INTERCREDITOR AND SUBORDINATION AGREEMENT
THIS
INTERCREDITOR AND SUBORDINATION AGREEMENT (this “Agreement”),
dated
as of April 15, 2008, is made by and among Airbee Wireless, Inc., a Delaware
corporation (“Airbee”
or
the
“Company”),
each
of the parties signing this Agreement under the title “Senior Creditors” on the
signature pages hereto (together with each of their heirs, successors and
assigns, each a “Senior
Creditor”,
and
collectively, the “Senior
Creditors”),
and
Xxxxxxx X. Xxxxxxxxxx, Xx. (the “Subordinated
Creditor”),
and
is made with reference to the following:
A. Pursuant
to (1) that certain Assignment Agreement dated as of January 30, 2008
(as amended, modified, renewed, extended or replaced from time to time, the
“Assignment
Agreement”)
by and
between the Company, BARTFAM, a California Limited Partnership and one of the
Senior Creditors (“Bartfam”),
and
YA Global Investment, L.P. (f/k/a Xxxxxxxxxx Equity Partners, L.P.), a Cayman
Islands exempted limited partnership, Bartfam purchased, among other securities,
a secured convertible debenture in the amount of One Hundred Fifty Thousand
Dollars ($150,000) (the “Xxxxxxxxxx
Debenture”)
dated
April 5, 2007 which is convertible into shares of the Company’s common
stock and which, following certain conversions into common stock, has an
outstanding principal balance of $53,300; which indebtedness is secured by
perfected liens and security interests on all of the Company’s assets that were
concurrently assigned to Bartfam pursuant to the Assignment Agreement; and
(2) that certain Debenture and Warrant Purchase Agreement (the
“Senior
Creditor D&W Purchase Agreement”)
dated
as of January 30, 2008, by and between the Company and each of the Senior
Creditors, the Senior Creditors have purchased, among other securities, $500,000
in principal amount of secured convertible debentures and the Company has agreed
to sell and the Senior Creditors have the right to purchase an additional
$901,157.00 in principal amount of secured convertible indentures from the
Company, all of which indebtedness is and shall remain secured by perfected
first priority liens and security interests on all of the Company’s assets in
favor of the Senior Creditors (any and all such secured convertible debentures,
collectively, the “2008
Senior Creditor Debentures”,
and
together with the Xxxxxxxxxx Debenture, the “Senior
Debentures”).
B. The
Company and the Subordinated Creditor are parties to (1) that certain
Settlement Agreement made and entered into as of April 15, 2008 (the
“Settlement
Agreement”)
pursuant to which, inter
alia,
the
Company has or will issue to the Subordinated Creditor a Subordinated Secured
Convertible Debenture (the “Subordinated
Debenture”)
in the
original principal balance of $465,000. The indebtedness evidenced by the
Subordinated Debenture shall be secured by subordinated liens and security
interests in substantially all of the Company’s assets.
C. It
is a condition precedent to the Company’s entry into the Settlement Agreement
that the Subordinated Creditor enter into deliver this Agreement with the Senior
Creditors to provide for the subordination of the Company’s indebtedness to the
Subordinated Creditor. The Subordinated Creditor has agreed to the subordination
of all of the Company’s indebtedness to it, upon the terms and subject to the
conditions set forth in this Agreement.
Accordingly,
the parties hereto agree as follows:
ARTICLE
I
DEFINITIONS;
INTERPRETATION
1.1
Certain
Other Defined Terms.
As used
in this Agreement, the following terms shall have the following meanings:
“Bankruptcy
Code”
means
Title 11 of the United States Code entitled “Bankruptcy”, as now or hereafter in
effect, or any successor statute.
1
“Bankruptcy
Law”
means
the Bankruptcy Code and any other federal, state, or foreign law for the relief
of debtors.
“Collateral”
means
all assets and rights of any nature, wherever located, whether in existence
or
hereafter arising or acquired, of the Company.
“Disposition”
or
“Dispose” means the sale, assignment, transfer, license, lease (as lessor), or
other disposition of any property by any person (or the granting of any option
or other right to do any of the foregoing).
“Distribution”
means
any payment or distribution by any Person of assets of any kind or character
(whether in cash, securities, assets, by set-off, or otherwise and including
by
purchase redemption or other acquisition).
“Enforcement
Action”
means
any action by the Subordinated Creditor to enforce payment or performance by
the
Company of any of its Subordinated Debt or Subordinated Debt Agreements,
including, but not limited to, any of the following: (a) acceleration of
the maturity of Subordinated Debt, (b) commencement of, prosecution of, or
participation in any lawsuit, action or proceeding, whether private, judicial,
equitable, administrative, or otherwise, against the Company, including without
limitation (x) the commencement or joining with any other creditors in the
commencement of any Reorganization, (y) the initiation, prosecution and/or
completion of a judicial or non-judicial foreclosure action (including without
limitation the recordation of any notice of default or notice of sale), or
(z) the acceptance of a deed in lieu of foreclosure or strict foreclosure,
(c) the exercise of any right of setoff for the collection of any amounts
due in respect of the Subordinated Debt, (d) exercise of any Secured
Creditor Remedy; or (e) in the event of an Reorganization:
(i) prosecuting a motion for relief from the automatic stay to exercise an
Enforcement Action; (ii) objecting to the Senior Creditors’ motion for
relief from the automatic stay to foreclose on and sell any of the Collateral;
(iii) seeking to provide debtor in possession loans or advances to the
Company wherein Senior Creditors’ liens would be subordinated in priority,
(iv) seeking or acquiescing in any request to convert an Reorganization
under chapter 11 of Title 11 of the Bankruptcy Code to a case under
chapter 7 of Title 11 of the Bankruptcy Code; (v) seeking the
appointment of a trustee or examiner with expanded powers for the Company or
any
of its subsidiaries or affiliates, if any; (vi) opposing the confirmation
of the Company’s plan of reorganization if such action might adversely affect
the Company’s business or the Company’s ability to repay the Senior Debt.
Notwithstanding the foregoing, none of the following shall constitute an
“Enforcement Action” for purposes of this Agreement: (x) the delivery of
any (unrecorded) notice of default or other notice to the Company pursuant
to or in connection with the Subordinated Debt Agreements, or (y) the
filing by Subordinated Creditor of a proof of claim in a Reorganization, which
proof of claim indicates Subordinated Creditor’s subordination hereunder and
otherwise complies with the terms of this Agreement.
“Lien”
means
any mortgage, deed of trust, pledge, security interest, assignment, deposit
arrangement, judgment lien, attachment, writ, charge or encumbrance, lien
(statutory or other) or other preferential arrangement (including any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing or any agreement
to give any security interest).
“Reorganization”
of
a
Person means (i) any distribution of assets of that Person upon any
voluntary or involuntary dissolution, winding up, total or partial liquidation
or reorganization, (ii) any bankruptcy or other action pursuant to the
Bankruptcy Code or any insolvency, receivership or other statutory or common
law
proceeding or arrangement involving a readjustment of the obligations of that
Person, (iii) any assignment for the benefit of creditors of that Person,
or (iv) any marshalling of the assets or obligations of that Person.
“Secured
Creditor Remedies”
means
any action by a secured creditor in furtherance of the sale, foreclosure,
realization upon, or the repossession or liquidation of any of the Collateral,
including without limitation, (i) the exercise of any remedies or rights of
a “Secured Creditor” under Article 9 of the Uniform Commercial Code, as
enacted in the State of New York (or, to the extent the laws of any other state
govern the perfection, effect of perfection, priority or enforcement of any
rights of the parties hereto with respect to the exercise of their rights as
secured parties, the Uniform Commercial Code as enacted in such other
jurisdiction), such as, without limitation, the notification of account debtors;
(ii) the exercise of any remedies available to a judgment creditor;
(iii) appointment of a receiver; or (iv) any other remedy available in
respect of the Collateral available to such secured creditor under any agreement
to which it is a party.
2
“Secured
Creditors’ Agreements”
means,
collectively, the Senior Debt Agreements and the Subordinated Debt Agreements.
“Senior
Credit Facility”
means
one or more credit facilities entered into by and among the Company and one
or
more commercial banks or financial institutions and providing for senior term
or
revolving credit borrowings (including the issuance of letters of credit) of
a
type similar to credit facilities typically entered into by commercial banks
and
financial institutions and one or more commercial paper or other senior
securities programs pursuant to which the Company is able to raise monies in
the
capital markets, including in each case any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, as such credit facilities, commercial paper and senior securities
programs and related agreements may be amended, extended, refinanced, renewed,
restated, replaced or refunded from time to time.
“Senior
Debt”
means
all present and future indebtedness, liabilities and other obligations of the
Company to the Senior Creditors or any of them under or in connection with
the
Senior Debt Agreements or otherwise, whether created under, arising out of
or in
connection with the Senior Debt Agreements or otherwise, including all unpaid
principal of any Senior Debentures, all interest accrued thereon, all fees,
costs, expenses, premiums and reimbursements due under any of the Senior Debt
Agreements, all indemnification obligations and all other amounts payable by
Company to the Senior Creditors or any of them thereunder, or in connection
therewith or otherwise, and any other senior indebtedness of the Company to
which the Senior Debt held by the Senior Creditors agree to subordinate to,
whether now existing or hereafter arising, and whether due or to become due,
absolute or contingent, liquidated or unliquidated, determined or undetermined.
“Senior
Debt Agreements”
means,
collectively, the Assignment Agreement, the Senior Creditor D&W Purchase
Agreement, the Senior Debentures, any security agreements, pledge agreements,
and any and all other documents and security instruments executed in connection
therewith, and all other agreements and instruments executed and delivered
by
Company in connection therewith or otherwise creating any financial obligation
of the Company in favor of the Senior Creditors or any of them.
“Senior
Debt Collateral”
means
all Collateral in which one or more of the Senior now has or at any time obtains
a Lien.
“Subordinated
Debt”
means
all indebtedness, liabilities and other obligations of the Company to the
Subordinated Creditor, whether now existing or hereafter arising and whether
due
or to become due, absolute or contingent, liquidated or unliquidated, determined
or undetermined, including all amounts payable by Company to the Subordinated
Creditor under or in connection with the Subordinated Debt Agreements or
otherwise including, without limitation, all amounts due to the Subordinated
Creditor pursuant to the Subordinated Debenture and all expenses and costs
incurred by the Subordinated Creditor in connection with the enforcement of any
of its rights under the Subordinated Agreements.
“Subordinated
Debt Agreements”
means,
collectively, the Settlement Agreement, the Subordinated Debenture, any security
agreements and any and all other documents and security instruments executed
in
connection therewith, and all other agreements, judgments, orders and
instruments executed and delivered by Company in connection therewith or
otherwise creating any financial obligation of the Company in favor of the
Subordinated Creditor.
“Subordinated
Debt Payment”
means
any payment or distribution by or on behalf of the Company, directly or
indirectly, of assets of the Company of any kind or character, whether in cash,
property or securities, including on account of the purchase, redemption or
other acquisition of the Subordinated Debt, as a result of any collection,
sale
or other disposition of collateral, or by setoff, exchange or in any other
manner, for or on account of the Subordinated Debt.
3
1.2
Interpretation.
In this
Agreement, except to the extent the context otherwise requires (i) any
reference in this Agreement to an Article, Section, Schedule or Exhibit is
a
reference to an article, section schedule or exhibit of or to this Agreement,
respectively, and to a subsection or clause is, unless otherwise stated, a
reference to a subsection or a clause of the Section or subsection in which
the
reference appears; (ii) the words “hereof,” “herein,” “hereto,” “hereunder”
and the like refer to this Agreement as a whole and not merely to the specific
Article, Section, subsection, paragraph or clause in which the reference
appears; (iii) the meaning of defined terms shall be equally applicable to
both the singular and plural forms of the terms defined; (iv) the words
“including,” “includes” and “include” shall be deemed to be followed by the
words “without limitation”; (v) references to agreements and other
contractual instruments shall be deemed to include all subsequent amendments
and
other modifications thereto; (vi) references to statutes or regulations are
to be construed as including all statutory and regulatory provisions
consolidating, amending or replacing the statute or regulation referred to;
and
(vii) the captions and headings are for convenience of reference only and
shall not affect the construction of this Agreement.
ARTICLE
II
AGREEMENT
OF SUBORDINATION
2.1
Subordination
to Payment of Senior Debt.
All
Subordinated Debt Payments on account of the Subordinated Debt shall be subject,
subordinate and junior in right of payment and exercise of remedies to the
prior
payment in full in cash of the Senior Debt.
2.2
Subordination
of Liens.
All
Liens of the Subordinated Creditor now existing or hereafter acquired in any
assets that serve as Senior Debt Collateral for all or any portion of the Senior
Debt or the Subordinated Debt shall be subject, subordinate and junior in all
respects and at all times to the Liens of the Senior Creditors now or hereafter
existing therein, regardless of the time or order of attachment or perfection
of
such Liens, the time or order of filing of financing statements, the acquisition
of purchase money or other Liens, the time of giving or failure to give notice
of the acquisition or expected acquisition of any purchase money or other Liens,
or any other circumstances whatsoever.
2.3
Benefit
of Subordination Provisions.
The
provisions of this Agreement relating to the subordination of the Subordinated
Debt and the Liens relating thereto to the Senior Debt and the Liens relating
thereto (collectively, the “Subordination
Provisions”)
are
made for the benefit of the Senior Creditors collectively and each of them
individually, and each of the Senior Creditors may proceed to enforce the
Subordination Provisions.
2.4
No
Challenge.
The
Subordinated Creditor shall not, whether in a Reorganization proceeding or
otherwise, challenge the validity, perfection or relative priority of the Senior
Creditors’ Liens nor any of the Senior Creditors’ right to prior payment
established by this ARTICLE II.
2.5
Subordination
to Senior Facilities, Private Equity and Venture Capital
Investments.
The
Subordinated Creditor shall, upon the request and at the expense of the Company,
promptly enter into an intercreditor and subordination agreement with the
provider(s) of (1) any Senior Credit Facility if the entry by the
Subordinated Creditor into any such agreement is a condition precedent to the
Company’s ability to obtain such Senior Credit Facility and (2) any private
equity and/or venture capital financing in the Company if the entry by the
Subordinated Creditor into any such agreement is a condition precedent to the
Company’s ability to obtain such private equity, venture capital or similar
financing, and provided that the Senior Creditors, so long as the Senior Debt
remains outstanding, also enter into such an intercreditor and subordination
agreement required as a condition precedent by the provider(s) of such Senior
Credit Facility, private equity or venture capital financing.
4
ARTICLE
III
SUBORDINATION
UPON ANY DISTRIBUTION OF ASSETS OF THE COMPANY
In
the
event of any payment or Distribution of assets of the Company, whether in cash,
property or securities, in connection with any Reorganization of the Company
or
otherwise:
(a) all
amounts owing on account of the Senior Debt shall first be paid in full in
cash
before any Subordinated Debt Payment is made; and
(b) to
the extent permitted by applicable law, any Subordinated Debt Payment to which
the Subordinated Creditor would be entitled but for the provisions of this
Agreement shall be paid or delivered by the trustee in bankruptcy, receiver,
assignee for the benefit of creditors or other liquidating Person making such
payment or distribution directly to the Senior Creditors for application to
the
payment of the Senior Debt in accordance with clause (a), before making any
payment or Distribution or provision therefor to the Subordinated Creditor
in
respect of the Subordinated Debt.
ARTICLE
IV
PAYMENT
BLOCKAGE
Notwithstanding
any provision to the contrary herein or in any of the Subordinated Debt
Agreements, until such time as the Senior Debt has been indefeasibly repaid
in
full in cash, or fully converted into shares of common stock of Airbee, and
all
commitments to purchase or lend any additional Senior Debt have terminated
(the
“Discharge
of the Senior Debt”),
the
Company shall not make, and the Subordinated Creditor shall not demand, accept
or receive, any Subordinated Debt Payment; provided, that so long as no Default
or Event of Default with respect to any of the Senior Debt shall have occurred
and be continuing (and the making of any such payment shall not result in a
Default with respect thereto), the Company may pay and the Subordinated Creditor
may receive Subordinated Debt Payments exclusively constituting scheduled
quarterly payments of interest on the Subordinated Debt at the contract (i.e.,
non-default) rate set forth in the Subordinated Debenture as and when such
scheduled quarterly interest payments are due and payable pursuant to the terms
of the Subordinated Debenture as in effect as of the date of its issuance.
ARTICLE
V
SUBORDINATION
OF REMEDIES
Notwithstanding
any provision herein or in any Subordinated Debt Agreement to the contrary,
until the Discharge of the Senior Debt has occurred, the following shall apply:
5.1
Senior
Creditors’ Exercise of Rights as Secured Party.
The
Senior Creditors shall be permitted and each of them is hereby authorized to
take any and all actions and to exercise any and all rights, remedies and
options which any of them may have under the Senior Debt Agreements and sell
or
otherwise realize upon the collateral securing the Senior Debt, in each case
upon the terms and subject to the conditions set forth therein, without regard
to the Subordinated Creditor.
5.2
Remedies
of Subordinated Creditor.
The
Subordinated Creditor shall not, without the prior written consent of the Senior
Creditors (which may granted or denied in the exercise of their sole
discretion), demand payment (other than a scheduled quarterly payment of
interest which Company is permitted to make and the Subordinated Creditor is
permitted to receive pursuant to the terms of this Agreement) with respect
to or
accelerate the maturity of the Subordinated Debt or commence or maintain any
Enforcement Action against Company; provided, however, that the Subordinated
Creditor may accelerate the maturity of the Subordinated Debt (but may not
make
any demand for payment of, or take any other collection or enforcement action
with respect to, the Subordinated Debt) at any time following the acceleration
by the Senior Creditors of all (but not less than all) of the Senior Debt.
5
5.3
Management
of Collateral.
Notwithstanding anything to the contrary contained in any of the Senior Debt
Agreements or the Subordinated Debt Agreements: (i) the Senior Creditors
shall have the exclusive right to manage the Collateral, including the exclusive
right to perform and enforce the terms of the Senior Debt Agreements with
respect to the Collateral and to exercise and enforce all privileges and rights
thereunder according to Senior Creditors’ sole discretion, including, without
limitation, the exclusive right to enforce or settle insurance claims with
respect to the Collateral, to pay, compromise, or settle competing claims,
liens, or security interests affecting the Collateral, to take or retake control
or possession of the Collateral, and to hold, prepare for sale, sell, lease,
or
liquidate the Collateral; (ii) neither Subordinated Creditor nor any party
acting on its behalf, shall exercise any Secured Party Remedies with respect
to
the Collateral or any part thereof; and (iii) any and all proceeds of the
Collateral which shall come into the possession, control, or custody of the
Subordinated Creditor will be deemed to have been received for the account
of
Senior Creditors and shall be immediately delivered or paid, as applicable,
over
to the Senior Creditors. In connection with the provisions of Section
5.3(i)
above,
the Subordinated Creditor waives any and all rights to affect the method or
challenge the appropriateness of any action by Senior Creditors with respect
to
the Collateral, and waives any claims or defenses it may have against the Senior
Creditors, including any such claims or defenses based on any actions or
omissions of any such person, in connection with the perfection, maintenance,
enforcement, foreclosure, sale, liquidation, or release of any lien or security
interest therein by the Senior Creditors or any of them, or any modification
or
waiver of any Senior Debt Agreements.
5.4
Sale
of Collateral.
Until
the Discharge of the Senior Debt has occurred: (i) only the Senior Creditors
shall have the right to restrict or permit, or approve or disapprove, the sale
or disposition of the Collateral or any portion thereof; and
(ii) immediately upon the sale or disposition of such Collateral by the
Company with the consent of the Senior Creditors in connection with the exercise
of any Secured Creditor Remedies, the Subordinated Creditor’s liens and security
interest upon the Collateral sold shall be automatically, unconditionally and
simultaneously released, and the Subordinated Creditor will promptly deliver
(at
the Company’s expense) such release, reconveyance, and termination documents as
the Senior Creditors or the Company may reasonably require in connection
therewith.
5.5
Insurance.
In the
event of the occurrence of a fire or other casualty resulting in damage to
all
or any portion of any Collateral (collectively, a “Casualty”):
(a) The
Subordinated Creditor hereby waives any right to participate or join in any
adjustment, compromise, or settlement of any claims resulting from a Casualty
with respect to any Collateral;
(b) all
proceeds received or to be received on account of a Casualty shall be applied
in
the manner or manners provided for in the Senior Debt Agreements until the
Discharge of the Senior Debt and thereafter, the Company may instruct the
insurer to pay any remaining insurance proceeds from such Casualty to the
Subordinated Credit to the extent of the outstanding balance of the Subordinated
Debt; and
(c) the
Subordinated Creditor agrees to execute and deliver to the Senior Creditors
any
documents, instruments, agreements or further assurances reasonably required
to
effectuate any of the foregoing.
ARTICLE
VI
PAYMENT
OVER TO SENIOR CREDITORS
In
the
event that the Subordinated Creditor receives any Subordinated Debt Payments
in
contravention of ARTICLE II, ARTICLE III, ARTICLE IV, ARTICLE V, ARTICLE VI,
ARTICLE VII, or ARTICLE X before the Discharge of the Senior Debt has occurred,
such Subordinated Debt Payments shall be held in trust for the benefit of the
Senior Creditors and shall be paid over or delivered to the Senior Creditors
for
application to the payment in full in cash of all Senior Debt remaining unpaid
to the extent necessary to give effect to ARTICLE II, ARTICLE III, ARTICLE
IV,
ARTICLE V, ARTICLE VI, ARTICLE VII, or ARTICLE X, after giving effect to any
concurrent payments or distributions to the Senior Creditors in respect of
the
Senior Debt.
6
ARTICLE
VII
REORGANIZATION
OF THE COMPANY
7.1
Rights
regarding the Reorganization of the Company.
Until
the Discharge of the Senior Debt, the Subordinated Creditor shall not, without
the prior written consent of the Senior Creditors, commence or join with any
other Person in commencing any Reorganization proceeding of or against Company.
The Senior Creditors shall have the sole right to accept or reject any plan
proposed in such proceeding and to take any other action which a party filing
a
claim is entitled to take. The Subordinated Creditor acknowledges and agrees
that any interest on the Senior Debt which accrues after the commencement of
any
such proceeding (or, if interest on any portion of the Senior Debt ceases to
accrue by operation of law by reason of the commencement of said proceeding,
such interest as would have accrued on any such portion of the Senior Debt
if
said proceedings had not been commenced) shall be included in the Senior Debt
because it is the intention of the parties that the Senior Debt should be
determined without regard to any rule of law or other principle which may
relieve Company of any portion of such obligations. The Subordinated Creditor
shall permit any trustee in bankruptcy, receiver, debtor in possession, assignee
for the benefit of creditors or similar person to pay the Senior Creditors,
or
allow the claim of the Senior Creditors in respect of, any such interest
accruing after the date on which such proceeding is commenced.
7.2
Reorganization
Matters.
(a) Enforceability
and Continuing Priority.
This
Agreement shall be applicable both before and after the commencement of any
Reorganization by or against the Company and all converted or succeeding cases
in respect thereof. The relative rights of the Senior Creditors and the
Subordinated Creditor in or to any distributions from or in respect of any
Collateral or proceeds of Collateral, shall continue after the commencement
of
any Reorganization by or against the Company. Accordingly, the provisions of
this Agreement are intended to be and shall be enforceable as a subordination
agreement within the meaning of Section 510 of the Bankruptcy Code.
(b) Financing.
Until
Discharge of the Senior Debt has occurred, if the Company shall be subject
to
any Reorganization and the Senior Creditors consents to the use of cash
collateral (as such term is defined in Section 363(a) of the Bankruptcy Code;
herein, “Cash
Collateral”),
on
which any Senior Creditor has a lien or to permit the Company to obtain
financing provided by Senior Creditor under Section 364 of the Bankruptcy
Code or any similar Bankruptcy Law (such financing, together with any Cash
Collateral use, collectively a “DIP
Financing”),
then
the Subordinated Creditor agrees that it will consent to such Cash Collateral
use and raise no objection to such DIP Financing and to the extent the liens
securing the Senior Debt are discharged, subordinated to or pari passu
with
such DIP Financing, the Subordinated Creditor will subordinate its liens in
the
Collateral to the liens securing such DIP Financing. If the Senior Creditors
or
any of them offer to provide DIP Financing that meets the requirements set
forth
above, the Subordinated Creditor agrees that it shall not, directly or
indirectly, (x) provide or offer to provide DIP Financing or support any
DIP Financing secured by a lien senior to or pari passu
with the
liens securing the Senior Debt, or (y) request or accept any form of adequate
protection or any other relief except as provided in Section 7.2(e)(ii).
In
connection with any DIP Financing, if any liens on the Collateral held by any
of
the Senior Creditors are subject to a surcharge or are subordinated to an
administrative priority claim, a professional fee “carve out,” or fees owed to
the United States Trustee, then the liens on the Collateral of the Subordinated
Creditor shall also be subordinated to such interest or claim and shall remain
subordinated to the liens on the Collateral of Senior Creditor consistent with
this Agreement.
(c) Sales.
Until
Discharge of the Senior Debt has occurred, the Subordinated Creditor agrees
that
it will consent, and will not object or oppose a motion to Dispose of any
Collateral free and clear of the liens or the claims that are in favor of the
Subordinated Creditor under Section 363 of the Bankruptcy Code if the
Senior Creditors have consented to such Disposition of such assets.
7
(d) Relief
from the Automatic Stay.
Until
Discharge of the Senior Debt has occurred, the Subordinated Creditor agrees
that
it shall not seek (or support any other person, other than the Senior Creditors,
seeking) relief from the automatic stay or any other stay in any Reorganization
in respect of the Collateral, without the prior written consent of the Senior
Creditors (which may be granted or withheld in the exercise of their sole
discretion).
(e)
Adequate
Protection.
(i) Senior
Creditors.
In any
Reorganization involving the Company, the Subordinated Creditor agrees that
it
shall not contest (or support any other person contesting):
(A) any
request by the Senior Creditors for adequate protection (whether in the form
of
payments, liens, a priority administrative expense claim, or otherwise);
(B) any
objection by the Senior Creditors to any motion, relief, action, or proceeding
based on the Senior Creditors claiming a lack of adequate protection (whether
in
the form of payments, liens, a priority administrative expense claim, or
otherwise);
(C) the
payment of interest, fees, expenses, or other amounts to Senior Creditor under
Section 506(b) or 506(c) of the Bankruptcy Code or otherwise.
(ii) Subordinated
Creditor.
In any
Reorganization involving the Company:
(A) Replacement
Liens.
(1) Until
Discharge of the Senior Debt has occurred, if the Senior Creditors are granted
adequate protection in the form of a replacement lien (on existing or future
assets of the Company) in connection with any DIP Financing, then the
Subordinated Creditor shall also be entitled to seek, without objection from
the
Senior Creditors, adequate protection in the form of a replacement lien (on
existing or future assets of the Company), which replacement lien, if obtained,
shall be subordinate to the liens securing the Senior Debt and the liens
securing such DIP Financing on the same basis as the other liens securing the
Subordinated Debt are subordinate to the Senior Debt under this Agreement;
and
(2) In
the event that the Subordinated Creditor is granted adequate protection in
the
form of a replacement lien (on existing or future assets of the Company), then
the Subordinated Creditor agrees that the Senior Creditors shall also be
entitled to seek, without objection from the Subordinated Creditor, a senior
adequate protection lien on existing or future assets of the Company as security
for the Senior Debt and for any DIP Financing provided by the Senior Creditors.
Any adequate protection lien on such existing or future assets securing the
Subordinated Debt shall be subordinated (i) to the lien on such collateral
securing the Senior Debt and any such DIP Financing provided by the Senior
Creditors, and (ii) to any other liens granted to the Senior Creditors as
adequate protection on the same basis as the other liens securing the
Subordinated Debt are so subordinated to such Senior Debt under this Agreement.
(B) No
Distributions.
In any
Reorganization involving the Company, the Subordinated Creditor shall not seek
(a) adequate protection in the form of Distributions in respect of the
Subordinated Debt, nor (b) adequate protection in the form of Distributions
with respect to their rights to the Collateral.
(iii) Allowance
of Postpetition Accrual.
The
Subordinated Creditor shall not object to, oppose, or challenge any claim by
Senior Creditor for allowance in any Reorganization of Senior Debt consisting
of
post-petition interest, fees, or expenses.
8
(f) Section 1111(b)
of the Bankruptcy Code.
The
Subordinated Creditor shall not object to, oppose, support any objection, or
take any other action to impede, the right of the Senior Creditors to make
an
election under Section 1111(b)(2) of the Bankruptcy Code. The Subordinated
Creditor waives any claim it may hereafter have against each Senior Creditor
arising out of the election by any or all Senior Creditors of the application
of
Section 1111(b)(2) of the Bankruptcy Code.
(g) No
Waiver.
Nothing
contained herein shall prohibit or in any way limit the Senior Creditors from
objecting in any Reorganization involving the Company to any action taken by
the
Subordinated Creditor, including the seeking by the Subordinated Creditor of
adequate protection or the assertion by the Subordinated Creditor of any of
its
rights and remedies under the Subordinated Debt Agreements.
(h) Avoidance
Issues.
If
Senior Creditor is required in any Reorganization or otherwise to turn over,
disgorge or otherwise pay to the estate of the Company any amount paid in
respect of the Senior Debt (a “Senior
Creditor Recovery”),
then
Senior Creditor shall be entitled to a reinstatement of Senior Debt with respect
to all such recovered amounts, and all rights, interests, priorities and
privileges recognized in this agreement shall apply with respect to any such
Senior Creditor Recovery. If this Agreement shall have been terminated prior
to
such Senior Creditor Recovery, this Agreement shall be reinstated in full force
and effect, and such prior termination shall not diminish, release, discharge,
impair, or otherwise affect the obligations of the parties hereto from such
date
of reinstatement.
(i) Plan
of Reorganization.
(a) If
in any Reorganization involving the Company, debt obligations of the reorganized
debtor, whether or not secured by liens upon any property of the reorganized
debtor, are distributed pursuant to a plan of reorganization or similar
dispositive restructuring plan, (a) on account of Senior Debt, or
(b) on account of the Subordinated Debt, or (c) all on account of the
Senior Debt and the Subordinated Debt, then the Subordinated Creditor shall
have
the right to receive such debt obligations so long as the provisions of this
Agreement (x) survive the distribution of such debt obligations pursuant to
such plan and (y) apply with like effect to such debt obligations and the
liens securing such debt obligations, and
(b) The
Subordinated Creditor shall not propose or support any plan of reorganization
that is inconsistent with the priorities or other provisions of this Agreement.
(j)
Prohibition
of Payments of Subordinated Debt on Acceleration or in
Reorganization.
(a) Upon
(i) any acceleration of the principal amount due on any Subordinated Debt
which has not been rescinded or revoked, or (ii) any payment or
distribution of assets of the Company, of any kind or character, whether in
cash, property or securities, following commencement of an Reorganization by
or
against the Company, there shall be a Discharge of the Senior Debt, before
any
Distribution is made on account of any of the Subordinated Debt; and following
commencement of a Reorganization, any Distribution in respect of the
Subordinated Debt to which the Subordinated Creditor would be entitled, except
for the provisions hereof, shall be paid by the Company or any other Person
making such Distribution, or by the Subordinated Creditor if received by it,
directly to the Senior Creditors, to the extent necessary to result in the
Discharge of the Senior Debt, before any Distribution is made to the
Subordinated Creditor.
(b) In
any Reorganization by or against the Company,
(A) The
Senior Creditors may, and are hereby irrevocably authorized and empowered (in
their own names or in the name of the Subordinated Creditor or otherwise),
but
shall have no obligation to (A) demand, xxx for, collect and receive every
payment or distribution referred to in this ARTICLE
VII
and give
acquittance therefor and (B) file claims and proofs of claim in respect of
the Subordinated Debt,
provided
that the
Senior Creditors may only file claims and proofs of claims in respect of the
Subordinated Debt if (1) the Subordinated Creditor has failed to file such
claims and proofs of claim and (2) there shall remain not more than
20 days before such action is barred, prohibited or otherwise cannot be
taken; and
9
(B) The
Subordinated Creditor will duly and promptly take such action as the Senior
Creditors may reasonably request (A) to collect the Subordinated Debt for
the account of the Senior Creditors and to file appropriate claims or proofs
of
claim with respect thereto, (B) to execute and deliver to the Senior
Creditors such powers of attorney, assignments or other instruments as the
Senior Creditors may request in order to enable it to enforce any and all claims
with respect to, and any security interests and other liens securing payment
of,
the Subordinated Debt, and (C) to collect and receive for the account of
the Senior Creditors any and all Distributions which may be payable or
deliverable upon or with respect to the Subordinated Debt; provided that any
reasonable and documented costs incurred in complying with any provision of
this
paragraph, including reasonable attorneys’ fees, shall be paid by the Senior
Creditors to the extent they are not paid by the Company or otherwise recovered
by the Subordinated Creditor.
(k) Payments
Held in Trust/Turnover.
In the
event that, notwithstanding the foregoing provisions of this ARTICLE
VII,
any
Distribution or Subordinated Debt Payment prohibited by this Agreement shall
be
received by the Subordinated Creditor before there has been a Discharge of
the
Senior Debt, such Distribution or Subordinated Debt Payment shall be held in
trust for the benefit of and shall be paid over to or delivered to Senior
Creditor, until there has been a Discharge of the Senior Debt.
ARTICLE
VIII
AMENDMENTS
TO SENIOR DEBT; AMENDMENTS TO SUBORDINATED DEBT
8.1
Amendments
to Senior Debt.
At any
time and from time to time, without notice to or the consent of the Subordinated
Creditor, without incurring responsibility to the Subordinated Creditor and
without impairing or releasing, the subordination provided for herein or
otherwise impairing the rights of the Senior Creditors hereunder:
(i) additional Senior Debt may be incurred, (ii) the time for the
Company’s performance of or compliance with any of its agreements contained in
the Senior Debt Agreements may be extended or such performance or compliance
may
be waived by the Senior Creditors; (iii) the agreements of the Senior
Creditors and the Company with respect to the Senior Debt Agreements may from
time to time be modified by the Company and the Senior Creditors for the purpose
of adding any requirements thereto, or changing in any manner the rights and
obligations of the Company and the Senior Creditors thereunder; (iv) the
manner, place or terms for payment of Senior Debt or any portion thereof may
be
altered or the terms for payment extended, or the Senior Debt may be renewed
in
whole or in part; (v) the maturity of the Senior Debt may be accelerated in
accordance with the terms of any present or future agreement among the Company
and the Senior Creditors; (vi) any Collateral may be sold, exchanged,
released or substituted and any Lien in favor of the Senior Creditors may be
terminated, subordinated or fail to be perfected or become unperfected;
(vii) any Person liable in any manner for Senior Debt may be discharged,
released or substituted; and (viii) all other rights against the Company,
any other Person or with respect to any collateral may be exercised (or the
Senior Creditors may waive or refrain from exercising such rights).
8.2
Amendments
to Subordinated Debt.
Neither
the Company nor the Subordinated Creditor shall, without the prior written
consent of the Senior Creditors granted or withheld in their sole discretion,
agree to or permit any amendment, modification or waiver of any provisions
of
any of the Subordinated Debt Agreements (including any amendment, modification
or waiver pursuant to an exchange of other securities or instruments for
outstanding Subordinated Debt) if the effect of such amendment, modification
or
waiver is to: (i) increase the interest rate on the Subordinated Debt or
change (to earlier dates) the dates upon which principal and interest are due
thereon; (ii) alter the redemption, prepayment, conversion, or
subordination provisions thereof; (iii) alter the covenants and events of
default in a manner which would make such provisions more onerous or restrictive
to Company; or (iv) otherwise increase the obligations of the Company in
respect of the Subordinated Debt or confer additional rights upon the
Subordinated Creditor which individually or in the aggregate would be adverse
in
any respect to the Company or the Senior Creditors and each of them.
10
ARTICLE
IX
CERTAIN
AGREEMENTS OF THE SUBORDINATED CREDITOR
9.1
No
Interference.
The
Subordinated Creditor acknowledges that Company has granted the Senior Creditors
a security interest in certain of the Company’s assets, including all of the
Company’s assets that are part of the collateral securing the Subordinated Debt,
and shall not interfere with or in any manner oppose a disposition of any such
collateral by the Senior Creditors in accordance with applicable law.
9.2
Acquisition
of Liens or Guaranties.
The
Subordinated Creditor shall not, without the prior written consent of the Senior
Creditors, acquire any right or interest in or to any property of the Company
or
accept any guaranties of the Subordinated Debt from the Company or any Person.
9.3
Rights
of Senior Creditors Not to Be Impaired.
No
right of the Senior Creditors to enforce the subordination provided for herein
or to exercise its other rights hereunder shall at any time in any way be
prejudiced or impaired by any act or failure to act by Company, the Senior
Creditors or any of them hereunder or under or in connection with the Senior
Debt Agreements or by any noncompliance by Company with the terms of this
Agreement or the Senior Debt Agreements, regardless of any knowledge thereof
the
Senior Creditors or any of them may have or otherwise be charged with.
9.4
Financial
Condition of the Company.
The
Subordinated Creditor shall not have any right to require the Senior Creditors
or any of them to obtain or disclose any information with respect to:
(i) the financial condition or character of the Company or the ability of
the Company to pay and perform the Senior Debt or the Subordinated Debt;
(ii) the Senior Debt; (iii) the collateral or any other security for
any or all of the Senior Debt; (iv) the existence or nonexistence of any
guarantees of, or any other subordination agreements with respect to, all or
any
part of the Senior Debt; (v) except as required hereunder, any action or
inaction on the part of the Senior Creditors or any Lender or any other Person;
or (vi) any other matter, fact or occurrence whatsoever.
9.5
Waivers
by Subordinated Creditor.
(a) Senior
Debt.
(i) All
Senior Debt at any time incurred by the Company shall be deemed to have been
incurred, and all Senior Debt held by any Senior Creditor shall be deemed to
have been extended, acquired or obtained, as applicable, in reliance upon this
Agreement, and the Subordinated Creditor hereby waives (i) notice of
acceptance, or proof of reliance, by each Senior Creditor of this Agreement,
and
(ii) notice of the existence, renewal, extension, accrual, creation, or
non-payment of all or any part of the Senior Debt. Nothing contained in this
Agreement shall preclude Senior Creditor from discontinuing the extension of
credit to the Company (whether under the Senior Debt Agreements or otherwise)
or
from taking (without notice to Subordinated Creditor, the Company, or any other
Person) any other action in respect of the Senior Debt or the Collateral which
such Senior Creditor is otherwise entitled to take with respect to the Senior
Debt or the Collateral.
(ii) Neither
Senior Creditors nor or any of their respective affiliates, partners, directors,
officers, employees, or agents (collectively, the “Senior
Creditor Parties”)
shall
be liable for failure to demand, collect, or realize upon any of the Collateral
or any proceeds or for any delay in doing so or shall be under any obligation
to
sell or otherwise Dispose of any Collateral or proceeds thereof or to take
any
other action whatsoever with regard to the Collateral or any part or proceeds
thereof. If any Senior Creditor honors (or fails to honor) a request by the
Company for an extension of credit pursuant to any of the Senior Debt
Agreements, whether such Senior Creditor has knowledge that the honoring of
(or
failure to honor) any such request would constitute a default under the terms
of
the Subordinated Debt Agreements or an act, condition, or event that, with
the
giving of notice or the passage of time, or both, would constitute such a
default, or if such Senior Creditor otherwise should exercise any of its
contractual rights or remedies under the Senior Debt Agreements (subject to
the
express terms and conditions hereof), the Senior Creditor Parties shall not
have
any liability whatsoever to the Subordinated Creditor as a result of such
action, omission, or exercise. The Senior Creditor Parties will be entitled
to
manage and supervise their loans and extensions of credit under the Senior
Debt
Agreements as the Senior Creditors may, in their sole discretion, deem
appropriate, and the Senior Creditors may manage their loans and extensions
of
credit without regard to any rights or interests that the Subordinated Creditor
may have in the Collateral or otherwise except as otherwise expressly set forth
in this Agreement. The Subordinated Creditor agrees that the Senior Creditor
Parties shall not incur any liability as a result of a sale, lease, license,
application or other Disposition of all or any portion of the Collateral or
any
part or proceeds thereof. The Senior Creditor Parties may, from time to time,
enter into agreements and settlements with the Company as they may determine
in
their sole discretion without impairing any of the subordinations, priorities,
rights or obligations of the parties under this Agreement, including, without
limitation, substituting Collateral, releasing any lien and releasing the
Company. The Subordinated Creditor waives any and all rights it may have to
require the Senior Creditor Parties to marshal assets, to exercise rights or
remedies in a particular manner, or to forbear from exercising such rights
and
remedies in any particular manner or order.
11
(b) Notice
of Acceptance and Other Waivers.
To the
fullest extent permitted by applicable law, the Subordinated Creditor hereby
waives: (i) notice of acceptance hereof; (ii) notice of any loans or other
financial accommodations made or extended under any of the Senior Debt
Agreements, or the creation or existence of any Senior Debt; (iii) notice
of the amount of the Senior Debt; (iv) notice of any adverse change in the
financial condition of the Company or of any other fact that might increase
Subordinated Creditor’s risk hereunder; (v) notice of presentment for
payment, demand, protest, and notice thereof as to any instrument among the
Senior Debt Agreements; (vi) notice of any Default or Event of Default
under the Senior Debt Agreements or otherwise relating to the Senior Debt;
(vii) all other notices (except if such notice is specifically required to
be given by the Company to the Subordinated Creditor under the Settlement
Agreement) and demands to which the Subordinated Creditor might otherwise be
entitled.
(c) Lawsuits;
Defenses; Setoff.
To the
fullest extent permitted by applicable law, the Subordinated Creditor
(i) waives the right by statute or otherwise to require the Senior
Creditors to institute suit against the Company or to exhaust any rights and
remedies which the Senior Creditors or any of them has or may have against
the
Company; (ii) waives any defense arising by reason of any disability or
other defense (other than the defense that the Discharge of the Senior Debt
has
occurred) of the Company or by reason of the cessation from any cause whatsoever
of the liability of the Company in respect thereof, (iii) waives any rights
to assert against any Senior Creditor Party any defense (legal or equitable),
set-off, counterclaim, or claim which the Subordinated Creditor may now or
at
any time hereafter have against the Company or any other party liable to any
Senior Creditor Party or the Subordinated Creditor, (iv) waives any
defense, set-off, counterclaim, or claim, of any kind or nature, arising
directly or indirectly from the present or future lack of perfection,
sufficiency, validity, or enforceability of any Senior Debt, any Subordinated
Debt or any security for either; (v) waives any defense arising by reason
of any claim or defense based upon an election of remedies by any Senior
Creditor; and (vi) waives the benefit of any statute of limitations affecting
Subordinated Creditor’s obligations hereunder or the enforcement thereof, and
any act which shall defer or delay the operation of any statute of limitations
applicable to the Senior Debt shall similarly operate to defer or delay the
operation of such statute of limitations applicable to such Subordinated
Creditor’s obligations hereunder.
ARTICLE
X
SUBROGATION
10.1
Subrogation.
Until
the Discharge of the Senior Debt, the Subordinated Creditor shall not have,
and
shall not directly or indirectly exercise, any rights that it may acquire by
way
of subrogation under this Agreement by any payment or distribution to the Senior
Creditors hereunder or otherwise. Upon the Discharge of the Senior Debt, the
Subordinated Creditor shall be subrogated to the rights of the Senior Creditors
to receive payments or distributions applicable to the Senior Debt until the
Subordinated Debt is paid in full. For purposes of the foregoing subrogation,
no
payments or distributions to the Senior Creditors of any cash, property or
securities to which the Subordinated Creditor would be entitled but for the
provisions of ARTICLE II, ARTICLE III, ARTICLE IV, ARTICLE V, ARTICLE VI,
ARTICLE VII, or ARTICLE X shall, as among Company, its creditors (other than
the
Senior Creditors and each of them) and the Subordinated Creditor, be deemed
to
be a payment by Company to or on account of the Senior Debt.
10.2
Payments
Over.
If any
payment or distribution to which the Subordinated Creditor would otherwise
have
been entitled but for the provisions of ARTICLE II, ARTICLE III, ARTICLE IV,
ARTICLE V, ARTICLE VI, ARTICLE VII, or Article X shall have been applied
pursuant to such Sections to the payment of amounts payable under the Senior
Debt, the Subordinated Creditor shall be entitled to receive from the Senior
Creditors any payments or distributions received by the Senior Creditors in
excess of the amount sufficient to pay in full in cash all amounts payable
under
or in respect of the Senior Debt. If any such excess payment is made to the
Senior Creditors, upon written demand the Senior Creditors shall promptly remit
such excess to the Subordinated Creditor and until so remitted the Senior
Creditors shall hold such excess payment for the benefit of the Subordinated
Creditor.
12
ARTICLE
XI
CONTINUING
AGREEMENT; REINSTATEMENT
11.1
Continuing
Agreement.
This
Agreement is a continuing agreement of subordination and shall continue in
effect and be binding upon the Subordinated Creditor until the Discharge of
the
Senior Debt. The subordinations, agreements and priorities set forth herein
shall remain in full force and effect regardless of whether any party hereto
in
the future seeks to rescind, amend, terminate or reform, by litigation or
otherwise, its respective agreements with the Company.
11.2
Reinstatement.
This
Agreement shall continue to be effective or shall be reinstated, as the case
may
be, if, for any reason, any payment of the Senior Debt by or on behalf of the
Company shall be rescinded or must otherwise be restored by the Senior Creditors
or any of them, whether as a result of an insolvency event or otherwise.
ARTICLE
XII
NO
FIDUCIARY DUTY
The
Senior Creditors and the Subordinated Creditor acknowledge and agree that none
of them has any fiduciary duty to the other(s) hereunder (and, additionally,
the
Subordinated Creditor acknowledges and agrees that none of the Secured Creditor
Parties has any fiduciary or other duty towards him, except for the duty of
the
Senior Creditors to perform or observe their express obligations to pay over
excess monies actually held by them (following the Discharge of the Senior
Debt)
to the Subordinated Creditor as expressly provided under the terms of this
Agreement), and that in approving or disapproving any matter or proposed action
hereunder, each may act in its sole and absolute discretion and in the manner
which it considers to be in its own best interests, except as may be
specifically provided otherwise herein. Further, the Senior Creditors and the
Subordinated Creditor acknowledge that none of them has made any warranties,
express or implied, to the other nor does either (nor any Secured Creditor
Party) assume any liabilities or duties to the other with respect to Company’s
financial condition or otherwise except as expressly provided otherwise herein.
ARTICLE
XIII
NO
TRANSFER OF SUBORDINATED DEBT
The
Subordinated Creditor may not assign or transfer its rights and obligations
under the Subordinated Credit Agreements, or any of them, or with respect to
any
interest in the Subordinated Debt without the prior written consent of the
Senior Creditors, and any such permitted transferee or assignee, as a condition
to acquiring such rights and obligations under the Subordinated Debt Agreements,
or with respect to any interest in the Subordinated Debt, shall agree to be
bound hereby in an agreement in form and substance satisfactory to the Senior
Creditors. Any purported assignment or transfer of any of the Subordinated
Creditor’s rights or interests in, to or with respect to the Subordinated Credit
Documents or the Subordinated Debt shall be void ab initio.
13
ARTICLE
XIV
OBLIGATIONS
OF THE COMPANY NOT AFFECTED
The
provisions of this Agreement are intended solely for the purpose of defining
the
relative rights against Company of the Subordinated Creditor, on the one hand,
and the Senior Creditors, on the other hand. Nothing contained in this Agreement
shall (i) impair, as between Company and the Subordinated Creditor, the
obligation of the Company to pay the principal of or interest on the
Subordinated Debenture and its other obligations with respect to the
Subordinated Debt as and when the same shall become due and payable in
accordance with the terms thereof, or (ii) otherwise affect the rights
against Company of the Subordinated Creditor, on the one hand, and the creditors
of the Company (other than the Senior Creditors), on the other hand.
ARTICLE
XV
REPRESENTATIONS
AND WARRANTIES
15.1
Representations
and Warranties of The Subordinated Creditor.
The
Subordinated Creditor represents and warrants to the Senior Creditors that:
(a) Powers.
The
Subordinated Creditor is an individual who has all the requisite power and
authority to execute, deliver and perform its obligations under this Agreement.
(b) No
Conflict.
The
execution, delivery and performance by the Subordinated Creditor of this
Agreement does not and will not result in a breach of or constitute a default
under any indenture or loan or credit agreement or any other agreement, lease
or
instrument to which the Subordinated Creditor is a party or by which it or
its
properties may be bound or affected or violate any provision of any law, rule,
regulation, order, writ, judgment, injunction, decree or the like binding on
or
affecting the Subordinated Creditor.
(c) Binding
Obligation.
This
Agreement constitutes the legal, valid and binding obligation of the
Subordinated Creditor, enforceable against the Subordinated Creditor in
accordance with its terms.
(d) Governmental
Consents.
No
authorization, consent, approval, license, exemption of, or filing or
registration with, any Governmental Person is required for the due execution,
delivery or performance by the Subordinated Creditor of this Agreement.
(e) No
Prior Assignment.
The
Subordinated Creditor has not previously assigned any interest in the
Subordinated Debt; no Person other than the Subordinated Creditor owns an
interest in the Subordinated Debt (whether as joint holders of the Subordinated
Debt, participants or otherwise); and the entire Subordinated Debt is owing
only
to Subordinated Creditor.
(f) Independent
Investigation.
The
Subordinated Creditor has undertaken its own independent investigation of the
financial condition of the Company and all other matters pertaining to this
Agreement and is not relying in any manner upon any representation or statement
of the Senior Creditors or any of them with respect thereto. The Subordinated
Creditor is aware of the terms of the Senior Debt Agreements and is in a
position to obtain, and it hereby assumes full responsibility for obtaining,
any
additional information concerning the financial condition of the Company and
any
other matters pertinent hereto that the Subordinated Creditor may desire. The
Subordinated Creditor is not relying upon or expecting the Senior Creditors
or
any of them to furnish to it any information now or hereafter in any Senior
Creditor’s possession concerning the financial condition of the Company or any
other matter.
14
15.2
Representations
and Warranties of the Senior Creditors.
The
Senior Creditors represent and warrant to the Subordinated Creditor that, to
the
Senior Creditors’ actual knowledge:
(a) Powers.
The
Senior Creditors possess all the requisite power and authority to execute,
deliver and perform their obligations under this Agreement.
(b) No
Conflict.
The
execution, delivery and performance by the Senior Creditors of this Agreement
does not and will not result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which the Senior Creditors are a party or by which they or their
properties may be bound or affected or violate any provision of any law, rule,
regulation, order, writ, judgment, injunction, decree or the like binding on
or
affecting the Senior Creditors.
(c) Binding
Obligation.
This
Agreement constitutes the legal, valid and binding obligation of the Senior
Creditors, enforceable against the Senior Creditors in accordance with its
terms.
(d) Governmental
Consents.
No
authorization, consent, approval, license, exemption of, or filing or
registration with, any Governmental Person is required for the due execution,
delivery or performance by the Senior Creditors of this Agreement.
(e) No
Prior Assignment.
The
Senior Creditors have not previously assigned any interest in the Subordinated
Debt; no Person other than the Senior Creditors owns an interest in the Senior
Debt (whether as joint holders of the Senior Debt, participants or otherwise);
and the entire Senior Debt is owing only to Senior Creditors.
(f) Independent
Investigation.
The
Senior Creditors have undertaken their own independent investigation of the
financial condition of the Company and all other matters pertaining to this
Agreement and are not relying in any manner upon any representation or statement
of the Subordinated Creditor with respect thereto. The Senior Creditors are
aware of the terms of the Subordinate Debt Agreements and are in a position
to
obtain, and they hereby assume full responsibility for obtaining, any additional
information concerning the financial condition of the Company and any other
matters pertinent hereto that the Senior Creditors may desire. The Senior
Creditors are not relying upon or expecting the Subordinate Creditor to furnish
to them any information now or hereafter in the Subordinate Creditor’s
possession concerning the financial condition of the Company or any other
matter.
ARTICLE
XVI
FURTHER
ASSURANCES AND ADDITIONAL ACTS
16.1
Endorsement
of Subordinated Debt Agreements.
The
Subordinated Debt Agreements and all other documents, financing statements,
and
instruments evidencing or perfecting any liens securing any of the Subordinated
Debt shall be endorsed with a legend noting that the Subordinated Debt
Agreements and such other documents and instruments are subject to this
Agreement, and the Subordinated Creditor shall promptly deliver to the Senior
Creditors evidence of the same.
16.2
Further
Assurances and Additional Acts.
The
Subordinated Creditor and Company shall each execute, acknowledge, deliver,
file, notarize and register at its own expense all such further agreements,
instruments, certificates, financing statements, documents and assurances,
and
perform such further acts as the Senior Creditors shall deem necessary or
appropriate to effectuate the purposes of this Agreement, and promptly provide
the Senior Creditors with evidence of the foregoing satisfactory in form and
substance to the Senior Creditors.
16.3
Attorney
in Fact.
Each
Senior Creditor is hereby irrevocably constituted and appointed the
attorney-in-fact of the Subordinated Creditor on the Subordinated Debt and
to
take all other action either in any Senior Creditor’s name or in the name of the
Subordinated Creditor, which in the Senior Creditors’ opinion is necessary or
desirable to enable the Senior Creditors to obtain all such payments on the
Subordinated Debt that are to be turned over to the Senior Creditors pursuant
to
this Agreement.
15
ARTICLE
XVII
NOTICES
All
notices and other communications provided for herein shall, unless otherwise
stated herein, be in writing (including by telex or facsimile transmission)
and
shall be mailed, sent or delivered at or to the address or telex or facsimile
number of the respective party or parties set forth on the signature pages
hereof, or at or to such other address or telex or facsimile number as such
party or parties shall have designated in a written notice to the other party
or
parties. All such notices and communications shall be effective (i) if
delivered by hand, when delivered; (ii) if sent by mail, upon the earlier of
the
date of receipt or five (5) Business Days, after deposit in the mail, first
class, postage prepaid; (iii) if sent by telex, upon receipt by the sender
of an appropriate answerback; and (iv) if sent by facsimile transmission,
when sent.
ARTICLE
XVIII
NO
WAIVER; CUMULATIVE REMEDIES
No
failure on the part of the Senior Creditors to exercise, and no delay in
exercising, any right, remedy, power or privilege hereunder shall operate as
a
waiver thereof nor shall any single or partial exercise of any such right,
remedy, power or privilege preclude any other or further exercise thereof or
the
exercise of any other right, remedy, power or privilege. The rights and remedies
under this Agreement are cumulative and not exclusive of any rights, remedies,
powers and privileges that may otherwise be available to the Senior Creditors.
ARTICLE
XIX
COSTS
AND EXPENSES
19.1
Payments
by the Company.
The
Company shall pay to the Senior Creditors on demand the reasonable out-of-pocket
costs and expenses of the Senior Creditors, and the reasonable fees and
disbursements of counsel to the Senior Creditors (including allocated costs
of
internal counsel), in connection with the negotiation, preparation, execution,
delivery and administration of this Agreement and any amendments, modifications
or waivers of the terms thereof.
19.2
Payments
by Company and The Subordinated Creditor.
Each of
the Company and the Subordinated Creditor, jointly and severally, shall pay
to
the Senior Creditors on demand all actual costs and expenses of the Senior
Creditors, and all actual fees and disbursements of counsel (including allocated
costs of internal counsel), incurred in connection with the enforcement or
attempted enforcement of, and preservation of rights or interests under, this
Agreement, including any losses, costs and expenses sustained by the Senior
Creditors as a result of any failure by the Subordinated Creditor to perform
or
observe its obligations contained in this Agreement. In addition, the Senior
Creditors agree pay to the Subordinated Creditor on demand all reasonable and
documented costs and expenses of the Subordinated Creditor, including reasonable
and documented fees and disbursements of counsel, to the extent incurred by
the
Subordinated Creditor exclusively and directly due to any failure by the Senior
Creditors to perform or observe their express obligations to pay over excess
monies actually held by them (following the Discharge of the Senior Debt) to
the
Subordinated Creditor as expressly provided under the terms of this Agreement.
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ARTICLE
XX
SURVIVAL
All
covenants, agreements, representations and warranties made in this Agreement
shall, except to the extent otherwise provided herein, survive the execution
and
delivery of this Agreement and shall continue in full force and effect for
so
long as any Senior Debt remains unpaid or the Commitment remains in effect.
Without limiting the generality of the foregoing, the obligations of the Company
and the Subordinated Creditor under ARTICLE XIX shall survive the Discharge
of
the Senior Debt.
ARTICLE
XXI
MISCELLANEOUS
21.1
Benefits
of Agreement.
This
Agreement is entered into for the sole protection and benefit of the parties
hereto and their successors and assigns, and no other Person shall be a direct
or indirect beneficiary of, or shall have any direct or indirect cause of action
or claim in connection with, this Agreement.
21.2
Binding
Effect.
Subject
to the provisions of this ARTICLE this Agreement shall be binding upon, inure
to
the benefit of and be enforceable by Company, The Subordinated Creditor and
the
Senior Creditors and their respective successors and assigns.
21.3
Governing
Law.
THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF
THE
STATE OF NEW YORK; INCLUDING, WITHOUT LIMITATION, SECTIONS 5-1401 AND 0-0000
XX
XXX XXXX XXXXX’S GENERAL OBLIGATIONS LAW.
21.4
Waiver
Of Jury Trial.
EACH
PARTY HERETO HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF ANY CREDITOR OR COMPANY OR ANY OF THEM WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENTS OR AGREEMENT EXECUTED OR DELIVERED
BY THEM 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 EACH PARTY HERETO HEREBY AGREES AND CONSENTS
THAT ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT JURY, AND THAT ANY OF THEM MAY FILE AN ORIGINAL COUNTERPART OR
A
COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THEIR CONSENT TO
THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
21.5
Submission
to Jurisdiction.
The
Subordinated Creditor hereby (i) submits to the non-exclusive jurisdiction
of the United States District Court for the Southern District of New York and
of
any New York state court sitting in New York County for the purposes of all
legal proceedings arising out of or relating to this Agreement; (ii) waives
to, the fullest extent permitted by applicable law, any objection which it
may
now or hereafter have to the laying of the venue of any proceeding brought
in
such a court or any claim that any such proceeding brought in such a court
has
been brought in an inconvenient forum; (iii) agrees that service of process
in any such action or proceeding may be affected by mailing a copy thereof
by
registered or certified mail (or any substantially similar form and mail),
postage prepaid, to the Subordinated Creditor or the Company at its respective
address set forth below each party’s respective signature hereon, or at such
other address of which the Senior Creditors shall have been notified pursuant
hereto; and (iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right
to xxx in any other jurisdiction.
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21.6
Entire
Agreement.
This
Agreement constitutes the entire agreement of the Company, the Senior Creditors
and The Subordinated Creditor with respect to the matters set forth herein
and
supersedes any prior agreements, commitments, discussions and understandings,
oral or written, with respect thereto. There are no conditions to the full
effectiveness of this Agreement.
21.7
Amendments
and Waivers.
This
Agreement may not be amended except by a writing signed by Company, The
Subordinated Creditor and the Senior Creditors. No waiver of any rights of
the
Senior Creditors under any provision of this Agreement or consent to any
departure by the Subordinated Creditor or Company therefrom shall be effective
unless in writing and signed by the Senior Creditors. Any such amendment, waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given.
21.8
Conflicts.
In case
of any conflict or inconsistency between any terms of this Agreement, on the
one
hand, and Subordinated Debt Agreements or any other document or instrument
relating to the Subordinated Debt, on the other hand, then the terms of this
Agreement shall control.
21.9
Severability.
Whenever possible, each provision of this Agreement shall be interpreted in
such
manner as to be effective and valid under all applicable laws and regulations.
If, however, any provision of this Agreement shall be prohibited by or invalid
under any such law or regulation in any jurisdiction, it shall, as to such
jurisdiction, be deemed modified to conform to the minimum requirements of
such
law or regulation, or, if for any reason it is not deemed, so modified, it
shall
be ineffective and invalid only to the extent of such prohibition or invalidity
without affecting the remaining provisions of this Agreement or the validity
or
effectiveness of such provision in any other jurisdiction.
21.10
Counterparts;
Electronic 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 shall be deemed
to be an original and all of which taken together shall constitute but one
and
the same agreement. Facsimile, PDF and other electronically transmitted copies
signatures on this Agreement shall be deemed the equivalent of original
signatures.
21.11
Termination
of Agreement.
Upon
the Discharge of the Senior Debt, this Agreement shall terminate and the Senior
Creditors shall promptly execute and deliver to the Company and the Subordinated
Creditor such documents and instruments as shall be necessary to evidence such
termination; provided, however, that the obligations of the Company and the
Subordinated Creditor under ARTICLE XX shall survive such termination.
[INTENTIONAL
END OF PAGE]
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IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the
date first above written.
SENIOR
CREDITORS
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BARTFAM,
a California limited partnership
By: /s/
Xxxxxx X. Xxxxxxx
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Xxxxxx
X. Xxxxxxx, Managing Trustee of The
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Xxxxxxx
X. Xxxxxxx Marital Trust
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Name:
Xxxxxx X. Xxxxxxx
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/s/
Xxxxxx X. Xxxxxxx
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Title:
General Partner
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Xxxxxx
X. Xxxxxx, Trustee of the Xxxxxx X.
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Xxxxxx
Xxxxxx Xxxxxxx, Trustee of the
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Fiskin
Trust dated April 16, 1996
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Xxxxxx
Xxxxxx Xxxxxxx Trust
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/s/
Xxxxxx X. Xxxxxx, Trustee
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/s/
Xxxxxx Xxxxxx Xxxxxxx
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Xxxxx
X. Xxxxxxx
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Xxxx
X. Xxxxxxx
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/s/
Xxxxx X. Xxxxxxx
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/s/
Xxxx X. Xxxxxxx
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Xxxxxxx
X. Xxxxxxx
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/s/
Xxxxxxx X. Xxxxxxx
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Address:
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Care
of:
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Xxxx
X. Xxxxxxx and Xxxxxx X. Xxxxxxx
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00000
Xxx Xxxxxxx Xxxx Xxxxx 000
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Xxx
Xxxxxxx, Xxxxxxxxxx 00000
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Facsimile:
000 000-0000
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with
copies to:
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Manatt,
Xxxxxx & Xxxxxxxx, LLP
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00000
X. Xxxxxxx Xxxx.
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Xxx
Xxxxxxx, XX 00000
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Attention:
[_______________], Esq.
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Facsimile:
(000) 000-0000
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SUBORDINATED
CREDITOR:
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/s/
Xxxxxxx X. Xxxxxxxxxx, Xx.
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Xxxxxxx
X. Xxxxxxxxxx, Xx
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Address:
000
X.
Xxx Xxxxxx
Xxxxx
Xxxxxx, Xxxxxxxx 00000
with
copies to:
Savit
& Xxxxxxxxxx, LLP
0000
Xxxxxxxxx Xxxxxx
Xxxxx 000X
Xxxxxxxx,
Xxxxxxxx 00000
Attention:
Xxxxx X. Xxxxx, Esq.
Telephone:
(000) 000-0000
COMPANY:
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By;
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/s/
E. Xxxxxx Xxxxxx
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Name:
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E.
Xxxxxx Xxxxxx
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Title:
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President
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Address:
0000
Xxx Xxxx Xxxxxx
Xxxxxxxxx,
Xxxxxxxx 00000
Attention:
E. Xxxxxx Xxxxxx, President
Facsimile:
(301) 57-1861
with
copies to:
Xxxxxxxxx
Xxxxx Xxxxxxx & Xxxxx
0000
Xxxxxxx Xxxxxx Xxxxx Xxxxx 0000
Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000
Attention:
Xxxxxxx X. Xxxxxx, Esq.
Facsimile:
(000) 000-0000
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