement shall not be deemed
to constitute consent or acquiescence in the sale, assignment, pledge or other
transfer or encumbrance of the Subordinated Debt by Subordinated Creditor.
This Agreement shall be construed and enforced in accordance with and governed
by the law of the State of Ohio.
13. Jury Trial Waiver. THE PARTIES TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION (1) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (2) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE: AND
THE PARTIES HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY
PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO
TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
14. Notice. Any notice or other communication required or
permitted pursuant to this Agreement shall be deemed given (a) one day after
the same is sent to the address set forth below such party's signature line
below if sent by recognized overnight delivery service, (b) upon confirmation
of electronic communication if sent by telecopier, or (c) upon delivery to such
address if personally delivered.
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15. Subrogation. Subject to the prior payment in full in cash of
Senior Debt, to the extent that Senior Creditor has received any payment or
distribution which but for this Agreement, would have been applied to the
Subordinated Debt, Subordinated Creditor shall be subrogated to the rights of
Senior Creditor until the Subordinated Debt shall be paid in full, and, for the
purposes of such subrogation, no such payment or distribution shall, as between
the Debtor or its other creditors, be deemed to be a payment or distribution on
account of the Senior Debt.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which when so executed and delivered shall be an
original, but all of which together shall constitute one and the same document.
17. Headings. The headings contained in this Agreement are for
ease of reference only, and shall not be construed to modify, alter or affect
this Agreement in any way.
18. Termination. This Agreement shall remain in full force and
effect until the earlier to occur of (a) the Senior Debt is indefeasibly paid
in full (including, but not limited to, all interest accruing from time to time
on the Senior Debt after the commencement of any proceeding) or (b) the
Subordinated Debt has been paid in full.
Each of the parties has executed this Agreement as of the date set
forth above.
SUBORDINATED CREDITOR:
PAGES, INC.
By: /s/ S. Xxxxxx Xxxxx
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S. Xxxxxx Xxxxx, Chairman of the Board
Notice address:
Pages, Inc.
0000 Xxxxx Xxxx
Xxxxxx, Xxxx 00000
Attention: S. Xxxxxx Xxxxx, Chairman
Phone No.: (000) 000-0000
Fax No.: (000) 000-0000
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SENIOR CREDITOR:
THE HUNTINGTON NATIONAL BANK
By: /s/ Xxxxxx X. Xxxxx VP
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Xxxxxx Xxxxx, Vice President
Notice Address:
The Huntington National Bank
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attention: Xxxxxx Xxxxx, Vice President
Phone No.: (000) 000-0000
Fax No.: (000) 000-0000
Debtor hereby acknowledges notice of the foregoing Debt Subordination
and Intercreditor Agreement and agrees to be bound by all of the terms,
provisions and conditions thereof.
DEBTOR:
CA SHORT COMPANY
By: /s/ S. Xxxxxx Xxxxx
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S. Xxxxxx Xxxxx, Chairman of the Board
Notice address:
0000 Xxxx Xxxxx Xxxx.
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Phone No.: (000) 000-0000
Fax No.: (000) 000-0000
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